Exlservice Holdings (EXLS) AI Stock Analysis

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Exlservice Holdings

(NASDAQ:EXLS)

Rating:78Outperform

Price Target:

$52.00

▲( 14.09% Upside)

Exlservice Holdings is performing well with strong financial health and a solid earnings outlook. The company's robust growth in data and AI initiatives and increased revenue guidance are significant positives. However, a relatively high P/E ratio and potential economic volatility are concerns.

Positive Factors

AI Adoption

ExlService's deep domain and data management expertise position the company well to benefit from GenAI adoption.

Financial Performance

The company's revenue exceeded forecasts, with a notable increase of 15% year-over-year.

Negative Factors

Margin Expansion

The company retained its stance of a 10-20bp margin expansion to approximately 19.5% in line with its strategy of investing in data/AI.

Valuation Concerns

Maintaining a MARKET PERFORM investment rating due to valuation considerations.

Exlservice Holdings (EXLS) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$7.42B

Dividend YieldN/A

Average Volume (3M)1.49M

Price to Earnings (P/E)34.4

Beta (1Y)0.85

Revenue Growth14.18%

EPS Growth21.49%

CountryUS

Employees59,500

SectorTechnology

Sector Strength77

IndustryInformation Technology Services

Share Statistics

EPS (TTM)0.48

Shares Outstanding162,694,350

10 Day Avg. Volume1,197,027

30 Day Avg. Volume1,494,410

Financial Highlights & Ratios

PEG Ratio3.89

Price to Book (P/B)7.49

Price to Sales (P/S)0.00

P/FCF Ratio30.90

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$53.43

Price Target Upside17.22% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering9

Exlservice Holdings Business Overview & Revenue Model

Company DescriptionExlService Holdings, Inc. operates as a data analytics, and digital operations and solutions company in the United States and internationally. It operates through Insurance, Healthcare, Analytics, and Emerging Business segments. The company provides digital operations and solutions and analytics-driven services across the insurance industry in areas, such as claims processing, premium and benefit administration, agency management, account reconciliation, policy research, underwriting support, new business acquisition, policy servicing, premium audit, surveys, billing and collection, commercial and residential survey, and customer service using digital technology, artificial intelligence, machine learning, and advanced automation; digital customer acquisition services using a software-as-a-service delivery model through LifePRO and LISS platforms; subrogation services; and Subrosource software platform, an end-to-end subrogation platform. It also offers CareRadius, an integrated care management offering; and health care services related to care management, utilization management, disease management, payment integrity, revenue optimization and customer engagement to healthcare payers, providers, pharmacy benefit managers, and life sciences organizations. Further, it offers predictive and prescriptive analytics in the areas of customer acquisition and lifecycle management, risk underwriting and pricing, operational effectiveness, credit and operational risk monitoring and governance, payment integrity and care management, and data management. The company was founded in 1999 and is headquartered in New York, New York.

How the Company Makes MoneyExlservice Holdings generates revenue primarily through long-term contracts with clients in diverse industries, offering solutions that integrate analytics, automation, and business process outsourcing (BPO). The company’s key revenue streams are derived from its analytics services, which provide data-driven insights to enhance decision-making, and its operations management services, which improve business processes and efficiency. EXLS also engages in strategic partnerships with technology providers and invests in innovative tools to expand its digital capabilities, thereby contributing to its financial growth.

Exlservice Holdings Financial Statement Overview

Summary

ExlService Holdings demonstrates strong financial performance with consistent revenue growth and solid profitability margins. The income statement shows efficient cost management and profitability with a gross profit margin of 37.2% and a net profit margin of 11.4%. The balance sheet is healthy, reflecting low financial leverage and a strong equity base. Cash flow analysis indicates effective cash management with a free cash flow growth rate of 10.55%.

Income Statement

Very Positive

The income statement reflects strong financial performance with consistent revenue growth and solid profitability margins. The TTM (Trailing-Twelve-Months) data shows a Gross Profit Margin of 37.2% and a Net Profit Margin of 11.4%, both indicating efficient cost management and profitability. Revenue growth from 2024 to TTM is 3.51%, showing steady expansion. EBIT and EBITDA margins are robust at 14.7% and 18.4%, respectively, demonstrating operational efficiency.

