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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________________________________
FORM 10-Q
_________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM                      TO                     
COMMISSION FILE NUMBER 001-33089
_________________________________________________________
EXLSERVICE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
_________________________________________________________
Delaware 82-0572194
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
320 Park Avenue,29th Floor, 
New York,New York10022
(Address of principal executive offices) (Zip code)
(212) 277-7100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:Trading symbol(s)Name of Each Exchange on Which Registered:
Common Stock, par value $0.001 per share EXLSNASDAQ
Securities registered pursuant to Section 12(g) of the Act:
None
________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.   Yes      No  

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer  Accelerated filer 
Non-accelerated filer  Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of April 30, 2024, there were 162,438,150 shares of the registrant’s common stock outstanding, par value $0.001 per share.
1

TABLE OF CONTENTS
  PAGE
ITEM
1.
FINANCIAL STATEMENTS (UNAUDITED)
2.
3.
4.
1.
1A.
2.
3.
4.
5.
6.

2

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EXLSERVICE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except per share amount and share count)
As of
NotesMarch 31, 2024December 31, 2023
Assets
Current assets:
Cash and cash equivalents7$108,565 $136,953 
Short-term investments8137,585 153,881 
Restricted cash74,291 4,062 
Accounts receivable, net 4335,523 308,108 
Other current assets1178,753 76,669 
Total current assets664,717 679,673 
Property and equipment, net 9101,622 100,373 
Operating lease right-of-use assets2166,799 64,856 
Restricted cash74,376 4,386 
Deferred tax assets, net2291,840 82,927 
Goodwill10405,574 405,639 
Other intangible assets, net 1047,080 50,164 
Long-term investments84,404 4,430 
Other assets1252,979 49,524 
Total assets$1,439,391 $1,441,972 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$3,093 $5,055 
Current portion of long-term borrowings1865,000 65,000 
Deferred revenue16,939 12,318 
Accrued employee costs50,970 117,137 
Accrued expenses and other current liabilities13107,059 112,900 
Current portion of operating lease liabilities2113,486 12,780 
Income taxes payable, net224,894 1,213 
Total current liabilities261,441 326,403 
Long-term borrowings, less current portion18280,000 135,000 
Operating lease liabilities, less current portion2159,876 58,175 
Deferred tax liabilities, net221,435 1,495 
Other non-current liabilities1433,384 31,462 
Total liabilities636,136 552,535 
Commitments and contingencies25
ExlService Holdings, Inc. 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, 204,734,988 shares issued and 162,425,610 shares outstanding as of March 31, 2024 and 203,410,038 shares issued and 165,277,880 shares outstanding as of December 31, 2023
19204 203 
Additional paid-in capital502,827 508,028 
Retained earnings1,132,426 1,083,663 
Accumulated other comprehensive loss15(130,436)(127,040)
Total including shares held in treasury1,505,021 1,464,854 
3

Less: 42,309,378 shares as of March 31, 2024 and 38,132,158 shares as of December 31, 2023, held in treasury, at cost
19(701,766)(575,417)
Total stockholders’ equity803,255 889,437 
Total liabilities and stockholders’ equity $1,439,391 $1,441,972 

See accompanying notes to unaudited consolidated financial statements.
4

EXLSERVICE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share amount and share count)

Three months ended March 31,
Notes20242023
Revenues, net3, 4$436,507    $400,643 
Cost of revenues (1)
273,424    251,469 
Gross profit (1)
163,083 149,174 
Operating expenses:   
General and administrative expenses53,243    46,746 
Selling and marketing expenses35,970    29,493 
Depreciation and amortization expense9, 1012,346    13,487 
Total operating expenses101,559 89,726 
Income from operations61,524    59,448 
Foreign exchange gain, net359    105 
Interest expense18(3,291)(3,385)
Other income, net63,952    3,155 
Income before income tax expense and earnings from equity affiliates62,544 59,323 
Income tax expense2213,753    8,058 
Income before earnings from equity affiliates48,791 51,265 
Gain/(loss) from equity-method investment(28)66 
Net income attributable to ExlService Holdings, Inc. stockholders$48,763 $51,331 
Earnings per share attributable to ExlService Holdings, Inc. stockholders (2):
5   
Basic$0.30    $0.31 
Diluted$0.29 $0.30 
Weighted average number of shares used in computing earnings per share attributable to ExlService Holdings, Inc. stockholders (2):
5
Basic165,082,387    167,197,820 
Diluted166,726,853    169,657,400 

(1) Exclusive of depreciation and amortization expense.
(2) Prior period information has been adjusted to reflect the 5-for-1 forward stock split of the Company’s common stock effected in August 2023. Refer to Note 19 – Capital Structure to the unaudited consolidated financial statements for further details.







