UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________________________________

FORM 10-Q

_________________________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                      TO                     

COMMISSION FILE NUMBER 001-33089

_________________________________________________________

EXLSERVICE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

_________________________________________________________

Delaware		82-0572194
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
320 Park Avenue,	29th Floor,
New York,	New York	10022
(Address of principal executive offices)		(Zip code)

(212) 277-7100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:	Trading symbol(s)	Name of Each Exchange on Which Registered:
Common Stock, par value $0.001 per share	EXLS	NASDAQ

Securities registered pursuant to Section 12(g) of the Act:

None

________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and

(2) has been subject to such filing requirements for the past 90 days.   Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐    No  ☒

As of July 26, 2022, there were 33,062,704 shares of the registrant’s common stock outstanding, par value $0.001 per share.

TABLE OF CONTENTS

		PAGE
ITEM
	Part I. Financial Information	3
1.	FINANCIAL STATEMENTS (UNAUDITED)
	Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	3
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2022 and 2021	5
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021	6
	Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2022 and 2021	7
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	9
	Notes to Consolidated Financial Statements	10
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
3.	Quantitative and Qualitative Disclosures About Market Risk	60
4.	Controls and Procedures	60
	Part II. Other Information	60
1.	Legal Proceedings	60
1A.	Risk Factors	60
2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
3.	Defaults Upon Senior Securities	61
4.	Mine Safety Disclosures	61
5.	Other Information	61
6.	Exhibits	62
Signatures		63

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except per share amount and share count)

	As of
	June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	106,304	$	135,337
Short-term investments	158,941		178,538
Restricted cash	6,840		6,174
Accounts receivable, net	237,453		194,232
Prepaid expenses	15,621		14,655
Advance income tax, net	12,712		15,199
Other current assets	23,143		34,009
Total current assets	561,014		578,144
Property and equipment, net	82,649		86,008
Operating lease right-of-use assets	67,962		76,692
Restricted cash	2,056		2,299
Deferred tax assets, net	40,924		21,404
Intangible assets, net	73,298		81,082
Goodwill	406,575		403,902
Other assets	53,195		30,369
Investment in equity affiliate	3,261		3,004
Total assets	$	1,290,934	$	1,282,904
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,377	$	5,647
Current portion of long-term borrowings	35,000		260,016
Deferred revenue	22,013		20,000
Accrued employee costs	75,698		114,285
Accrued expenses and other current liabilities	89,030		76,350
Current portion of operating lease liabilities	18,548		18,487
Income taxes payable, net	21,348		901
Total current liabilities	266,014		495,686
Long-term borrowings, less current portion	250,000		—
Operating lease liabilities, less current portion	59,224		68,506
Income taxes payable	1,790		1,790
Deferred tax liabilities, net	841		965
Other non-current liabilities	27,412		22,801
Total liabilities	605,281		589,748
Commitments and contingencies (Refer to Note 24)
Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued	—		—
ExlService Holdings, Inc. Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized, 39,795,161 shares issued and 33,124,035 shares outstanding as of June 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	420,306		395,742

3

Retained earnings	828,161		756,137
Accumulated other comprehensive income/(loss)	(133,374)		(89,474)
Total including shares held in treasury	1,115,133		1,062,445
Less: 6,671,126 shares as of June 30, 2022 and 6,216,858 shares as of December 31, 2021, held in treasury, at cost	(429,480)		(369,289)
Stockholders’ equity	685,653		693,156
Total equity	685,653		693,156
Total liabilities and stockholders’ equity	$	1,290,934	$	1,282,904

See accompanying notes to unaudited consolidated financial statements.

4

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except per share amount and share count)

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Revenues, net	$	346,782	$	275,064	$	675,990	$	536,479
Cost of revenues(1)	221,207		170,701		428,723		329,522
Gross profit(1)	125,575		104,363		247,267		206,957
Operating expenses:
General and administrative expenses	40,434		36,499		80,379		67,202
Selling and marketing expenses	23,985		19,724		48,155		37,959
Depreciation and amortization expense	14,075		12,310		27,677		24,411
Total operating expenses	78,494		68,533		156,211		129,572
Income from operations	47,081		35,830		91,056		77,385
Foreign exchange gain, net	1,423		1,353		3,179		1,787
Interest expense	(1,502)		(2,520)		(2,378)		(4,994)
Other income/(loss), net	(174)		2,215		2,237		3,625
Income before income tax expense and earnings from equity affiliates	46,828		36,878		94,094		77,803
Income tax expense	11,125		8,865		22,327		17,823
Income before earnings from equity affiliates	35,703		28,013		71,767		59,980
Gain/(loss) from equity-method investment	143		8		257		(28)
Net income attributable to ExlService Holdings, Inc. stockholders	$	35,846	$	28,021	$	72,024	$	59,952
Earnings per share attributable to ExlService Holdings, Inc. stockholders:
Basic	$	1.07	$	0.83	$	2.15	$	1.78
Diluted	$	1.06	$	0.81	$	2.13	$	1.75
Weighted-average number of shares used in computing earnings per share attributable to ExlService Holdings Inc. stockholders:
Basic	33,403,411		33,571,074		33,422,618		33,652,146
Diluted	33,830,539		34,389,768		33,862,597		34,353,593

