Release Details
EXL Reports 2023 Third Quarter Results¹
2023 Third Quarter Revenue of
Q3 Diluted EPS (GAAP) of
Q3 Adjusted Diluted EPS (Non-GAAP) (2) of
Vice Chairman and Chief Executive Officer
Chief Financial Officer
__________________________________________________________
| (1) | Prior period information has been adjusted to reflect the 5-for-1 forward stock split of our common stock effected in |
| (2) | 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: Third Quarter 2023
- Revenue for the quarter ended
September 30, 2023 increased to$411.0 million compared to$361.4 million for the third quarter of 2022, an increase of 13.7% on a reported basis and 13.2% on a constant currency basis. Revenue increased by 1.5% sequentially on a reported basis and constant currency basis, from the second quarter of 2023.
| Revenue | Gross Margin | |||||||||||||||||
| Three months ended | Three months ended | |||||||||||||||||
| Reportable Segments | 2023 | 2022 | 2023 | 2023 | 2022 | 2023 | ||||||||||||
| (dollars in millions) | ||||||||||||||||||
| Insurance | $ | 136.4 | $ | 116.2 | $ | 128.5 | 36.6 | % | 35.4 | % | 34.4 | $ | ||||||
| Healthcare | 26.2 | 22.8 | 27.2 | 36.8 | % | 25.0 | % | 35.4 | % | |||||||||
| Emerging Business | 65.3 | 56.1 | 67.1 | 42.4 | % | 42.2 | % | 43.7 | % | |||||||||
| Analytics | 183.1 | 166.3 | 182.2 | 37.0 | % | 36.3 | % | 37.7 | % | |||||||||
| Revenues, net | $ | 411.0 | $ | 361.4 | $ | 405.0 | 37.7 | % | 36.2 | % | 37.5 | % | ||||||
- Operating income margin for the quarter ended
September 30, 2023 was 14.7%, compared to 13.9% for the third quarter of 2022 and 16.0% for the second quarter of 2023. Adjusted operating income margin for the quarter endedSeptember 30, 2023 was 20.0%, compared to 18.5% for the third quarter of 2022 and 20.0% for the second quarter of 2023.
- Diluted earnings per share for the quarter ended
September 30, 2023 was$0.26 , compared to$0.23 for the third quarter of 2022 and$0.29 for the second quarter of 2023. Adjusted diluted earnings per share for the quarter endedSeptember 30, 2023 was$0.37 , compared to$0.31 for the third quarter of 2022 and$0.36 for the second quarter of 2023.
Business Highlights: Third Quarter 2023
- Won 16 new clients in the third quarter of 2023, with five in digital operations and solutions business and 11 in data analytics.
- Established a headquarters for international business in
Dublin and formed new centers of excellence to develop best practices and improve efficiencies. - Recognized as a Leader and Star Performer in Everest Group’s Property and Casualty (P&C) Insurance BPS PEAK Matrix® Assessment 2023.
- Recognized as a Leader in Everest Group’s Clinical and Care Management Operations – Services PEAK Matrix® Assessment 2023.
2023 Guidance
Based on current visibility, and a
- Revenue of
$1.620 billion to$1.628 billion , representing growth of 15% on a reported basis and 15% to 16% on a constant currency basis from 2022.
- Adjusted diluted earnings per share of
$1.40 to$1.42 , representing growth of 16% to 18% from 2022.
