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 25, 2025, there were 161,513,147 shares of the registrant’s common stock outstanding, par value $0.001 per share.
(In thousands, except per share amount and share count)
As of
Notes
June 30, 2025
December 31, 2024
Assets
Current assets:
Cash and cash equivalents
7
$
149,134
$
153,355
Short-term investments
8
204,160
187,223
Restricted cash
7
11,503
9,972
Accounts receivable, net
4
345,470
304,322
Other current assets
11
148,049
140,317
Total current assets
858,316
795,189
Property and equipment, net
9
114,103
101,837
Operating lease right-of-use assets
21
73,083
68,784
Restricted cash
7
9,888
8,071
Deferred tax assets, net
22
117,208
104,747
Goodwill
10
420,573
420,387
Other intangible assets, net
10
42,825
49,331
Long-term investments
8
7,516
13,972
Other assets
12
64,991
56,085
Total assets
$
1,708,503
$
1,618,403
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
5,971
$
5,884
Current portion of long-term borrowings
18
4,886
4,886
Deferred revenue
21,989
19,264
Accrued employee costs
99,535
129,994
Accrued expenses and other current liabilities
13
121,548
113,597
Current portion of operating lease liabilities
21
18,374
16,491
Total current liabilities
272,303
290,116
Long-term borrowings, less current portion
18
255,155
283,598
Operating lease liabilities, less current portion
21
62,402
59,851
Deferred tax liabilities, net
22
2,216
1,403
Other non-current liabilities
14
55,477
53,573
Total liabilities
647,553
688,541
Commitments and contingencies
25
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, 207,810,635 shares issued and 161,829,331 shares outstanding as of June 30, 2025 and 206,510,587 shares issued and 161,801,212 shares outstanding as of December 31, 2024
19
207
206
Additional paid-in capital
625,984
588,583
Retained earnings
1,414,572
1,281,960
Accumulated other comprehensive loss
15
(134,434)
(154,722)
Total including shares held in treasury
1,906,329
1,716,027
Less: 45,981,304 shares as of June 30, 2025 and 44,709,375 shares as of December 31, 2024, held in treasury, at cost
19
(845,379)
(786,165)
Total stockholders’ equity
1,060,950
929,862
Total liabilities and stockholders’ equity
$
1,708,503
$
1,618,403
See accompanying notes to unaudited consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(In thousands)
Three months ended June 30,
Six months ended June 30,
Notes
2025
2024
2025
2024
Net income
$
66,051
$
45,825
$
132,612
$
94,588
Other comprehensive income/(loss):
Unrealized gain/(loss) on cash flow hedges
17
5,955
(2,778)
15,424
(2,840)
Currency translation adjustments
4,006
(3,189)
7,933
(6,253)
Reclassification adjustments:
(Gain)/loss on cash flow hedges (1)
17
(554)
475
1,044
32
Retirement benefits (2)
20
(117)
(147)
(228)
(302)
Income tax effects relating to above (3)
22
(937)
(33)
(3,885)
295
Total other comprehensive income/(loss)
8,353
(5,672)
20,288
(9,068)
Total comprehensive income
$
74,404
$
40,153
$
152,900
$
85,520
(1)These are reclassified to net income and are included in revenues, 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.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(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 global data and artificial intelligence (“AI”) company that offers services and solutions to reinvent client business models, drive better outcomes and unlock growth with speed. The Company harnesses the power of data, AI, and deep industry knowledge to transform businesses, including the world’s leading corporations in industries including insurance, healthcare and life sciences, banking and capital markets, retail, communications and media, and energy and infrastructure, among others.
The Company’s clients are located principally in the United States of America and the United Kingdom.
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, 2024.
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 recorded using equity method of accounting.
In the first quarter of 2025, the Company implemented operational and structural changes to accelerate the execution of its data and AI strategy. Under the new structure, the Company reports its financial performance based on new segments described in Note 3 - Segment Information to the unaudited consolidated financial statements. In conjunction with the new reporting structure, the Company has recast prior period amounts, wherever applicable, to conform to the way the Company internally manages and monitors segment performance. This change primarily impacted Note 3 - Segment Information and Note 10 - Goodwill and Other Intangible Assets to the unaudited consolidated financial statements. This change in segment presentation does not affect the Company’s unaudited consolidated statements of income, balance sheets or statements of cash flows.
(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 these estimates. The significant estimates that affect the unaudited consolidated financial statements include, but are not limited to, estimates of the contingent consideration, credit risk of customers, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, variable consideration in a customer contract, expected recoverability from customers
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
with contingent fee arrangements, estimated costs 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 December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (“Accounting Standards Codification (“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 is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of the new disclosure requirements. This ASU will affect the Company’s annual income tax disclosures but is not expected to impact its consolidated balance sheets or statements of income for the year ending December 31, 2025.
In November 2024, FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income (“ASC Topic 220”): Expense Disaggregation Disclosures. This ASU improves disclosures relating to the disaggregation of income statement expenses, requires additional disclosures about the nature of expenses in commonly presented financial statement captions on an annual and interim basis for all public business entities. The ASU will be effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements.
(d)Recently Adopted and Applicable Accounting Pronouncements
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 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 Information
The Company is a provider of data and AI-led and digital operations services in an integrated manner for clients across industry verticals.
In the first quarter of 2025, the Company implemented operational and structural changes to align with how the Company’s Chief Operating Decision Maker (“CODM”) reviews financial information and makes operating decisions. This new operating model comprises of Industry Market Units (“IMUs”) which focus on delivering higher value to clients by leveraging full suite of capabilities; and Strategic Growth Units which rapidly advance the capabilities specific to various industries and client needs.
Consequently, the Company realigned its reportable segments to the IMUs as follows:
•Insurance
•Healthcare and Life Sciences,
•Banking, Capital Markets and Diversified Industries,
•International Growth Markets
The primary changes in the new reportable segments reflect 1) the integration of the former Analytics reportable segment as a core capability within each of the IMUs, ensuring alignment with the specialized needs of clients across IMUs, 2) the
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
reorganization of the former Emerging Business reportable segment into a Banking, Capital Markets and Diversified Industries reportable segment, excluding Life Sciences, which is now a part of the new Healthcare and Life Sciences reportable segment, and 3) the formation of International Growth Markets as a separate business unit to represent all service and solutions offerings to clients in the United Kingdom, Europe, Middle East, Asia-Pacific and South Africa geographies across all industry verticals. The International Growth Markets business unit will help the Company to strategically expand its footprint in markets outside of North America and drive focus on offerings and expansion in those markets in new and existing clients.
In addition, revenues by service type are now presented as data and AI-led and digital operations services. Revenues attributable to geographical regions are now presented as North America (including the United States, Canada and Mexico), the United Kingdom & Europe, and the Rest of World.
The Company has recast segment disclosures for the prior periods presented herein to conform to the new segment structure. This change in segment presentation does not affect the Company’s unaudited consolidated statements of income, balance sheet or statements of cash flows.
The Company’s Chief Executive Officer has been identified as the CODM. The CODM generally reviews financial information such as revenues, cost of revenues and gross profit to allocate an overall budget and measure segment performance.
Revenues and cost of revenues for the three months ended June 30, 2025 and 2024, respectively, for each of the reportable segments, are as follows:
Three months ended June 30, 2025
Insurance
Healthcare and Life Sciences
Banking, Capital Markets and Diversified Industries
International Growth Markets
Total
Revenues, net
$
172,174
$
129,489
$
121,089
$
91,708
$
514,460
Cost of revenues (1)
Employee costs
95,370
60,972
66,158
49,637
272,137
Infrastructure and technology costs
13,380
7,067
6,367
8,294
35,108
Other costs (2)
3,558
5,066
2,845
1,558
13,027
Gross profit (1)
$
59,866
$
56,384
$
45,719
$
32,219
$
194,188
Operating expenses
113,050
Foreign exchange gain, net, interest expense and other income, net
3,600
Income tax expense
18,546
Loss from equity-method investment
(141)
Net income
$
66,051
(1) Exclusive of depreciation and amortization expense.
(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
Three months ended June 30, 2024
Insurance
Healthcare and Life Sciences
Banking, Capital Markets and Diversified Industries
International Growth Markets
Total
Revenues, net
$
158,459
$
106,117
$
104,573
$
79,217
$
448,366
Cost of revenues (1)
Employee costs
83,368
49,013
57,903
43,353
233,637
Infrastructure and technology costs
12,012
5,843
5,203
7,526
30,584
Other costs (2)
9,140
5,259
2,128
1,358
17,885
Gross profit (1)
$
53,939
$
46,002
$
39,339
$
26,980
$
166,260
Operating expenses
104,811
Foreign exchange gain, net, interest expense and other income, net
(1,742)
Income tax expense
13,873
Loss from equity-method investment
(9)
Net income
$
45,825
(1) Exclusive of depreciation and amortization expense.
(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.
Revenues and cost of revenues for the six months ended June 30, 2025 and 2024, respectively, for each of the reportable segments, are as follows:
Six months ended June 30, 2025
Insurance
Healthcare and Life Sciences
Banking, Capital Markets and Diversified Industries
International Growth Markets
Total
Revenues, net
$
344,230
$
255,081
$
238,791
$
177,377
$
1,015,479
Cost of revenues (1)
Employee costs
185,919
119,896
130,452
94,457
530,724
Infrastructure and technology costs
26,626
13,805
12,536
16,455
69,422
Other costs (2)
8,930
9,916
6,131
2,854
27,831
Gross profit (1)
$
122,755
$
111,464
$
89,672
$
63,611
$
387,502
Operating expenses
227,949
Foreign exchange gain, net, interest expense and other income, net
5,351
Income tax expense
32,042
Loss from equity-method investment
(250)
Net income
$
132,612
(1) Exclusive of depreciation and amortization expense.
(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
Six months ended June 30, 2024
Insurance
Healthcare and Life Sciences
Banking, Capital Markets and Diversified Industries
International Growth Markets
Total
Revenues, net
$
316,726
$
206,773
$
207,826
$
153,548
$
884,873
Cost of revenues (1)
Employee costs
164,772
94,774
116,598
83,076
459,220
Infrastructure and technology costs
23,933
11,285
10,156
14,367
59,741
Other costs (2)
20,536
9,091
4,471
2,471
36,569
Gross profit (1)
$
107,485
$
91,623
$
76,601
$
53,634
$
329,343
Operating expenses
206,370
Foreign exchange gain, net, interest expense and other income, net
(722)
Income tax expense
27,626
Loss from equity-method investment
(37)
Net income
$
94,588
(1) Exclusive of depreciation and amortization expense.
(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.
Revenues, net by service type, were as follows:
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Data and AI-led (1)
$
278,770
$
237,403
$
546,699
$
469,127
Digital operations (2)
235,690
210,963
468,780
415,746
Revenues, net
$
514,460
$
448,366
$
1,015,479
$
884,873
(1) Data and AI-led revenue comes from AI-powered solutions and services in which the Company embeds data and AI into client workflows. Leveraging the Company’s depth of domain knowledge, analytics, data management and digital engineering expertise, the Company’s industry-specific offerings are designed to help clients accelerate growth, improve customer experience, enhance efficiency, and deliver lasting competitive advantages. As clients evolve from digital operations to data and AI-powered operations and outcomes, these capabilities represent the next stage of enterprise transformation.
(2) Digital operations revenue comes from the Company’s industry-specific solutions and services that help clients run essential business functions with greater speed, accuracy, and efficiency. The Company applies deep industry expertise and tailored technology—whether its proprietary technology or client technology—to solve complex challenges and drive measurable outcomes. These digital operations deployments form the foundation for future client transformation opportunities to infuse AI into client workflows and unlock even greater value.
All four reportable segments of the Company include revenues from both data and AI-led and digital operations services.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
The Company attributes revenues based on geographical markets where the customer operations being served by it are located.