(1) Exclusive of depreciation and amortization expense.

See accompanying notes to unaudited consolidated financial statements.

5

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In thousands)

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Net income	$	35,846	$	28,021	$	72,024	$	59,952
Other comprehensive income/(loss):
Unrealized loss on cash flow hedges	(14,632)		(871)		(15,149)		(303)
Loss on net investment hedges	—		(1,134)		—		(1,134)
Foreign currency translation loss	(22,782)		(4,775)		(30,227)		(6,686)
Reclassification adjustments
Gain on cash flow hedges(1)	(1,459)		(2,866)		(3,448)		(5,695)
Retirement benefits(2)	149		176		304		355
Income tax effects relating to above(3)	3,656		1,478		4,620		1,702
Total other comprehensive income/(loss)	$	(35,068)	$	(7,992)	$	(43,900)	$	(11,761)
Total comprehensive income	$	778	$	20,029	$	28,124	$	48,191

(1)These are reclassified to net income and are included in cost of revenues and operating expenses, as applicable in the unaudited consolidated statements of income. Refer to Note 16 - Derivatives and Hedge Accounting to the unaudited consolidated financial statements.

(2)These are reclassified to net income and are included in other income/(loss), net in the unaudited consolidated statements of income. Refer to Note 19 - Employee Benefit Plans to the unaudited consolidated financial statements.

(3)These are income tax effects recognized on cash flow hedges, retirement benefits and foreign currency translation gains/(losses). Refer to Note 21 - Income Taxes to the unaudited consolidated financial statements.

See accompanying notes to unaudited consolidated financial statements.

6

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

For the three months ended June 30, 2022 and 2021

(In thousands, except share count)

	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Treasury Stock			Total Equity
	Shares	Amount								Shares	Amount
Balance as of March 31, 2022	39,794,154	$	40	$	406,966	$	792,315	$	(98,306)	(6,465,410)	$	(400,674)	$	700,341
Stock issued against stock-based compensation plans	1,007	—		—		—		—		—	—		—
Stock-based compensation	—	—		13,340		—		—		—	—		13,340
Acquisition of treasury stock	—	—		—		—		—		(205,716)	(28,806)		(28,806)
Other comprehensive loss	—	—		—		—		(35,068)		—	—		(35,068)
Net income	—	—		—		35,846		—		—	—		35,846
Balance as of June 30, 2022	39,795,161	$	40	$	420,306	$	828,161	$	(133,374)	(6,671,126)	$	(429,480)	$	685,653

	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Treasury Stock			Total Equity
	Shares	Amount								Shares	Amount
Balance as of March 31, 2021	39,273,989	$	39	$	428,882	$	673,310	$	(78,753)	(5,747,100)	$	(297,253)	$	726,225
Stock issued against stock-based compensation plans	9,864	—		99		—		—		—	—		99
Stock-based compensation	—	—		10,070		—		—		—	—		10,070
Acquisition of treasury stock	—	—		—		—		—		(287,044)	(28,409)		(28,409)
Other comprehensive loss	—	—		—		—		(7,992)		—	—		(7,992)
Net income	—	—		—		28,021		—		—	—		28,021
Balance as of June 30, 2021	39,283,853	$	39	$	439,051	$	701,331	$	(86,745)	(6,034,144)	$	(325,662)	$	728,014

7

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

For the six months ended June 30, 2022 and 2021

(In thousands, except share count)

	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Treasury Stock			Total Equity
	Shares	Amount								Shares	Amount
Balance as of January 1, 2022	39,508,340	$	40	$	395,742	$	756,137	$	(89,474)	(6,216,858)	$	(369,289)	$	693,156
Stock issued against stock-based compensation plans	286,821	—		—		—		—		—	—		—
Stock-based compensation	—	—		24,564		—		—		—	—		24,564
Acquisition of treasury stock	—	—		—		—		—		(454,268)	(60,191)		(60,191)
Other comprehensive loss	—	—		—		—		(43,900)		—	—		(43,900)
Net income	—	—		—		72,024		—		—	—		72,024
Balance as of June 30, 2022	39,795,161	$	40	$	420,306	$	828,161	$	(133,374)	(6,671,126)	$	(429,480)	$	685,653

