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EXL Reports 2022 Third Quarter Results
来源: Nasdaq GlobeNewswire / 27 10月 2022 05:00:00 America/Chicago
2022 Third Quarter Revenues of $361.4 Million, up 24.5% year-over-year
Q3 Diluted Earnings Per Share (GAAP) of $1.16, up from $0.77 in Q3 of 2021
Q3 Adjusted Diluted Earnings Per Share (Non-GAAP) (1) of $1.54, up from $1.30 in Q3 of 2021
NEW YORK, Oct. 27, 2022 (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 ended September 30, 2022.
Rohit Kapoor, Vice Chairman and Chief Executive Officer, said, “EXL had a strong third quarter with revenue of $361.4 million, a 24.5% increase from the third quarter of 2021. Analytics continued to lead our growth with a 38.0% revenue increase from the third quarter of 2021. In addition, Digital Operations and Solutions revenue has significantly accelerated this year, growing by 14.8% as compared to the third quarter of 2021. Adjusted diluted earnings per share for the quarter was $1.54, an 18.5% increase year-over-year. We continue to see healthy demand across our client base for data-led solutions that enable better business decisions, embed intelligence directly into workflows and streamline operations. We are uniquely positioned to help our clients harness data, AI and the cloud to improve their profitability, boost revenue growth and enhance customer experience. Based on our outlook, we anticipate a strong finish to the year.”
Maurizio Nicolelli, Chief Financial Officer, said, “Our strong revenue growth in the quarter exceeded expectations, and drove our increase in EPS. As a result, we are increasing our revenue guidance for 2022 to be in the range of $1.39 billion to $1.40 billion, from $1.35 billion to $1.37 billion. This represents a 24% to 25% increase year-over-year on a reported basis and 21% to 22% increase year-over-year on an organic constant currency basis. We are also increasing our adjusted diluted earnings per share guidance for 2022 to $5.85 to $5.95, from $5.60 to $5.80, representing a 21% to 23% increase over 2021.”
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- 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 2022
- Revenues for the quarter ended September 30, 2022, increased to $361.4 million compared to $290.3 million for the third quarter of 2021, an increase of 24.5% on a reported basis and 26.4% on a constant currency basis from the third quarter of 2021. Revenues increased by 4.2% sequentially on a reported basis and 4.8% on a constant currency basis, from the second quarter of 2022.
Revenues Gross Margin Three months ended Three months ended September 30,
2022September 30,
2021June 30,
2022September 30,
2022September 30,
2021June 30,
2022Reportable Segments (dollars in millions) Insurance $ 116.2 $ 98.0 $ 108.5 35.4 % 37.3 % 34.9 % Healthcare 22.8 27.3 23.1 25.0 % 37.6 % 23.2 % Emerging Business 56.1 44.5 53.9 42.2 % 46.8 % 42.1 % Analytics 166.3 120.5 161.3 36.3 % 37.3 % 37.0 % Total Revenues, net $ 361.4 $ 290.3 $ 346.8 36.2 % 38.8 % 36.2 % - Operating income margin for the quarter ended September 30, 2022, was 13.9%, compared to 14.6% for the third quarter of 2021 and 13.6% for the second quarter of 2022. Adjusted operating income margin for the quarter ended September 30, 2022, was 18.5% compared to 19.4% for the third quarter of 2021 and 18.7% for the second quarter of 2022.
- Diluted earnings per share for the quarter ended September 30, 2022, was $1.16 compared to $0.77 for the third quarter of 2021 and $1.06 for the second quarter of 2022. Adjusted diluted earnings per share for the quarter ended September 30, 2022, was $1.54 compared to $1.30 for the third quarter of 2021 and $1.50 for the second quarter of 2022.
Business Highlights: Third Quarter 2022
- Won 11 new clients in the third quarter of 2022, with six in our digital operations and solutions business and five in analytics.
- Announced a collaboration with CyberCube, a cyber risk analytics company, to jointly develop cyber insurance solutions for the property and casualty insurance industry.
- Awarded a 2022 Sustainability Gold Medal Rating by EcoVadis which places EXL in the top 5% of companies rated.
- EXL recognized as a Leader in the Everest Group Digital Platform and Augmentation Suite (DPAS) in Insurance BPS Services PEAK Matrix® Assessment 2022.
- EXL recognized as Best-in-Class in the 2022 Aité Matrix: Payment Integrity in Healthcare.
2022 Guidance
Based on current visibility, and a U.S. Dollar to Indian Rupee exchange rate of 82.50, British Pound to U.S. Dollar exchange rate of 1.12, U.S. Dollar to the Philippine Peso exchange rate of 59.0 and all other currencies at current exchange rates, we are providing the following guidance for the full year 2022:- Revenue of $1.39 billion to $1.40 billion, representing an increase of 24% to 25% on a reported basis, and 21% to 22% on an organic constant currency basis from 2021.
