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Table of Contents
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 SEPTEMBER 30, 2024
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 York10022
(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 EXLSNasdaq
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 October 27, 2024, there were 160,882,437 shares of the registrant’s common stock outstanding, par value $0.001 per share.


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Table of Contents
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
NotesSeptember 30, 2024December 31, 2023
Assets
Current assets:
Cash and cash equivalents7$150,102 $136,953 
Short-term investments8175,648 153,881 
Restricted cash77,342 4,062 
Accounts receivable, net4340,904 308,108 
Other current assets1193,693 76,669 
Total current assets767,689 679,673 
Property and equipment, net9107,395 100,373 
Operating lease right-of-use assets2171,796 64,856 
Restricted cash75,820 4,386 
Deferred tax assets, net22106,881 82,927 
Goodwill10427,663 405,639 
Other intangible assets, net1051,291 50,164 
Long-term investments814,184 4,430 
Other assets1257,113 49,524 
Total assets$1,609,832 $1,441,972 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$4,082 $5,055 
Current portion of long-term borrowings184,891 65,000 
Deferred revenue12,472 12,318 
Accrued employee costs110,677 117,137 
Accrued expenses and other current liabilities13105,159 114,113 
Current portion of operating lease liabilities2116,904 12,780 
Total current liabilities254,185 326,403 
Long-term borrowings, less current portion18339,828 135,000 
Operating lease liabilities, less current portion2162,336 58,175 
Deferred tax liabilities, net223,245 1,495 
Other non-current liabilities1442,675 31,462 
Total liabilities702,269 552,535 
Commitments and contingencies25
Stockholders’ equity:
Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued
— — 
Common stock, $0.001 par value; 400,000,000 shares authorized, 205,317,002 shares issued and 160,880,592 shares outstanding as of September 30, 2024 and 203,410,038 shares issued and 165,277,880 shares outstanding as of December 31, 2023
19205 203 
Additional paid-in capital572,430 508,028 
Retained earnings1,231,288 1,083,663 
Accumulated other comprehensive loss15(122,593)(127,040)
Total including shares held in treasury1,681,330 1,464,854 
Less: 44,436,410 shares as of September 30, 2024 and 38,132,158 shares as of December 31, 2023, held in treasury, at cost
19(773,767)(575,417)
Total stockholders’ equity907,563 889,437 
Total liabilities and stockholders’ equity $1,609,832 $1,441,972 
See accompanying notes to unaudited consolidated financial statements.
3

Table of Contents
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,
Notes2024202320242023
Revenues, net3, 4$472,073 $410,971 $1,356,946 $1,216,610 
Cost of revenues (1)
293,806 256,002 849,336 760,691 
Gross profit (1)
178,267 154,969 507,610 455,919 
Operating expenses:
General and administrative expenses57,495 52,213 167,195 144,564 
Selling and marketing expenses37,568 30,943 108,982 88,674 
Depreciation and amortization expense9, 1013,799 11,583 39,055 38,192 
Total operating expenses108,862 94,739 315,232 271,430 
Income from operations69,405 60,230 192,378 184,489 
Foreign exchange gain, net278 409 673 838 
Interest expense18(5,526)(3,405)(14,145)(10,030)
Other income, net64,374 778 11,876 6,594 
Income before income tax expense and earnings from equity affiliates68,531 58,012 190,782 181,891 
Income tax expense2215,460 14,161 43,086 37,773 
Income before earnings from equity affiliates53,071 43,851 147,696 144,118 
Gain/(loss) from equity-method investment(34)25 (71)157 
Net income$53,037 $43,876 $147,625 $144,275 
Earnings per share:5
Basic$0.33 $0.26 $0.90 $0.87 
Diluted$0.33 $0.26 $0.90 $0.86 
Weighted average number of shares used in computing earnings per share:5
Basic161,732,872 166,159,619163,197,767 166,707,599
Diluted163,187,733 167,688,374164,620,081 168,591,612

(1) Exclusive of depreciation and amortization expense.