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Revenues, net
North America
$
422,822
$
369,148
$
838,171
$
731,324
United Kingdom & Europe
77,635
66,494
150,019
129,812
Rest of World
14,003
12,724
27,289
23,737
Revenues, net
$
514,460
$
448,366
$
1,015,479
$
884,873
Revenues, net by industry verticals, were as follows:
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Insurance
$
203,222
$
185,660
$
403,583
$
368,719
Healthcare and Life Sciences
129,737
106,438
255,563
207,338
Banking, Capital Markets and Diversified Industries
181,501
156,268
356,333
308,816
Revenues, net
$
514,460
$
448,366
$
1,015,479
$
884,873
Long-lived assets by geographic area, which consist of property and equipment, net and operating lease ROU assets were as follows:
As of
June 30, 2025
December 31, 2024
Long-lived assets
India
$
66,861
$
63,040
North America
53,912
52,510
The Philippines
35,125
25,881
South Africa
21,800
23,828
Rest of World
9,488
5,362
Long-lived assets
$
187,186
$
170,621
4. Revenues, net and Accounts Receivable, net
Refer to Note 3 - Segment Information to the unaudited consolidated financial statements for revenues disaggregated by reportable segments, service type, geography and industry verticals.
Contract balances
The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers:
As of
June 30, 2025
December 31, 2024
Accounts receivable, net
$
345,470
$
304,322
Contract assets
$
34,472
$
39,700
Contract liabilities:
Deferred revenue (consideration received in advance)
$
16,958
$
15,484
Consideration received for process transition activities
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
Accounts receivable includes $145,546 and $121,817 as of June 30, 2025 and December 31, 2024, 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 performance risk associated with its unbilled receivables. Contract assets as of June 30, 2025 and December 31, 2024, includes receivables of $28,576 and $33,472, respectively, from our payment integrity services. There are no performance risks associated with these contract assets.
There were no significant cumulative catch-up impact or impairment related to contract assets as of June 30, 2025 and December 31, 2024.
Revenue recognized during the three and six months ended June 30, 2025 and 2024, which was included in the contract liabilities balance at the beginning of the respective periods:
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Deferred revenue (consideration received in advance)
$
3,877
$
1,231
$
11,306
$
8,292
Consideration received for process transition activities
$
1,279
$
647
$
2,656
$
1,279
Contract acquisition and fulfillment costs
The following table provides details of the Company’s contract acquisition and fulfillment costs:
Contract Acquisition Costs
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Opening balance
$
2,126
$
1,901
$
2,287
$
2,122
Additions
284
364
365
371
Amortization
(218)
(275)
(460)
(503)
Closing balance
$
2,192
$
1,990
$
2,192
$
1,990
Contract Fulfillment Costs
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Opening balance
$
38,080
$
27,287
$
36,022
$
24,673
Additions
2,156
3,958
5,485
7,284
Amortization
(1,298)
(841)
(2,569)
(1,553)
Closing balance
$
38,938
$
30,404
$
38,938
$
30,404
There was no significant impairment for contract acquisition and contract fulfillment costs as of June 30, 2025 and December 31, 2024.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
Allowance for expected credit losses
The following table provides information about accounts receivable, net of allowance for expected credit losses:
As of
June 30, 2025
December 31, 2024
Accounts receivable, including unbilled receivables
$
350,197
$
307,850
Less: Allowance for expected credit losses
(4,727)
(3,528)
Accounts receivable, net
$
345,470
$
304,322
The movement in “Allowance for expected credit losses” was as follows:
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Opening balance
$
4,734
$
3,358
$
3,528
$
3,703
Additions / (reductions)
29
201
1,248
(68)
Reductions due to write-off of accounts receivable
(34)
—
(47)
(76)
Currency translation adjustments
(2)
1
(2)
1
Closing balance
$
4,727
$
3,560
$
4,727
$
3,560
Customer and credit risk concentration
No single customer accounted for more than 10% of the Company's revenues, net during the three and six months ended June 30, 2025 and 2024. 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 June 30, 2025 and December 31, 2024.
5. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Numerator:
Net income
$
66,051
$
45,825
$
132,612
$
94,588
Denominator:
Basic weighted average common shares outstanding
162,925,484
162,794,138
162,709,034
163,938,263
Dilutive effect of stock-based awards
1,267,774
1,167,616
1,667,464
1,406,041
Diluted weighted average common shares outstanding
164,193,258
163,961,754
164,376,498
165,344,304
Earnings per share:
Basic
$
0.41
$
0.28
$
0.82
$
0.58
Diluted
$
0.40
$
0.28
$
0.81
$
0.57
Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
6. Other Income, net
Other income, net consists of the following:
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Gain on sale and fair value mark-to-market on investments
$
2,259
$
1,162
$
4,207
$
2,178
Interest and dividend income
2,682
2,375
5,307
4,659
Fair value changes of contingent consideration (1)
—
—
—
589
Others, net
730
13
860
76
Other income, net
$
5,671
$
3,550
$
10,374
$
7,502
(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 consolidated statements of cash flows, cash, cash equivalents and restricted cash consist of the following:
As of
June 30, 2025
June 30, 2024
December 31, 2024
Cash and cash equivalents
$
149,134
$
115,303
$
153,355
Restricted cash (current) (1)
11,503
6,351
9,972
Restricted cash (non-current) (2)
9,888
—
8,071
Cash, cash equivalents and restricted cash
$
170,525
$
121,654
$
171,398
(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.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
8. Investments
Investments consist of the following:
As of
June 30, 2025
December 31, 2024
Short-term investments
Mutual funds
$
120,809
$
108,251
Term deposits
83,351
78,972
Short-term investments
$
204,160
$
187,223
Long-term investments
Term deposits
$
2,489
$
9,295
Investment in equity affiliate
5,027
4,677
Long-term investments
$
7,516
$
13,972
Refer to Note 16 - Fair Value Measurements to the unaudited consolidated financial statements for further details.
9. Property and Equipment, net
Property and equipment consists of the following:
As of
June 30, 2025
December 31, 2024
Property and equipment, gross
$
387,987
$
356,060
Less: Accumulated depreciation and amortization
(273,884)
(254,223)
Property and equipment, net
$
114,103
$
101,837
During the three and six months ended June 30, 2025, there were no material 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 June 30,
Six months ended June 30,
2025
2024
2025
2024
Depreciation and amortization expense
$
10,778
$
9,833
$
21,089
$
19,099
Internally developed software costs, included in property and equipment was as follows:
As of
June 30, 2025
December 31, 2024
Cost
$
63,194
$
60,447
Less : Accumulated amortization
(43,726)
(38,243)
Internally developed software, net
$
19,468
$
22,204
The amortization expense on internally developed software recognized in the unaudited consolidated statements of income was as follows:
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
During the three and six months ended June 30, 2025 and 2024, there were no indicators of impairment related to capitalized software.
10. Goodwill and Other Intangible Assets
Goodwill
In the first quarter of 2025, the Company implemented operational and structural changes which resulted in the realignment of its reporting segments. Refer to Note 3- Segment Information for further details. Goodwill has been re-allocated to reporting units based on the relative fair value approach.
The Company tested goodwill for impairment prior to the segment realignment and immediately thereafter, for events and conditions identified in accordance with the guidance in ASC Topic 350, Intangibles- Goodwill and Other. The fair value of the reporting units was calculated using a discounted cash flow model using estimated future cash flows. The results of the evaluation demonstrated that the fair value of each reporting unit exceeded its book value as of the date of the segment realignment.
The following table sets forth details of changes in goodwill by reportable segment of the Company:
Insurance
Healthcare and Life Sciences
Banking, Capital Markets and Diversified Industries
International Growth Markets
Total
Balance as of December 31, 2024
$
77,099
$
189,621
$
100,639
$
53,028
$
420,387
Currency translation adjustments
217
(1)
(17)
(13)
186
Balance as of June 30, 2025
$
77,316
$
189,620
$
100,622
$
53,015
$
420,573
During the three and six months ended June 30, 2025 and 2024, the Company performed an assessment to determine whether events or circumstances exist that may lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Based on such assessment, the Company concluded that there was no impairment on goodwill during the three and six months ended June 30, 2025 and 2024.
Other Intangible Assets
Information regarding the Company’s intangible assets is set forth below:
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
13. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following:
As of
June 30, 2025
December 31, 2024
Accrued expenses
$
67,339
$
63,548
Payable to statutory authorities
21,937
22,935
Client liabilities
13,258
9,711
Accrued capital expenditures
6,186
2,059
Derivative instruments
4,133
7,454
Income taxes payable
232
284
Contingent consideration
—
1,280
Others
8,463
6,326
Accrued expenses and other current liabilities
$
121,548
$
113,597
14. Other Non-Current Liabilities
Other non-current liabilities consist of the following:
As of
June 30, 2025
December 31, 2024
Retirement benefits
$
25,034
$
24,795
Deferred transition revenue
22,762
18,213
Contingent consideration
2,700
1,420
Unrecognized tax benefits
2,215
1,966
Derivative instruments
772
4,363
Others
1,994
2,816
Other non-current liabilities
$
55,477
$
53,573
15. Accumulated Other Comprehensive Income/(Loss)
Accumulated other comprehensive income/(loss) (“AOCI”) consists of actuarial gain/(loss) on retirement benefits and foreign currency translation adjustments. In addition, the Company enters into foreign currency forward contracts and interest rate swaps, which are designated as cash flow hedges, as applicable, in accordance with ASC Topic 815, Derivatives and Hedging. Cumulative changes in the fair values of cash flow hedges are recognized in AOCI on the Company’s consolidated balance sheets. The fair value changes are reclassified from AOCI to unaudited consolidated statements of income upon settlement of foreign currency forward contracts designated as cash flow hedges of a forecast transaction, whereas such changes for interest rate swaps are reclassified over the term of the contract. The following table sets forth the changes in AOCI during the six months ended June 30, 2025 and 2024:
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
Accumulated Other Comprehensive Income/(Loss)
Currency translation adjustments
Unrealized gain/(loss) on cash flow hedges
Retirement benefits
Total
Balance as of December 31, 2024
$
(146,998)
$
(7,548)
$
(176)
$
(154,722)
Gain recognized during the period
7,933
15,424
—
23,357
Reclassification to net income (1)
—
1,044
(228)
816
Income tax effects (2)
(1,012)
(2,847)
(26)
(3,885)
Accumulated other comprehensive income/(loss) as of June 30, 2025
$
(140,077)
$
6,073
$
(430)
$
(134,434)
Balance as of December 31, 2023
$
(132,643)
$
4,198
$
1,405
$
(127,040)
Loss recognized during the period
(6,253)
(2,840)
—
(9,093)
Reclassification to net income (1)
—
32
(302)
(270)
Income tax effects (2)
1,227
(930)
(2)
295
Accumulated other comprehensive income/(loss) as of June 30, 2024
$
(137,669)
$
460
$
1,101
$
(136,108)
(1) Refer to Note 17 - Derivatives and Hedge Accounting and Note 20 - Employee Benefit Plans to the unaudited consolidated financial statements for reclassification to net income.
(2) These are income tax effects recognized on cash flow hedges, retirement benefits and currency translation adjustments. Refer to Note 22 - Income Taxes to the unaudited consolidated financial statements.
`16. Fair Value Measurements
Assets and Liabilities Measured at Fair Value
The following table sets forth the Company’s assets and liabilities that were recognized at fair value:
Quoted Prices in Active Markets for Identical Assets
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
Quoted Prices in Active Markets for Identical Assets
Significant Other Observable Inputs
Significant Other Unobservable Inputs
As of December 31, 2024
(Level 1)
(Level 2)
(Level 3)
Total
Assets
Cash equivalents - Money market funds (1)
$
54,925
$
—
$
—
$
54,925
Mutual funds (2)
108,251
—
—
108,251
Derivative financial instruments
—
2,825
—
2,825
Total
$
163,176
$
2,825
$
—
$
166,001
Liabilities
Derivative financial instruments
$
—
$
11,817
$
—
$
11,817
Contingent consideration (3)
—
—
2,700
2,700
Total
$
—
$
11,817
$
2,700
$
14,517
(1) Represents money market funds which are carried at the fair value option under ASC Topic 825 “Financial Instruments”.
(2) Represents those short-term investments which are carried at the fair value option under ASC Topic 825 “Financial Instruments”.
(3) Contingent consideration is presented under “Accrued Expenses and Other Current Liabilities” and “Other Non-Current Liabilities,” as applicable, in the consolidated balance sheets.
Fair Value of Derivative Financial Instruments:
The Company’s derivative financial instruments consist of foreign currency forward contracts and interest rate swaps. Fair values for derivative financial instruments are based on independent sources including highly rated financial institutions and are classified as Level 2. Refer to Note 17 - Derivatives and Hedge Accounting to the unaudited consolidated financial statements for further details.