Conference Call
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
EXL (NASDAQ: EXLS) is a leading data analytics and digital operations and solutions company that partners with clients to improve business outcomes and unlock growth. By bringing together deep domain expertise with robust data, powerful analytics, cloud, artificial intelligence (“AI”) and machine learning (“ML”), we create agile, scalable solutions and execute complex operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media, and retail, among others. Focused on driving faster decision-making and transforming operating models, EXL was founded on the core values of innovation, collaboration, excellence, integrity and respect. Headquartered in
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
| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||||||||||||||
| (In thousands, except per share amount and share count) | |||||||||||||||
| Three months ended |
Nine months ended |
||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenues, net | $ | 410,971 | $ | 361,351 | $ | 1,216,610 | $ | 1,037,341 | |||||||
| Cost of revenues(1) | 256,002 | 230,462 | 760,691 | 659,185 | |||||||||||
| Gross profit(1) | 154,969 | 130,889 | 455,919 | 378,156 | |||||||||||
| Operating expenses: | |||||||||||||||
| General and administrative expenses | 52,213 | 42,519 | 144,564 | 122,898 | |||||||||||
| Selling and marketing expenses | 30,943 | 23,879 | 88,674 | 72,034 | |||||||||||
| Depreciation and amortization expense | 11,583 | 14,380 | 38,192 | 42,057 | |||||||||||
| Total operating expenses | 94,739 | 80,778 | 271,430 | 236,989 | |||||||||||
| Income from operations | 60,230 | 50,111 | 184,489 | 141,167 | |||||||||||
| Foreign exchange gain, net | 409 | 1,504 | 838 | 4,683 | |||||||||||
| Interest expense | (3,405 | ) | (2,442 | ) | (10,030 | ) | (4,820 | ) | |||||||
| Other income, net | 778 | 2,261 | 6,594 | 4,498 | |||||||||||
| Income before income tax expense and earnings from equity affiliates | 58,012 | 51,434 | 181,891 | 145,528 | |||||||||||
| Income tax expense | 14,161 | 12,447 | 37,773 | 34,774 | |||||||||||
| Income before earnings from equity affiliates | 43,851 | 38,987 | 144,118 | 110,754 | |||||||||||
| Gain from equity-method investment | 25 | 108 | 157 | 365 | |||||||||||
| Net income attributable to |
$ | 43,876 | $ | 39,095 | $ | 144,275 | $ | 111,119 | |||||||
| Earnings per share attributable to |
|||||||||||||||
| Basic | $ | 0.26 | $ | 0.24 | $ | 0.87 | $ | 0.67 | |||||||
| Diluted | $ | 0.26 | $ | 0.23 | $ | 0.86 | $ | 0.66 | |||||||
| Weighted-average number of shares used in computing earnings per share attributable to |
|||||||||||||||
| Basic | 166,159,619 | 166,189,165 | 166,707,599 | 166,801,730 | |||||||||||
| Diluted | 167,688,374 | 168,888,745 | 168,591,612 | 169,168,185 | |||||||||||
(1) Exclusive of depreciation and amortization expense.
(2) Prior period information has been adjusted to reflect the 5-for-1 forward stock split of the Company’s common stock effected in
| CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||
| (In thousands, except per share amount and share count) | ||||||||
| As of | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 122,655 | $ | 118,669 | ||||
| Short-term investments | 151,581 | 179,027 | ||||||
| Restricted cash | 3,257 | 4,897 | ||||||
| Accounts receivable, net | 303,378 | 259,222 | ||||||
| Other current assets | 70,697 | 50,979 | ||||||
| Total current assets | 651,568 | 612,794 | ||||||
| Property and equipment, net | 96,729 | 82,828 | ||||||
| Operating lease right-of-use assets, net | 56,817 | 55,347 | ||||||
| Restricted cash | 2,047 | 2,055 | ||||||
| Deferred tax assets, net | 79,767 | 55,791 | ||||||
| 405,579 | 405,637 | |||||||
| Other intangible assets, net | 53,315 | 64,819 | ||||||
| Long-term investments | 5,273 | 34,779 | ||||||
| Other assets | 51,398 | 32,069 | ||||||
| Total assets | $ | 1,402,493 | $ | 1,346,119 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,159 | $ | 7,789 | ||||
| Current portion of long-term borrowings | 50,000 | 30,000 | ||||||
| Deferred revenue | 13,766 | 18,782 | ||||||
| Accrued employee costs | 105,535 | 108,100 | ||||||
| Accrued expenses and other current liabilities | 107,730 | 95,352 | ||||||
| Current portion of operating lease liabilities | 14,008 | 14,978 | ||||||
| Income taxes payable, net | 11,948 | 2,945 | ||||||
| Total current liabilities | 306,146 | 277,946 | ||||||
| Long-term borrowings, less current portion | 160,000 | 220,000 | ||||||