	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Treasury Stock			Total Equity
	Shares	Amount								Shares	Amount
Balance as of January 1, 2021	38,968,052	$	39	$	420,976	$	641,379	$	(74,984)	(5,408,618)	$	(268,238)	$	719,172
Stock issued against stock-based compensation plans	315,801	—		173		—		—		—	—		173
Stock-based compensation	—	—		17,902		—		—		—	—		17,902
Acquisition of treasury stock	—	—		—		—		—		(625,526)	(57,424)		(57,424)
Other comprehensive loss	—	—		—		—		(11,761)		—	—		(11,761)
Net income	—	—		—		59,952		—		—	—		59,952
Balance as of June 30, 2021	39,283,853	$	39	$	439,051	$	701,331	$	(86,745)	(6,034,144)	$	(325,662)	$	728,014

See accompanying notes to unaudited consolidated financial statements.

8

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Six months ended June 30,
	2022		2021
Cash flows from operating activities:
Net income	$	72,024	$	59,952
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	27,739		24,734
Stock-based compensation expense	24,564		17,902
Amortization of operating lease right-of-use assets	12,005		13,632
Unrealized (gain)/loss on short term investments	(275)		6,777
Unrealized foreign currency exchange gain, net	(10,280)		(2,634)
Deferred income tax benefit	(1,462)		(14,737)
Allowance / (reversal) of expected credit losses	170		(390)
Fair value changes in contingent consideration	1,000		—
(Gain)/loss from equity-method investment	(257)		28
Amortization of non-cash interest expense related to convertible senior notes	—		1,364
Others, net	783		144
Change in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(46,385)		(34,152)
Prepaid expenses and other current assets	2,861		189
Advance income tax, net	8,684		39
Other assets	(6,584)		1,589
Accounts payable	(1,107)		(2,458)
Deferred revenue	4,276		(20,832)
Accrued employee costs	(34,016)		3,833
Accrued expenses and other liabilities	11,190		12,290
Operating lease liabilities	(11,922)		(13,327)
Net cash provided by operating activities	53,008		53,943
Cash flows from investing activities:
Purchases of property and equipment	(25,054)		(19,903)
Proceeds from sale of property and equipment	154		527
Business acquisition (net of cash and cash equivalents acquired)	(2,572)		—
Purchases of investments	(96,082)		(32,987)
Proceeds from redemption of investments	82,567		64,031
Net cash (used for)/provided by investing activities	(40,987)		11,668
Cash flows from financing activities:
Principal payments of finance lease liabilities	(75)		(107)
Proceeds from borrowings	35,000		25,000
Repayments of borrowings	(10,000)		(99,000)
Acquisition of treasury stock	(60,191)		(57,424)
Proceeds from exercise of stock options	—		174
Net cash used for financing activities	(35,266)		(131,357)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(5,365)		(2,237)
Net decrease in cash, cash equivalents and restricted cash	(28,610)		(67,983)
Cash, cash equivalents and restricted cash at the beginning of the period	143,810		225,519
Cash, cash equivalents and restricted cash at the end of the period	$	115,200	$	157,536
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	2,694	$	3,599
Income taxes, net of refunds	$	14,301	$	18,710
Supplemental disclosure of non-cash investing and financing activities:
Assets acquired under finance lease	$	118	$	50

See accompanying notes to unaudited consolidated financial statements.

9

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(In thousands, except per share amount and share count)

1. Organization

ExlService Holdings, Inc. (“ExlService Holdings”) is organized as a corporation under the laws of the state of Delaware. ExlService Holdings, together with its subsidiaries and affiliates (collectively, the “Company”), 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 and machine learning, the Company creates agile, scalable solutions and executes complex operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media, and retail, among others. The Company’s data-led value creation framework enables better and faster decision making, leveraging its end-to-end data and analytics capabilities to drive improved business outcomes, and re-designing of operating models to integrate advanced technology into operational workflows. The Company embeds digital operations and solutions into clients’ businesses and introduces its data led approach to transform operations. Accordingly, as the Company’s operations management services are now a part of its digital operations and solutions, they are referred to as “digital operations and solutions” herein; however, the Company has not changed the way in which it manages its business or its operating segments or segment reporting structure.