See accompanying notes to unaudited consolidated financial statements.
5

EXLSERVICE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(In thousands)
Three months ended March 31,
Notes20242023
Net income$48,763 $51,331 
 Other comprehensive income/(loss):
Unrealized gain/(loss) on cash flow hedges17(62)7,294 
Currency translation adjustments(3,064)5,313 
   Reclassification adjustments:
(Gain)/loss on cash flow hedges(1)
17(443)3,065 
Retirement benefits(2)
20(155)(25)
Income tax effects relating to above(3)
22328 (2,991)
  Total other comprehensive income/(loss)(3,396)12,656 
Total comprehensive income$45,367 $63,987 

(1)These are reclassified to net income and are included in cost of revenues, operating expenses and interest expense, as applicable in the unaudited consolidated statements of income.
(2)These are reclassified to net income and are included in other income, net in the unaudited consolidated statements of income.
(3)These are income tax effects recognized on cash flow hedges, retirement benefits and currency translation adjustments.


See accompanying notes to unaudited consolidated financial statements.


6


EXLSERVICE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
For the three months ended March 31, 2024 and 2023
(In thousands, except share count)
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income/(loss)Treasury StockTotal
NotesSharesAmountShares
Amount (2)
Balance as of January 1, 2024203,410,038 $203 $508,028 $1,083,663 $(127,040)(38,132,158)$(575,417)$889,437 
Stock issued against stock-based compensation plans231,324,950 1 1,947 — — — — 1,948 
Stock-based compensation23— — 17,852 — — — — 17,852 
Acquisition of treasury stock19— — — — — (4,177,220)(126,349)(126,349)
Accelerated share repurchase5, 19— — (25,000)— — — — (25,000)
Other comprehensive income15— — — — (3,396)— — (3,396)
Net income— — — 48,763 — — — 48,763 
Balance as of March 31, 2024204,734,988 $204 $502,827 $1,132,426 $(130,436)(42,309,378)$(701,766)$803,255 
Common Stock (1)
Additional Paid-in Capital (1)
Retained EarningsAccumulated Other Comprehensive Income/(loss)Treasury StockTotal
NotesSharesAmount
Shares (1)
Amount
Balance as of January 1, 2023199,939,880 $200 $444,948 $899,105 $(144,143)(33,767,660)$(441,931)$758,179 
Stock issued against stock-based compensation plans231,731,960 2 1,010 — — — — 1,012 
Stock-based compensation23— — 14,407 — — — — 14,407 
Acquisition of treasury stock19— — — — — (1,296,905)(42,363)(42,363)
Other comprehensive income15— — — — 12,656 — — 12,656 
Net income— — — 51,331 — — — 51,331 
Balance as of March 31, 2023201,671,840 $202 $460,365 $950,436 $(131,487)(35,064,565)$(484,294)$795,222 
(1) Prior period information has been adjusted to reflect the 5-for-1 forward stock split of the Company’s common stock effected in August 2023. Refer to Note 19 – Capital Structure to the unaudited consolidated financial statements for further details.

(2) Inclusive of excise tax for the three months ended March 31, 2024. Refer to Note 19 – Capital Structure to the unaudited consolidated financial statements for further details.


