ExlService: AI-Driven Pricing Shift and Margin Expansion Underpin Buy Rating

William Blair analyst Maggie Nolan has maintained their bullish stance on EXLS stock, giving a Buy rating on January 9.

Maggie Nolan has given his Buy rating due to a combination of factors that point to durable growth and improving profitability for ExlService. Management is actively pivoting away from traditional headcount-based billing and toward transaction- and outcome-linked pricing, a mix that is already a meaningful share of revenue and is expected to climb over the next several years. This model is being enabled by the company’s expanding use of AI, which not only supports measurable client outcomes but also allows EXL to capture better long-term margins despite somewhat higher execution risk. Early case studies, such as a major British energy client where AI deployment led to significant efficiency gains and deeper engagement scope, reinforce the view that these solutions can enhance both client stickiness and wallet share.

Nolan also points to the company’s track record and outlook for margin expansion as a core pillar of the Buy thesis. EXL has already improved profitability through operational efficiencies achieved in recent years, and management expects gross margins to widen further as AI becomes more embedded in delivery and as the business mix tilts toward higher-value data and analytics offerings. The company is targeting consistent, incremental annual margin improvement while simultaneously reinvesting to sustain double-digit top-line growth, supporting faster EPS growth over time. Finally, Nolan notes that EXL’s positioning and capabilities in data, AI, and digital operations are increasingly setting it apart from traditional BPO competitors, reinforcing confidence in the company’s long-term competitive advantage and justifying a positive rating on the shares.

In another report released on January 9, TD Cowen also maintained a Buy rating on the stock with a $51.00 price target.

Based on the recent corporate insider activity of 47 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of EXLS in relation to earlier this year.