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EXL Reports 2022 Fourth Quarter and Year-End Results; Issues 2023 Guidance
来源: Nasdaq GlobeNewswire / 23 2月 2023 06:00:01 America/New_York
2022 Fourth Quarter Revenue of $374.7 Million, up 26.8% year-over-year
Q4 Diluted EPS (GAAP) of $0.94, up 13.3% from $0.83 in Q4 of 2021
Q4 Adjusted Diluted EPS (Non-GAAP) (1) of $1.56, up 28.9% from $1.21 in Q4 of 20212022 Revenue of $1.41 Billion, up 25.8% year-over-year
2022 Diluted EPS (GAAP) of $4.23, up 26.3% from $3.35 in 2021
2022 Adjusted Diluted EPS (Non-GAAP) (1) of $6.02, up 24.6% from $4.83 in 2021NEW YORK, Feb. 23, 2023 (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 and full year ended December 31, 2022.
Rohit Kapoor, Vice Chairman and Chief Executive Officer, said, “We ended the year strong with fourth quarter revenue and EPS growth of over 25%. Our data-led approach has differentiated us within our industry and expanded our total addressable market. Our proprietary data assets, digital solutions and domain and data expertise, combined with our best-in-class talent, creates value for our clients. This is reflected in the continued growth of our analytics business and the acceleration of growth in our digital operations and solutions business. As we look to 2023, EXL is well positioned with a strong pipeline, differentiated solutions and a growing base of client relationships across industry verticals.”
Maurizio Nicolelli, Chief Financial Officer, said, “We ended 2022 with strong momentum in our business, a healthy balance sheet and solid free cash flow. We are mindful of the potential for recessionary headwinds later in the year, but continue to believe we will deliver double-digit revenue and EPS growth in 2023. Our guidance for 2023 revenue is in the range of $1.56 billion to $1.60 billion, representing an 11% to 13% increase year-over-year on a reported basis and 11% to 14% on a constant currency basis. We expect adjusted diluted EPS to be in the range of $6.60 to $6.80, representing a 10% to 13% increase over 2022."
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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: Fourth Quarter 2022
- Revenue for the quarter ended December 31, 2022 increased to $374.7 million compared to $295.5 million for the fourth quarter of 2021, an increase of 26.8% on a reported basis and 28.6% on a constant currency basis. Revenue increased by 3.7% sequentially on reported basis and constant currency basis, from the third quarter of 2022.
Revenue Gross Margin Three months ended Three months ended December
31, 2022December
31, 2021September
30, 2022December
31, 2022December
31, 2021September
30, 2022Reportable Segments (dollars in millions) Insurance $ 120.7 $ 98.1 $ 116.2 36.2 % 36.2 % 35.4 % Healthcare 25.3 26.5 22.8 27.0 % 33.6 % 25.0 % Emerging Business 58.0 44.4 56.1 39.2 % 43.9 % 42.2 % Analytics 170.7 126.5 166.3 37.5 % 37.9 % 36.3 % Total Revenue, net $ 374.7 $ 295.5 $ 361.4 36.6 % 37.8 % 36.2 % - Operating income margin for the quarter ended December 31, 2022 was 13.6%, compared to 12.2% for the fourth quarter of 2021 and 13.9% for the third quarter of 2022. Adjusted operating income margin for the quarter ended December 31, 2022 was 18.0% compared to 17.0% for the fourth quarter of 2021 and 18.5% for the third quarter of 2022.
- Diluted earnings per share for the quarter ended December 31, 2022 was $0.94 compared to $0.83 for the fourth quarter of 2021 and $1.16 for the third quarter of 2022. Adjusted diluted earnings per share for the quarter ended December 31, 2022 was $1.56 compared to $1.21 for the fourth quarter of 2021 and $1.54 for the third quarter of 2022.
Financial Highlights: Full Year 2022
- Revenue for the year ended December 31, 2022 increased to $1.41 billion compared to $1.12 billion for the year ended December 31, 2021, an increase of 25.8% on a reported basis and 27.3% on a constant currency basis.