See accompanying notes to unaudited consolidated financial statements.
7

EXLSERVICE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Three months ended March 31,
20242023
Cash flows from operating activities:
Net income$48,763 $51,331 
Adjustments to reconcile net income to net cash provided by/(used for) operating activities:
Depreciation and amortization expense12,337 13,408 
Stock-based compensation expense17,852 14,407 
Reduction in the carrying amount of operating lease right-of-use assets4,995 4,883 
Fair value mark-to-market of investments353 8,186 
Unrealized foreign currency exchange (gain)/loss, net(274)2,814 
Deferred income tax benefit(8,680)(9,444)
(Reversal)/allowance for expected credit losses(240)342 
Fair value changes in contingent consideration(589) 
Others, net376 1,160 
Change in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable(27,578)(30,896)
Other current assets(11,394)(6,046)
Income taxes payable, net11,443 7,883 
Other assets(3,575)(4,172)
Accounts payable(1,936)(4,445)
Deferred revenue 5,829 2,451 
Accrued employee costs(64,246)(57,315)
Accrued expenses and other liabilities10,307 26,931 
Operating lease liabilities(4,616)(5,453)
Payment of contingent consideration(11,000) 
Net cash (used for)/provided by operating activities(21,873)16,025 
Cash flows from investing activities:
Purchases of property and equipment(11,266)(12,479)
Proceeds from sale of property and equipment62 565 
Purchases of investments(64,932)(51,495)
Proceeds from redemption of investments80,825 106,750 
Net cash provided by investing activities4,689 43,341 
Cash flows from financing activities:
Principal payments of finance lease liabilities(60)(43)
Proceeds from borrowings180,000 50,000 
Repayments of borrowings(35,000)(100,000)
Payment of contingent consideration(4,000) 
Acquisition of treasury stock(152,227)(42,363)
Proceeds from issuance of common stock1,514 1,102 
Net cash used for financing activities(9,773)(91,304)
Effect of exchange rate changes(1,212)1,282 
Net decrease in cash, cash equivalents and restricted cash(28,169)(30,656)
Cash, cash equivalents and restricted cash at the beginning of the period145,401 125,621 
Cash, cash equivalents and restricted cash at the end of the period$117,232 $94,965 
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest$2,971 $3,325 
Income taxes$11,122 $6,525 
Supplemental disclosure of non-cash investing and financing activities:
Additions to property and equipment not yet paid$3,381 $3,827 
Assets acquired under finance lease$287 $99 

See accompanying notes to unaudited consolidated financial statements.
8


EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024
(In thousands, except per share amount and share count)

1. Organization
ExlService Holdings, Inc. (“ExlService Holdings”) is organized as a corporation under the laws of the State of Delaware. ExlService Holdings, together with its subsidiaries and affiliates (collectively, the “Company”), is a leading data analytics and digital operations and solutions company. The Company partners with clients using a data and AI-led approach to reinvent business models, drive better business outcomes and unlock growth with speed. The Company harnesses the power of data, analytics, artificial intelligence (“AI”), and deep industry knowledge to transform operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media and retail, among others.
The Company’s clients are located principally in the United States of America (“U.S.”) and the United Kingdom (“U.K.”).
2. Summary of Significant Accounting Policies
(a)Basis of Preparation and Principles of Consolidation
The unaudited consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
The unaudited consolidated financial statements reflect all adjustments (of a normal and recurring nature) that management considers necessary for a fair presentation of such statements for the interim periods presented. The unaudited consolidated statements of income for the interim periods presented are not necessarily indicative of the results for the full year or for any subsequent period.

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

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

Accounting policies of the respective individual subsidiaries and equity affiliates are aligned wherever necessary, so as to ensure consistency with the accounting policies that are adopted by the Company under U.S. GAAP.
(b)Use of Estimates
The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities included in the unaudited consolidated financial statements. Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from those estimates. The significant estimates that affect the unaudited consolidated financial statements include, but are not limited to, estimates of the fair value of the identifiable intangible assets and contingent consideration, purchase price allocation, including revenue projections and the discount rate applied within the discounted cash flow model for business acquisitions, credit risk of customers, the nature and
9

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EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)
timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, and variable consideration in a customer contract, expected recoverability from customers with contingent fee arrangements, estimated costs to complete fixed price contracts, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments and stock-based awards, and useful life of long-lived assets and other intangible assets. The significant assumptions underneath these estimates include, but are not limited to assumptions to calculate stock-based compensation expense, determine incremental borrowing rate to calculate lease liabilities and right-of-use (“ROU”) assets, determine lease term to calculate single operating lease cost, determine pattern of generation of economic benefits to calculate depreciation and amortization for long-lived assets and other intangible assets, and recoverability of long-lived assets, goodwill and other intangible assets.
(c) Recent Accounting Pronouncements

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

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

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

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 718. The ASU will be effective for annual periods beginning after December 15, 2024, including interim periods within those years. The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements.

