EXL Reports 2023 Fourth Quarter and Year-End Results(1); Issues 2024 Guidance

2023 Fourth Quarter Revenue of $414.1 Million, up 10.5% year-over-year
Q4 Diluted EPS (GAAP) of $0.24, up 28.2% from $0.19 in Q4 of 2022
Q4 Adjusted Diluted EPS (Non-GAAP) (2) of $0.35, up 11.3% from $0.31 in Q4 of 2022

2023 Revenue of $1.63 Billion, up 15.5% year-over-year
2023 Diluted EPS (GAAP) of $1.10, up 29.9% from $0.85 in 2022
2023 Adjusted Diluted EPS (Non-GAAP) (2) of $1.43, up 19.1% from $1.20 in 2022

NEW YORK, Feb. 29, 2024 (GLOBE NEWSWIRE) — ExlService Holdings, Inc. (NASDAQ:EXLS), a leading data analytics and digital operations and solutions company, today announced its financial results for the quarter and full year ended December 31, 2023.

Rohit Kapoor, Vice Chairman and Chief Executive Officer, said, “In 2023, we achieved revenue growth of 16% and EPS growth of 19%, despite a challenging macro-economic environment and lower demand across the IT services industry. During the year, we made a strategic pivot in our strategy – to be data- and AI-led in everything we do. This strategy, and the meaningful investments we have made in our data and AI capabilities, put EXL in a leading market position as clients continue to recognize our differentiated value proposition. With our proven strategy, unique data, analytics and AI capabilities and an exceptionally talented and dedicated team, we believe EXL is well positioned to continue to outperform the industry in 2024 and beyond.”

Maurizio Nicolelli, Chief Financial Officer, said, “We ended 2023 with strong momentum across our business, a healthy balance sheet and solid free cash flow. While we are mindful of the economic uncertainty heading into 2024, we remain confident we will deliver above industry average revenue and EPS growth in 2024. Our guidance for 2024 revenue is in the range of $1.78 billion to $1.82 billion, representing a 9% to 12% increase year-over-year on both a reported and constant currency basis. We expect adjusted diluted EPS to be in the range of $1.56 to $1.62, representing a 9% to 13% increase over 2023.

“Our Board of Directors authorized a $500 million common stock repurchase program, effective March 1, 2024, for a two-year period, in line with our capital allocation strategy. This new authorization of $500 million represents confidence in our ability to continue our growth trajectory and generate significant free cash flow.”

__________________________________________________

Prior period information has been adjusted to reflect the 5-for-1 forward stock split of our common stock effected in August 2023. See Note 19 – Capital Structure to our Annual Report on Form 10-K for the year ended December 31, 2023 for further details.
Reconciliations of adjusted (non-GAAP) financial measures to the most directly comparable GAAP measures, where applicable, are included at the end of this release under “Reconciliation of Adjusted Financial Measures to GAAP Measures.” These non-GAAP measures, including adjusted diluted EPS and constant currency measures, are not measures of financial performance prepared in accordance with GAAP.

Financial Highlights: Fourth Quarter 2023

Revenue for the quarter ended December 31, 2023 increased to $414.1 million compared to $374.7 million for the fourth quarter of 2022, an increase of 10.5% on a reported basis and 10.1% on a constant currency basis. Revenue increased by 0.8% sequentially on reported basis and constant currency basis, from the third quarter of 2023.

 
 
Revenue
 
Gross Margin

 
 
Three months ended
 
Three months ended

 Reportable Segments
 
December
31, 2023
 
December
31, 2022
 
September
30, 2023
 
December
31, 2023
 
December
31, 2022
 
September
30, 2023

 
 
(dollars in millions)
 
 
 
 

Insurance
 
$
139.1
 
$
120.7
 
$
136.4
 
36.2%
 
36.2%
 
36.6%

Healthcare
 
26.0
 
25.3
 
26.2
 
36.9%
 
27.0%
 
36.8%

Emerging Business
 
67.0
 
58.0
 
65.3
 
41.0%
 
39.2%
 
42.4%

Analytics
 
182.0
 
170.7
 
183.1
 
35.4%
 
37.5%
 
37.0%

Revenues, net
 
$
414.1
 
$
374.7
 
$
411.0
 
36.7%
 
36.6%
 
37.7%

Operating income margin for the quarter ended December 31, 2023 was 13.1%, compared to 13.6% for the fourth quarter of 2022 and 14.7% for the third quarter of 2023. Adjusted operating income margin for the quarter ended December 31, 2023 was 17.8%, compared to 18.0% for the fourth quarter of 2022 and 20.0% for the third quarter of 2023.
Diluted earnings per share for the quarter ended December 31, 2023 was $0.24, compared to $0.19 for the fourth quarter of 2022 and $0.26 for the third quarter of 2023. Adjusted diluted earnings per share for the quarter ended December 31, 2023 was $0.35, compared to $0.31 for the fourth quarter of 2022 and $0.37 for the third quarter of 2023.

Financial Highlights: Full Year 2023

Revenue for the year ended December 31, 2023 increased to $1.63 billion compared to $1.41 billion for the year ended December 31, 2022, an increase of 15.5% on a reported basis and 15.6% on a constant currency basis.