Revenue Gross Margin Year ended Year ended December 31,
2022December 31,
2021December 31,
2022December 31,
2021Reportable Segments (dollars in millions) Insurance $ 448.7 $ 382.0 35.9 % 37.3 % Healthcare 97.4 112.4 27.1 % 37.9 % Emerging Business 218.6 167.2 41.4 % 45.1 % Analytics 647.3 460.7 36.7 % 37.1 % Total Revenue, net $ 1,412.0 $ 1,122.3 36.5 % 38.4 % - Operating income margin for the year ended December 31, 2022 was 13.6% compared to 13.9% for the year ended December 31, 2021. Adjusted operating income margin for the year ended December 31, 2022 was 18.3% compared to 18.6% for the year ended December 31, 2021.
- Diluted earnings per share for the year ended December 31, 2022 was $4.23 compared to $3.35 for the year ended December 31, 2021. Adjusted diluted earnings per share for the year ended December 31, 2022 was $6.02 compared to $4.83 for the year ended December 31, 2021.
Business Highlights: Fourth Quarter 2022
- Won 19 new clients in the fourth quarter of 2022, with eight in our digital operations and solutions business and 11 in analytics. For the year, we won 59 new clients, with 31 in our digital operations and solutions business and 28 in analytics.
- Recognized as a Leader in all four categories in the 2022 ISG Provider Lens™ Digital Finance & Accounting Outsourcing Services.
- Announced alliance with EY to support digital transformation initiatives in insurance, financial services and health care sectors.
- Recognized as ‘Luminary’ in Celent New Business and Underwriting Systems: Global Life Insurance Edition report.
- Named to Newsweek’s 2022 list of America’s Most Responsible Companies.
2023 Guidance
Based on current visibility, and a U.S. dollar to Indian rupee exchange rate of 82.5, U.K. pound sterling to U.S. dollar exchange rate of 1.21, U.S. dollar to the Philippine peso exchange rate of 55.0 and all other currencies at current exchange rates, we are providing the following guidance for the full year 2023:- Revenue of $1.56 billion to $1.60 billion, representing an increase of 11% to 13% on a reported basis, and 11% to 14% on a constant currency basis, from 2022.
- Adjusted diluted earnings per share of $6.60 to $6.80, representing an increase of 10% to 13% from 2022.
Conference Call
ExlService Holdings, Inc. will host a conference call on Thursday, February 23, 2023 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 45,400 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 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 Securities and Exchange Commission, including EXL’s Annual Report on Form 10-K. 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
(In thousands, except per share amount and share count)(Unaudited) Year ended December 31, Three months ended December 31, 2022 2021 2022 2021 Revenues, net $ 1,412,044 $ 1,122,293 $ 374,703 $ 295,489 Cost of revenues(1) 896,595 690,934 237,410 183,669 Gross profit(1) 515,449 431,359 137,293 111,820 Operating expenses: General and administrative expenses 169,016 142,040 46,118 38,671 Selling and marketing expenses 97,989 84,306 25,955 24,675 Depreciation and amortization expense 56,282 49,132 14,225 12,416 Total operating expenses 323,287 275,478 86,298 75,762 Income from operations 192,162 155,881 50,995 36,058 Foreign exchange gain, net 6,199 4,313 1,516 1,355 Interest expense (8,252 ) (7,561 ) (3,432 ) (757 ) Other income/(loss), net (10 ) 6,773 (4,508 ) 1,427 Loss on settlement of convertible notes — (12,845 ) — — Income before income tax expense and earnings from equity affiliates 190,099 146,561 44,571 38,083 Income tax expense 47,565 31,850 12,791 9,831 Income before earnings from equity affiliates 142,534 114,711 31,780 28,252 Gain from equity-method investment 434 47 69 47 Net income attributable to ExlService Holdings, Inc. stockholders $ 142,968 $ 114,758 $ 31,849 $ 28,299 Earnings per share attributable to ExlService Holdings, Inc. stockholders: Basic $ 4.29 $ 3.42 $ 0.96 $ 0.85 Diluted $ 4.23 $ 3.35 $ 0.94 $ 0.83 Weighted-average number of shares used in computing earnings per share attributable to ExlService Holdings, Inc. stockholders: Basic 33,330,317 33,549,275 33,241,208 33,446,852 Diluted 33,833,858 34,244,478 33,835,497 33,968,189 (1)Exclusive of depreciation and amortization expense.
