Release Details
EXL Reports 2015 Third Quarter Results
2015 Third Quarter Revenues of
Diluted EPS (GAAP) of
Adjusted Diluted EPS (Non-GAAP) of
Our Operations Management business, including the impact of Overland Solutions, grew by 13% year-over-year. The adoption of our Business EXLerator Framework™, BPaaS and product solutions are resonating with clients. These capabilities enable EXL to work across the end-to-end business value chain to impact not only cost, but also top-line revenues and customer experience. This has resulted in new client wins and expansion of existing client relationships."
Analytics & Business Transformation continues to exhibit high growth with revenues up 58% year-over-year, due to strong organic growth in our core analytics business and the impact of RPM. The demand for our analytics services continues to be strong, and we continue to make investments to retain our leadership position as one of the few large and differentiated players in the global analytics market."
Based on our strong year-to-date performance and our growth outlook in the fourth quarter of 2015, EXL is raising its revenue guidance to
Our business is divided into two reporting segments: Operations Management and Analytics & Business Transformation.
Reconciliations of adjusted financial measures to GAAP are included at the end of this release.
- Revenues for the quarter ended
September 30, 2015 were$163.5 million compared to$122.5 million for the quarter endedSeptember 30, 2014 and$155.6 million for the quarter endedJune 30, 2015 . Revenues for the quarter endedSeptember 30, 2014 were reduced by$9.6 million due to the reimbursement of disentanglement costs. Operations Management revenues for the quarter endedSeptember 30, 2015 were$114.0 million compared to$91.2 million for the quarter endedSeptember 30, 2014 and$112.6 million for the quarter endedJune 30, 2015 . Analytics & Business Transformation revenues for the quarter endedSeptember 30, 2015 were$49.5 million compared to$31.3 million for the quarter endedSeptember 30, 2014 and$43.0 million for the quarter endedJune 30, 2015 .
- Gross margin for the quarter ended
September 30, 2015 was 36.9% compared to 30.6% for the quarter endedSeptember 30, 2014 and 35.4% for the quarter endedJune 30, 2015 . Operations Management gross margin for the quarter endedSeptember 30, 2015 was 36.8% compared to 31.0% for the quarter endedSeptember 30, 2014 and 36.5% for the quarter endedJune 30, 2015 . Analytics & Business Transformation gross margin for the quarter endedSeptember 30, 2015 was 37.1% compared to 29.4% for the quarter endedSeptember 30, 2014 and 32.7% for the quarter endedJune 30, 2015 .
- Operating margin for the quarter ended
September 30, 2015 was 12.7% compared to 4.4% for the quarter endedSeptember 30, 2014 and 9.8% for the quarter endedJune 30, 2015 .
- Net income for the quarter ended
September 30, 2015 was$15.2 million compared to$6.1 million for the quarter endedSeptember 30, 2014 and$12.1 million for the quarter endedJune 30, 2015 .
- Adjusted operating margin for the quarter ended
September 30, 2015 was 17.0% compared to 14.3% for the quarter endedSeptember 30, 2014 and 13.9% for the quarter endedJune 30, 2015 . Adjusted EBITDA for the quarter endedSeptember 30, 2015 was$33.3 million compared to$24.4 million for the quarter endedSeptember 30, 2014 and$26.9 million for the quarter endedJune 30, 2015 .
- Diluted earnings per share for the quarter ended
September 30, 2015 was$0.44 compared to$0.18 for the quarter endedSeptember 30, 2014 and$0.35 for the quarter endedJune 30, 2015 . Adjusted diluted earnings per share for the quarter endedSeptember 30, 2015 was$0.58 compared to$0.44 for the quarter endedSeptember 30, 2014 and$0.48 for the quarter endedJune 30, 2015 .
Business Highlights
- Won 4 new clients in Operations Management and 5 new clients in Analytics & Business Transformation.
- Expanded multiple Operations Management relationships, including migrating 39 new processes in the third quarter of 2015.
- Positioned in the Winner's Circle in the "HfS Blueprint Report: Insurance As-a-Service 2015"
- Positioned in the Winner's Circle in the "HfS Blueprint Report: Healthcare Payer Operations 2015"
- Positioned as a Leader in Everest Research's "Property and Casualty Insurance BPO - Service Provider Landscape with PEAK Matrix™ Assessment 2015"
- Positioned as a Leader in Everest Research's "Life and Pensions Insurance BPO - Service Provider Landscape with PEAK Matrix™ Assessment 2015"
- Redesigned the EXL website creating a better client experience while showcasing EXL's investments in thought leadership across our business domains.
- Recorded headcount as of
September 30, 2015 of 23,715 compared to 22,684 as ofJune 30, 2015 and 23,050 (including employees under managed services) as ofSeptember 30, 2014 .
- Reported employee attrition for the quarter ended
September 30, 2015 of 34.5%, compared with 34.9% for the quarter endedJune 30, 2015 and 38.0% for the quarter endedSeptember 30, 2014 .
