ExlService Holdings, Inc. Q4 FY2024 earnings call

• Revenue in Q4 was $481 million, up 16% y/y; adjusted EPS was $0.44, up 26% y/y. - Accelerated growth in analytics due to improvement in analytics services growth, healthcare payment services, and ITI data acquisition. - Digital operations and solutions grew 18% y/y to $274M, driven by strong growth across industry verticals. - Changed operating model to industry market units and strategic growth units to accelerate data and AI strategy. - Acquired ITI Data to enhance data management and engineering capabilities. - Scaled proprietary AI solutions like Extracto, Paymentor, etc. - Launched eaccelerate.ai, an agentic AI platform. - Upcoming events: AI in Action virtual event on March 5th and investor strategy update on May 6th.

In the fourth quarter, ExlService generated revenue of $481 million, up 16% year over year. Analytics business delivered revenue of $208 million, 14% year over year and 2% sequentially. This was driven by improvement in analytics services growth rate, strong performance in healthcare payment services, and ITI data acquisition. Analytics contributed 43.2% of total revenue ($208M / $481M). Digital operations and solutions business grew to $274 million, 18% year over year and 2% sequentially, accounting for 57% of total revenue ($274M / $481M). By segment: Insurance segment generated $162 million, 16.6% y/y; Emerging segment had $80.2 million, 19.7% y/y; Healthcare segment reported $31.6 million, 21.6% y/y. The insurance vertical (digital ops and analytics) grew 15.8% y/y to $201.5M; emerging vertical (digital ops and analytics) grew 16.6% y/y to $170.1M; healthcare vertical (digital ops and analytics) grew 17% y/y to $109.7M. Analytics segment revenue was $207.7 million, 14.2% y/y.

• 2025 revenue expected in range of $2.025 billion to $2.06 billion, representing 10%-12% reported growth and 11%-13% constant currency growth (with $10M foreign exchange headwind and $1M gain). - Adjusted EPS expected in range of $1.83 to $1.89, up 11%-14% y/y. - Capital expenditures expected in range of $50 million to $55 million. - Full year effective tax rate expected in range of 22%-23%.

General economic conditions, factors set forth in press release, periodic reports, and SEC filings could cause actual results to differ materially from forward-looking statements. Risks include uncertainties related to economic conditions, client adoption of AI solutions, and execution of operating model changes.

Q: Bryan Bergin asked about 2025 growth outlook and operating model change.

A: Rohit Kapoor said demand environment remains strong, pipeline is developing well; operating model change is to be closer to clients and develop new capabilities faster, with more details to be shared at investor day on May 6th.

Q: Surinder Thind asked about emphasis on IP and client readiness.

A: Rohit Kapoor said innovation and IP development are critical, and ExlService helps clients with cloud shift, legacy tech modernization, and data asset availability to benefit from AI.

Q: Maggie Nolan asked about data assets and margin expectations.

A: Maurizio Nicolelli said ExlService has 100 data assets and accelerators, and in 2025, gross margins will continue to increase with annual progression despite choppy quarters, and AOPM margin expected to increase 10-20 basis points.

Q: Puneet Jain asked about AI agents and analytics in new model.

A: Rohit Kapoor said AI agents need to be embedded in workflow, integrated with data assets, which clients struggle to do themselves; analytics is integrated into industry verticals and will be reported with greater transparency.

Q: David Grossman asked about operating model change and Gen AI impact.

A: Rohit Kapoor said operating model change is to be closer to clients and focus on international markets, and Gen AI is used in code conversion, customer service, and data extraction, acting as a tailwind to revenue growth and margin.