The Company’s clients are located principally in the United States of America (“U.S.”) and the United Kingdom (“U.K.”).

2. Summary of Significant Accounting Policies

(a)Basis of Preparation and Principles of Consolidation

The unaudited consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

The unaudited consolidated financial statements reflect all adjustments (of a normal and recurring nature) that management considers necessary for a fair presentation of such statements for the interim periods presented. The unaudited consolidated statements of income for the interim periods presented are not necessarily indicative of the results for the full year or for any subsequent period.

The accompanying unaudited consolidated financial statements include the financial statements of ExlService Holdings and all of its subsidiaries. The standalone financial statements of subsidiaries are fully consolidated on a line-by-line basis. Intra-group balances and transactions, and gains and losses arising from intra-group transactions, are eliminated while preparing consolidated financial statements.

Accounting policies of the respective individual subsidiary and associate are aligned wherever necessary, so as to ensure consistency with the accounting policies that are adopted by the Company under U.S. GAAP.

The Company’s investments in equity affiliates are initially recorded at cost and any excess purchase consideration paid over proportionate share of the fair value of the net assets of the investee at the acquisition date is recognized as goodwill. The proportionate share of net income or loss of the investee after its acquisition is recognized in the unaudited consolidated statements of income.

10

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2022

(In thousands, except per share amount and share count)

(b)Investments

The Company’s short-term investments consist of investments in mutual funds and those term deposits with more than three months of original maturity and less than twelve months of remaining maturity as of the reporting date, while long-term investments consist of term deposits with more than twelve months of remaining maturity as of the reporting date.

The Company’s investments in term deposits with financial institutions are measured and recognized at cost and approximate fair value. Interest earned on such investments is included in interest income.

The Company’s mutual fund investments are in debt funds invested in India. These investments are accounted for in accordance with the fair value option under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments, (“Topic 825”). The fair value is represented by original cost on the acquisition date and the net asset value (“NAV”) as quoted, at each reporting period and any changes in fair value are included in other income/(loss), net. Gain or loss on the disposal of these investments is calculated using the weighted average cost of the investments sold or disposed and is included in other income/(loss), net.

(c)Use of Estimates

The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the unaudited consolidated statements of income during the reporting period. Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from those estimates. The significant estimates and assumptions that affect the unaudited consolidated financial statements include, but are not limited to, estimates of the fair value of the identifiable intangible assets and contingent consideration, purchase price allocation, including revenue projections and discount rate applied within the discounted cash flow model for business acquisitions, allowance for expected credit losses, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, and variable consideration in a customer contract, expected recoverability from customers with contingent fee arrangements, estimated costs to complete fixed price contracts, recoverability of dues from statutory authorities, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments, assumptions used to calculate stock-based compensation expense, assumptions used to determine the incremental borrowing rate to calculate lease liabilities and right-of-use (“ROU”) assets, lease term to calculate amortization of ROU, depreciation and amortization periods, and recoverability of long-lived assets, goodwill and intangibles.

(d)Recent Accounting Pronouncements    

In March 2020, FASB issued Accounting Standard Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and London Inter-Bank Offered Rate (“LIBOR”). The ASU provides practical expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are elective and are effective upon issuance for all entities through December 31, 2022. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In October 2021, FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU provides guidance in Topic 805 to require the acquirer entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers, as if it had originated the contracts. Generally, this should result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements, if the acquiree prepared financial statements in accordance with U.S. GAAP. The ASU is effective for fiscal years beginning after December 15, 2022. An entity may early adopt the ASU including adoption in an interim period, with retrospective application to all business combinations within the fiscal year that includes such interim period. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

11

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2022

(In thousands, except per share amount and share count)

3. Segment and Geographical Information

The Company is a provider of data analytics and digital operations and solutions.

The Company manages and reports financial information through its four reportable segments: Insurance, Healthcare, Analytics and Emerging Business, which reflects how management reviews financial information and makes operating decisions. These business units develop client-specific solutions, build capabilities, maintain a unified go-to-market approach and are integrally responsible for service delivery, customer satisfaction, growth and profitability.

The chief operating decision maker (“CODM”) generally reviews financial information such as revenues, cost of revenues and gross profit, disaggregated by the operating segments to allocate an overall budget among the operating segments.

The Company does not allocate and therefore the CODM does not evaluate, certain operating expenses, interest expense or income taxes by segment. Many of the Company’s assets are shared by multiple operating segments. The Company manages these assets on a total Company basis, not by operating segment, and therefore asset information and capital expenditures by operating segment are not presented.