In March 2024, FASB issued ASU No. 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements. This ASU contains amendments to the ASC that remove references to various FASB Concepts Statements. The ASU will be effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements.


10

Table of Contents
EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)
(d) Recently adopted Accounting Pronouncements
In March 2023, FASB issued ASU No. 2023-01, Leases (“ASC Topic 842”): Common Control Arrangements. This ASU provides guidance in ASC Topic 842 that leasehold improvements associated with common control leases should be (i) amortized by the lessee over the useful life of the leasehold improvements to the common control group, regardless of the lease term, as long as the lessee controls the use of the underlying asset through a lease, and (ii) accounted for as a transfer between entities under common control through an adjustment to equity if and when the lessee no longer controls the use of the underlying asset. The ASU is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted for both interim and annual financial statements that have not yet been issued. When adopted in an interim period, it must be adopted from the beginning of the year that includes that interim period. The Company does not have any lease arrangements with entities under common control and the adoption of this ASU did not have a material impact on its unaudited consolidated financial statements.
3. Segment and Geographical Information
The Company is a provider of data analytics and digital operations and solutions.
The Company manages and reports financial information through its four reportable segments: Insurance, Healthcare, Analytics and Emerging Business, which reflects how management reviews financial information and makes operating decisions. These business units develop client-specific solutions, build capabilities, maintain a unified go-to-market approach and are integrally responsible for service delivery, customer satisfaction, growth and profitability.
The CODM generally reviews financial information such as revenues, cost of revenues and gross profit, disaggregated by the operating segments to allocate an overall budget among the operating segments.
The Company does not allocate and therefore the CODM does not evaluate, certain operating expenses, interest expense or income taxes by segment. Many of the Company’s assets are shared by multiple operating segments. The Company manages these assets on a total Company basis, not by operating segment, and therefore asset information and capital expenditures by operating segment are not presented.
Revenues and cost of revenues for the three months ended March 31, 2024 and 2023, respectively, for each of the reportable segments, are as follows:
Three months ended March 31, 2024
InsuranceHealthcareEmerging BusinessAnalyticsTotal
Revenues, net$145,139 $26,250 $74,392 $190,726 $436,507 
Cost of revenues(1)
92,292 17,317 40,979 122,836 273,424 
Gross profit(1)
$52,847 $8,933 $33,413 $67,890 $163,083 
Operating expenses101,559 
Foreign exchange gain, net, interest expense and other income, net1,020 
Income tax expense13,753 
Loss from equity-method investment(28)
Net income$48,763 
(1) Exclusive of depreciation and amortization expense.
11

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EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)
Three months ended March 31, 2023
InsuranceHealthcareEmerging BusinessAnalyticsTotal
Revenues, net$125,937 $26,703 $66,161 $181,842 $400,643 
Cost of revenues(1)
82,324 18,809 35,970 114,366 251,469 
Gross profit(1)
$43,613 $7,894 $30,191 $67,476 $149,174 
Operating expenses89,726 
Foreign exchange gain, net, interest expense and other income, net(125)
Income tax expense8,058 
Gain from equity-method investment66 
Net income$51,331 
(1) Exclusive of depreciation and amortization expense.
Revenues, net by service type, were as follows:
Three months ended March 31,
20242023
Digital operations and solutions(1)
$245,781 $218,801 
Analytics services190,726 181,842 
Revenues, net$436,507 $400,643 
(1) Digital operations and solutions include revenues of the Company’s Insurance, Healthcare and Emerging Business reportable segments. Refer to the reportable segment disclosure above.
The Company attributes the revenues to regions based upon the location of its customers.
 Three months ended March 31,
 20242023
Revenues, net
The United States$362,306 $339,073 
Non-United States
     The United Kingdom50,402 41,574 
     Rest of World23,799 19,996 
Total Non-United States74,201 61,570 
Revenues, net$436,507 $400,643 