| Operating lease liabilities, less current portion | 48,445 | 48,155 | ||||||
| Deferred tax liabilities, net | 461 | 547 | ||||||
| Other non-current liabilities | 31,354 | 41,292 | ||||||
| Total liabilities | 546,406 | 587,940 | ||||||
| Commitments and contingencies | ||||||||
| Preferred stock, |
— | — | ||||||
| Common stock, |
202 | 200 | ||||||
| Additional paid-in capital (1) | 492,577 | 444,948 | ||||||
| Retained earnings | 1,043,380 | 899,105 | ||||||
| Accumulated other comprehensive loss | (136,805 | ) | (144,143 | ) | ||||
| Total including shares held in treasury | 1,399,354 | 1,200,110 | ||||||
| Less: 37,006,326 shares as of |
(543,267 | ) | (441,931 | ) | ||||
| Total stockholders’ equity | 856,087 | 758,179 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,402,493 | $ | 1,346,119 | ||||
(1) Prior period information has been adjusted to reflect the 5-for-1 forward stock split of the Company’s common stock effected in
Reconciliation of Adjusted Financial Measures to GAAP Measures
In addition to its reported operating results in accordance with
| (i) | Adjusted operating income and adjusted operating income margin; | |
| (ii) | Adjusted EBITDA and adjusted EBITDA margin; | |
| (iii) | Adjusted net income and adjusted diluted earnings per share; and | |
| (iv) | Revenue growth on an organic constant currency basis. | |
These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles, should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. Accordingly, the financial results calculated in accordance with GAAP and reconciliations from those financial statements should be carefully evaluated. EXL believes that providing these non-GAAP financial measures may help investors better understand EXL’s underlying financial performance. Management also believes that these non-GAAP financial measures, when read in conjunction with EXL’s reported results, can provide useful supplemental information for investors analyzing period-to-period comparisons of the Company’s results and comparisons of the Company’s results with the results of other companies. Additionally, management considers some of these non-GAAP financial measures to determine variable compensation of its employees. The Company believes that it is unreasonably difficult to provide its earnings per share financial guidance in accordance with GAAP, or a qualitative reconciliation thereof, for a number of reasons, including, without limitation, the Company’s inability to predict its future stock-based compensation expense under ASC Topic 718, the amortization of intangibles associated with further acquisitions and the currency fluctuations and associated tax impacts. As such, the Company presents guidance with respect to adjusted diluted earnings per share. The Company also incurs significant non-cash charges for depreciation that may not be indicative of the Company’s ability to generate cash flow.
EXL non-GAAP financial measures exclude, where applicable, stock-based compensation expense, amortization of acquisition-related intangible assets, provision for litigation settlement, impairment charges on acquired long-lived and intangible assets including goodwill, effects of termination of leases, certain defined social security contributions, allowance for certain material expected credit losses, other acquisition-related expenses or benefits and effect of any non-recurring tax adjustments. Acquisition-related expenses or benefits include, changes in the fair value of contingent consideration, external deal costs, integration expenses, direct and incremental travel costs and non-recurring benefits or losses. Our adjusted net income and adjusted diluted EPS also excludes the effects of income tax on the above pre-tax items, as applicable. The effects of income tax of each item is calculated by applying the statutory rate of the local tax regulations in the jurisdiction in which the item was incurred.
A limitation of using non-GAAP financial measures versus financial measures calculated in accordance with GAAP is that non-GAAP financial measures do not reflect all of the amounts associated with our operating results as determined in accordance with GAAP and exclude costs that are recurring, namely stock-based compensation and amortization of acquisition-related intangible assets. EXL compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP financial measures to allow investors to evaluate such non-GAAP financial measures.