See accompanying notes to unaudited consolidated financial statements.
4

Table of Contents
EXLSERVICE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(In thousands)
Three months ended September 30,Nine months ended September 30,
Notes2024202320242023
Net income$53,037 $43,876 $147,625 $144,275 
 Other comprehensive income/(loss):
Unrealized gain/(loss) on cash flow hedges1710,097 (7,903)7,257 8,242 
Currency translation adjustments5,770 (7,782)(483)(2,605)
Reclassification adjustments:
(Gain)/loss on cash flow hedges (1)
17(882)32 (850)4,261 
Retirement benefits (2)
20(153)(22)(455)(70)
Income tax effects relating to above (3)
22(1,317)3,017 (1,022)(2,490)
  Total other comprehensive income/(loss)13,515 (12,658)4,447 7,338 
Total comprehensive income$66,552 $31,218 $152,072 $151,613 


(1)These are reclassified to net income and are included in cost of revenues, operating expenses and interest expense, as applicable in the unaudited consolidated statements of income.

(2)These are reclassified to net income and are included in other income, net in the unaudited consolidated statements of income.

(3)These are income tax effects recognized on cash flow hedges, retirement benefits and currency translation adjustments.








See accompanying notes to unaudited consolidated financial statements.
5

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EXLSERVICE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
For the three months ended September 30, 2024 and 2023
(In thousands, except share count)


Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income/(loss)Treasury StockTotal
NotesSharesAmountSharesAmount
Balance as of June 30, 2024204,783,113 $204 $520,922 $1,178,251 $(136,108)(42,606,731)$(710,663)$852,606 
Stock issued against stock-based compensation plans23533,889 1 2,414 — — — — 2,415 
Stock-based compensation23— — 21,232 — — — — 21,232 
Acquisition of treasury stock19— — — — — (1,009,246)(34,830)(34,830)
Excise tax on repurchase of common stock, net of stock issuances19— — — — — — (412)(412)
Accelerated share repurchase19— — 27,862 — — (820,433)(27,862)— 
Other comprehensive income15— — — — 13,515 — — 13,515 
Net income— — — 53,037 — — — 53,037 
Balance as of September 30, 2024205,317,002 $205 $572,430 $1,231,288 $(122,593)(44,436,410)$(773,767)$907,563 


Common Stock Additional Paid-in Capital Retained EarningsAccumulated Other Comprehensive Income/(loss)Treasury StockTotal
NotesSharesAmountShares Amount
Balance as of June 30, 2023201,748,635 $202 $471,962 $999,504 $(124,147)(35,985,285)$(513,307)$834,214 
Stock issued against stock-based compensation plans23375,550 — 3,548 — — — — 3,548 
Stock-based compensation23— — 17,067 — — — — 17,067 
Acquisition of treasury stock19— — — — — (1,021,041)(29,960)(29,960)
Other comprehensive loss15— — — — (12,658)— — (12,658)
Net income— — — 43,876 — — — 43,876 
Balance as of September 30, 2023202,124,185 $202 $492,577 $1,043,380 $(136,805)(37,006,326)$(543,267)$856,087 





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EXLSERVICE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
For the nine months ended September 30, 2024 and 2023
(In thousands, except share count)

Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income/(loss)Treasury StockTotal
NotesSharesAmountSharesAmount
January 1, 2024203,410,038 $203 $508,028 $1,083,663 $(127,040)(38,132,158)$(575,417)$889,437 
Stock issued against stock-based compensation plans231,906,964 2 4,361 — — — — 4,363 
Stock-based compensation23— — 57,179 — — — — 57,179 
Acquisition of treasury stock19— — — — — (2,133,735)(69,458)(69,458)
Excise tax on repurchase of common stock, net of stock issuances19— — — — — — (1,030)(1,030)
Accelerated share repurchase19— — 2,862 — — (4,170,517)(127,862)(125,000)
Other comprehensive income15— — — — 4,447 — — 4,447 
Net income— — — 147,625 — — — 147,625 
Balance as of September 30, 2024205,317,002 $205 $572,430 $1,231,288 $(122,593)(44,436,410)$(773,767)$907,563 


Common Stock Additional Paid-in Capital Retained EarningsAccumulated Other Comprehensive Income/(loss)Treasury StockTotal
NotesSharesAmountShares Amount
January 1, 2023199,939,880 $200 $444,948 $899,105 $(144,143)(33,767,660)$(441,931)$758,179 
Stock issued against stock-based compensation plans232,184,305 2 4,644 — — — — 4,646 
Stock-based compensation23— — 42,985 — — — — 42,985 
Acquisition of treasury stock19— — — — — (3,238,666)(101,336)(101,336)
Other comprehensive income15— — — — 7,338 — — 7,338 
Net income— — — 144,275 — — — 144,275 
Balance as of September 30, 2023202,124,185 $202 $492,577 $1,043,380 $(136,805)(37,006,326)$(543,267)$856,087 