Fair Value of Contingent Consideration:
The fair value measurement of contingent consideration is determined using Level 3 inputs. The Company’s contingent consideration represents a component of the total purchase consideration for business acquisitions. The measurement is calculated using unobservable inputs based on the Company’s own assessment of achievement of certain performance goals. The Company estimated the fair value of the contingent consideration based on the Monte Carlo simulation model.
The following table summarizes the changes in the fair value of contingent consideration:
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Opening balance
$
2,700
$
—
$
2,700
$
15,589
Fair value changes
—
—
—
(589)
Payments
—
—
—
(15,000)
Closing balance
$
2,700
$
—
$
2,700
$
—
During the three and six months ended June 30, 2025 and 2024, there were no transfers among Level 1, Level 2 and Level 3.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
Financial Instruments Not Carried at Fair Value:
The Company’s other financial instruments not carried at fair value consist primarily of cash and cash equivalents (except investments in money market funds, as disclosed above), short-term investments (except investments in mutual funds, as disclosed above), restricted cash, accounts receivable, net, long-term investments, accrued capital expenditures, accrued expenses, client liabilities and interest payable on borrowings for which fair values approximate their carrying amounts. The carrying value of the Company’s outstanding revolving credit facility approximates its fair value because the Company’s interest rate yield is near current market rates for comparable debt instruments.
17. Derivatives and Hedge Accounting
The Company uses derivative instruments to mitigate cash flow volatility from risk of fluctuations in foreign currency exchange rates and interest rates. The Company enters into foreign currency forward contracts to hedge cash flow risks from forecasted revenues and other transactions denominated in certain foreign currencies. These contracts qualify as cash flow hedges under ASC Topic 815, Derivatives and Hedging, and are with counterparties that are highly rated financial institutions.
The following table sets forth the aggregate notional amount of derivatives in cash flow hedging relationship:
The Company estimates that approximately $4,421 of derivative gains, net, excluding tax effects, included in AOCI, representing changes in the value of cash flow hedges based on exchange rates prevailing as of June 30, 2025, could be reclassified into earnings within the next twelve months. As of June 30, 2025, the maximum outstanding term of the cash flow hedges was approximately 45 months.
The Company also enters into foreign currency forward contracts to hedge its intercompany balances and other monetary assets and liabilities denominated in currencies other than functional currencies, against the risk of fluctuations in foreign currency exchange rates associated with remeasurement of such assets and liabilities to functional currency. These foreign currency forward contracts do not qualify as fair value hedges under ASC Topic 815, Derivatives and Hedging. Changes in the fair value of these financial instruments are recognized in the unaudited consolidated statements of income and are included in the foreign exchange gain/(loss) line item.
The following table sets forth the aggregate notional principal amounts of outstanding foreign currency forward contracts for derivatives not designated as hedging instruments:
(1) This includes $10,147 and $10,006 related to USD purchases against sale of ZAR 181,501 and ZAR 188,373 as of June 30, 2025 and December 31, 2024, respectively.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
The following table sets forth the fair value of the foreign currency forward contracts and their location on the consolidated balance sheets:
Derivatives in cash flow hedging relationships
Derivatives not designated as hedging instruments
As of
As of
June 30, 2025
December 31, 2024
June 30, 2025
December 31, 2024
Assets:
Other current assets
$
8,021
$
1,711
$
174
$
262
Other assets
$
3,615
$
852
$
—
$
—
Liabilities:
Accrued expenses and other current liabilities
$
3,600
$
7,404
$
533
$
50
Other non-current liabilities
$
772
$
4,363
$
—
$
—
The following table sets forth the effect of foreign currency forward contracts and interest rate swaps on AOCI and the unaudited consolidated statements of income:
Three months ended June 30,
Six months ended June 30,
Derivative financial instruments:
2025
2024
2025
2024
Unrealized gain/(loss) recognized in other comprehensive income (“OCI”)
Derivatives in cash flow hedging relationships
$
5,955
$
(2,778)
$
15,424
$
(2,840)
Gain/(loss) recognized in unaudited consolidated statements of income
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
The following table sets forth the location and amount of gain/(loss) recognized in unaudited consolidated statements of income for derivatives in cash flow hedging relationships and derivatives not designated as hedging instruments:
Three months ended June 30,
2025
2024
As per unaudited consolidated statements of income
Gain/(loss) on derivative financial instruments
As per unaudited consolidated statements of income
Gain/(loss) on derivative financial instruments
Derivatives in cash flow hedging relationships
Location in unaudited consolidated statements of income where gain/(loss) was reclassified from AOCI
Revenues, net
$
514,460
$
(1,028)
$
448,366
$
—
Cost of revenues
$
320,272
1,360
$
282,106
(732)
General and administrative expenses
$
59,549
126
$
56,457
40
Selling and marketing expenses
$
39,446
7
$
35,444
10
Depreciation and amortization expense
$
14,055
89
$
12,910
(34)
Interest expense
$
4,282
—
$
5,328
241
Total before tax
554
(475)
Income tax effects on above
(165)
(207)
Net of tax
$
389
$
(682)
Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where gain/(loss) was recognized
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
The following table sets forth the location and amount of gain/(loss) recognized in unaudited consolidated statements of income for derivatives in cash flow hedging relationships and derivatives not designated as hedging instruments:
Six months ended June 30,
2025
2024
As per unaudited consolidated statements of income
Gain/(loss) on derivative financial instruments
As per unaudited consolidated statements of income
Gain/(loss) on derivative financial instruments
Derivatives in cash flow hedging relationships
Location in unaudited consolidated statements of income where gain/(loss) was reclassified from AOCI
Revenues, net
$
1,015,479
(1,028)
$
884,873
$
—
Cost of revenues
$
627,977
(53)
$
555,530
(582)
General and administrative expenses
$
118,966
(28)
$
109,700
79
Selling and marketing expenses
$
81,371
(9)
$
71,414
14
Depreciation and amortization expense
$
27,612
74
$
25,256
(26)
Interest expense
$
8,426
—
$
8,619
483
Total before tax
(1,044)
(32)
Income tax effects on above
217
(309)
Net of tax
$
(827)
$
(341)
Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where gain/(loss) was recognized
Foreign exchange gain/(loss), net
$
3,403
$
(1,286)
$
395
$
(2,073)
18. Borrowings
The following tables summarizes the Company’s debt position under its credit agreement with Citibank, N.A:
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
Unamortized debt issuance costs for the Company’s revolving credit facility of $701 and $895 as of June 30, 2025 and December 31, 2024, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.
Credit Agreement
The Company held a $300,000 revolving credit facility pursuant to its credit agreement (the “Credit Agreement”), dated as of November 21, 2017 with certain lenders and Citibank N.A. as Administrative Agent. This agreement was amended and restated in April 2022, followed by the First Amendment to Amended and Restated Credit Agreement in August 2024 (the “2024 Credit Agreement”). Among other things, the 2024 Credit Agreement increases revolving credit commitments to $500,000 and provides a new term loan facility of $100,000 with an annual repayment amount of 5%. The increased revolving credit facility and the new term loan facility both mature on April 18, 2027.
Under the 2024 Credit Agreement, obligations bear interest at a rate equal to specified prime rate (alternate base rate) or the adjusted secured overnight financing rate (SOFR) specified therein, plus, in each case, an applicable margin, and are guaranteed by the Company’s wholly-owned material domestic subsidiaries and secured by all or substantially all of the Company’s and its material domestic subsidiaries’ assets. The revolving credit commitments are subject to a commitment fee. The 2024 Credit Agreement includes a letter of credit sub facility and is voluntarily pre-payable from time to time without premium or penalty. Borrowings under the revolving credit facility can be used for working capital and general corporate purposes, including permitted acquisitions.
The effective interest rates of the revolving credit facility and the term loan facility are as follows:
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Revolving credit facility
5.8
%
6.5
%
5.8
%
6.6
%
Term loan facility
5.7
%
—
%
5.7
%
—
%
As of June 30, 2025 and December 31, 2024, the Company was in compliance with the financial covenants under the 2024 Credit Agreement.
The maturity profile of the Company’s long-term borrowings, excluding debt issuance costs, outstanding as of June 30, 2025 was as follows:
Revolving credit facility
Term loan facility
2025 (July 1 - December 31)
$
—
$
2,500
2026
—
5,000
2027
164,000
88,750
Total
$
164,000
$
96,250
Letters of Credit
In the ordinary course of business, the Company provides standby letters of credit to third parties primarily for facility leases. As of June 30, 2025 and December 31, 2024, the Company had outstanding letters of credit of $741 and $761, respectively, that were not recognized in the consolidated balance sheets.
19. Capital Structure
Common Stock
The Company has one class of common stock outstanding.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
Share Repurchases
The Company purchased shares of its common stock from certain employees in connection with withholding tax payments related to the vesting of restricted stock units and performance-based restricted stock units, as below:
Shares repurchased
Total consideration
Weighted average purchase price per share (1)
Three months ended June 30, 2025
—
$
—
$
—
Three months ended June 30, 2024
—
$
—
$
—
Six months ended June 30, 2025
190,716
$
9,432
$
49.46
Six months ended June 30, 2024
200,402
$
6,375
$
31.81
(1)The weighted average purchase price per share is based on the closing price of the Company’s common stock on the Nasdaq Global Select Market on the trading day prior to the applicable vesting date of the restricted stock units.
On February 26, 2024, the Company’s board of directors authorized a $500,000 (excluding excise tax) common stock repurchase program beginning March 1, 2024 (the “2024 Repurchase Program”), and, on February 29, 2024, terminated the previous repurchase program, which had been effective since the beginning of 2022.
In March 2024, the Company entered into the 2024 Accelerated Share Repurchase (ASR) Agreement with Citibank to repurchase shares of its common stock for an aggregate purchase price of $125,000 under the 2024 Repurchase Program. The Company received an initial delivery of 3,350,084 shares in March 2024, representing 80% of the aggregate purchase price, which was recorded in treasury stock, while a prepayment of $25,000 was recorded in additional paid-in capital to reflect the pending settlement. The Company received an additional 820,433 shares upon final settlement in July 2024.
Under the Company’s repurchase program, shares may be purchased by the Company from time to time from the open market and through private transactions, or otherwise, as determined by the Company’s management as market conditions warrant. Repurchases may be discontinued at any time by the management.
The Company purchased shares of its common stock, for a total consideration including commissions but excluding excise tax, under its repurchase programs, as below:
Shares repurchased
Total consideration
Weighted average purchase price per share
Three months ended June 30, 2025
906,150
$
41,752
$
46.08
Three months ended June 30, 2024
297,353
$
8,823
$
29.67
Six months ended June 30, 2025
1,081,213
$
49,811
$
46.07
Six months ended June 30, 2024
4,274,171
$
128,253
$
30.01
Repurchased shares have been recorded as treasury shares and will be held until the Company’s board of directors designates that these shares be retired or used for other purposes.
Pursuant to the Inflation Reduction Act, the Company is required to pay a 1% excise tax on the fair market value of each share of common stock repurchased, net of stock issuances. The Company recognized excise tax of ($29) and $74, during the three months ended June 30, 2025 and 2024, respectively, and ($29) and $618, during the six months ended June 30, 2025 and 2024, respectively, on repurchase of common stock as a part of the cost of such repurchases.
20. Employee Benefit Plans
The Company’s Gratuity Plan in India (the “India Plan”) provides for a lump sum payment to vested employees on retirement or upon termination of employment in an amount based on the respective employee’s salary and years of
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
employment with the Company. In addition, the Company’s subsidiary operating in the Philippines conforms to the minimum regulatory benefit, which provide for lump sum payment to vested employees on retirement from employment in an amount based on the respective employee’s salary and years of employment with the Company (the “Philippines Plan”). Liabilities with regard to the India Plan and the Philippines Plan are determined by actuarial valuation using the projected unit credit method. Current service costs for these plans are accrued in the year to which they relate. Actuarial gains or losses or prior service costs, if any, resulting from amendments to the plans are recognized and amortized over the remaining period of service of the employees.
The India Plan is partially funded whereas the Philippines Plan is unfunded. The Company makes annual contributions to the India Plan established with insurance companies. Fund managers manage these funds and calculate the annual contribution required to be made by the Company and manage the India Plan, including any required payouts. These funds are managed on a cash accumulation basis, inclusive of interest which is declared periodically. The Company expects to earn a return of approximately 7.0% per annum on the India Plan for the year ending December 31, 2025.