12

Table of Contents
EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)
Long-lived assets by geographic area, which consist of property and equipment, net and operating lease ROU assets were as follows:
As of
March 31, 2024December 31, 2023
Long-lived assets
The United States$60,177 $61,592 
India54,601 53,813 
The Philippines24,455 21,952 
South Africa22,588 20,890 
Rest of World6,600 6,982 
Long-lived assets$168,421 $165,229 

4. Revenues, net and Accounts Receivable, net
Refer to Note 3 - Segment and Geographical Information to the unaudited consolidated financial statements for revenues disaggregated by reportable segments and geography.
Contract balances
The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers:
As of
March 31, 2024December 31, 2023
Accounts receivable, net$335,523 $308,108 
Contract assets$10,063 $9,665 
Contract liabilities:
    Deferred revenue (consideration received in advance)$14,251 $9,764 
 Consideration received for process transition activities$14,026 $12,411 
Accounts receivable includes $170,386 and $148,735 as of March 31, 2024 and December 31, 2023, respectively, representing unbilled receivables. The Company has accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers and considers no significant performance risk associated with its unbilled receivables.
There was no significant impairment of contract assets as of March 31, 2024 and December 31, 2023.
Revenue recognized during the three months ended March 31, 2024 and 2023, which was included in the contract liabilities balance at the beginning of the respective periods:
Three months ended March 31,
20242023
Deferred revenue (consideration received in advance)
$7,061 $13,002 
Consideration received for process transition activities
$632 $703 


13

Table of Contents
EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)
Contract acquisition and fulfillment costs
The following table provides details of the Company’s contract acquisition and fulfillment costs:
Contract Acquisition CostsContract Fulfillment Costs
Three months endedYear endedThree months endedYear ended
March 31, 2024March 31, 2023December 31, 2023March 31, 2024March 31, 2023December 31, 2023
Opening Balance$2,122 $1,095 $1,095 $24,673 $13,871 $13,871 
Additions7 1,079 1,841 3,326 4,618 13,605 
Amortization(228)(180)(814)(712)(616)(2,803)
Closing Balance$1,901 $1,994 $2,122 $27,287 $17,873 $24,673 
There was no significant impairment for contract acquisition and contract fulfillment costs as of March 31, 2024 and December 31, 2023.
Allowance for expected credit losses
The following table provides information about accounts receivable, net of allowance for expected credit losses:
As of
March 31, 2024December 31, 2023
Accounts receivable, including unbilled receivables$338,881 $311,811 
Less: Allowance for expected credit losses(3,358)(3,703)
Accounts receivable, net$335,523 $308,108 
The movement in “Allowance for expected credit losses” was as follows:
Three months ended March 31,Year ended
20242023December 31, 2023
Opening Balance$3,703 $1,332 $1,332 
Additions/(reductions)(269)451 2450
Reductions due to write-off of accounts receivable(76)(112)(79)
Closing Balance$3,358 $1,671 $3,703 
Customer and credit risk concentration
No single customer accounted for more than 10% of the Company's revenues, net during the three months ended March 31, 2024 and 2023. The Company’s management believes that the loss of any of its top ten clients could have a material adverse effect on its financial performance.
To reduce credit risk, the Company conducts ongoing credit evaluations of its customers. No customer accounted for more than 10% of accounts receivable, net, as of March 31, 2024 and December 31, 2023.









14

Table of Contents
EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)
5. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:
Three months ended March 31,
20242023
Numerators:
Net income$48,763 $51,331 
Denominators (1):
Basic weighted average common shares outstanding165,082,387 167,197,820 
Dilutive effect of stock-based awards1,644,466 2,459,580 
Diluted weighted average common shares outstanding166,726,853 169,657,400 
Earnings per share attributable to ExlService Holdings, Inc. stockholders (1):
Basic$0.30 $0.31 
Diluted$0.29 $0.30 
Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share3,181,304 546,345 

(1) Prior period information has been adjusted to reflect the 5-for-1 forward stock split of the Company’s common stock effected in August 2023. Refer to Note 19 – Capital Structure to the unaudited consolidated financial statements for further details.