EXLSERVICE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amount and share count)As of December 31, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 118,669 $ 135,337 Short-term investments 179,027 179,430 Restricted cash 4,897 6,174 Accounts receivable, net 259,222 194,232 Other current assets 50,979 62,971 Total current assets 612,794 578,144 Property and equipment, net 82,828 86,008 Operating lease right-of-use assets 55,347 76,692 Restricted cash 2,055 2,299 Deferred tax assets, net 55,791 21,404 Intangible assets, net 64,819 81,082 Goodwill 405,637 403,902 Long-term investments 34,779 3,190 Other assets 32,069 30,183 Total assets $ 1,346,119 $ 1,282,904 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 7,789 $ 5,647 Current portion of long-term borrowings 30,000 260,016 Deferred revenue 18,782 20,000 Accrued employee costs 108,100 114,285 Accrued expenses and other current liabilities 95,352 76,350 Current portion of operating lease liabilities 14,978 18,487 Income taxes payable, net 2,945 901 Total current liabilities 277,946 495,686 Long-term borrowings, less current portion 220,000 — Operating lease liabilities, less current portion 48,155 68,506 Deferred tax liabilities, net 547 965 Other non-current liabilities 41,292 24,591 Total liabilities 587,940 589,748 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, 39,987,976 shares issued and 33,234,444 shares outstanding as of December 31, 2022 and 39,508,340 shares issued and 33,291,482 shares outstanding as of December 31, 2021 40 40 Additional paid-in capital 445,108 395,742 Retained earnings 899,105 756,137 Accumulated other comprehensive loss (144,143 ) (89,474 ) Total including shares held in treasury 1,200,110 1,062,445 Less: 6,753,532 shares as of December 31, 2022 and 6,216,858 shares as of December 31, 2021, held in treasury, at cost (441,931 ) (369,289 ) Total Stockholders’ equity 758,179 693,156 Total liabilities and stockholders’ equity $ 1,346,119 $ 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 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 74.79 during the quarter ended December 31, 2021 to 82.31 during the quarter ended December 31, 2022, representing a depreciation of 10.1% against the U.S. dollar. The average exchange rate of the U.S. dollar against the Philippine peso increased from 50.60 during the quarter ended December 31, 2021 to 56.76 during the quarter ended December 31, 2022, representing a depreciation of 12.2% against the U.S. dollar. The average exchange rate of the U.K. pound sterling against the U.S. dollar decreased from 1.35 during the quarter ended December 31, 2021 to 1.19 during the quarter ended December 31, 2022, representing a depreciation of 12.0% against the U.S. dollar.
The following table shows the reconciliation of these non-GAAP financial measures for the year ended December 31, 2022 and 2021, the three months ended December 31, 2022 and 2021 and the three months ended September 30, 2022:
Reconciliation of Adjusted Operating Income and Adjusted EBITDA
(Amounts in thousands)Year ended Three months ended December 31, December 31, September 30, 2022 2021 2022 2021 2022 Net Income (GAAP) $ 142,968 $ 114,758 $ 31,849 $ 28,299 $ 39,095 add: Income tax expense 47,565 31,850 12,791 9,831 12,447 add/(subtract): Other income/(expense) (a) 1,629 9,273 6,355 (2,072 ) (1,431 ) Income from operations (GAAP) $ 192,162 $ 155,881 $ 50,995 $ 36,058 $ 50,111 add: Stock-based compensation expense 49,366 38,621 12,616 9,825 12,186 add: Amortization of acquisition-related intangibles 17,109 12,778 4,234 2,998 4,243 add/(subtract): Other expenses (b) (40 ) 1,312 (560 ) 1,312 169 Adjusted operating income (Non-GAAP) $ 258,597 $ 208,592 $ 67,285 $ 50,193 $ 66,709 Adjusted operating income margin as a % of Revenue (Non-GAAP) 18.3 % 18.6 % 18.0 % 17.0 % 18.5 % add: Depreciation on long-lived assets 38,869 36,354 9,687 9,418 10,137 Adjusted EBITDA (Non-GAAP) $ 297,466 $ 244,946 $ 76,972 $ 59,611 $ 76,846 Adjusted EBITDA margin as a % of revenue (Non-GAAP) 21.1 % 21.8 % 20.5 % 20.2 % 21.3 % (a) Include foreign exchange gain/(loss), interest expense, loss on settlement of convertible notes, gain/(loss) from equity-method investment and other income/(loss), net.