2015 Outlook
Based on current visibility and an Indian rupee to U.S. dollar exchange rate of 65, the Company is updating its guidance for the calendar year 2015:
- Revenue of
$623 million to$626 million .
- Adjusted diluted earnings per share, excluding the impact of stock-based compensation expense, amortization of intangibles and associated tax impacts, of
$1.95 to$2.01 .
Conference Call
To listen to the conference call via phone, please dial 1-877-303-6384 or if dialing in 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).
About EXL
EXL (NASDAQ:EXLS) is a leading business process solutions company that looks deeper to drive business impact through integrated services and industry knowledge. EXL provides operations management, decision analytics and technology platforms to organizations in insurance, healthcare, banking and financial services, utilities, travel, and transportation and logistics, among others. We work as a strategic partner to help our clients streamline business operations, improve corporate finance, manage compliance, create new channels for growth and better adapt to change. Headquartered in
Continuing 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 the 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 are discussed in more detail in EXL's filings with the
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
| (In thousands, except share and per share amounts) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three months ended |
Nine months ended |
|||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| Revenues, net | $ | 163,503 | $ | 122,457 | $ | 462,634 | $ | 363,992 | ||||||||||
| Cost of revenues (exclusive of depreciation and amortization) | 103,198 | 84,983 | 296,801 | 241,164 | ||||||||||||||
| Gross profit | 60,305 | 37,474 | 165,833 | 122,828 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| General and administrative expenses | 18,817 | 15,952 | 57,428 | 46,992 | ||||||||||||||
| Selling and marketing expenses | 12,682 | 9,117 | 35,769 | 28,812 | ||||||||||||||
| Depreciation and amortization | 8,057 | 7,014 | 23,171 | 20,049 | ||||||||||||||
| Total operating expenses | 39,556 | 32,083 | 116,368 | 95,853 | ||||||||||||||
| Income from operations | 20,749 | 5,391 | 49,465 | 26,975 | ||||||||||||||
| Other income/(expense) : | ||||||||||||||||||
| Foreign exchange gain / (loss) | 191 | 642 | 2,347 | (328 | ) | |||||||||||||
| Interest and other income, net | 1,787 | 1,044 | 4,300 | 2,861 | ||||||||||||||
| Income before income taxes | 22,727 | 7,077 | 56,112 | 29,508 | ||||||||||||||
| Income tax expense | 7,565 | 1,002 | 19,309 | 4,523 | ||||||||||||||
| Net income | $ | 15,162 | $ | 6,075 | $ | 36,803 | $ | 24,985 | ||||||||||
| Earnings per share: | ||||||||||||||||||
| Basic | $ | 0.46 | $ | 0.18 | $ | 1.10 | $ | 0.76 | ||||||||||
| Diluted | $ | 0.44 | $ | 0.18 | $ | 1.08 | $ | 0.74 | ||||||||||
| Weighted-average number of shares used in computing earnings per share: | ||||||||||||||||||
| Basic | 33,307,312 | 32,890,475 | 33,320,477 | 32,743,384 | ||||||||||||||
| Diluted | 34,180,635 | 33,676,665 | 34,147,120 | 33,594,304 | ||||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands, except share and per share amounts) | ||||||||
| 2015 | 2014 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 90,656 | $ | 176,499 | ||||
| Short-term investments | 93,184 | 11,577 | ||||||
| Restricted cash | 2,547 | 1,395 | ||||||
| Accounts receivable, net | 98,272 | 80,244 | ||||||
| Prepaid expenses | 5,501 | 5,783 | ||||||
| Deferred tax assets, net | 4,738 | 4,455 | ||||||
| Advance income tax, net | 4,169 | 9,905 | ||||||
| Other current assets | 13,217 | 12,533 | ||||||
| Total current assets | 312,284 | 302,391 | ||||||
| Fixed assets, net | 47,071 | 45,369 | ||||||
| Restricted cash | 3,289 | 3,258 | ||||||
| Deferred tax assets, net | 7,996 | 11,985 | ||||||
| Intangible assets, net | 55,462 | 46,979 | ||||||
| 171,753 | 139,599 | |||||||
| Other assets | 22,083 | 23,975 | ||||||
| Total assets | $ | 619,938 | $ | 573,556 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,637 | $ | 4,663 | ||||
| Short-term borrowings | 10,000 | - | ||||||
| Deferred revenue | 8,110 | 7,690 | ||||||
| Accrued employee cost | 36,788 | 37,606 | ||||||
| Accrued expenses and other current liabilities | 34,239 | 40,206 | ||||||
| Current portion of capital lease obligations | 481 | 803 | ||||||
| Total current liabilities | 93,255 | 90,968 | ||||||
| Long term borrowings | 60,000 | 50,000 | ||||||
| Capital lease obligations, less current portion | 304 | 560 | ||||||
| Non-current liabilities | 18,971 | 12,870 | ||||||
| Total liabilities | 172,530 | 154,398 | ||||||
| Commitments and contingencies | ||||||||
| Preferred stock, |
- | - | ||||||
| Stockholders' equity: | ||||||||
| Common stock, |
35 | 34 | ||||||
| Additional paid-in-capital | 248,614 | 233,173 | ||||||
| Retained earnings | 306,227 | 269,424 | ||||||
| Accumulated other comprehensive loss | (66,250 | ) | (55,509 | ) | ||||
| Total stockholders' equity including shares held in treasury | 488,626 | 447,122 | ||||||
| Less: 1,665,906 shares as of |
(41,218 | ) | (27,964 | ) | ||||
| Total stockholders' equity | 447,408 | 419,158 | ||||||
| Total liabilities and stockholders' equity | $ | 619,938 | $ | 573,556 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Reconciliation of Adjusted Financial Measures to GAAP Measures
In addition to its reported operating results in accordance with U.S. generally accepted accounting principles (GAAP), EXL has included in this release adjusted financial measures (adjusted operating margin, adjusted EBITDA, adjusted net income and adjusted diluted earnings per share) that the
Additionally, EXL provides certain information on a constant currency basis, which reflects a comparison of current period results translated at the prior period currency rates. This information is provided because EXL believes that it provides useful incremental information to investors regarding EXL's operating performance.