See accompanying notes to unaudited consolidated financial statements.
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EXLSERVICE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Nine months ended September 30,
20242023
Cash flows from operating activities:
Net income$147,625 $144,275 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense39,068 38,010 
Stock-based compensation expense57,179 42,985 
Reduction in the carrying amount of operating lease right-of-use assets16,070 15,171 
Fair value mark-to-market of investments(1,233)6,003 
Unrealized foreign currency exchange (gain)/loss, net(3,064)(862)
Deferred income tax benefit(25,423)(26,555)
Others, net(341)6,328 
Change in operating assets and liabilities:
Accounts receivable(28,900)(46,488)
Other current and non-current assets(6,961)(19,204)
Income taxes payable, net(8,438)(12,022)
Deferred revenue 35 2,319 
Accrued employee costs(6,435)(1,853)
Accounts payable, accrued expenses and other liabilities10,177 (325)
Operating lease liabilities(15,180)(15,622)
Payment of contingent consideration(11,000)— 
Net cash provided by operating activities163,179 132,160 
Cash flows from investing activities:
Purchases of property and equipment(36,188)(41,106)
Proceeds from sale of property and equipment172 640 
Investment in equity affiliate(600)(600)
Business acquisition (net of cash acquired)(24,466)— 
Purchases of investments(225,555)(165,021)
Proceeds from redemption of investments192,162 217,525 
Net cash (used for)/provided by investing activities(94,475)11,438 
Cash flows from financing activities:
Principal payments of finance lease liabilities(222)(120)
Proceeds from borrowings290,000 70,000 
Repayments of borrowings(145,000)(110,000)
Acquisition of treasury stock(195,880)(100,542)
Payment of contingent consideration(4,000)(5,000)
Proceeds from issuance of common stock3,524 4,690 
Payment of debt issuance costs(593)— 
Net cash used for financing activities(52,171)(140,972)
Effect of exchange rate changes on cash, cash equivalents and restricted cash1,330 (288)
Net increase in cash, cash equivalents and restricted cash17,863 2,338 
Cash, cash equivalents and restricted cash at the beginning of the period145,401 125,621 
Cash, cash equivalents and restricted cash at the end of the period$163,264 $127,959 
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest$14,346 $10,580 
Income taxes$78,069 $76,743 
Supplemental disclosure of non-cash investing and financing activities:
Additions to property and equipment not yet paid$2,756 $3,975 
Assets acquired under finance lease$972 $285 

See accompanying notes to unaudited consolidated financial statements.
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EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(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. The Company partners with clients using a data and AI-led approach to reinvent business models, drive better business outcomes and unlock growth with speed. The Company harnesses the power of data, analytics, artificial intelligence (“AI”), and deep industry knowledge to transform operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media and retail, among others.

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, 2023.

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.

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.

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

(b)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 carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities included in the unaudited consolidated financial statements. 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 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 the discount rate applied within the discounted cash flow model for business acquisitions, credit risk of customers, 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
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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
September 30, 2024
(In thousands, except per share amount and share count)
to complete fixed price contracts, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income tax uncertainties and other contingencies, valuation of derivative financial instruments and stock-based awards, and useful life of long-lived assets and other intangible assets. The significant assumptions underneath these estimates include, but are not limited to assumptions to calculate stock-based compensation expense, determine incremental borrowing rate to calculate lease liabilities and right-of-use (“ROU”) assets, determine lease term to calculate single operating lease cost, determine pattern of generation of economic benefits to calculate depreciation and amortization for long-lived assets and other intangible assets, and recoverability of long-lived assets, goodwill and other intangible assets.

(c)Recent Accounting Pronouncements

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This ASU modifies the disclosure or presentation requirements of a variety of Topics in the Codification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The amendments in this ASU should be applied prospectively. For all entities, if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The adoption of this ASU will not have a material impact on the Company’s unaudited consolidated financial statements. The Company will continue to monitor for SEC action, and plan accordingly for adoption.

In November 2023, FASB issued ASU No. 2023-07, Segment Reporting (“Accounting Standards Codification (“ASC”) Topic 280”): Improvements to Reportable Segment Disclosures. This ASU improves reportable segment disclosure requirements on an annual and interim basis for all public entities by requiring disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment's profit or loss and assets. The ASU also allows, in addition to the measure that is most consistent with U.S. GAAP, the disclosure of additional measures of segment profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements.