On March 15, 2024, the Company entered into a master confirmation (the “Master Accelerated Share Repurchase Confirmation”) and a supplemental confirmation (together with the Master Accelerated Share Repurchase Confirmation, the “2024 ASR Agreement”), with Citibank, N.A. (“Citibank”). Refer to Note 19 - Capital Structure to the unaudited consolidated financial statements for further details. During the three months ended March 31, 2024, the Company recorded the initial delivery of shares in treasury stock at cost, which resulted in an immediate reduction of its outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share. The forward contracts indexed to the Company's own common stock met the criteria for equity classification, and prepayment of $25,000 was initially recorded in additional paid-in capital, which reflects the pending settlement of the 2024 ASR Agreement.

Had the 2024 ASR Agreement been settled as of March 31, 2024, determined based on the volume-weighted average price per share since its effective date, Citibank would have been required to deliver additional estimated shares to the Company. The effect of the potential share settlement under the 2024 ASR Agreement was excluded from the computation of diluted earnings per share as its inclusion would have been anti-dilutive.

6. Other Income, net

Other income, net consists of the following:
Three months ended March 31,
20242023
Gain on sale and fair value mark-to-market on investments$1,016 $1,644 
Interest and dividend income2,284 1,721 
Fair value changes of contingent consideration*589  
Others, net63 (210)
Other income, net$3,952 $3,155 

* Refer to Note 16 - Fair Value Measurements to the unaudited consolidated financial statements for further details.


15

Table of Contents
EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)

7. Cash, Cash Equivalents and Restricted Cash
For the purposes of unaudited statements of cash flows, cash, cash equivalents and restricted cash consist of the following:
As of
March 31, 2024March 31, 2023December 31, 2023
Cash and cash equivalents$108,565 $87,298 $136,953 
Restricted cash (current)4,291 5,598 4,062 
Restricted cash (non-current)4,376 2,069 4,386 
Cash, cash equivalents and restricted cash$117,232 $94,965 $145,401 
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 (non-current) represents amounts on deposit 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 assessments. These deposits with banks will mature one year after the balance sheet date.

8. Investments
Investments consist of the following:
 As of
 March 31, 2024December 31, 2023
Short-term investments
Mutual funds$44,488$52,650
Term deposits93,097101,231
Total Short-term investments$137,585$153,881
Long-term investments
Term deposits$241$239
Investment in equity affiliate4,1634,191
Total Long-term investments$4,404$4,430

Refer to Note 16 - Fair Value Measurements to the unaudited consolidated financial statements for further details.    
16

Table of Contents
EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)
9. Property and Equipment, net
Property and equipment consists of the following:
As of
Estimated useful lives (Years)March 31, 2024December 31, 2023
Owned Assets:
Network equipment and computers
3-5
$153,955 $149,975 
Software
2-5
98,957 94,279 
Leasehold improvements
3-8
42,238 41,933 
Office furniture and equipment
3-8
21,629 21,199 
Motor vehicles
2-5
682 686 
Buildings
30
954 956 
Land624 625 
Capital work in progress10,990 12,276 
330,029 321,929 
Less: Accumulated depreciation and amortization(229,400)(222,333)
$100,629 $99,596 
ROU assets under finance leases:
Network equipment and computers58 58 
Leasehold improvements602 604 
Office furniture and equipment425 427 
Motor vehicles1,262 1,020 
2,347 2,109 
Less: Accumulated depreciation(1,354)(1,332)
$993 $777 
Property and equipment, net$101,622 $100,373 

During the three months ended March 31, 2024, there were no changes in estimated useful lives of property and equipment during the ordinary course of operations.
The depreciation and amortization expense, excluding amortization of acquisition-related intangibles, recognized in the unaudited consolidated statements of income was as follows:
Three months ended March 31,
20242023
Depreciation and amortization expense$9,266 $9,338 

The effect of foreign exchange gain/(loss) upon settlement of cash flow hedges recorded under depreciation and amortization expense, was as follows:
Three months ended March 31,
20242023
Effect of foreign exchange gain/(loss)$(9)$(79)
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EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)
Internally developed software costs, included under Software, was as follows:
As of
March 31, 2024December 31, 2023
Cost$51,370 $46,625 
Less : Accumulated amortization(27,931)(25,413)
Internally developed software, net$23,439 $21,212 

The amortization expense on internally developed software recognized in the unaudited consolidated statements of income was as follows:
Three months ended March 31,
20242023
Amortization expense$2,520 $1,975 
As of March 31, 2024 and December 31, 2023, the Company believes no impairment exists because the long-lived asset's future undiscounted net cash flows expected to be generated exceeds its carrying value; however, there can be no assurance that long-lived assets will not be impaired in future periods. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which undiscounted cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount, the asset’s residual value, if any. It is reasonably possible that the judgments and estimates described above could change in future periods.