Change in Plan Assets
Plan assets as of December 31, 2024
$
19,963
Actual return
693
Employer contribution
2,929
Benefits paid
(801)
Currency translation adjustments
(28)
Plan assets as of June 30, 2025
$
22,756
Components of net periodic benefit costs recognized in unaudited consolidated statements of income and actuarial (gain)/loss reclassified from AOCI, were as follows:
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Service cost
$
1,406
$
1,100
$
2,789
$
2,208
Interest cost
517
386
1,026
774
Expected return on plan assets
(351)
(310)
(696)
(622)
Amortization of actuarial (gain)/loss, gross of tax
(117)
(147)
(228)
(302)
Net gratuity cost
$
1,455
$
1,029
$
2,891
$
2,058
Amortization of actuarial (gain)/loss, gross of tax
$
(117)
$
(147)
$
(228)
$
(302)
Income tax effects on above
(13)
(1)
(26)
(2)
Amortization of actuarial (gain)/loss, net of tax
$
(130)
$
(148)
$
(254)
$
(304)
The Company maintains several 401(k) plans (the “401(k) Plans”) under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), covering all eligible employees, as defined in the Code as a defined contribution plan. The Company may make discretionary contributions of up to a maximum of 3.0% of employee compensation within certain limits.
The Company’s contributions to various defined contribution plans were as follows:
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Contribution to the 401(k) Plans
$
1,376
$
1,190
$
4,171
$
3,633
Contributions to the defined contribution plans in foreign subsidiaries of the Company
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
21. Leases
The Company conducts its operations using facilities leased under operating lease agreements that expire at various dates. The Company finances its use of certain motor vehicles and other equipment under various lease arrangements provided by financial institutions. The lease agreements do not contain any covenants to impose any restrictions except for market-standard practice for similar lease arrangements.
The Company had performed an evaluation of its contracts with suppliers in accordance with ASC Topic 842, Leases, and had determined that, except for leases for office facilities, motor vehicles and other equipment as described above, none of the Company’s contracts contain a lease.
The components of lease cost, which are included in the Company’s unaudited consolidated statements of income, are as follows:
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Finance lease:
Depreciation on underlying ROU assets
$
147
$
83
$
279
$
150
Interest on lease liabilities
77
45
146
81
224
128
425
231
Operating lease (1)
6,528
5,743
12,707
11,093
Variable lease costs
1,214
1,105
2,287
2,089
Sublease income
(113)
—
(223)
—
Total lease cost
$
7,853
$
6,976
$
15,196
$
13,413
(1) Includes short-term leases, which are immaterial.
Supplemental cash flow and other information related to leases are as follows:
Six months ended June 30,
2025
2024
Cash payments for amounts included in the measurement of lease liabilities :
Operating cash outflows for operating leases
$
12,250
$
9,645
Operating cash outflows for finance leases
$
77
$
81
Financing cash outflows for finance leases
$
247
$
132
ROU assets obtained in exchange for new operating lease liabilities
$
12,332
$
16,445
ROU assets obtained in exchange for new finance lease liabilities
$
633
$
581
Weighted average remaining lease term (in years)
Finance lease
2.4 years
3.2 years
Operating lease
4.7 years
5.1 years
Weighted average discount rate
Finance lease
15.1
%
15.0
%
Operating lease
8.0
%
7.9
%
As part of the Company’s efforts to optimize its existing network of operations centers, the Company continued to evaluate its office facilities to determine where it can exit or consolidate its use of office space. The Company modified certain of its operating leases, resulting in an increase of its lease liabilities by $3,107 and $3,377, during the six months ended June 30, 2025 and 2024, respectively, with a corresponding adjustment to ROU assets.
As of June 30, 2025 and December 31, 2024, the Company did not have any significant leases that have not yet commenced but that create significant rights and obligations for the Company.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
Maturities of lease liabilities as of June 30, 2025 were as follows:
Operating Leases
Finance Leases
2025 (July 1 - December 31)
$
12,060
$
845
2026
23,430
793
2027
21,271
627
2028
18,070
399
2029
9,903
157
2030 and thereafter
13,273
—
Total lease payments
98,007
2,821
Less: Imputed interest
17,231
658
Present value of lease liabilities
$
80,776
$
2,163
22. Income Taxes
The Company determines the tax provision for interim periods using an estimate of its annual effective tax rate. Each quarter, the Company updates its estimate of annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment.
The effective tax rate decreased from 23.2% to 21.9%, during the three months ended June 30, 2024 and 2025, respectively. The Company recorded income tax expense of $18,546 and $13,873 during the three months ended June 30, 2025 and 2024, respectively. The increase in income tax expense was primarily driven by higher profit, partially offset by lower state taxes and higher excess tax benefits during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
The effective tax rate decreased from 22.6% to 19.5%, during the six months ended June 30, 2024 and 2025, respectively. The Company recorded income tax expense of $32,042 and $27,626 during the six months ended June 30, 2025 and 2024, respectively. The increase in income tax expense was primarily driven by higher profit, and an increase in non-deductible expenses, partially offset by lower state taxes and higher excess tax benefits during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Deferred income taxes recognized in OCI were as follows:
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Deferred taxes benefit / (expense) recognized on:
Unrealized gain/(loss) on cash flow hedges
$
(750)
$
(947)
$
(2,630)
$
(1,239)
Reclassification adjustment for cash flow hedges
165
207
(217)
309
Reclassification adjustment for retirement benefits
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
23. Stock-Based Compensation
Stock-based compensation expense by function, as below, are included in the unaudited consolidated statements of income:
Three months ended June 30,
Six months ended June 30,
2025
2024
2025
2024
Cost of revenues
$
3,421
$
3,858
$
6,908
$
7,807
General and administrative expenses
6,617
7,234
13,803
14,121
Selling and marketing expenses
6,354
7,003
14,868
14,019
Total
$
16,392
$
18,095
$
35,579
$
35,947
Income tax benefit related to share-based compensation (1)
$
4,211
$
4,619
$
13,316
$
9,977
(1) Includes $203 and $18 during the three months ended June 30, 2025 and 2024, respectively, and $14,728 and $7,541 during the six months ended June 30, 2025 and 2024, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No. 2016-09, Compensation - Stock Compensation.
On June 17 2025, the Company’s stockholders approved 2025 Omnibus Incentive Plan (the "2025 Plan"), which among other things, reserves 6,800,000 shares (as adjusted under the terms thereof) of the Company’s common stock for grant of awards under the 2025 Plan, at which time new awards under the 2018 Omnibus Incentive Plan (the "2018 Plan") were not permitted to be made, but outstanding awards under the 2018 Plan will continued to be governed by the terms thereof. As of June 30, 2025, the Company had 5,755,688 shares available for future grants under the 2025 Plan.
Stock Options
Stock option activity under the Company’s stock-based compensation plans is shown below:
Number of Options
Weighted Average Exercise Price
Aggregate Intrinsic Value
Weighted Average Remaining Contractual Life (Years)
Outstanding at December 31, 2024
1,768,305
$
30.14
$
25,187
8.5
Granted
—
—
—
—
Exercised
—
—
—
—
Forfeited
(33,585)
30.15
—
—
Outstanding at June 30, 2025
1,734,720
$
30.14
$
23,686
8.0
Vested and exercisable at June 30, 2025
828,235
$
30.14
$
11,303
8.0
Weighted average grant date fair value of per unit of stock option granted during the period
$
—
As of June 30, 2025, unrecognized compensation cost of $10,390 is expected to be expensed over a weighted average period of 2.0 years.
Share Matching Program
Under the Company’s 2018 Plan, the Company established a share matching program (“SMP”) for executive officers and other specified employees. Under the SMP, the Company agreed to issue a number of restricted stock units equal to the number of newly acquired shares of the Company's common stock.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
Restricted stock unit activity under the SMP is shown below:
Restricted Stock Units (SMP)
Number
Weighted Average Fair Value
Outstanding as of December 31, 2024*
144,845
$
24.95
Granted
—
—
Vested*
(144,845)
24.95
Forfeited
—
—
Outstanding as of June 30, 2025*
—
$
—
* As of June 30, 2025 and December 31, 2024 restricted stock units vested for which the underlying common stock is yet to be issued are 217,230 and 72,385, respectively.
Restricted Stock Units
Restricted stock unit activity under the Company’s stock-based compensation plans is shown below:
Restricted Stock Units
Number
Weighted Average Fair Value
Outstanding as of December 31, 2024*
3,240,200
$
28.82
Granted
996,878
51.01
Vested*
(1,291,993)
26.37
Forfeited
(72,886)
34.93
Outstanding as of June 30, 2025*
2,872,199
$
37.47
* As of June 30, 2025 and December 31, 2024 restricted stock units vested for which the underlying common stock is yet to be issued are 346,431 and 289,547, respectively.
As of June 30, 2025, unrecognized compensation cost of $91,077 is expected to be expensed over a weighted average period of 2.8 years.
Performance Based Stock Awards
Under the Company’s equity incentive plans, the Company grants performance-based restricted stock units (“PRSUs”) to executive officers and other specified employees. During the six months ended June 30, 2025, under the 2025 Plan and the 2018 Plan, the Company granted 40% of each award recipient’s equity grants in the form of PRSUs that cliff vest at the end of a three-year period based on an aggregated revenue target for a three-year period (“PU”). The remaining 60% of each award recipient’s equity grants are PRSUs that are based on market conditions, contingent on the Company’s meeting a total shareholder return relative to a group of peer companies specified under PRSU agreements, and are measured over a three-year performance period (“MU”).
PRSU activity under the Company’s stock plans is shown below:
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
As of June 30, 2025, unrecognized compensation cost of $55,968 is expected to be expensed over a weighted average period of 2.0 years.
Employee Stock Purchase Plan
On June 21, 2022, at the annual meeting of stockholders of the Company, the Company’s stockholders approved the ExlService Holdings, Inc. 2022 Employee Stock Purchase Plan (the “2022 ESPP”).
The 2022 ESPP allows eligible employees to purchase the Company’s shares of common stock through payroll deductions at a pre-specified discount to the lower of closing price of the Company’s common shares on the date of offering or the last business day of each purchase interval. The dollar amount of shares of common stock that can be purchased under the 2022 ESPP must not exceed 15% of the participating employee’s compensation during the offering period, subject to a cap of $25 per employee per calendar year. The Company has reserved 4,000,000 shares of common stock for issuance under the 2022 ESPP.
The sixth offering period under the 2022 ESPP commenced on January 1, 2025 with a term of six months.
Activity under the Company’s 2022 ESPP is shown below:
Number
Total Proceeds Received
Shares available for issuance as of December 31, 2024
3,672,744
Issuance of common stock made during the fifth offering period
64,939
$
1,823
Shares available for issuance as of June 30, 2025
3,607,805
Issuance of common stock related to the sixth offering period made subsequent to June 30, 2025
97,536
$
3,844
24. Related Party Disclosures
The Company provides data and AI-led services to Corridor Platforms, Inc., which is an equity affiliate of the Company. The Company recognized revenues, net of $42 and $151, during the three months ended June 30, 2025 and 2024 respectively, and $84 and $302, during the six months ended June 30, 2025 and 2024 respectively. The Company had outstanding accounts receivable, net of $56 each, related to this service contract as of June 30, 2025 and December 31, 2024.
The Company provides data and AI-led services to PharmaCord LLC., where one of the Company’s directors is the member-manager as of June 30, 2025. The Company recognized revenues of $105 and $nil during the three months ended June 30, 2025 and 2024, respectively, and $224 and nil during the six months ended June 30, 2025 and 2024, respectively. The Company had outstanding accounts receivable, net of $70 and $nil, related to this service contract as of June 30, 2025 and December 31, 2024, respectively.
25. Commitments and Contingencies
Capital Commitments
As of June 30, 2025, the Company had committed to spend approximately $5,000 under agreements to purchase property and equipment. This amount is net of capital advances paid which are recognized in unaudited consolidated balance sheets as “Capital work in progress” under “Property and equipment, net.”