In December 2023, FASB issued ASU No. 2023-09, Income Taxes (“ASC Topic 740”), Improvements to Income Tax Disclosures. This ASU expands disclosures relating to the entity’s income tax rate reconciliation, income taxes paid and certain other disclosures related to income taxes. The ASU will be effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements.
    
(d)Recently adopted Accounting Pronouncements

In March 2023, FASB issued ASU No. 2023-01, Leases (“ASC Topic 842”): Common Control Arrangements. This ASU provides guidance in ASC Topic 842 that leasehold improvements associated with common control leases should be (i) amortized by the lessee over the useful life of the leasehold improvements to the common control group, regardless of the lease term, as long as the lessee controls the use of the underlying asset through a lease, and (ii) accounted for as a transfer between entities under common control through an adjustment to equity if and when the lessee no longer controls the use of the underlying asset. The ASU is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted for both interim and annual financial statements that have not yet been issued. When adopted in an interim period, it must be adopted from the beginning of the year that includes that interim period. The Company does not have any lease arrangements with entities under common control and the adoption of this ASU did not have a material impact on its unaudited consolidated financial statements.

In March 2024, FASB issued ASU No. 2024-01, Compensation-Stock Compensation (“ASC Topic 718”). This ASU clarifies how to evaluate whether profits interest and similar awards given to employees and non-employees are within the scope of share-based payment arrangement under ASC Topic 718. The ASU will be effective for annual periods beginning after December 15, 2024, including interim periods within those years, with early adoption permitted. The Company has early
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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
September 30, 2024
(In thousands, except per share amount and share count)
adopted this ASU beginning January 1, 2024. The adoption of this ASU did not have a material impact on the Company’s unaudited consolidated financial statements.

In March 2024, FASB issued ASU No. 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements. This ASU contains amendments to the ASC that remove references to various FASB Concepts Statements. The ASU will be effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company has early adopted this ASU beginning January 1, 2024. The adoption of this ASU did not have a material impact on the Company’s unaudited consolidated financial statements.
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 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 August 2024 acquisition of Incandescent Technologies, Inc. (“ITI Data”) is included in the Analytics reportable segment. Refer to Note 10 - Business Combinations, Goodwill and Other Intangible Assets to the unaudited consolidated financial statements for further details.

Revenues and cost of revenues for the three months ended September 30, 2024 and 2023, respectively, for each of the reportable segments, are as follows:
Three months ended September 30, 2024
InsuranceHealthcareEmerging BusinessAnalyticsTotal
Revenues, net$157,574 $30,498 $79,999 $204,002 $472,073 
Cost of revenues (1)
100,327 20,254 47,834 125,391 293,806 
Gross profit (1)
$57,247 $10,244 $32,165 $78,611 $178,267 
Operating expenses108,862 
Foreign exchange gain, net, interest expense and other income, net(874)
Income tax expense15,460 
Loss from equity-method investment(34)
Net income$53,037 
(1) Exclusive of depreciation and amortization expense.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
September 30, 2024
(In thousands, except per share amount and share count)
Three months ended September 30, 2023
InsuranceHealthcareEmerging BusinessAnalyticsTotal
Revenues, net$136,369 $26,177 $65,316 $183,109 $410,971 
Cost of revenues (1)
86,435 16,533 37,599 115,435 256,002 
Gross profit (1)
$49,934 $9,644 $27,717 $67,674 $154,969 
Operating expenses94,739 
Foreign exchange gain, net, interest expense and other income, net(2,218)
Income tax expense14,161 
Gain from equity-method investment25 
Net income$43,876 
(1) Exclusive of depreciation and amortization expense.

Revenues and cost of revenues for the nine months ended September 30, 2024 and 2023, respectively, for each of the reportable segments, are as follows:

Nine months ended September 30, 2024
InsuranceHealthcareEmerging BusinessAnalyticsTotal
Revenues, net$452,010 $84,846 $231,576 $588,514 $1,356,946 
Cost of revenues (1)
288,143 56,373 133,882 370,938 849,336 
Gross profit (1)
$163,867 $28,473 $97,694 $217,576 $507,610 
Operating expenses315,232 
Foreign exchange gain, net, interest expense and other income, net(1,596)
Income tax expense43,086 
Loss from equity-method investment(71)
Net income$147,625 
(1) Exclusive of depreciation and amortization expense.