The following table shows the reconciliation of these adjusted financial measures from GAAP measures for the three months ended
| Reconciliation of Adjusted Operating Income and Adjusted EBITDA | ||||||||||||||
| (Amounts in thousands) | ||||||||||||||
| Three Months Ended |
Three Months Ended |
|||||||||||||
| 2015 | 2014 | 2015 | ||||||||||||
| Revenues (GAAP) | $ | 163,503 | $ | 122,457 | $ | 155,621 | ||||||||
| add: Reimbursement of transition and disentanglement costs (a) | - | 9,626 | - | |||||||||||
| Revenues (Non-GAAP) | $ | 163,503 | $ | 132,083 | $ | 155,621 | ||||||||
| subtract: Cost of revenues (GAAP) | (103,198 | ) | (84,983 | ) | (100,478 | ) | ||||||||
| subtract: Operating expenses (GAAP) | (39,556 | ) | (32,083 | ) | (39,895 | ) | ||||||||
| Income from operations (Non- GAAP) | $ | 20,749 | $ | 15,017 | $ | 15,248 | ||||||||
| add: Stock-based compensation expense (b) | 4,471 | 2,376 | 3,553 | |||||||||||
| add: Amortization of acquisition-related intangibles (c) | 2,642 | 1,441 | 2,808 | |||||||||||
| Adjusted operating income (Non-GAAP) | $ | 27,862 | $ | 18,834 | $ | 21,609 | ||||||||
| Adjusted operating margin as a % of Revenues (Non-GAAP) | 17.0 | % | 14.3 | % | 13.9 | % | ||||||||
| add: Depreciation | 5,415 | 5,573 | 5,253 | |||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 33,277 | $ | 24,407 | $ | 26,862 | ||||||||
| Adjusted EBITDA margin as a % of Revenues (Non-GAAP) | 20.4 | % | 18.5 | % | 17.3 | % | ||||||||
| (a) To exclude reimbursement of transition and disentanglement costs for a disclosed client issue. | ||||||||||||||
| (b) To exclude stock-based compensation expense under ASC Topic 718. | ||||||||||||||
| (c) To exclude amortization of acquisition-related intangibles. | ||||||||||||||
| Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings Per Share | ||||||||||||||
| (Amounts in thousands, except per share data) | ||||||||||||||
| Three Months Ended |
Three Months Ended |
|||||||||||||
| 2015 | 2014 | 2015 | ||||||||||||
| Net income (GAAP) | $ | 15,162 | $ | 6,075 | $ | 12,074 | ||||||||
| add: Stock-based compensation expense (a) | 4,471 | 2,376 | 3,553 | |||||||||||
| add: Amortization of acquisition-related intangibles (b) | 2,642 | 1,441 | 2,808 | |||||||||||
| add: reimbursement of transition and disentanglement costs (c) | - | 9,626 | - | |||||||||||
| subtract: Tax impact on stock-based compensation expense | (1,704 | ) | (907 | ) | (1,320 | ) | ||||||||
| subtract: Tax impact on amortization of acquisition-related intangibles | (656 | ) | (191 | ) | (716 | ) | ||||||||
| subtract: Tax impact on reimbursement of transition and disentanglement costs | - | (3,658 | ) | - | ||||||||||
| Adjusted net income (Non-GAAP) | $ | 19,915 | $ | 14,762 | $ | 16,399 | ||||||||
| Adjusted diluted earnings per share (Non-GAAP) | $ | 0.58 | $ | 0.44 | $ | 0.48 | ||||||||
| (a) To exclude stock-based compensation expense under ASC Topic 718. | ||||||||||||||
| (b) To exclude amortization of acquisition-related intangibles. | ||||||||||||||
| (c) To exclude reimbursement of transition and disentanglement costs for a disclosed client issue. | ||||||||||||||
Contact:Steven N. Barlow Vice President, Investor RelationsExlService Holdings, Inc. 280 Park Avenue New York, NY 10017 (212) 624-5913 ir@exlservice.com
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