 
 
Revenue
 
Gross Margin

 
 
Year ended
 
Year ended

Reportable Segments
 
December
31, 2023
 
December
31, 2022
 
December
31, 2023
 
December
31, 2022  

 
 
(dollars in millions)
 
 

Insurance
 
$
529.9
 
$
448.7
 
35.5%
 
35.9%

Healthcare
 
106.0
 
97.4
 
34.6%
 
27.1%

Emerging Business
 
265.7
 
218.6
 
43.2%
 
41.4%

Analytics
 
729.1
 
647.3
 
36.8%
 
36.7%

Revenues, net
 
$
1,630.7
 
$
1,412.0
 
37.3%
 
36.5%

Operating income margin for the year ended December 31, 2023 was 14.6%, compared to 13.6% for the year ended December 31, 2022. Adjusted operating income margin for the year ended December 31, 2023 was 19.3%, compared to 18.3% for the year ended December 31, 2022.
Diluted earnings per share for the year ended December 31, 2023 was $1.10, compared to $0.85 for the year ended December 31, 2022. Adjusted diluted earnings per share for the year ended December 31, 2023 was $1.43, compared to $1.20 for the year ended December 31, 2022.

Business Highlights: Fourth Quarter 2023

Won 17 new clients in the fourth quarter of 2023, with 9 clients in the digital operations and solutions business and 8 clients in analytics. For the year, we won 63 new clients, with 35 of those clients in digital operations and solutions business and 28 in analytics.
Formed a new collaboration with AWS for developing and delivering generative AI solutions through a cloud-native AI workbench, including the use of Amazon Bedrock for large language models.
Established a new collaboration with Microsoft to co-develop and accelerate generative AI solutions for businesses to help clients drive growth, personalize customer experiences, unlock valuable insights and develop new offerings.
Named in Newsweek’s 2024 America’s Most Responsible Companies list for fourth consecutive year.

2024 Guidance
Based on current visibility, and a U.S. dollar to Indian rupee exchange rate of 83.0, U.K. pound sterling to U.S. dollar exchange rate of 1.27, U.S. dollar to the Philippine peso exchange rate of 56.0 and all other currencies at current exchange rates, we are providing the following guidance for the full year 2024:

Revenue of $1.78 billion to $1.82 billion, representing an increase of 9% to 12% on a reported basis, and constant currency basis, from 2023; and
Adjusted diluted earnings per share of $1.56 to $1.62, representing an increase of 9% to 13% from 2023.

Conference Call

ExlService Holdings, Inc. will host a conference call on Thursday, Feb. 29, 2024, at 10:00 A.M. ET to discuss the Company’s fourth quarter and year-end 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.

Please note that there is a new system to access the live call-in order to ask questions. To join the live call, please register here. A dial-in and unique PIN will be provided to join the call. 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.

About ExlService Holdings, Inc.

EXL (NASDAQ:EXLS) is a leading data analytics and digital operations and solutions company. We partner with clients using a data and AI-led approach to reinvent business models, drive better business outcomes and unlock growth with speed. EXL harnesses the power of data, analytics, AI, and deep industry knowledge to transform operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media and retail, among others. EXL was founded in 1999 with the core values of innovation, collaboration, excellence, integrity and respect. We are headquartered in New York and have more than 54,000 employees spanning six continents. For more information, visit www.exlservice.com.

Cautionary Statement Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. 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 maintain and grow client demand, our ability to hire and retain sufficiently trained employees, and our ability to accurately estimate and/or manage costs, rising interest rates, rising inflation and recessionary economic trends, are discussed in more detail in EXL’s filings with the Securities and Exchange Commission, including EXL’s Annual Report on Form 10-K. 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 applicable law.

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amount and share count)

 

 
 
 
 
 
(Unaudited)

 
Year ended December 31,
 
Three months ended December 31,

 
 
2023
 
 
 
2022
 
 
 
2023
 
 
 
2022
 

Revenues, net
$
1,630,668
 
 
$
1,412,044
 
 
$
414,058
 
 
$
374,703
 

Cost of revenues(1)
 
1,022,902
 
 
 
896,595
 
 
 
262,211
 
 
 
237,410
 

Gross profit(1)
 
607,766
 
 
 
515,449
 
 
 
151,847
 
 
 
137,293
 

Operating expenses:
 
 
 
 
 
 
 

General and administrative expenses
 
198,294
 
 
 
169,016
 
 
 
53,730
 
 
 
46,118
 

Selling and marketing expenses
 
120,227
 
 
 
97,989
 
 
 
31,553
 
 
 
25,955
 

Depreciation and amortization expense
 
50,490
 
 
 
56,282
 
 
 
12,298
 
 
 
14,225
 

Total operating expenses
 
369,011
 
 
 
323,287
 
 
 
97,581
 
 
 
86,298
 

Income from operations
 
238,755
 
 
 
192,162
 
 
 
54,266
 
 
 
50,995
 

Foreign exchange gain, net
 
1,532
 
 
 
6,199
 
 
 
694
 
 
 
1,516
 

Interest expense
 
(13,180
)
 
 
(8,252
)
 
 
(3,150
)
 
 
(3,432
)

Other income/(loss), net
 
10,834
 
 
 
(10
)
 
 
4,240
 
 
 
(4,508
)

Income before income tax expense and earnings from equity affiliates
 
237,941
 
 
 
190,099
 
 
 
56,050
 
 
 
44,571
 

Income tax expense
 
53,536
 
 
 
47,565
 
 
 
15,763
 
 
 
12,791
 

Income before earnings from equity affiliates
 
184,405
 
 
 
142,534
 
 
 
40,287
 
 
 
31,780
 

Gain/(loss) from equity-method investment
 
153
 
 
 
434