- Adjusted diluted earnings per share of $5.85 to $5.95, representing an increase of 21% to 23% from 2021.
Conference Call
ExlService Holdings, Inc. will host a conference call on Thursday, October 27, 2022, at 10:00 A.M. ET to discuss the Company’s quarterly 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 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 New York, our team is over 43,100 strong, with more than 50 offices spanning six continents. For more information, visit www.exlservice.com.
Cautionary 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 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 successfully close and integrate strategic acquisitions, our ability to respond to and manage public health crises, including the outbreak and continued effects of COVID-19 pandemic, are discussed in more detail in EXL’s filings with the Securities and Exchange Commission, including EXL’s Quarterly Report on Form 10-Q and Annual Report on Form 10-K. These risks could cause actual results to differ materially from those implied by forward-looking statements in this release. 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 federal securities laws.
EXLSERVICE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share amount and share count) Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Revenues, net $ 361,351 $ 290,325 $ 1,037,341 $ 826,804 Cost of revenues(1) 230,462 177,743 659,185 507,265 Gross profit(1) 130,889 112,582 378,156 319,539 Operating expenses: General and administrative expenses 42,519 36,167 122,898 103,369 Selling and marketing expenses 23,879 21,672 72,034 59,631 Depreciation and amortization expense 14,380 12,305 42,057 36,716 Total operating expenses 80,778 70,144 236,989 199,716 Income from operations 50,111 42,438 141,167 119,823 Foreign exchange gain, net 1,504 1,171 4,683 2,958 Interest expense (2,442 ) (1,810 ) (4,820 ) (6,804 ) Other income, net 2,261 1,721 4,498 5,346 Loss on settlement of convertible notes — (12,845 ) — (12,845 ) Income before income tax expense and earnings from equity affiliates 51,434 30,675 145,528 108,478 Income tax expense 12,447 4,196 34,774 22,019 Income before earnings from equity affiliates 38,987 26,479 110,754 86,459 Gain from equity-method investment 108 28 365 — Net income attributable to ExlService Holdings, Inc. stockholders $ 39,095 $ 26,507 $ 111,119 $ 86,459 Earnings per share attributable to ExlService Holdings, Inc. stockholders: Basic $ 1.18 $ 0.79 $ 3.33 $ 2.57 Diluted $ 1.16 $ 0.77 $ 3.28 $ 2.52 Weighted-average number of shares used in computing earnings per share attributable to ExlService Holdings Inc. stockholders: Basic 33,237,833 33,449,311 33,360,346 33,583,791 Diluted 33,777,749 34,305,893 33,833,637 34,336,950 (1)Exclusive of depreciation and amortization expense.
EXLSERVICE HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except per share amount and share count) As of September 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 89,262 $ 135,337 Short-term investments 172,889 179,430 Restricted cash 7,013 6,174 Accounts receivable, net 256,911 194,232 Other current assets 54,509 62,971 Total current assets 580,584 578,144 Property and equipment, net 79,933 86,008 Operating lease right-of-use assets 61,966 76,692 Restricted cash 1,996 2,299 Deferred tax assets, net 54,898 21,404 Intangible assets, net 69,008 81,082 Goodwill 405,781 403,902 Long-term investments 34,724 3,190 Other assets 29,838 30,183 Total assets $ 1,318,728 $ 1,282,904 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 3,487 $ 5,647 Current portion of long-term borrowings 35,000 260,016 Deferred revenue 19,279 20,000 Accrued employee costs 92,252 114,285 Accrued expenses and other current liabilities 96,800 76,350 Current portion of operating lease liabilities 16,740 18,487 Income taxes payable, net 23,410 901 Total current liabilities 286,968 495,686 Long-term borrowings, less current portion 235,000 — Operating lease liabilities, less current portion 54,174 68,506 Deferred tax liabilities, net 759 965 Other non-current liabilities 37,243 24,591 Total liabilities 614,144 589,748 Commitments and contingencies ExlService Holdings, Inc. Stockholders’ equity: Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued — — Common stock, $0.001 par value; 100,000,000 shares authorized, 39,798,956 shares issued and 33,051,021 shares outstanding as of September 30, 2022 and 39,508,340 shares issued and 33,291,482 shares outstanding as of December 31, 2021 40 40 Additional paid-in capital 432,492 395,742 Retained earnings 867,256 756,137 Accumulated other comprehensive loss (154,203 ) (89,474 ) Total including shares held in treasury 1,145,585 1,062,445 Less: 6,747,935 shares as of September 30, 2022 and 6,216,858 shares as of December 31, 2021, held in treasury, at cost (441,001 ) (369,289 ) Total stockholders’ equity 704,584 693,156 Total liabilities and stockholders’ equity $ 1,318,728 $ 1,282,904 EXLSERVICE HOLDINGS, INC.