The December 2021 and June 2022 acquisition of Clairvoyant AI Inc. (“Clairvoyant”) and Inbound Media Group, LLC (“Inbound”), respectively, are both included in the Analytics reportable segment. Refer to Note 9 - Business Combination, Goodwill and Intangible Assets to the unaudited consolidated financial statements for further details.

Revenues and cost of revenues for the three months ended June 30, 2022 and 2021, respectively, for each of the reportable segments, are as follows:

	Three months ended June 30, 2022
	Insurance		Healthcare		Emerging Business		Analytics		Total
Revenues, net	$	108,557	$	23,051	$	53,873	$	161,301	$	346,782
Cost of revenues(1)	70,645		17,694		31,214		101,654		221,207
Gross profit(1)	$	37,912	$	5,357	$	22,659	$	59,647	$	125,575
Operating expenses									78,494
Foreign exchange gain, interest expense and other loss, net									(253)
Income tax expense									11,125
Gain from equity-method investment									143
Net income									$	35,846

(1) Exclusive of depreciation and amortization expense.

	Three months ended June 30, 2021
	Insurance		Healthcare		Emerging Business		Analytics		Total
Revenues, net	$	94,719	$	28,250	$	40,690	$	111,405	$	275,064
Cost of revenues(1)	59,359		17,685		22,346		71,311		170,701
Gross profit(1)	$	35,360	$	10,565	$	18,344	$	40,094	$	104,363
Operating expenses									68,533
Foreign exchange gain, interest expense and other income, net									1,048
Income tax expense									8,865
Gain from equity-method investment									8
Net income									$	28,021

(1) Exclusive of depreciation and amortization expense.

12

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2022

(In thousands, except per share amount and share count)

Revenues and cost of revenues for the six months ended June 30, 2022 and 2021, respectively, for each of the reportable segments, are as follows:

	Six months ended June 30, 2022
	Insurance		Healthcare		Emerging Business		Analytics		Total
Revenues, net	$	211,823	$	49,207	$	104,620	$	310,340	$	675,990
Cost of revenues(1)	135,727		35,345		60,427		197,224		428,723
Gross profit(1)	$	76,096	$	13,862	$	44,193	$	113,116	$	247,267
Operating expenses									156,211
Foreign exchange gain, interest expense and other income, net									3,038
Income tax expense									22,327
Gain from equity-method investment									257
Net income									$	72,024

(1) Exclusive of depreciation and amortization expense.

	Six months ended June 30, 2021
	Insurance		Healthcare		Emerging Business		Analytics		Total
Revenues, net	$	185,879	$	58,515	$	78,358	$	213,727	$	536,479
Cost of revenues(1)	115,452		35,076		43,190		135,804		329,522
Gross profit(1)	$	70,427	$	23,439	$	35,168	$	77,923	$	206,957
Operating expenses									129,572
Foreign exchange gain, interest expense and other income, net									418
Income tax expense									17,823
Loss from equity-method investment									28
Net income									$	59,952

(1) Exclusive of depreciation and amortization expense.

Revenues, net by service type, were as follows:

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Digital operations and solutions(1)	$	185,481	$	163,659	$	365,650	$	322,752
Analytics services	161,301		111,405		310,340		213,727
Revenues, net	$	346,782	$	275,064	$	675,990	$	536,479

(1) Digital operations and solutions include revenues of the Company’s Insurance, Healthcare and Emerging Business reportable segments. Refer to the reportable segment disclosure above.

The Company attributes the revenues to regions based upon the location of its customers.

13

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2022

(In thousands, except per share amount and share count)

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Revenues, net
United States	$	298,520	$	235,288	$	580,899	$	459,656
Non-United States
United Kingdom	32,090		26,175		64,863		50,926
Rest of World	16,172		13,601		30,228		25,897
Total Non-United States	48,262		39,776		95,091		76,823
Revenues, net	$	346,782	$	275,064	$	675,990	$	536,479

Long-lived assets by geographic area, which consist of property and equipment, net and operating lease right-of-use assets were as follows:

	As of
	June 30, 2022		December 31, 2021
Long-lived assets
India	$	65,899	$	79,604
United States	54,085		50,095
Philippines	20,921		22,011
Rest of World	9,706		10,990
Long-lived assets	$	150,611	$	162,700

4. Revenues, net

Refer to Note 3 - Segment and Geographical Information to the unaudited consolidated financial statements for revenues disaggregated by reportable segments and geography.

Contract balances

The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers:

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	As of
	June 30, 2022		December 31, 2021
Accounts receivable, net	$	237,453	$	194,232
Contract assets	$	1,648