EXL Reports 2020 Third Quarter Results

2020 Third Quarter Revenues of $241.0 Million, down 4.1% year-over-year

Q3 Diluted EPS (GAAP) of $0.76, up from $0.55 in Q3 of 2019

Q3 Adjusted Diluted EPS (Non-GAAP) of $1.04, up from $0.84 in Q3 of 2019

New York, NY - October 29, 2020 - ExlService Holdings, Inc. (NASDAQ: EXLS), a leading operations management and analytics company, today announced its financial results for the quarter ended September 30, 2020. 

Rohit Kapoor, Vice Chairman and Chief Executive Officer, said, “EXL had a strong third quarter as our revenue increased to $241.0 million from $222.5 million in the second quarter of 2020. Our ‘work-from-anywhere’ delivery model has been very successful and helped us strengthen our relationships with our existing clients and win new business. Adjusted diluted EPS in the third quarter of 2020 was $1.04, improved from $0.53 in the second quarter of 2020, owing to higher revenues and the benefit of cost management measures taken earlier in the year. Our third quarter results demonstrate that clients are continuing to make decisions now to drive their strategic goals despite the challenges presented by the global pandemic. While the full business impact of the pandemic remains uncertain, we are confident in our resilient and agile business model and ability to deliver digital transformation agendas.” 

Maurizio Nicolelli, Chief Financial Officer, said, “EXL had a strong rebound in the third quarter compared to our second quarter. We exceeded our preliminary third quarter guidance and are raising our 2020 guidance. Our updated revenue guidance for 2020 is $950 million to $958 million, up from $945 million to $955 million. Our adjusted diluted EPS guidance for 2020 is increased to $3.40 to $3.48 from $3.35 to $3.45. Our balance sheet continues to remain very strong with cash and short-term investments of $362.6 million as of September 30, 2020.” 

Financial Highlights: Third Quarter 2020

Effective January 1, 2020, we made certain operational and structural changes to manage and report financial information through our four reportable segments: Insurance, Healthcare, Emerging Business and Analytics. Financial information for historical periods are recast to conform to the current presentation. For details regarding the change in segments, refer to our quarterly report on Form 10-Q for the quarter ended September 30, 2020. Reconciliations of adjusted (non-GAAP) financial measures to GAAP measures are included at the end of this release.
 

• Revenues for the quarter ended September 30, 2020 decreased to $241.0 million compared to $251.4 million for the third quarter of 2019, a decrease of 4.1% on a reported basis and 4.2% on a constant currency basis from the third quarter of 2019. Revenues increased by 8.3% sequentially on a reported basis and 7.7% on a constant currency basis, from the second quarter of 2020.

  

• Operating income margin for the quarter ended September 30, 2020 was 14.3%, compared to an operating income margin of 8.9% for the third quarter of 2019 and operating income margin of 4.4% for the second quarter of 2020. During the quarter ended September 30, 2019 we recorded impairment and restructuring charges of $0.5 million related to the wind down of the Health Integrated business, which reduced our operating income margin by 20 basis points. Adjusted operating income margin for the quarter ended September 30, 2020 was 19.2% compared to 14.3% for the third quarter of 2019 and 9.4% for the second quarter of 2020.
• Diluted earnings per share for the quarter ended September 30, 2020 was $0.76 compared to $0.55 for the third quarter of 2019 and $0.24 for the second quarter of 2020. During the quarter ended September 30, 2019 we recorded impairment and restructuring charges of $0.5 million ($0.4 million net of tax) related to the wind down of the Health Integrated business, which reduced our diluted earnings per share by $0.01. Adjusted diluted earnings per share for the quarter ended September 30, 2020 was $1.04 compared to $0.84 for the third quarter of 2019 and $0.53 for the second quarter of 2020. 