Balance Sheet

Positive

The balance sheet is healthy with a relatively low Debt-to-Equity Ratio of 0.08 in TTM, suggesting low financial leverage and reduced risk. The Equity Ratio is strong at 60.4%, indicating a solid equity base. Return on Equity (ROE) is 21.4%, reflecting effective use of equity to generate profits. Overall, the balance sheet indicates financial stability and prudent management of liabilities.

Cash Flow

Very Positive

Cash flow analysis reveals positive trends with Free Cash Flow growth rate of 10.55% from 2024 to TTM, showcasing effective cash management. The Operating Cash Flow to Net Income Ratio stands at 1.36, indicating good cash generation relative to net income. The Free Cash Flow to Net Income Ratio is 1.14, reinforcing the company's ability to generate cash after capital expenditures.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.90B	1.84B	1.63B	1.41B	1.12B	958.43M
	Gross Profit
707.60M	691.01M	607.77M	515.45M	431.36M	334.50M
	EBIT
279.73M	263.62M	238.75M	192.16M	155.88M	110.02M
	EBITDA
360.62M	297.20M	305.72M	262.32M	208.15M	180.03M
	Net Income Common Stockholders
216.09M	198.30M	184.56M	142.97M	114.76M	89.48M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
331.42M	340.58M	290.83M	297.70M	313.88M	402.82M
	Total Assets
1.68B	1.62B	1.44B	1.35B	1.28B	1.25B
	Total Debt
386.10M	364.83M	271.76M	313.13M	347.01M	330.73M
	Net Debt
245.66M	211.47M	134.81M	194.46M	211.67M	112.20M
	Total Liabilities
664.53M	688.54M	552.53M	587.94M	589.75M	528.68M
	Stockholders Equity
1.01B	929.86M	889.44M	758.18M	693.16M	719.17M
Cash Flow		Free Cash Flow
245.71M	222.26M	158.40M	121.31M	147.14M	160.75M
	Operating Cash Flow
293.64M	268.52M	211.20M	166.14M	184.39M	202.97M
	Investing Cash Flow
-146.06M	-119.10M	-12.00M	-96.55M	-114.27M	-18.32M
	Financing Cash Flow
-105.92M	-119.10M	-181.45M	-81.72M	-146.88M	-89.56M

Exlservice Holdings Technical Analysis

Technical Analysis Sentiment

Negative

Last Price45.58

Price Trends

50DMA

45.79

Negative

100DMA

47.03

Negative

200DMA

43.75

Positive

Market Momentum

MACD

0.07

Positive

RSI

47.64

Neutral

STOCH

21.95

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EXLS, the sentiment is Negative. The current price of 45.58 is below the 20-day moving average (MA) of 46.15, below the 50-day MA of 45.79, and above the 200-day MA of 43.75, indicating a neutral trend. The MACD of 0.07 indicates Positive momentum. The RSI at 47.64 is Neutral, neither overbought nor oversold. The STOCH value of 21.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EXLS.

Exlservice Holdings Risk Analysis

Exlservice Holdings disclosed 32 risk factors in its most recent earnings report. Exlservice Holdings reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 1 New Risks

The use of AI technology presents competitive, reputational and legal risks, and our use of AI technology may not be successful. Q4, 2024

Exlservice Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EXLS	78 Outperform	$7.42B	34.43	23.81%	―	14.18%	21.49%
G	76 Outperform	$7.61B	14.81	22.21%	1.44%	7.31%	-15.86%
WNS	75 Outperform	$2.68B	14.88	21.21%	―	-0.64%	30.96%
EPAM	74 Outperform	$9.97B	24.60	11.57%	―	4.72%	-3.06%
Sector *	61 Neutral	$11.29B	10.07	-7.05%	2.96%	7.47%	-10.75%
KD	52 Neutral	$9.16B	38.05	12.09%	―	-8.20%	―
DXC	46 Neutral	$2.67B	7.00	12.88%	―	-5.65%	78.20%