Nine months ended September 30, 2023
InsuranceHealthcareEmerging BusinessAnalyticsTotal
Revenues, net$390,762 $80,036 $198,677 $547,135 $1,216,610 
Cost of revenues (1)
253,081 52,882 111,414 343,314 760,691 
Gross profit (1)
$137,681 $27,154 $87,263 $203,821 $455,919 
Operating expenses271,430 
Foreign exchange gain, net, interest expense and other income, net(2,598)
Income tax expense37,773 
Gain from equity-method investment157 
Net income$144,275 
(1) Exclusive of depreciation and amortization expense.



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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
September 30, 2024
(In thousands, except per share amount and share count)
Revenues, net by service type, were as follows:
Three months ended September 30,Nine months ended September 30,
2024202320242023
Digital operations and solutions (1)
$268,071 $227,862 $768,432 $669,475 
Analytics services204,002 183,109 588,514 547,135 
Revenues, net$472,073 $410,971 $1,356,946 $1,216,610 
(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.
 Three months ended September 30,Nine months ended September 30,
 2024202320242023
Revenues, net
The United States$388,067 $343,135 $1,121,122 $1,022,883 
Non-United States
The United Kingdom56,650 46,327 160,019 131,549 
Rest of World27,356 21,509 75,805 62,178 
Total Non-United States84,006 67,836 235,824 193,727 
Revenues, net$472,073 $410,971 $1,356,946 $1,216,610 

Long-lived assets by geographic area, which consist of property and equipment, net and operating lease ROU assets were as follows:
As of
September 30, 2024December 31, 2023
Long-lived assets
India$61,015 $53,813 
The United States57,307 61,592 
South Africa27,783 20,890 
The Philippines27,600 21,952 
Rest of World5,486 6,982 
Long-lived assets$179,191 $165,229 
4. Revenues, net and Accounts Receivable, 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:
As of
September 30, 2024December 31, 2023
Accounts receivable, net$340,904 $308,108 
Contract assets$6,083 $9,665 
Contract liabilities:
Deferred revenue (consideration received in advance)$9,346 $9,764 
Consideration received for process transition activities$18,710 $12,411 
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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
September 30, 2024
(In thousands, except per share amount and share count)
Accounts receivable includes $168,420 and $148,735 as of September 30, 2024 and December 31, 2023, respectively, representing unbilled receivables. The Company has accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers and considers no significant performance risk associated with its unbilled receivables.

There was no significant impairment of contract assets as of September 30, 2024 and December 31, 2023.

Revenue recognized during the three and nine months ended September 30, 2024 and 2023, which was included in the contract liabilities balance at the beginning of the respective periods:
Three months ended September 30,Nine months ended September 30,
2024202320242023
Deferred revenue (consideration received in advance)$803 $690 $9,095 $16,682 
Consideration received for process transition activities$717 $373 $1,996 $1,381 

Contract acquisition and fulfillment costs

The following table provides details of the Company’s contract acquisition and fulfillment costs:
Contract Acquisition Costs
Three months endedNine months endedYear ended
September 30, 2024September 30, 2023September 30, 2024September 30, 2023December 31, 2023
Opening Balance$1,990 $2,183 $2,122 $1,095 $1,095 
Additions6 115 377 1,591 1,841 
Amortization(218)(233)(721)(621)(814)
Closing Balance$1,778 $2,065 $1,778 $2,065 $2,122 
Contract Fulfillment Costs
Three months endedNine months endedYear ended
September 30, 2024September 30, 2023September 30, 2024September 30, 2023December 31, 2023
Opening Balance$30,404 $21,445 $24,673 $13,871 $13,871 
Additions3,530 3,790 10,814 12,633 13,605 
Amortization(713)(878)(2,266)(2,147)(2,803)
Closing Balance$33,221 $24,357 $33,221 $24,357 $24,673 

There was no significant impairment for contract acquisition and contract fulfillment costs as of September 30, 2024 and December 31, 2023.

