ExlService Q2 2025 presentation: Revenue jumps 14.7%, guidance raised

Introduction & Market Context

ExlService Holdings Inc (NASDAQ:EXLS) released its second quarter 2025 financial results on July 29, showing continued strong performance with double-digit growth in both revenue and earnings per share. The company’s stock responded positively in after-hours trading, rising 0.83% to $42.57, building on momentum from its previous quarter when it had exceeded analyst expectations.

The results demonstrate ExlService’s continued success in capitalizing on demand for AI and data-driven solutions across its key markets, particularly in healthcare and banking sectors. This quarter’s performance extends the company’s growth trajectory established in Q1, when it reported a 15% year-over-year revenue increase and beat EPS forecasts by 9.1%.

Quarterly Performance Highlights

ExlService reported total revenue of $514.5 million for Q2 2025, representing a 14.7% year-over-year increase (14.6% in constant currency). The company achieved an adjusted diluted earnings per share of $0.49, up 20.3% compared to the same period last year, while adjusted operating margin came in at 19.6%, showing a slight decrease of 20 basis points year-over-year.

As shown in the following performance overview:

The company’s growth was distributed across all four reportable segments, with Healthcare and Life Sciences leading at 22.0% growth, followed by Banking, Capital Markets and Diversified Industries at 15.8%, International Growth Markets at 15.0%, and Insurance at 8.6%. By industry classification, Healthcare and Life Sciences again led with 21.9% growth, while Banking, Capital Markets and Diversified Industries grew 15.7%, and Insurance increased by 9.5%.

Segment and Service Type Analysis

ExlService’s operational metrics for the quarter revealed continued expansion, with 13 new clients added and employee count increasing to 61,100, up 448 from the previous quarter. The company reported an attrition rate of 26.5%.

A notable trend in the company’s business mix shows the growing importance of its Data and AI-Led services, which now represent 54.2% of total revenue at $278.8 million, growing at 17.3% year-over-year in constant currency. Digital Operations services contributed $235.7 million, or 45.8% of revenue, growing at 11.6%.

The following slide details these operational metrics:

From a geographic perspective, North America remains ExlService’s dominant market, accounting for 82.2% of revenue, while the United Kingdom (TADAWUL:4280) and Europe contribute 15.1%, and the Rest of World represents 2.7%.

Financial Performance Trends

ExlService has maintained consistent growth over the past five quarters, with revenue increasing from $448.4 million in Q2 2024 to $514.5 million in Q2 2025. Similarly, adjusted diluted earnings per share have shown steady improvement, rising from $0.40 to $0.49 over the same period.

The quarterly trend data illustrates this consistent upward trajectory:

This performance builds on the momentum reported in Q1 2025, when the company achieved a 15% year-over-year revenue increase and a 27% increase in adjusted EPS. The Q2 results, while showing a slightly lower revenue growth rate of 14.7%, demonstrate sustained performance and continued profitability improvements.

Updated Financial Guidance

Based on the strong first-half performance, ExlService has raised its full-year 2025 guidance. The company now expects revenue between $2,050 million and $2,070 million, representing 12-13% growth in constant currency. This is an increase from the previous guidance of $2,035-$2,065 million provided on April 30, 2025.

Similarly, adjusted diluted earnings per share guidance has been raised to $1.86-$1.90, indicating expected growth of 13-15%, up from the previous range of $1.83-$1.89.

The updated guidance reflects management’s confidence in continued momentum as shown here:

This upward revision aligns with the company’s strong performance in the first half of 2025 and suggests management’s confidence in continued execution despite macroeconomic uncertainties.

Forward-Looking Statements

ExlService’s presentation emphasized the company’s ongoing transformation into an AI and data-led enterprise, with these services now representing over half of total revenue. The company’s focus on expanding its capabilities in this area appears to be yielding results, as evidenced by the higher growth rate in Data and AI-Led services compared to Digital Operations.

The company’s financial reconciliations provide additional context for its performance metrics. The adjusted operating income for Q2 2025 was $100.8 million, with adjustments primarily related to stock-based compensation and amortization of acquisition-related intangibles:

Similarly, the reconciliation to adjusted net income shows how the company arrived at its adjusted EPS figure of $0.49:

Looking ahead, ExlService appears well-positioned to capitalize on growing demand for AI and data-driven solutions across its key industries. The raised guidance suggests management anticipates continued strong performance through the second half of 2025, building on the momentum established in the first two quarters.

The company’s focus on expanding its Data and AI-Led services, which are growing faster than its traditional operations, indicates a strategic shift that aligns with broader industry trends toward digital transformation and intelligent automation. As these services continue to represent a larger portion of ExlService’s business, they may drive further margin improvements and revenue growth in future quarters.

Full presentation:

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