The information provided on an organic constant currency basis reflects a comparison of current period results translated at the prior period currency rates and exclude the impact from an acquisition for a twelve-month period from the date of the acquisition. This information is provided because EXL believes that it provides useful comparative incremental information to investors regarding EXL’s true operating performance. EXL’s primary exchange rate exposure is with the Indian rupee, the
The following table shows the reconciliation of these non-GAAP financial measures for the three months ended
| Reconciliation of Adjusted Operating Income and Adjusted EBITDA | ||||||||||||
| (Amounts in thousands) | ||||||||||||
| Three months ended | ||||||||||||
| 2023 | 2022 | 2023 | ||||||||||
| Net Income (GAAP) | $ | 43,876 | $ | 39,095 | $ | 49,068 | ||||||
| add: Income tax expense | 14,161 | 12,447 | 15,554 | |||||||||
| add/(subtract): Foreign exchange gain, net, interest expense, gain from equity-method investment and other income/(loss), net |
2,193 | (1,431 | ) | 189 | ||||||||
| Income from operations (GAAP) | $ | 60,230 | $ | 50,111 | $ | 64,811 | ||||||
| add: Stock-based compensation expense | 17,067 | 12,186 | 11,511 | |||||||||
| add: Amortization of acquisition-related intangibles | 3,157 | 4,243 | 4,204 | |||||||||
| add: Allowance for expected credit losses (a) | 1,700 | — | — | |||||||||
| add: Other expenses (b) | — | 169 | 578 | |||||||||
| Adjusted operating income (Non-GAAP) | $ | 82,154 | $ | 66,709 | $ | 81,104 | ||||||
| Adjusted operating income margin as a % of Revenue (Non-GAAP) | 20.0 | % | 18.5 | % | 20.0 | % | ||||||
| add: Depreciation on long-lived assets | 8,426 | 10,137 | 8,289 | |||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 90,580 | $ | 76,846 | $ | 89,393 | ||||||
| Adjusted EBITDA margin as a % of revenue (Non-GAAP) | 22.0 | % | 21.3 | % | 22.1 | % | ||||||
| (a) | To exclude the effects of material allowance for expected credit losses on accounts receivables related to a customer bankruptcy event. |
| (b) | To exclude certain expenses related to defined social security contribution plan in |
| Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings Per Share | ||||||||||||
| (Amounts in thousands, except per share data) | ||||||||||||
| Three months ended | ||||||||||||
| 2023 | 2022 | 2023 | ||||||||||
| Net income (GAAP) | $ | 43,876 | $ | 39,095 | $ | 49,068 | ||||||
| add: Stock-based compensation expense | 17,067 | 12,186 | 11,511 | |||||||||
| add: Amortization of acquisition-related intangibles | 3,157 | 4,243 | 4,204 | |||||||||
| add: Effects of changes in fair value of contingent consideration | 2,500 | — | — | |||||||||
| add: Allowance for expected credit losses (a) | 1,700 | — | — | |||||||||
| add: Other expenses (b) | — | 481 | 578 | |||||||||
| subtract: Tax impact on stock-based compensation expense (c) | (4,340 | ) | (2,833 | ) | (2,789 | ) | ||||||
| subtract: Tax impact on amortization of acquisition-related intangibles | (771 | ) | (994 | ) | (1,036 | ) | ||||||
| subtract: Tax impact on allowance for expected credit losses | (429 | ) | — | — | ||||||||
| subtract: Tax impact on other expenses | — | (78 | ) | (145 | ) | |||||||
| Adjusted net income (Non-GAAP) | $ | 62,760 | $ | 52,100 | $ | 61,391 | ||||||
| Adjusted diluted earnings per share (Non-GAAP) | $ | 0.37 | $ | 0.31 | $ | 0.36 | ||||||
| (a) | To exclude the effects of material allowance for expected credit losses on accounts receivables related to a customer bankruptcy event. |
| (b) | To exclude certain expenses related to defined social security contribution plan in |
| (c) | Tax impact includes |
Contacts:
Investor Relations
Vice President, Investor Relations
+1 212 209 4613
ir@exlservice.com
Media - US
Senior Manager, Media Relations
+1 703 598 0980
media.relations@exlservice.com
Media -
+44 202 617 7240
exlteam@firstlightgroup.io
Media -
Vice President Corporate Communications
+91 9810476075
shailendra.singh@exlservice.com
Source: ExlService Holdings, Inc.