* Technology Sector Average

Performance Comparison

EXLS

Exlservice Holdings

45.58

15.35

50.78%

EPAM

Epam Systems

175.95

-1.32

-0.74%

Genpact

43.51

10.77

32.90%

WNS

57.79

6.33

12.30%

DXC

DXC Technology

14.75

-0.41

-2.70%

Kyndryl Holdings Incorporation

38.87

11.66

42.85%

Exlservice Holdings Earnings Call Summary

Earnings Call Date:Apr 29, 2025

(Q1-2025)

% Change Since: 1.33%|

Next Earnings Date:Jul 24, 2025

Earnings Call Sentiment Positive

The earnings call reflected a strong start to the fiscal year with robust revenue growth and a promising outlook for the company's AI initiatives. However, there are concerns about economic volatility and slower growth in the insurance segment. Despite this, the company's increased revenue guidance and strong sales pipeline suggest a positive outlook.

Q1-2025 Updates

Positive Updates

Strong Revenue Growth

EXL generated revenue of $501 million, an increase of 15% year-over-year. Adjusted EPS grew by 27% to $0.48 per share.

Segment Performance

New segments introduced: insurance, healthcare and life sciences, banking, capital markets and diversified industries, and international growth markets. Healthcare and Life Sciences segment reported revenue growth of 24.8% year-over-year.

Data and AI-Led Revenue

Data and AI-led revenue grew 16% year-over-year, representing 53% of total revenue.

Launch of Excelerate.ai

Introduced excelerate.ai, an Agentic AI platform, enabling faster deployment of AI at significantly lower costs.

Strong Sales Pipeline

The sales pipeline remains strong, growing both year-over-year and sequentially in the first quarter.

Financial Strength

Cash including short and long-term investments was $346 million, and the company maintained a net cash position of $39 million.

Raised Revenue Guidance

Increased revenue guidance for 2025 to the range of $2.035 billion to $2.065 billion, representing 11% to 13% growth on a constant currency basis.

Negative Updates

Insurance Segment Slowdown

Insurance segment, including international growth markets, grew only 9.7% year-over-year, compared to previous mid-teens growth.

Potential Economic Volatility

Acknowledged potential challenges due to macroeconomic uncertainty and the need to remain cautious.

Increased Investment Needs

Anticipate increased investments in data and AI capabilities, which might affect margins in the short term.

SG&A Expenses

SG&A expenses as a percentage of revenue declined only marginally by 20 basis points year-over-year to 20.2%.

Company Guidance

During the Q1 2025 earnings call for ExlService Holdings, several key metrics and guidance updates were provided. The company reported a notable revenue increase of 15% year-over-year, reaching $501 million, while adjusted EPS grew by 27% to $0.48 per share. The business is now segmented into four categories: insurance, healthcare and life sciences, banking, capital markets and diversified industries, and international growth markets. The insurance segment accounted for over one-third of revenue, while healthcare and life sciences represented about one-quarter, each showing strong growth. International growth markets contributed over 17% of total revenue. Data and AI-led revenue grew by 16% year-over-year, now constituting 53% of total revenue. The company raised its 2025 revenue guidance to $2.035 billion to $2.065 billion, with expected year-over-year growth of 11% to 12% on a reported basis, and adjusted EPS projected to increase by 11% to 14%. The company continues to focus on expanding its data and AI capabilities, with recent initiatives like the launch of the excelerate.ai platform.

Exlservice Holdings Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Exlservice Holdings Director Jaynie Studenmund Resigns

Neutral

Mar 18, 2025

On March 12, 2025, Jaynie Studenmund, a member of the Board of Directors at ExlService Holdings, announced her decision not to stand for re-election at the company’s 2025 annual meeting, marking her resignation from the board and its committees by June 2025. Her departure is not due to any disagreements with the company, and during her tenure, she significantly contributed to EXL’s transformation into a leading data and AI company, enhancing stockholder value by over 350%. Her leadership was particularly impactful in the Audit and Compensation and Talent Management Committees.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.