ExlService Holdings, Inc. Q3 FY2025 earnings call

Key Points

• Strong quarter with revenue up 12% YOY, adjusted EPS up 11% to $0.48. Data and AI-led revenue at 56% of total, growing 18% YOY.
• Segments: Insurance (9% YOY, 1/3 revenue), Healthcare (22% YOY, 1/4 revenue), Banking etc. (12% YOY, nearly 1/4 revenue), International (8% YOY, 18% revenue).
• AI Initiatives: Launched EXLdata.ai, an AI suite for data modernization. Successful AI deployments in client workflows, e.g., U.K. insurer risk assessment, U.S. healthcare document processing, U.K. energy client operations.
• Recognitions: EXL recognized for AI leadership in Insurance, Healthcare, and Banking.

In the third quarter, EXLService generated revenue of $529.6 million, up 12.2% year-over-year on a reported basis and 12.3% on a constant currency basis. Data and AI-led revenue grew 18% year-over-year, reaching 56% of total revenue. Digital Operations revenue grew 6% year-over-year. Segment details: Insurance segment grew 8.5% YOY with revenue of $180.5 million (1/3 of revenue); Healthcare and Life Sciences segment grew 21.6% YOY with revenue of $135.3 million (1/4 of revenue); Banking, Capital Markets and Diversified Industries segment grew 11.8% YOY with revenue of $121 million; International Growth Markets segment grew 8.4% YOY with revenue of $92.8 million (18% of total revenue).

Forward-Looking

• Raised 2025 revenue guidance to $2.07-$2.08 billion (+13% YOY). Adjusted EPS guidance $1.88-$1.92 (+14-16% YOY).
• Expect FX gain, net interest income, and tax rate 22%-23%. Capital expenditures $50-$55 million.

Risks

• General economic conditions could cause actual results to differ from forward-looking statements.
• Execution risks in implementing AI and data solutions across client workflows.

Q: Thoughts on demand environment and sustainability of double-digit growth?

A: Rohit says demand is strong, TAM expanded, data and AI-led revenue at 56% driving growth.

Q: Shift in demand and deflationary impact?

A: Rohit explains clients give more work, penetration low, new areas like agentic AI create opportunities.

Q: Client relationship management and market share win?

A: Front-end teams trained on AI, talking to multiple C-levels, go-to-market with partners.

Q: Healthcare growth outlook?

A: Rohit says healthcare is data-rich, fragmented, huge opportunity, multiple areas for growth.

Q: EXLdata.ai landscape and international segment acceleration?

A: EXLdata.ai differentiates with AI for data readiness, international segment investing in talent and partnerships.

Q: AI deployment and revenue multiplier?

A: EXLdata.ai used standalone and integrated, data enablement heavy lifting, multiplier to grow.