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 certain financial measures that are considered non-GAAP financial measures, including the following:
(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, non-cash interest expense on convertible senior notes, impairment charges on acquired long-lived and intangible assets including goodwill, gains or losses on settlement of convertible senior notes, restructuring charges, effects of termination of leases, certain defined social security contributions, 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 U.K. pound sterling and the Philippine Peso. The average exchange rate of the U.S. Dollar against the Indian Rupee increased from 73.88 during the quarter ended September 30, 2021 to 80.01 during the quarter ended September 30, 2022, representing an appreciation of 8.3%. The average exchange rate of the U.S. Dollar against the Philippine Peso increased from 50.24 during the quarter ended September 30, 2021 to 56.63 during the quarter ended September 30, 2022, representing an appreciation of 12.7%. The average exchange rate of the British Pound against the U.S. Dollar decreased from 1.37 during the quarter ended September 30, 2021 to 1.16 during the quarter ended September 30, 2022, representing an appreciation of 15.2% against the U.S. Dollar.
The following table shows the reconciliation of these non-GAAP financial measures for the three months ended September 30, 2022 and September 30, 2021, and the three months ended June 30, 2022:
Reconciliation of Adjusted Operating Income and Adjusted EBITDA (Amounts in thousands) Three months ended September 30, June 30, 2022 2021 2022 Net Income (GAAP) $ 39,095 $ 26,507 $ 35,846 add: Income tax expense 12,447 4,196 11,125 add/(subtract): Foreign exchange gain/(loss), interest expense, loss on settlement of convertible notes, effects of equity-method investment and other income, net (1,431 ) 11,735 110 Income from operations (GAAP) $ 50,111 $ 42,438 $ 47,081 add: Stock-based compensation expense 12,186 10,894 13,340 add: Amortization of acquisition-related intangibles 4,243 3,022 4,146 add: Other expenses (a) 169 — 217 Adjusted operating income (Non-GAAP) $ 66,709 $ 56,354 $ 64,784 Adjusted operating income margin as a % of Revenues (Non-GAAP) 18.5 % 19.4 % 18.7 % add: Depreciation on long-lived assets 10,137 9,283 9,929 Adjusted EBITDA (Non-GAAP) $ 76,846 $ 65,637 $ 74,713 Adjusted EBITDA margin as a % of revenue (Non-GAAP) 21.3 % 22.6 % 21.5 % (a) To exclude certain expenses related to defined social security contribution plan in India for historical periods.
Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings Per Share (Amounts in thousands, except per share data) Three months ended September 30, June 30, 2022 2021 2022 Net income (GAAP) $ 39,095 $ 26,507 $ 35,846 add: Stock-based compensation expense 12,186 10,894 13,340 add: Amortization of acquisition-related intangibles 4,243 3,022 4,146 add: Non-cash interest expense related to convertible senior notes — 431 — add: Loss on settlement of convertible senior notes — 12,845 — add: Effects of changes in fair value of contingent consideration (a) — — 1,000 add: Other expenses (b) 481 — 580 subtract: Tax impact on stock-based compensation expense (c) (2,833 ) (2,697 ) (3,216 ) subtract: Tax impact on amortization of acquisition-related intangibles (994 ) (699 ) (971 ) subtract: Tax impact on non-cash interest expense related to convertible senior notes — (103 ) — subtract: Tax impact on settlement of convertible senior notes (d) — (5,494 ) — subtract: Tax impact on other expenses (78 ) — (92 ) Adjusted net income (Non-GAAP) $ 52,100 $ 44,706 $ 50,633 Adjusted diluted earnings per share (Non-GAAP) $ 1.54 $ 1.30 $ 1.50 (a) To exclude the effects of changes in the fair valuation of contingent consideration related to the Clairvoyant acquisition.
(b) To exclude certain expenses related to defined social security contribution plan in India for historical periods.
(c) Tax impact includes ($92) and $528 during the three months ended September 30, 2022 and 2021 respectively, and $14 during the three months ended June 30, 2022, related to discrete benefits recognized in income tax expense in accordance with ASU No. 2016-09, Compensation - Stock Compensation.
(d) Tax impact includes deferred tax benefit of $2,400 on unamortized debt discount and issuance costs, and $3,094 of income-tax benefit on loss on settlement of convertible senior notes.
Investor Relations
Contact: Steven N. Barlow
Vice President, Investor Relations
(917) 596-7684
ir@exlservice.comMedia - US
John Roderick
J. Roderick Public Relations
631-584-2200
exl@jroderick.comMedia - UK, Europe, and APAC
Anna Price
First Light Group
+44 202 617 7240
exlteam@firstlightgroup.ioMedia - India
Shailendra Singh
Vice President Corporate Communications
+91-98104-76075
shailendra.singh@exlservice.com
- 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.