Allowance for expected credit losses

The following table provides information about accounts receivable, net of allowance for expected credit losses:
As of
September 30, 2024December 31, 2023
Accounts receivable, including unbilled receivables$344,778 $311,811 
Less: Allowance for expected credit losses(3,874)(3,703)
Accounts receivable, net$340,904 $308,108 



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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
September 30, 2024
(In thousands, except per share amount and share count)
The movement in “Allowance for expected credit losses” was as follows:

Three months endedNine months endedYear ended
September 30, 2024September 30, 2023September 30, 2024September 30, 2023December 31, 2023
Opening Balance$3,560 $1,800 $3,703 $1,332 $1,332 
Additions/(reductions)342 1,964 274 2,441 2,450 
Reductions due to write-off of accounts receivable(27)(70)(103)(78)(79)
Currency translation adjustments(1)2 — 1 — 
Closing Balance$3,874 $3,696 $3,874 $3,696 $3,703 

Customer and credit risk concentration

No single customer accounted for more than 10% of the Company's revenues, net during the three and nine months ended September 30, 2024 and 2023. The Company’s management believes that the loss of any of its top ten clients could have a material adverse effect on its financial performance.

To reduce credit risk, the Company conducts ongoing credit evaluations of its customers. No customer accounted for more than 10% of accounts receivable, net, as of September 30, 2024 and December 31, 2023.
5. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:
 Three months ended September 30,Nine months ended September 30,
 2024202320242023
Numerators:
Net income$53,037 $43,876 $147,625 $144,275 
Denominators:
Basic weighted average common shares outstanding161,732,872 166,159,619 163,197,767 166,707,599 
Dilutive effect of stock-based awards1,454,861 1,528,755 1,422,314 1,884,013 
Diluted weighted average common shares outstanding163,187,733 167,688,374 164,620,081 168,591,612 
Earnings per share:
Basic$0.33 $0.26 $0.90 $0.87 
Diluted$0.33 $0.26 $0.90 $0.86 
Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share1,790,695 2,899,035 2,762,178 1,564,844 
On March 15, 2024, the Company entered into a master confirmation (the “Master Accelerated Share Repurchase Confirmation”) and a supplemental confirmation (together with the Master Accelerated Share Repurchase Confirmation, the “2024 ASR Agreement”), with Citibank, N.A. (“Citibank”). Refer to Note 19 - Capital Structure to the unaudited consolidated financial statements for further details. During the nine months ended September 30, 2024, the Company recorded the initial delivery and final settlement of shares in treasury stock, which resulted in an immediate reduction of its outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share.


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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
September 30, 2024
(In thousands, except per share amount and share count)
6. Other Income, net
Other income, net consists of the following:
Three months ended September 30,Nine months ended September 30,
2024202320242023
Gain on sale and fair value mark-to-market on investments$1,766 $1,337 $3,944 $4,076 
Interest and dividend income2,547 2,106 7,206 5,480 
Fair value changes of contingent consideration (1)
— (2,500)589 (2,500)
Others, net61 (165)137 (462)
Other income, net$4,374 $778 $11,876 $6,594 
(1) Refer to Note 16 - Fair Value Measurements to the unaudited consolidated financial statements for further details.
7. Cash, Cash Equivalents and Restricted Cash

For the purposes of unaudited statements of cash flows, cash, cash equivalents and restricted cash consist of the following:
 As of
 September 30, 2024September 30, 2023December 31, 2023
Cash and cash equivalents$150,102 $122,655 $136,953 
Restricted cash (current) (1)
7,342 3,257 4,062 
Restricted cash (non-current) (2)
5,820 2,047 4,386 
Cash, cash equivalents and restricted cash$163,264 $127,959 $145,401 
(1) Restricted cash (current) primarily represents funds held on behalf of customers in dedicated bank accounts. The corresponding liability against the same is included under “Accrued Expenses and other current liabilities.” Restricted cash also includes funds held as collateral in a dedicated bank account for irrevocable letters of credit issued in favor of third parties for facility leases.
(2) Restricted cash (non-current) represents deposits with banks against bank guarantees issued through banks in favor of relevant statutory authorities for equipment imports, deposits for obtaining indirect tax registrations and for demands against pending income tax and value added tax (“VAT”) assessments. These deposits with banks will mature one year after the balance sheet date.
8. Investments
Investments consist of the following:
 As of
 September 30, 2024December 31, 2023
Short-term investments
Mutual funds$99,621 $52,650 
Term deposits76,027 101,231 
Total Short-term investments$175,648 $153,881 
Long-term investments
Term deposits$9,464 $239 
Investment in equity affiliate4,720 4,191 
Total Long-term investments$14,184 $4,430 
Refer to Note 16 - Fair Value Measurements to the unaudited consolidated financial statements for further details.
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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
September 30, 2024
(In thousands, except per share amount and share count)
9. Property and Equipment, net
Property and equipment consists of the following:
As of
September 30, 2024December 31, 2023
Property, plant and equipment, gross $357,102 $324,038 
Less: Accumulated depreciation and amortization (249,707)(223,665)
Property, plant and equipment, net $107,395 $100,373 

During the three and nine months ended September 30, 2024, there were no changes in estimated useful lives of property and equipment during the ordinary course of operations.