On June 15, 2023, the Company, along with other limited partners, entered into a limited partnership agreement with the general partner, PNP Financial Services Fund GP I, LLC and initial limited partner and outgoing partner, to form a partnership with the name Plug and Play Financial Services Fund I, L.P. (the “Partnership”) for the primary purpose of making investments in growth-stage technology companies. The Company committed to make an aggregate investment of $4,000 in the Partnership. As of June 30, 2025, the Company has invested $1,800 in the Partnership and is committed to make further investments up to an amount of $2,200.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
Other Commitments
Certain units of the Company’s Indian subsidiaries were established as 100%Export-Oriented units or under the Software Technology Parks of India or Special Economic Zone scheme promulgated by the Government of India. These units are exempt from customs, central excise duties, and levies on imported and indigenous capital goods, stores, and spares. The Company has undertaken to pay custom duties, service taxes, levies, and liquidated damages payable, if any, in respect of imported and indigenous capital goods, stores and spares consumed duty free, in the event that certain terms and conditions are not fulfilled. The Company believes, however, that these units have in the past satisfied, and will continue to satisfy, the required conditions.
The Company’s operations centers in the Philippines are registered as qualified Philippines Economic Zone Authority units, which provides the Company fiscal incentives on the import of capital goods and local purchase of services and materials. The Company is required to meet certain requirements to retain the incentives. The Company has complied, and intends to continue compliance, with the requirements to avail itself of the incentives.
Contingencies
The transfer pricing regulations in the countries where the Company operates require that controlled intercompany transactions be at arm’s-length. Accordingly, the Company determines and documents pricing for controlled intercompany transactions based on an economic analysis as prescribed in the respective regulations. The tax authorities have jurisdiction to review the Company’s transfer pricing. If the Company’s transfer pricing is challenged by the authorities, they could assess additional tax, interest and penalties, thereby impacting the Company’s profitability and cash flows.
The Company is currently involved in transfer pricing and related income tax disputes with Indian tax authorities. The aggregate amount demanded by Indian tax authorities (net of advance payments) as of June 30, 2025 and December 31, 2024 is $50,191 and $49,588, respectively. The Company has made payments and/or provided bank guarantees against these demands in the amounts of $8,031 and $7,506, as of June 30, 2025 and December 31, 2024, respectively. The Company believes that its positions will more likely than not be sustained upon final examination by the tax authorities, and accordingly has not accrued any liabilities with respect to these matters in its consolidated financial statements.
Pursuant to reviewing the Company’s annual VAT filings, the Indian tax authorities raised aggregate VAT demands for tax years 2015 and 2017, in the amounts of $5,330 and $5,339, as of June 30, 2025 and December 31, 2024, respectively. The Company has provided bank guarantees against these demands in the amounts of $5,330 and 5,339, as of June 30, 2025 and December 31, 2024, respectively. The Company has filed appeals against these matters and believes that it is more likely than not that upon final examination its position will be sustained based on technical merits.
The Indian GST authorities rejected the Company’s refund claims in the amounts of $5,732 and $5,885 as of June 30, 2025 and December 31, 2024, respectively. The Company has filed appeals against these matters and believes that it is more likely than not that upon final examination its position will be sustained based on its technical merits. Accordingly, no allowance was recorded against these GST receivables as of June 30, 2025 and December 31, 2024, respectively.
Some of the Company’s subsidiaries in India have undergone assessments with the statutory authority with respect to defined contribution plan. Except for some components of the assessments for which the Company has recognized a provision in the unaudited consolidated financial statements, the Company believes that the amount demanded by such authority is not a meaningful indicator of the potential liabilities of the Company, and that these matters are without merit. The Company is defending against the assessment orders and in one case, has instituted an appeal against the order before the relevant tribunal while also making a payment under protest of the amount demanded. As of the reporting date, the Company’s management does not believe that the ultimate assessments in any of these matters will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. The Company will continue to monitor and evaluate its position based on future events and developments on these matters.
From time to time, the Company, its subsidiaries, and/or their present officers or directors, may be or have been, named as a defendant in litigation matters, including employment-related claims. The plaintiffs in those cases seek damages, including, where applicable, compensatory damages, punitive damages and attorney’s fees. With respect to pending litigation matters as of the reporting date, the Company believes that the damages claimed are without merit, and the Company intends to vigorously
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
June 30, 2025
(In thousands, except per share amount and share count)
defend them. The Company will continuously monitor developments on these matters to assess potential impacts to the financial statements.
The outcomes of legal actions are unpredictable and subject to significant uncertainties, and thus it is inherently difficult to determine the likelihood of the Company incurring a material loss or quantification of any such loss. With respect to certain pending litigation matters as of the reporting date, the Company has made provisions based on information currently available, including its evaluation of the facts underlying each matter and legal counsel’s advice on the estimated losses or range of reasonably possible losses. Based on the Company’s assessment, including the availability of insurance recoveries, the Company’s management does not believe that currently pending litigation, individually or in aggregate, will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. The Company will continuously monitor these matters to assess potential impacts to the financial statements.
On July 4, 2025, President Trump signed a new tax legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), effectively extending certain provisions of the 2017 Tax Cuts and Jobs Act, including adjusting a number of provisions that were subject to sunsets, phase-outs, or phase-ins. While most of the changes made by OBBBA are effective in future tax years, some of its provisions are effective in the current tax year. The Company is currently evaluating the impact of OBBBA on its consolidated financial statements.
On July 29, 2025, the Company entered into an Accelerated Share Repurchase (ASR) Agreement with Citibank to repurchase shares of its common stock for an aggregate purchase price of $125,000, as part of the Company’s previously announced 2024 Repurchase Program of $500,000. The Company plans to fund the repurchase with available cash on hand and/or borrowings from its credit facility.
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion in connection with our unaudited consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Some of the statements in the following discussion are forward looking statements.
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include but are not limited to:
•our ability to maintain and grow client demand for our services and solutions, including anticipating and incorporating the latest technologies, for instance, artificial intelligence (“AI”), including generative AI into our offerings;
•use of AI technology presents competitive, operational, reputational and legal risks, and our use of AI technology may not be successful;
•impact on client demand by the selling cycle and terms of our client contracts;
•our ability to successfully transition to and implement new organization structure;
•fluctuations in our earnings;
•our ability to hire and retain enough sufficiently trained employees to support our operations or any changes in the senior management team;
•our ability to accurately estimate and/or manage costs;
•our ability to adjust our pricing terms or effectively manage our asset utilization levels to meet the changing demands of our clients and potential clients;
•cyber security incidents, data breaches, or other unauthorized disclosure of sensitive or confidential client and employee data;
•reliance on third parties to deliver services and infrastructure for client critical services, and on third party data use rights for certain of our offerings;
•employee wage increases;
•failure to protect our intellectual property;
•our dependence on a limited number of clients and our ability to withstand the loss of a significant client;
•our ability to manage rapid infrastructure and personnel growth across countries;
•our ability to successfully consummate or integrate strategic acquisitions including the impact from the impairment of goodwill and other intangible assets, if any;
•legal liability arising out of customer and third party contracts;
•increasing competition in our industry;
•telecommunications or technology disruptions or breaches, natural or other disasters, medical epidemics or pandemics, or acts of violence or war;
•challenges by applicable tax authorities to transfer pricing determinations or the introduction of new or unfavorable tax legislation, tariffs, including legal restrictions on repatriation of funds held abroad;
•exposure to currency exchange rate fluctuations in the various currencies in which we do business including rising inflation, high interest rates and economic recessionary trends on currency exchange rates;
•restrictions on immigration and work permits;
•regulatory, legislative and judicial developments, including our ability to adhere to regulations or accreditation or licensing standards that govern our business;
•our ability to service debt or obtain additional financing on competitive terms, or exposure to interest rate fluctuations that are not fully hedged through interest rate swaps;
•negative public reaction in the United States or elsewhere to offshore outsourcing;
•effects of political and economic conditions globally including newly imposed U.S tariffs and any additional responsive non-U.S tariffs, particularly in the geographies where we operate;
•our ability to make accurate estimates and assumptions in connection with the preparation of our consolidated financial statements;
•credit risk fluctuations in the market values of our investment and derivatives portfolios; and
•our ability to execute our sustainability-related initiatives.
These and other factors are more fully discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. These and other risks could cause actual results to differ materially from those implied by forward-looking statements in this Quarterly Report on Form 10-Q.
The forward-looking statements made by us in this Quarterly Report on Form 10-Q, or elsewhere, speak only as of the date on which they were made. New risks and uncertainties may occur from time to time, and it is impossible for us to predict those events or how they may affect us. We have no obligation to update any forward-looking statements in this Quarterly Report on Form 10-Q after the date of this Quarterly Report on Form 10-Q, except as required by federal securities laws.
Executive Overview
We are a global data and artificial intelligence (“AI”) company that offers services and solutions to reinvent client business models, drive better outcomes and unlock growth with speed. We harness the power of data, AI, and deep industry knowledge to transform businesses, including the world’s leading corporations in industries including insurance, healthcare, life sciences, banking and financial services, media and retail, communications and media, and energy and infrastructure, among others.
Our global delivery network, which includes highly trained industry and process specialists across the United States, the United Kingdom, Latin America, South Africa, Europe and Asia (primarily India and the Philippines), is a key asset. We have operations centers in India, the United States, the Philippines, South Africa, Colombia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and the Republic of Ireland.
In the first quarter of 2025, we implemented operational and structural changes to align with how our management reviews financial information and makes operating decisions. The new operating model is comprised of Industry Market Units (“IMUs”) to focus on delivering higher value to clients leveraging our full suite of capabilities; and Strategic Growth Units to focus on rapidly advancing our operational, analytics, data engineering, and AI capabilities specific to our chosen industries. Our IMUs will focus on managing customer relationships and delivering the “One EXL” value proposition to clients, maintain a unified go-to-market approach and be integrally responsible for growth, profitability and client satisfaction.
Accordingly, our new reportable segments, aligned to our IMUs, are as follows:
•Insurance,
•Healthcare and Life Sciences,
•Banking, Capital Markets and Diversified Industries,
The primary changes in our new reportable segments reflect 1) the integration of our former Analytics reportable segment as a core capability within each of our IMUs, ensuring alignment with the specialized needs of our clients across IMUs, 2) the reorganization of our former Emerging Business reportable segment into a Banking, Capital Markets and Diversified Industries reportable segment, excluding Life Sciences, which is now a part of the new Healthcare and Life Sciences reportable segment, and 3) the formation of International Growth Markets as a separate business unit to represent all our service and solutions offerings to clients in the United Kingdom, Europe, Middle East, Asia-Pacific and South Africa geographies across all industry verticals. The International Growth Markets business unit will help strategically expand our footprint in markets outside of North America and drive focus on offerings and expansion in those markets in new and existing clients.
In addition, our revenues by service type are now presented as data and AI-led and digital operations services. Revenues attributable to geographical regions are now presented as North America (including the United States, Canada and Mexico), the United Kingdom and Europe, and Rest of World.
We have recast our segment disclosures for all prior periods presented to conform to the way we internally manage and monitor segment level performance of our business.
Revenues
For the three months ended June 30, 2025, we generated revenues of $514.5 million compared to revenues of $448.4 million for the three months ended June 30, 2024, an increase of $66.1 million, or 14.7%. For the six months ended June 30, 2025, we generated revenues of $1,015.5 million compared to revenues of $884.9 million for the six months ended June 30, 2024, an increase of $130.6 million, or 14.8%.
We serve clients mainly in North America, and the United Kingdom and Europe, with these two regions generating 82.2% and 15.1%, respectively, of our total revenues for the three months ended June 30, 2025, and 82.3% and 14.8%, respectively, of our total revenues for the three months ended June 30, 2024. For the six months ended June 30, 2025, these two regions generated 82.5% and 14.8%, respectively, of our total revenues and 82.6% and 14.7%, respectively, of our total revenues for the six months ended June 30, 2024.
For the three months ended June 30, 2025 and 2024, our total revenues from our top ten clients accounted for 33.5% and 33.0% of our total revenues, respectively. For the six months ended June 30, 2025 and 2024, our total revenues from our top ten clients accounted for 33.6% and 32.9% of our total revenues, respectively. Although we continue to develop relationships with new clients to diversify our client base, we believe that the loss of any of our top ten clients could have a material adverse effect on our financial performance.
Our Business
We provide data and AI-led and digital operations services to our clients. We market and sell our solutions and services to existing and prospective clients through our sales and client management teams, which are aligned by our IMUs. Our sales and client management teams operate primarily from the United States, India, the United Kingdom, Ireland and Australia.