10. Goodwill and Other Intangible Assets
Goodwill
The following table sets forth details of changes in goodwill by reportable segment of the Company:
InsuranceHealthcareEmerging BusinessAnalyticsTotal
Balance as of January 1, 2024$50,035 $21,872 $47,001 $286,731 $405,639 
Currency translation adjustments(25)(2)(38) (65)
Balance as of March 31, 2024$50,010 $21,870 $46,963 $286,731 $405,574 
As of March 31, 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. The Company considered current and forecasted economic and market conditions and qualitative factors, such as the Company’s performance during the three months ended March 31, 2024, business forecasts for the remainder of the year, stock price movements, generation and availability of cash and expansion plans. The Company reviewed key assumptions, including revisions of projected future revenues for reporting units against the results of the annual impairment test performed during the fourth quarter of 2023. The Company did not identify any triggers or indications of potential impairment for its reporting units as of March 31, 2024.
The recoverability of goodwill is dependent upon the continued growth of cash flows from the Company’s business activities. This growth is based on business forecasts and improvement in profitability of its reporting units. The Company continues to maintain its focus on cultivating long-term client relationships as well as attracting new clients.


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EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)

Other Intangible Assets
Information regarding the Company’s intangible assets is set forth below:
 As of March 31, 2024
 Gross
Carrying Amount
Accumulated
Amortization
Net Carrying
Amount
Finite-lived intangible assets:
Customer relationships$99,050 $(53,898)$45,152 
Developed technology3,539 (2,721)818 
Trade names and trademarks1,400 (1,321)79 
Non-compete agreements336 (205)131 
104,325 (58,145)46,180 
Indefinite-lived intangible assets:
Trade names and trademarks900 — 900 
Total intangible assets$105,225 $(58,145)$47,080 
 As of December 31, 2023
 Gross
Carrying Amount
Accumulated
Amortization
Net Carrying
Amount
Finite-lived intangible assets:
Customer relationships$99,050 $(51,085)$47,965 
Developed technology3,552 (2,522)1,030 
Trade names and trademarks1,400 (1,286)114 
Non-compete agreements336 (181)155 
104,338 (55,074)49,264 
Indefinite-lived intangible assets:
Trade names and trademarks900 — 900 
Total intangible assets$105,238 $(55,074)$50,164 
The amortization expense recognized in the unaudited consolidated statements of income was as follows:
Three months ended March 31,
20242023
Amortization expense$3,080 $4,149 
Estimated future amortization expense related to finite-lived intangible assets as of March 31, 2024 was as follows:
2024 (April 1 - December 31)$9,049 
202510,698 
202610,360 
20279,364 
20286,709 
Total$46,180 
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EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)
11. Other Current Assets
Other current assets consist of the following:
As of
March 31, 2024December 31, 2023
Prepaid expenses$27,225 $18,171 
Receivables from statutory authorities18,620 18,500 
Advance income tax, net15,508 23,269 
Derivative instruments3,903 4,308 
Advances to suppliers3,808 1,883 
Deferred contract fulfillment costs2,837 3,303 
Contract assets2,779 2,830 
Others4,073 4,405 
Other current assets$78,753 $76,669 