(b) To exclude acquisition-related expenses of Clairvoyant of $134 and $761, expenses related to defined social security contribution plan in India for historical periods of $386 and $nil and effects of lease termination of ($560) and $551 for the year ended December 31, 2022 and 2021, respectively. To exclude effects of lease termination of ($560) and $551 and acquisition-related expenses of Clairvoyant of $nil and $761 for the three months ended December 31, 2022 and 2021, respectively.
Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings Per Share
(Amounts in thousands, except per share data)Year ended Three months ended December 31, December 31, September 30, 2022 2021 2022 2021 2022 Net income (GAAP) $ 142,968 $ 114,758 $ 31,849 $ 28,299 $ 39,095 add: Stock-based compensation expense 49,366 38,621 12,616 9,825 12,186 add: Amortization of acquisition-related intangibles 17,109 12,778 4,234 2,998 4,243 add: Non-cash interest expense and loss on settlement of convertible notes — 14,640 — — — add: Effects of changes in fair value of contingent consideration 8,500 — 7,500 — — add/(subtract): Other expenses/(benefits) (a) 635 1,312 (560 ) 1,312 481 subtract: Tax impact on stock-based compensation expense (b) (9,785 ) (9,535 ) (930 ) (2,406 ) (2,833 ) subtract: Tax impact on amortization of acquisition-related intangibles (4,151 ) (2,993 ) (1,134 ) (770 ) (994 ) subtract: Tax impact on non-cash interest expense and loss on settlement of convertible notes — (3,633 ) — (120 ) — add/(subtract): Tax impact on other expenses/(benefits) (29 ) (136 ) 141 (136 ) (78 ) add/(subtract): Other tax expenses/(benefits) (c) (1,079 ) (243 ) (1,079 ) 2,168 — Adjusted net income (Non-GAAP) $ 203,534 $ 165,569 $ 52,637 $ 41,170 $ 52,100 Adjusted diluted earnings per share (Non-GAAP) $ 6.02 $ 4.83 $ 1.56 $ 1.21 $ 1.54 (a) To exclude expenses related to defined social security contribution plan in India for historical periods of $1,061 and $nil, acquisition-related expenses of Clairvoyant of $134 and $761 and effects of lease termination of ($560) and $551 for the year ended December 31, 2022 and 2021, respectively. To exclude effects of lease termination of ($560) and $551 and acquisition-related expenses of Clairvoyant of $nil and $761 for the three months ended December 31, 2022 and 2021, respectively.
(b) Tax impact includes $5,881 and $3,651 for the year ended December 31, 2022 and 2021 respectively, $2,349 and $2,095 for the three months ended December 31, 2022 and 2021 respectively related to discrete benefit recognized in income tax expense on adoption of ASU No. 2016-09, Compensation - Stock Compensation.
(c) To exclude other tax expense/(benefits) related to certain deferred tax assets and liabilities.
Investor Relations
Contact: John Kristoff
Vice President, Investor Relations
+1 212 209 4613
ir@exlservice.comMedia - US
Keith Little
Senior Manager, Media Relations
+1 703 598 0980
media.relations@exlservice.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 9810476075
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.