Data and AI-led: Our data and AI-led revenue comes from AI-powered solutions and services in which we embed data and AI into client workflows. Leveraging our depth of domain knowledge, analytics, data management and digital engineering expertise, our industry-specific offerings are designed to help clients accelerate growth, improve customer experience, enhance efficiency, and deliver lasting competitive advantages. As clients evolve from digital operations to data and AI-powered operations and outcomes, these capabilities represent the next stage of enterprise transformation.
Digital operations: Our digital operations revenue comes from our industry-specific solutions and services that help clients run essential business functions with greater speed, accuracy, and efficiency. We apply deep industry expertise and tailored technology—whether our proprietary technology or client technology—to solve complex challenges and drive measurable outcomes. These digital operations deployments form the foundation for future client transformation opportunities to infuse AI into client workflows and unlock even greater value.
Our industry market units, which provide data and AI-led and digital operations services, are described below:
Insurance: We combine our cloud-first digital insurance software solutions and industry expertise with generative AI, machine learning, advanced analytics, and platforms, to enable insurance businesses to transform operations and embed artificial intelligence into workflows. Our data and AI-powered operations and services span across the insurance value chain. We provide services to insurers in the areas of property and casualty, life, disability, annuity, and retirement services. Additionally, we serve insurance brokers, reinsurers, and insurtech companies.
Our offerings include digital marketing, new business acquisition, actuarial, underwriting support, claims processing, premium and benefit administration, policy servicing, premium audit, surveys, billing and collection, commercial and residential surveys, finance and accounting and customer service. This includes our Insurance Large Language Model (“LLM”), a specialized generative AI platform for claims, underwriting and subrogation, developed leveraging our deep experience and proprietary data in the insurance space.
Healthcare and Life Sciences: We work with clients across the healthcare ecosystem to meet their current and dynamic business challenges. We deliver integrated solutions and services at the intersection of domain, data, and AI to enable AI transformation for healthcare payers and providers, pharmacy benefit managers (“PBMs”), and life sciences organizations. Through the provision of a range of data and AI-powered operations and solutions, we focus on streamlining healthcare administration processes to enhance operational efficiency, aimed at reducing costs for both providers and consumers and improving consumer experience. We leverage innovative technologies to provide offerings intended to simplify complex workflows, minimize bureaucratic hurdles, and improve overall effectiveness.
For healthcare payers, we offer pre and post-pay auditing services, payment analytics, payment integrity, a care management platform and services and patient navigation. For healthcare providers, we offer revenue cycle management, digital transformation, data and analytics and call center modernization. For PBMs, we provide digital transformation, data and analytics and call center modernization. Within the life sciences space, we provide finance and accounting operations and data analytics. Across our segments, we leverage AI, analytics, and cloud-based solutions to enhance value-based care, optimize claims, and ensure regulatory compliance.
Banking, Capital Markets, and Diversified Industries: Our Banking and Capital Markets and Diversified Industries group delivers comprehensive solutions across retail and commercial banking, credit card services, payment services, fintech, banking infrastructure services, capital markets, mortgage services, utilities, retail and consumer packaged goods, media, communications and entertainment, travel and leisure, transportation and logistics, and other business services industries.
By integrating domain expertise with AI-driven data management, we empower financial institutions to innovate, enhance operational agility, and navigate evolving market demands. Our tailored services span retail banking operations such as digital lending solutions that enhance underwriting and compliance, sales and demand generation, omni-channel marketing, digital onboarding, know your customer (“KYC”)/anti-money laundering (“AML”) compliance, and collections; credit card services including customer acquisition, fraud management, and payment processing; and payment services structured for secure, multi-currency transaction processing. Additionally, we support fintechs with AI-driven hyper-personalization and analytics, while our capital markets solutions cover investment banking, asset management, custodian banking, and fund administration. Mortgage services include loan origination, account servicing, default management, and title settlement services. Our industry-leading AI and automation-driven service offerings drive efficiency and innovation across financial services.
Our enterprise services and solutions include domain-specific operations, finance and accounting, customer experience management, back-office operations, and revenue enhancement, such as pricing and billing, enabling our clients to deliver superior economic performance. For example, in the retail and consumer packaged goods sectors, we provide supply chain management services and AI-led advanced analytical services including merchandising, pricing, and demand forecasting and for our clients in the utilities sector, we offer AI-enabled operations and solutions related to end-to-end customer life cycle management, including onboarding and terminations, engineering field services, customer service, billing, and debt management and collections.
International Growth Markets: Our International Growth Markets (“IGM”) unit is focused on extending our global reach in growth markets outside North America. This provides us with opportunities to leverage our investments, experience, and expertise from the North America market to expand our global client base, drive further growth, and bring us closer to our
customers across the world. IGM consists of dedicated teams servicing clients in the banking and capital markets, insurance, life sciences, energy and infrastructure, retail, consumer goods, and travel industries in growth markets. This unit is instrumental in localizing our global capabilities in these industry segments to align with the local regulatory, cultural, linguistic and economic needs. Across all regions in which we operate, we combine deep domain experience with our data and AI expertise to help clients innovate, enhance operational agility, adapt to changing market demands, and drive better business outcomes.
Pricing: We charge for our services using various pricing models like time-and-material pricing, full-time-equivalent pricing, transaction-based pricing, outcome-based pricing, subscription-based pricing and other alternative or emerging pricing models. Outcome-based pricing arrangements is an example of a non-linear pricing model where our revenues from platforms and solutions and the services we provide are compensated based on our clients’ usage or savings rather than the efforts we deploy to provide these services. We continue to observe a shift in the industry pricing models toward transaction-based pricing, outcome-based pricing and other alternative pricing models. We believe this trend will continue and we use such alternative pricing models with some of our current clients and are seeking to move certain other clients from a full-time-equivalent pricing model to a transaction-based or other alternative pricing model. These alternative pricing models place the focus on operating efficiency in order to maintain or improve our gross margins.
Income Taxes
The Organization for Economic Cooperation and Development, issued a Pillar II model for implementing a 15% global minimum tax effective January 1, 2024. The application of the rules relating to Pillar II continue to evolve, and there are countries that are still in the process of issuing attendant rules and regulations, including available transitional safe harbor rules. The two countries where we operate but do not meet the available safe harbor rules are the Republic of Ireland and the Philippines. The Pillar II impacts for the Republic of Ireland and the Philippines are not significant and have been properly reflected in our financial statements. We will continue to monitor Pillar II developments and assess any future impacts.
Critical Accounting Policies and Estimates
In the first quarter of 2025, we implemented operational and structural changes which resulted in the realignment of our reporting segments. Refer to Note 3- Segment Information and Note 10- Goodwill and Other Intangible Assets to our unaudited consolidated financial statements for further details.
Goodwill has been re-allocated to reporting units based on the relative fair value approach. We tested goodwill for impairment prior to the segment realignment and immediately thereafter, for events and conditions identified in accordance with the guidance in ASC Topic 350, Intangibles- Goodwill and Other. The fair value of our reporting units was calculated using a discounted cash flow model using estimated future cash flows. The results of our evaluation demonstrated that the fair value of each reporting unit exceeded its book value as of the date of the segment realignment.
There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2025, as compared to the critical accounting policies and estimates referred in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Critical Accounting Policies and Estimates” and Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
The following table summarizes our results of operations for the three months ended June 30, 2025 and 2024:
(dollars in millions)
Three months ended June 30, 2025
Percentage of Revenues, net
Three months ended June 30, 2024
Percentage of Revenues, net
Dollar Change
Percentage Change
(A)
(B)
(C=A-B)
Revenues, net
$
514.5
100.0
%
$
448.4
100.0
%
$
66.1
14.7
%
Cost of revenues (1)
320.3
62.3
%
282.1
62.9
%
38.2
13.5
%
Gross profit (1)
194.2
37.7
%
166.3
37.1
%
27.9
16.8
%
Operating expenses:
General and administrative expenses
59.5
11.6
%
56.5
12.6
%
3.0
5.5
%
Selling and marketing expenses
39.4
7.7
%
35.4
7.9
%
4.0
11.3
%
Depreciation and amortization expense
14.1
2.7
%
12.9
2.9
%
1.2
8.9
%
Total operating expenses
113.0
22.0
%
104.8
23.4
%
8.2
7.9
%
Income from operations
81.2
15.8
%
61.5
13.7
%
19.7
32.0
%
Foreign exchange gain, net
2.2
0.4
%
—
—
%
2.2
6041.7
%
Interest expense
(4.3)
(0.8)
%
(5.3)
(1.2)
%
1.0
(19.6)
%
Other income, net
5.7
1.1
%
3.5
0.8
%
2.2
59.7
%
Income before income tax expense and earnings from equity affiliates
84.8
16.5
%
59.7
13.3
%
25.1
41.9
%
Income tax expense
18.6
3.6
%
13.9
3.1
%
4.7
33.7
%
Income before earnings from equity affiliates
66.2
12.9
%
45.8
10.2
%
20.4
44.4
%
Loss from equity-method investment
(0.1)
—
%
—
—
%
(0.1)
—
%
Net income
$
66.1
12.8
%
$
45.8
10.2
%
$
20.3
44.1
%
(1) Exclusive of depreciation and amortization expense.
Due to rounding, the numbers presented in the tables included in this Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may not add up precisely to the totals provided.
Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024
Revenues
The following table summarizes our revenues by reportable segments:
Three months ended June 30,
Percentage change
Percentage of Total Revenues for the three months ended June 30,
2025
2024
Dollar change
2025
2024
(dollars in millions)
Insurance
$
172.2
$
158.5
$
13.7
8.7
%
33.5
%
35.3
%
Healthcare and Life Sciences
129.5
106.1
23.4
22.0
%
25.2
%
23.7
%
Banking, Capital Markets and Diversified Industries
121.1
104.6
16.5
15.8
%
23.5
%
23.3
%
International Growth Markets
91.7
79.2
12.5
15.8
%
17.8
%
17.7
%
Total revenues, net
$
514.5
$
448.4
$
66.1
14.7
%
100.0
%
100.0
%
Revenues for the three months ended June 30, 2025 were up by $66.1 million, or 14.7%, compared to the three months ended June 30, 2024, driven primarily by revenue growth from our new and existing clients in all of our reportable segments.
Revenue growth in Insurance of $13.7 million was primarily driven by expansion of business from our new and existing clients during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Revenue growth in Healthcare and Life Sciences of $23.4 million was primarily driven by the expansion of business from our new and existing clients, including incremental revenue from our August 2024 acquisition of Incandescent Technologies, Inc. (“ITI Data”) during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Revenue growth in Banking, Capital Markets and Diversified Industries of $16.5 million was primarily driven by expansion of business from our new and existing clients of $16.6 million, including incremental revenue from our August 2024 acquisition of ITI Data, partially offset by a foreign exchange loss of $0.1 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Revenue growth in International Growth Markets of $12.5 million was primarily driven by expansion of business from our new and existing clients of $11.9 million, including incremental revenue from our August 2024 acquisition of ITI Data and a foreign exchange gain, net of hedging of $0.6 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Cost of Revenues and Gross Margin: The following table sets forth cost of revenues and gross margin of our reportable segments:
Cost of Revenues
Gross Margin
Three months ended June 30,
Dollar change
Percentage change
Three months ended June 30,
Percentage change
2025
2024
2025
2024
(dollars in millions)
Insurance
$
112.3
$
104.5
$
7.8
7.5
%
34.8
%
34.0
%
0.8
%
Healthcare and Life Sciences
73.1
60.1
13.0
21.6
%
43.5
%
43.4
%
0.1
%
Banking, Capital Markets and Diversified Industries
75.4
65.3
10.1
15.5
%
37.8
%
37.6
%
0.2
%
International Growth Markets
59.5
52.2
7.3
13.9
%
35.1
%
34.1
%
1.0
%
Total
$
320.3
$
282.1
$
38.2
13.5
%
37.7
%
37.1
%
0.6
%
Cost of revenues for the three months ended June 30, 2025 increased by $38.2 million, or 13.5% compared to the three months ended June 30, 2024. The increase in cost of revenues was primarily due to increases in employee-related costs and
technology costs, partially offset by foreign exchange gain, net of hedging. Our gross margin for the three months ended June 30, 2025 was 37.7%, compared to 37.1% for the three months ended June 30, 2024, an increase of 60 basis points (“bps”) primarily driven by higher revenues and operational efficiencies, partially offset by increases in employee-related costs during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
The increase in cost of revenues in Insurance of $7.8 million for the three months ended June 30, 2025 was primarily due to increases in employee-related costs of $12.1 million on account of higher headcount and wage inflation, higher technology costs of $0.9 million and higher other operating costs of $0.4 million, partially offset by lower mail and data expenses in our direct marketing business of $4.6 million, and foreign exchange gain, net of hedging of $1.0 million. Gross margin in Insurance increased by 80 bps, primarily due to higher revenues and operational efficiencies during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
The increase in cost of revenues in Healthcare and Life Sciences of $13.0 million for the three months ended June 30, 2025 was primarily due to increases in employee-related costs of $11.9 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher facilities costs of $1.0 million and higher other operating costs of $0.7 million, partially offset by foreign exchange gain, net of hedging of $0.6 million. Gross margin in Healthcare and Life Sciences increased by 10 bps primarily due to higher volumes in certain existing clients during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
The increase in cost of revenues in Banking, Capital Markets and Diversified Industries of $10.1 million for the three months ended June 30, 2025 was primarily due to increases in employee-related costs of $9.0 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher technology costs of $0.6 million and higher other operating costs $1.1 million, partially offset by foreign exchange gain, net of hedging of $0.6 million. Gross margin in Banking, Capital Markets and Diversified Industries increased by 20 bps, primarily due to higher revenues and operational efficiencies during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
The increase in cost of revenues in International Growth Markets of $7.3 million for the three months ended June 30, 2025 was primarily due to increases in employee-related costs of $6.2 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher technology costs of $0.6 million and higher other operating costs $0.5 million. Gross margin in International Growth Markets increased by 100 bps, primarily due to higher revenues and operational efficiencies during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Selling, General and Administrative (“SG&A”) Expenses.