The depreciation and amortization expense, excluding amortization of acquisition-related intangibles, recognized in the unaudited consolidated statements of income was as follows:
Three months ended September 30,Nine months ended September 30,
2024202320242023
Depreciation and amortization expense$10,350 $8,426 $29,449 $26,682 

Internally developed software costs included in property and equipment was as follows:
As of
September 30, 2024December 31, 2023
Cost$59,286 $46,625 
Less : Accumulated amortization(33,817)(25,413)
Internally developed software, net$25,469 $21,212 

The amortization expense on internally developed software recognized in the unaudited consolidated statements of income was as follows:
Three months ended September 30,Nine months ended September 30,
2024202320242023
Amortization expense$2,961 $2,311 $8,408 $6,711 

There were no indicators of impairment related to long-lived assets as of September 30, 2024 and December 31, 2023.

10. Business Combinations, Goodwill and Other Intangible Assets

Incandescent Technologies, Inc.

On August 1, 2024, the Company, through its wholly owned subsidiary Clairvoyant AI, Inc., completed the acquisition of ITI Data, a Nebraska corporation, pursuant to an equity securities purchase agreement dated July 31, 2024 (the "Purchase Agreement"). The Company purchased 100% of the issued and outstanding equity securities in ITI Data.

ITI Data is a data management solutions firm that works with the global banks, financial services and healthcare companies. It delivers enterprise business solutions for clients processing significant data volumes with complex data management requirements. The acquisition strengthens the Company’s ability to deliver reliable, data-driven insights to its clients and ultimately drive greater value and innovation across their operations.

The base purchase consideration payable at the closing of the transaction was $26,000, excluding cash acquired, debt and other estimated post-closing adjustments. The Purchase Agreement also allows the seller the ability to earn up to $13,000 of
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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
September 30, 2024
(In thousands, except per share amount and share count)
contingent consideration, based on the achievement of certain performance goals by ITI Data during the two years ending July 31, 2026. The contingent consideration had an estimated fair value of $7,700, and has been presented as contingent consideration under “Accrued expenses and other current liabilities” and “Other non-current liabilities,” as applicable in the consolidated balance sheets. A portion of the purchase consideration otherwise payable was placed into escrow as security for the post-closing working capital adjustments and the indemnification obligations under the Purchase Agreement. To finance the acquisition, the Company utilized its available cash on hand.

The Company’s preliminary purchase price allocation to net tangible and intangible assets of ITI Data as of August 1, 2024 is as follows:
Intangible assets $10,720 
Other assets, net 581 
Goodwill22,035 
Total purchase consideration*$33,336 
* Includes contingent consideration of $7,700 recognized at fair value as of the date of acquisition.

The fair value of assets acquired and liabilities assumed from the acquisition of ITI Data is based on a preliminary valuation and, as such, the Company's estimates and assumptions are subject to change within the measurement period. The Company is in the process of finalizing the adjustments related to debt, working capital position and other post-closing adjustments, which, when determined, may result in the recognition of additional assets or liabilities as of the acquisition date, and shall accordingly lead to finalization of the purchase consideration. The measurement period will not exceed one year from the acquisition date.

In connection with this acquisition, the Company recorded $10,420 in customer-related intangibles which are being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated weighted average amortization period of 5 years.

The ITI Data acquisition is treated as a stock acquisition for tax purposes.

The goodwill recognized represents the acquired capabilities, operating synergies and other benefits expected to result from combining the acquired operations with the Company’s existing operations. The goodwill has been assigned to the Company’s Analytics reportable segment based upon the Company’s assessment of nature of services rendered by ITI Data.

The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s unaudited consolidated financial statements with effect from the date of the acquisition. The acquisition did not materially impact the Company's financial position, results of operations or cash flows, and therefore, the Company has not provided unaudited supplemental pro forma results.

Goodwill

The following table sets forth details of changes in goodwill by reportable segment of the Company:
Insurance