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Introduction & Market Context
ExlService Holdings Inc. (NASDAQ:EXLS) presented its first quarter 2025 financial results on April 29, 2025, revealing continued strong performance with revenue growth of 14.8% year-over-year. The company’s strategic focus on data and artificial intelligence services is yielding results, with these offerings now representing over half of the company’s revenue. EXLS shares were up 1.17% in regular trading and gained an additional 0.93% in premarket activity following the presentation.
The company’s performance continues the positive momentum seen in previous quarters, with Q1 marking the fifth consecutive quarter of accelerating growth. This comes as ExlService successfully navigates the increasing demand for AI-powered business solutions across its key industry verticals.
Quarterly Performance Highlights
ExlService reported total revenue of $501 million for Q1 FY25, representing a 14.8% increase year-over-year on a reported basis and 15.1% growth in constant currency. The company achieved an adjusted operating margin of 20.1%, expanding 120 basis points compared to the same period last year. Adjusted diluted earnings per share reached $0.48, growing 26.9% year-over-year.
As shown in the following comprehensive performance overview:
The company’s performance was driven by strong results across all segments, with Healthcare and Life Sciences showing particularly robust growth at 24.8% year-over-year. Insurance remains the largest segment at 34.3% of total revenue, while Banking, Capital Markets and Diversified Industries and International Growth Markets contributed 23.5% and 17.1% respectively.
EXLS added 10 new clients during the quarter and increased its total employee count to 60,652, representing an addition of 1,100 employees since Q4 2024. The company reported an attrition rate of 22.4% for the quarter.
Segment and Service Type Analysis
ExlService has reorganized its reporting segments to better align with its strategic focus areas. The new structure provides greater transparency into performance across key industry verticals and geographic markets.
The following slide illustrates the distribution of revenue by service type and geographic market:
A significant milestone for the company is that Data and AI-Led services now account for 53.5% of total revenue ($267.9 million), growing at 16% year-over-year. Digital Operations services represent the remaining 46.5% ($233.1 million) and grew at 14.2%. This shift highlights the company’s successful transformation into a data and AI-focused enterprise.
From a geographic perspective, North America continues to be the dominant market, representing 82.9% of revenue, followed by the United Kingdom (TADAWUL:4280) & Europe at 15.1% and Rest of the World at 2.0%.
To provide context for the new reporting segments, the company included a comparison with the previous year’s revenue under the new format:
Growth Trends and Guidance
ExlService has demonstrated consistent revenue and earnings growth over the past five quarters, as illustrated in the following chart:
The quarterly trend shows revenue growing from $436.5 million in Q1 2024 to $501 million in Q1 2025, with year-over-year growth rates increasing from 8.8% to 15.1% in constant currency. Similarly, adjusted diluted EPS has risen from $0.38 to $0.48 over the same period, with growth accelerating from 8.9% to 26.9%.
Based on this strong performance, ExlService has raised its 2025 revenue guidance while maintaining its earnings outlook:
The company now expects full-year 2025 revenue to be between $2,035 million and $2,065 million, representing growth of 11-13% in constant currency. This is an increase from the previous guidance of $2,025-$2,060 million provided in February 2025. The adjusted diluted EPS guidance remains unchanged at $1.83-$1.89, representing growth of 11-14% year-over-year.
Strategic Positioning
ExlService’s reorganization of reporting segments reflects its strategic evolution and focus on industry-specific solutions. The company has transitioned from its previous segment structure to a more market-aligned approach, as shown in the following diagram:
This reorganization allows for better alignment with client needs and market opportunities across key verticals. The strong performance in Healthcare & Life Sciences (24.8% growth) and Banking, Capital Markets & Diversified Industries (14.3% growth) demonstrates the effectiveness of this strategic approach.
The company’s focus on Data and AI-Led services is paying dividends, with these higher-margin offerings now representing the majority of revenue. This aligns with comments from previous earnings calls where CEO Rohit Kapoor emphasized that "Data and AI are at the core of our business" and that the "fusion of domain, data, and AI expertise is our core competitive differentiator."
With strong Q1 results, increased revenue guidance, and continued momentum in high-growth service areas, ExlService appears well-positioned to maintain its growth trajectory throughout 2025. The company’s strategic focus on data and AI capabilities, combined with its industry-specific expertise, provides a solid foundation for continued success in an increasingly digital and AI-driven business environment.
Full presentation:
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