Three months ended June 30,
Dollar change
Percentage change
2025
2024
(dollars in millions)
General and administrative expenses
$
59.5
$
56.5
$
3.0
5.5
%
Selling and marketing expenses
39.4
35.4
4.0
11.3
%
Selling, general and administrative expenses
$
98.9
$
91.9
$
7.0
7.7
%
The increase in SG&A expenses of $7.0 million was primarily due to increases in employee-related costs of $8.2 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher investments in digital and generative AI capabilities of $1.0 million, higher sales and marketing costs of $0.5 million and foreign exchange loss, net of hedging of $0.4 million. This increase in SG&A was partially offset by one-time restructuring and litigation settlement costs of $3.1 million incurred during the three months ended June 30, 2024, compared to the three months ended June 30, 2025.
The increase in depreciation expense was $1.0 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to investments in infrastructure, technology assets and digital capabilities.
Income from Operations. Income from operations increased by $19.7 million, or 32.0%, from $61.5 million for the three months ended June 30, 2024 to $81.2 million for the three months ended June 30, 2025, primarily due to higher revenues and higher gross margins, partially offset by higher SG&A expenses during the three months ended June 30, 2025.
Foreign Exchange Gain, net. Foreign exchange gains and losses are primarily attributable to the movement of the U.S. dollar against the Indian rupee, the Philippine peso, the U.K. pound sterling and the South African rand during the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The average exchange rate of the U.S. dollar against the Indian rupee increased from 83.42 during the three months ended June 30, 2024 to 85.27 during the three months ended June 30, 2025. The average exchange rate of the U.S. dollar against the Philippine peso decreased from 58.29 during the three months ended June 30, 2024 to 55.97 during the three months ended June 30, 2025. The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.26 during the three months ended June 30, 2024 to 1.35 during the three months ended June 30, 2025. The average exchange rate of the U.S. dollar against the South African rand decreased from 18.53 during the three months ended June 30, 2024 to 18.12 during the three months ended June 30, 2025.
We recorded a foreign exchange gain, net of $2.2 million for the three months ended June 30, 2025 compared to a foreign exchange gain, net of $nil for the three months ended June 30, 2024.
Interest expense. Interest expense decreased from $5.3 million for the three months ended June 30, 2024 to $4.3 million for the three months ended June 30, 2025, primarily due to lower average borrowings and a lower effective interest rate of 5.8% during the three months ended June 30, 2025, compared to 6.5% to the three months ended June 30, 2024.
Other Income, net.
Three months ended June 30,
Change
Percentage change
2025
2024
(dollars in millions)
Gain on sale and fair value mark-to-market on investments
$
2.3
$
1.2
$
1.1
94.4
%
Interest and dividend income
2.7
2.4
0.3
12.9
%
Others, net
0.7
(0.1)
0.8
—
%
Other income, net
$
5.7
$
3.5
$
2.2
59.7
%
Other income, net increased from $3.5 million for the three months ended June 30, 2024 to $5.7 million for the three months ended June 30, 2025. The increase is primarily due to higher yield on our investments and reversal of certain contingent liabilities of $0.9 million that were no longer required during the three months ended June 30, 2025.
Income Tax Expense. The effective tax rate decreased from 23.2% during the three months ended June 30, 2024 to 21.9% during the three months ended June 30, 2025. We recorded income tax expense of $18.6 million and $13.9 million for the three months ended June 30, 2025 and 2024, respectively. The increase in income tax expense was primarily as a result of higher profit, partially offset by lower state taxes and higher excess tax benefits during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Net Income. Net income increased from $45.8 million for the three months ended June 30, 2024 to $66.1 million for the three months ended June 30, 2025, primarily due to higher in income from operations of $19.7 million, higher foreign exchange and other income, net of $2.2 million each and lower interest expense by $1.0 million. This was partially offset by higher income tax expense of $4.7 million.
The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024:
(dollars in millions)
Six months ended June 30, 2025
Percentage of Revenues, net
Six months ended June 30, 2024
Percentage of Revenues, net
Dollar Change
Percentage Change
(A)
(B)
(C=A-B)
Revenues, net
$
1,015.5
100.0
%
$
884.9
100.0
%
$
130.6
14.8
%
Cost of revenues (1)
628.0
61.8
%
555.5
62.8
%
72.5
13.0
%
Gross profit (1)
387.5
38.2
%
329.4
37.2
%
58.1
17.7
%
Operating expenses:
General and administrative expenses
119.0
11.7
%
109.7
12.4
%
9.3
8.4
%
Selling and marketing expenses
81.4
8.0
%
71.4
8.1
%
10.0
13.9
%
Depreciation and amortization expense
27.6
2.7
%
25.3
2.9
%
2.3
9.3
%
Total operating expenses
228.0
22.4
%
206.4
23.3
%
21.6
10.5
%
Income from operations
159.5
15.7
%
123.0
13.9
%
36.5
29.7
%
Foreign exchange gain, net
3.4
0.3
%
0.4
—
%
3.0
761.5
%
Interest expense
(8.4)
(0.8)
%
(8.6)
(1.0)
%
0.2
(2.2)
%
Other income, net
10.4
1.0
%
7.4
0.8
%
3.0
38.3
%
Income before income tax expense and earnings from equity affiliates
164.9
16.2
%
122.2
13.8
%
42.7
34.9
%
Income tax expense
32.0
3.2
%
27.6
3.1
%
4.4
16.0
%
Income before earnings from equity affiliates
132.9
13.1
%
94.6
10.7
%
38.3
40.4
%
Loss from equity-method investment
(0.3)
—
%
—
—
%
(0.3)
575.7
%
Net income
$
132.6
13.1
%
$
94.6
10.7
%
$
38.0
40.2
%
(1) Exclusive of depreciation and amortization expense.
Due to rounding, the numbers presented in the tables included in this Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may not add up precisely to the totals provided.
Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Revenues
The following table summarizes our revenues by reportable segments:
Six months ended June 30,
Percentage change
Percentage of Total Revenues for the six months ended June 30,
2025
2024
Dollar change
2025
2024
(dollars in millions)
Insurance
$
344.2
$
316.7
$
27.5
8.7
%
33.9
%
35.8
%
Healthcare and Life Sciences
255.1
206.8
48.3
23.4
%
25.1
%
23.4
%
Banking, Capital Markets and Diversified Industries
238.8
207.9
30.9
14.9
%
23.5
%
23.5
%
International Growth Markets
177.4
153.5
23.9
15.5
%
17.5
%
17.3
%
Total revenues, net
$
1,015.5
$
884.9
$
130.6
14.8
%
100.0
%
100.0
%
Revenues for the six months ended June 30, 2025 were up by $130.6 million, or 14.8%, compared to the six months ended June 30, 2024, driven primarily by revenue growth from our new and existing clients in all of our reportable segments.
Revenue growth in Insurance of $27.5 million was primarily driven by expansion of business from our new and existing clients during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Revenue growth in Healthcare and Life Sciences of $48.3 million was primarily driven by the expansion of business from our new and existing clients, including incremental revenue from our August 2024 acquisition of ITI Data during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Revenue growth in Banking, Capital Markets and Diversified Industries of $30.9 million was primarily driven by expansion of business from our new and existing clients of $31.2 million, including incremental revenue from our August 2024 acquisition of ITI Data, partially offset by a foreign exchange loss of $0.3 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Revenue growth in International Growth Markets of $23.9 million was primarily driven by expansion of business from our new and existing clients of $24.5 million, including incremental revenue from our August 2024 acquisition of ITI Data, partially offset by a foreign exchange loss, net of hedging of $0.6 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Cost of Revenues and Gross Margin: The following table sets forth cost of revenues and gross margin of our reportable segments:
Cost of Revenues
Gross Margin
Six months ended June 30,
Dollar change
Percentage change
Six months ended June 30,
Percentage change
2025
2024
2025
2024
(dollars in millions)
Insurance
$
221.5
$
209.2
$
12.3
5.8
%
35.7
%
33.9
%
1.8
%
Healthcare and Life Sciences
143.6
115.2
28.4
24.7
%
43.7
%
44.3
%
(0.6)
%
Banking, Capital Markets and Diversified Industries
Cost of revenues for the six months ended June 30, 2025 increased by $72.5 million, or 13.0%, compared to the six months ended June 30, 2024. The increase in cost of revenues was primarily due to increases in employee-related costs and technology costs, partially offset by foreign exchange gain, net of hedging. Our gross margin for the six months ended June 30, 2025 was 38.2% compared to 37.2% for the six months ended June 30, 2024, an increase of 100 bps primarily driven by higher revenues and operational efficiencies, partially offset by increases in employee-related costs during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
The increase in cost of revenues in Insurance of $12.3 million for the six months ended June 30, 2025 was primarily due to increases in employee-related costs of $22.8 million on account of higher headcount and wage inflation, higher technology costs of $1.8 million, partially offset by lower mail and data expenses in our direct marketing business of $9.0 million, other operating costs of $0.9 million and foreign exchange gain, net of hedging of $2.4 million. Gross margin in Insurance increased by 180 bps, primarily due to higher revenues and operational efficiencies during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
The increase in cost of revenues in Healthcare and Life Sciences of $28.4 million for the six months ended June 30, 2025 was primarily due to increases in employee-related costs of $26.2 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher facilities costs of $1.2 million, higher technology costs of $1.3 million, and higher other operating costs of $1.3 million, partially offset by foreign exchange gain, net of hedging of $1.6 million. Gross margin in Healthcare and Life Sciences decreased by 60 bps, primarily due to lower volumes in certain existing clients during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
The increase in cost of revenues in Banking, Capital Markets and Diversified Industries of $17.9 million for the six months ended June 30, 2025 was primarily due to increases in employee-related costs of $16.3 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher facilities costs of $1.1 million, higher technology costs of $1.1 million, and higher other operating costs of $1.1 million, partially offset by foreign exchange gain, net of hedging of $1.7 million. Gross margin in Banking, Capital Markets and Diversified Industries increased by 70 bps, primarily due to higher revenues and operational efficiencies during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
The increase in cost of revenues in International Growth Markets of $13.9 million for the six months ended June 30, 2025 was primarily due to increases in employee-related costs of $12.5 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher technology costs of $1.7 million, and higher other operating costs of $0.7 million, partially offset by foreign exchange gain, net of hedging of $1.0 million. Gross margin in International Growth Markets increased by 100 bps during the six months ended June 30, 2025, primarily due to higher revenues and operational efficiencies during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Selling, General and Administrative (“SG&A”) Expenses.