Business Highlights: Third Quarter 2020

• Won 11 new clients in the third quarter of 2020, with five in our operations management businesses and six in Analytics. For the first nine months, we won 30 new clients, with thirteen in operations management businesses and seventeen in Analytics.
• Recognized as the 2020 Gartner Peer Insights Customers’ Choice for Data and Analytics Service Providers.*
• EXL Health Named 'One of the Strongest Performers in the Risk Adjustment & Analytics Space’ in 2020 KLAS Performance Report.
• Achieved Six Leader Placements in the “2020 ISG Provider Lens™ Financial and Accounting Outsourcing for the US and UK”.
• Recognized as a Leader and Star Performer in the Everest Group Life & Pensions Insurance BPO PEAK Matrix® Assessment 2020.
• Opened a new delivery center in Bogotá, Colombia. 

2020 Guidance

Based on current visibility, and a U.S. Dollar to Indian Rupee exchange rate of 73.50, British Pound to U.S. Dollar exchange rate of 1.28, U.S. Dollar to the Philippine Peso exchange rate of 48.75 and all other currencies at current exchange rates, we are providing the following guidance: 

• Revenue of $950 million to $958 million, representing an annual revenue reduction of 3% to 4% on a constant currency basis from 2019. 

• Adjusted diluted earnings per share of $3.40 to $3.48 compared to $3.09 in 2019. 

Conference Call 

ExlService Holdings, Inc. will host a conference call on Thursday, October 29, 2020 at 8:00 A.M. ET to discuss the Company’s quarterly operating and financial results. The conference call will be available live via the internet by accessing the investor relations section of EXL’s website at ir.exlservice.com, where an accompanying investor-friendly spreadsheet of historical operating and financial data can also be accessed. Please access the website at least fifteen minutes prior to the call to register, download and install any necessary audio software. 

To listen to the conference call via phone, please dial 1-877-303-6384, or if dialing internationally, 1-224-357-2191 and an operator will assist you. For those who cannot access the live broadcast, a replay will be available on the EXL website ir.exlservice.com for a period of twelve months. 

*Source: Gartner Peer Insights ‘Voice of the Customer’: Data and Analytics Service Providers, Peer Contributors, 22 September 2020.

Disclaimer

Gartner Peer Insights Customers’ Choice constitute the subjective opinions of individual end-user reviews, ratings, and data applied against a documented methodology; they neither represent the views of, nor constitute an endorsement by, Gartner or its affiliates.

About ExlService Holdings, Inc.

EXL (NASDAQ: EXLS) is a leading operations management and analytics company that helps our clients build and grow sustainable businesses. By orchestrating our domain expertise, data, analytics and digital technology, we look deeper to design and manage agile, customer-centric operating models to improve global operations, drive profitability, enhance customer satisfaction, increase data-driven insights, and manage risk and compliance. Headquartered in New York, EXL has approximately 31,800 professionals in locations throughout the United States, the UK, Europe, India, the Philippines, Colombia, Australia and South Africa. EXL serves multiple industries including insurance, healthcare, banking and financial services, utilities, travel, transportation and logistics, media and retail, among others. For more information, visit www.exlservice.com. 

Cautionary Statement Regarding Forward-Looking Statements This press release contains forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to EXL's operations and business environment, all of which are difficult to predict and many of which are beyond EXL’s control. Forward-looking statements include information concerning EXL’s possible or assumed future results of operations, including descriptions of its business strategy. These statements may include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of management's experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. You should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although EXL believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect EXL’s actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors, which include our ability to successfully close and integrate strategic acquisitions, our ability to respond to and manage public health crises, including the outbreak and continued effects of the coronavirus pandemic, are discussed in more detail in EXL’s filings with the Securities and Exchange Commission, including EXL’s Annual Report on Form 10-K and EXL’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. These risks could cause actual results to differ materially from those implied by forward-looking statements in this release. You should keep in mind that any forward-looking statement made herein, or elsewhere, speaks only as of the date on which it is made. New risks and uncertainties come up from time to time, and it is impossible to predict these events or how they may affect EXL. EXL has no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.

For a full view of EXL’s financial tables, click here