12. Other Assets
Other assets consist of the following:
As of
March 31, 2024December 31, 2023
Deferred contract fulfillment costs$24,450 $21,370 
Contract assets7,284 6,835 
Deposits with statutory authorities6,945 6,960 
Lease deposits5,468 5,159 
Derivative instruments3,515 3,299 
Others5,317 5,901 
Other assets$52,979 $49,524 
13. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following:
As of
March 31, 2024December 31, 2023
Accrued expenses$54,957 $58,736 
Payable to statutory authorities35,304 20,591 
Client liabilities6,516 6,909 
Accrued capital expenditures3,789 4,134 
Derivative instruments2,172 2,009 
Contingent consideration 15,000 
Others4,321 5,521 
Accrued expenses and other current liabilities$107,059 $112,900 
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EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)
14. Other Non-Current Liabilities
Other non-current liabilities consist of the following:
As of
March 31, 2024December 31, 2023
Retirement benefits$17,771 $16,666 
Deferred transition revenue11,339 10,195 
Unrecognized tax benefits1,368 1,262 
Derivative instruments345 216 
Contingent consideration 589 
Others2,561 2,534 
Other non-current liabilities$33,384 $31,462 
15. Accumulated Other Comprehensive Income/(Loss)
Accumulated other comprehensive income/(loss) (“AOCI”) consists of actuarial gain/(loss) on retirement benefits and foreign currency translation adjustments. In addition, the Company enters into foreign currency forward contracts and interest rate swaps, which are designated as cash flow hedges and net investment hedges, as applicable, in accordance with ASC Topic 815, Derivatives and Hedging. Cumulative changes in the fair values of cash flow hedges are recognized in AOCI on the Company’s consolidated balance sheets. The fair value changes are reclassified from AOCI to unaudited consolidated statements of income upon settlement of foreign currency forward contracts designated as cash flow hedges of a forecast transaction, whereas such changes for interest rate swaps are reclassified over the term of the contract. Fair value changes related to net investment hedges are included in AOCI and are reclassified to unaudited consolidated statements of income when a foreign operation is disposed or partially disposed. The following table sets forth the changes in AOCI during the three months ended March 31, 2024 and 2023:
Accumulated Other Comprehensive Income/(Loss)
Currency translation adjustmentsUnrealized gain/(loss) on cash flow hedgesRetirement benefitsTotal
Balance as of January 1, 2024$(132,643)$4,198 $1,405 $(127,040)
Losses recognized during the period(3,064)(62) (3,126)
Reclassification to net income (1)
 (443)(155)(598)
Income tax effects (2)
519 (190)(1)328 
Accumulated other comprehensive income/(loss) as of March 31, 2024$(135,188)$3,503 $1,249 $(130,436)
Balance as of January 1, 2023$(133,139)$(11,303)$299 $(144,143)
Gains recognized during the period5,313 7,294  12,607 
Reclassification to net income (1)
 3,065 (25)3,040 
Income tax effects (2)
(1,138)(1,834)(19)(2,991)
Accumulated other comprehensive income/(loss) as of March 31, 2023$(128,964)$(2,778)$255 $(131,487)
(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.
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EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)
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 Significant Other Observable InputsSignificant Other Unobservable Inputs
As of March 31, 2024(Level 1)(Level 2)(Level 3)Total
Assets
Cash equivalents - Money market funds (1)
$15,073 $ $ $15,073 
Mutual funds (2)
44,488   44,488 
Derivative financial instruments 7,418  7,418 
Total$59,561 $7,418 $ $66,979 
Liabilities
Derivative financial instruments$ $2,517 $ $2,517 
Total$ $2,517 $ $2,517 
Quoted Prices in Active Markets for Identical Assets Significant Other Observable InputsSignificant Other Unobservable Inputs
As of December 31, 2023(Level 1)(Level 2)(Level 3)Total
Assets
Cash equivalents - Money market funds (1)
$49,806 $ $ $49,806 
Mutual funds (2)
52,650   52,650 
Derivative financial instruments 7,607  7,607 
Total$102,456 $7,607 $ $110,063 
Liabilities
Derivative financial instruments$ $2,225 $ $2,225 
Contingent consideration (3)
  15,589 15,589 
Total$ $2,225 $15,589 $17,814 

(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.





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EXLSERVICE HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
March 31, 2024
(In thousands, except per share amount and share count)
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 and scenario-based method.

The following table summarizes the changes in the fair value of contingent consideration:
Three months ended March 31,
20242023
Opening balance$15,589 $18,689 
Fair value changes(589) 
Payments(15,000) 
Closing balance$ $18,689 
    
During the three months ended March 31, 2024 and 2023, there were no transfers among Level 1, Level 2 and Level 3.
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 fu