Six months ended June 30,
Percentage change
2025
2024
Dollar change
(dollars in millions)
General and administrative expenses
$
119.0
$
109.7
$
9.3
8.4
%
Selling and marketing expenses
81.4
71.4
10.0
13.9
%
Selling, general and administrative expenses
$
200.4
$
181.1
$
19.3
10.6
%
The increase in SG&A expenses of $19.3 million was primarily due to increases in employee-related costs of $18.0 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher investments in digital and generative AI capabilities of $1.6 million, higher sales and marketing costs of $0.9 million and higher other operating costs of $1.9 million. This increase in SG&A was partially offset by one-time restructuring and litigation settlement costs of $3.1 million incurred during the six months ended June 30, 2024, compared to the six months ended June 30, 2025.
The increase in depreciation expense was $2.0 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to investments in infrastructure, technology assets and digital capabilities.
Income from Operations. Income from operations increased by $36.5 million, or 29.7%, from $123.0 million for the six months ended June 30, 2024 to $159.5 million for the six months ended June 30, 2025, primarily due to higher revenues and higher gross margins, partially offset by higher SG&A expenses during the six months ended June 30, 2025.
Foreign Exchange Gain, net. Foreign exchange gains and losses are primarily attributable to the movement of the U.S. dollar against the Indian rupee, the Philippine peso, the U.K. pound sterling and the South African rand during the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The average exchange rate of the U.S. dollar against the Indian rupee increased from 83.27 during the six months ended June 30, 2024 to 85.90 during the six months ended June 30, 2025. The average exchange rate of the U.S. dollar against the Philippine peso decreased from 57.27 during the six months ended June 30, 2024 to 56.91 during the six months ended June 30, 2025. The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.26 during the six months ended June 30, 2024 to 1.31 during the six months ended June 30, 2025. The average exchange rate of the U.S. dollar against the South African rand decreased from 18.74 during the six months ended June 30, 2024 to 18.30 during the six months ended June 30, 2025.
We recorded a foreign exchange gain, net of $3.4 million for the six months ended June 30, 2025 compared to a foreign exchange gain, net of $0.4 million for the six months ended June 30, 2024.
Interest expense. Interest expense decreased from $8.6 million for the six months ended June 30, 2024 to $8.4 million for the six months ended June 30, 2025, primarily due to a lower effective interest rate of 5.8% during the six months ended June 30, 2025, compared to 6.6% to the six months ended June 30, 2024.
Other Income, net.
Six months ended June 30,
Percentage change
2025
2024
Change
Gain on sale and fair value mark-to-market on investments
$
4.2
$
2.2
$
2.0
93.2
%
Interest and dividend income
5.3
4.7
0.6
13.9
%
Fair value changes of contingent consideration
—
0.6
(0.6)
(100.0)
%
Others, net
0.9
(0.1)
1.0
–
%
Other income, net
$
10.4
$
7.4
$
3.0
38.3
%
Other income, net increased from $7.4 million for the six months ended June 30, 2024 to $10.4 million for the six months ended June 30, 2025. The increase is primarily due to higher yield on our investments and reversal of certain contingent liabilities of $0.9 million that were no longer required during the six months ended June 30, 2025, partially offset by reversal of contingent consideration liability of $0.6 million related to our June 2022 acquisition of Inbound Media Group, LLC during the six months ended June 30, 2024.
Income Tax Expense. The effective tax rate decreased from 22.6% during the six months ended June 30, 2024 to 19.5% during the six months ended June 30, 2025. We recorded income tax expense of $32.0 million and $27.6 million for the six months ended June 30, 2025 and 2024, respectively. The increase in income tax expense was primarily driven by higher profit and an increase in non-deductible expenses, partially offset by lower state taxes and higher excess tax benefits during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Net Income. Net income increased from $94.6 million for the six months ended June 30, 2024 to $132.6 million for the six months ended June 30, 2025, primarily due to increases in income from operations of $36.5 million, higher foreign exchange and other income, net of $3.0 million each and lower interest expense by $0.2 million, partially offset by lower income tax expense of $4.4 million and loss from equity-method investment of $0.3 million.
Opening cash, cash equivalents and restricted cash
$
171.4
$
141.0
$
30.4
21.5
%
Net cash provided by operating activities
112.6
53.0
59.6
112.3
%
Net cash used for investing activities
(36.3)
(43.2)
6.9
(16.1)
%
Net cash used for financing activities
(84.6)
(27.3)
(57.3)
209.7
%
Effect of exchange rate changes
7.4
(1.8)
9.2
(498.4)
%
Closing cash, cash equivalents and restricted cash
$
170.5
$
121.7
$
48.8
40.2
%
As of June 30, 2025 and December 31, 2024, we had $353.3 million and $340.6 million, respectively, in cash, cash equivalents and short-term investments, of which $315.7 million and $296.0 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes. We periodically evaluate opportunities to distribute cash among our group entities to fund our operations, expand our business and make strategic acquisitions in the United States and other geographies, and as and when we decide to distribute, we may have to accrue additional taxes in accordance with local tax laws, rules and regulations in the relevant foreign jurisdictions.
Operating Activities: Net cash provided by operating activities was $112.6 million during the six months ended June 30, 2025, compared to $53.0 million during six months ended June 30, 2024, reflecting higher cash earnings and lower working capital needs. The major drivers contributing to the increase of $59.6 million year-over-year included the following:
•An increase in cash earnings including adjustments for non-cash and other items contributed higher cash flow of $44.0 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024. These adjustments include fair value changes in investments, unrealized foreign currency exchange (gain)/loss, net, stock-based employee compensation, depreciation and amortization of long-lived assets and intangibles acquired in business combinations, among others.
•Changes in accounts receivable, including advance billings, contributed lower cash flow of $19.0 million in the six months ended June 30, 2025, compared to the six months ended June 30, 2024. Collections in accounts receivable, including advance billings, was driven by revenue growth during the six months ended June 30, 2025. Our days sales outstanding were 64 days as of June 30, 2025, compared to 63 days as of June 30, 2024.
•Payment of contingent consideration related to our December 2021 acquisition of Clairvoyant AI, Inc. (“Clairvoyant”) during the six months ended June 30, 2024 contributed to a higher cash payout of $11.0 million, whereas no such payment occurred during the six months ended June 30, 2025.
•Changes in other assets, accounts payables including other liabilities contributed to a lower cash payouts of $23.6 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Investing Activities: Net cash used for investing activities was $36.3 million for the six months ended June 30, 2025, compared to $43.2 million for the six months ended June 30, 2024. The decrease of $6.9 million was primarily due to lower net purchase of investments of $11.5 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024. This was partially offset by higher cash paid for capital expenditures, including investments in infrastructure, technology assets and digital capabilities of $4.0 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Financing Activities: Net cash used for financing activities was $84.6 million during the six months ended June 30, 2025, compared to $27.3 million during the six months ended June 30, 2024. The increase of $57.3 million was primarily due to net repayments of borrowings of $28.5 million during the six months ended June 30, 2025, compared to net proceeds from borrowings of $135.0 million during the six months ended June 30, 2024. This was partially offset by lower purchases of treasury stock of $101.0 million under our share repurchase programs during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
We expect to use cash from operating activities to maintain and expand our business by making investments, primarily related to building new digital capabilities, including AI and purchase telecommunications equipment and computer hardware and software in connection with managing client operations.
We incurred $27.4 million of capital expenditures during the six months ended June 30, 2025. We expect to incur total capital expenditures of between $50.0 million to $55.0 million in fiscal 2025, primarily to meet our growth requirements, including additions to our facilities and infrastructure, as well as investments in technology applications, product development, and other digital technologies.
In connection with any tax assessment orders that have been issued, or may be issued against us or our subsidiaries, we may be required to deposit additional amounts with the relevant authorities with respect to such assessment orders. See Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for further details.
We believe that our existing cash, cash equivalents and short-term investments and sources of liquidity will be sufficient to satisfy our cash requirements over the next 12 months. Our future cash requirements will depend on many factors, including our rate of revenue growth, our investments in strategic initiatives like acquisition of complementary businesses, capital expenditures and continued stock repurchases, including accelerated stock repurchase under our board-authorized stock repurchase program, which may require the use of significant cash resources and/or additional financing. We anticipate that we will continue to rely upon cash from operating activities to finance most of our above-mentioned requirements, although if we have significant growth through acquisitions, we may need to obtain additional financing.
Subsequent to the end of the second quarter of 2025, on July 29, 2025, we entered into an Accelerated Share Repurchase Agreement with Citibank to repurchase shares of our common stock for an aggregate purchase price of $125 million, as part of our previously announced 2024 Repurchase Program of $500 million. We plan to fund the repurchase with available cash on hand and/or borrowings from our credit facility.
In the ordinary course of business, we enter into contracts and commitments that obligate us to make payments in the future. These obligations include borrowings, including interest obligations, purchase commitments, operating and finance lease commitments, employee benefit payments under gratuity plans, payments for contingent consideration and uncertain tax positions. See Note 16 - Fair Value Measurements - Fair Value of Contingent Consideration, Note 18 - Borrowings, Note 20 - Employee Benefit Plans, Note 21 - Leases, Note 22 - Income Taxes and Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for further information on material cash requirements from known contractual and other obligations.
In the ordinary course of business, we provide standby letters of credit to third parties primarily for facility leases. As of June 30, 2025 and December 31, 2024, we had outstanding letters of credit of $0.7 million and $0.8 million respectively, that were not recognized in our consolidated balance sheets. These are unlikely to have, a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. We had no other off-balance sheet arrangements or obligations.
As of June 30, 2025 and December 31, 2024, we were in compliance with the financial covenants under our credit agreement with certain lenders and Citibank N.A. as administrative agent. See Note 18 – Borrowings to our unaudited consolidated financial statements.
Recent Accounting Pronouncements
For a description of recent accounting pronouncements, see Note 2 - Summary of Significant Accounting Policies - Recent Accounting Pronouncements to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements.”
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
During the six months ended June 30, 2025, there were no material changes in our market risk exposure. For a discussion of our market risk associated with exchange rate risk and interest rate risk, see Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), to allow timely decisions regarding required disclosure. In connection with the preparation of this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of the CEO and CFO, of the effectiveness and operation of our disclosure controls and procedures as of June 30, 2025. Based upon that evaluation, our CEO and CFO have concluded that the Company’s disclosure controls and procedures, as of June 30, 2025, were effective.
Changes in Internal Control over Financial Reporting
During the three months ended June 30, 2025, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
In the course of our normal business activities, various lawsuits, claims and proceedings may be instituted or asserted against us. Although there can be no assurance, we believe that the disposition of matters currently instituted or asserted will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. See Note 25 - Commitments and Contingenciesto our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for details regarding our tax proceedings.
ITEM 1A. Risk Factors
We have disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, a number of risks which may materially affect our business, financial condition or results of operations. You should carefully consider those risk factors and the other information set forth elsewhere in this Quarterly Report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us may also materially adversely affect our business, financial condition and/or results of operations.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended June 30, 2025, purchases of common stock were as follows:
Shares Purchased from Employees in connection with satisfaction of Withholding Tax Obligations
Shares Purchased as Part of Publicly Announced Programs
Total Number of Shares Purchased
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
Period
Number of Shares Purchased
Average Price Paid per share
Number of Shares Purchased
Average Price Paid per share
April 1, 2025 through April 30, 2025
—
$
—
—
$
—
—
$
314,847,451
May 1, 2025 through May 31, 2025
—
$
—
426,500
$
46.18
426,500
$
295,151,177
June 1, 2025 through June 30, 2025
—
$
—
479,650
$
45.98
479,650
$
273,095,473
Total
—
$
—
906,150
$
46.08
906,150
$
—
On February 26, 2024, the Company’s board of directors authorized a $500 million (excluding excise tax) common stock repurchase program beginning March 1, 2024 (the “2024 Repurchase Program”).
Under our repurchase program, shares may be purchased by us from time to time from the open market and through private transactions, or otherwise, as determined by our management as market conditions warrant. We have structured open market purchases under our repurchase program to comply with Rule 10b-18 under the Exchange Act. Repurchases may be discontinued at any time by management. Repurchased shares are recorded as treasury shares and are held until our board of directors designates that these shares be retired or used for other purposes.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information
Rule 10b5-1 Trading Plans
During the three months ended June 30, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*This exhibit will not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
60
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: July 29, 2025
EXLSERVICE HOLDINGS, INC.
By:
/S/ MAURIZIO NICOLELLI
MAURIZIO NICOLELLI Chief Financial Officer (Duly Authorized Signatory, Principal Financial and Accounting Officer)