ExlService Holdings, Inc.

What they do

EXL provides data and AI-led solutions and digital operations solutions to clients, embedding data and AI into client workflows. It operates through four Industry Market Units: Insurance, Healthcare and Life Sciences, Banking, Capital Markets and Diversified Industries, and International Growth Markets. Delivery is supported by operations centers in India, the United States, the Philippines, South Africa, Colombia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and Ireland.

Revenue drivers

• Insurance — Largest segment with $197.8 million in Q2 2026 revenue, 33% of total; gross margin was 34.6% in Q2 2026.
• Healthcare and Life Sciences — Second largest at $158.0 million in Q2 2026 revenue, 27% of total; highest gross margin at 46.9%.
• Banking, Capital Markets and Diversified Industries — $133.9 million in Q2 2026 revenue, 23% of total; gross margin was 34.8%.
• International Growth Markets — Smallest segment at $105.1 million in Q2 2026 revenue, 18% of total; covers UK, Europe, Middle East, Asia-Pacific and South Africa.

Recent performance

Q2 2026 revenue was $594.8 million, up 15.6% year-over-year and 4.3% sequentially. GAAP diluted EPS was $0.42, up 4.9% from $0.40 in Q2 2025, while adjusted diluted EPS was $0.59, up 22.3% from $0.49. Operating income margin declined to 14.7% from 15.8% a year earlier, and adjusted operating margin was 19.7% versus 19.6%. Total gross margin was 38.0%, down from 38.9% in Q1 2026. The company won 17 new clients in the quarter.

Strategy

EXL is executing a data and AI strategy under an operating model implemented in Q1 2025, with Industry Market Units managing client relationships and Strategic Growth Units advancing AI, analytics and digital engineering capabilities. The company is expanding its AI ecosystem, achieving gold status with Databricks, becoming an OpenAI Services Partner, joining the Claude Partner Network, and achieving Snowflake Premier Partner status. EXL agreed to acquire iMerit to add foundation model expertise and technology. It is also focusing on expanding its footprint outside North America through the International Growth Markets unit.

Risks

• Client demand concentration — EXL depends on a limited number of clients, and loss of a significant client could materially affect results.
• AI technology competition — Failure to keep pace with advanced AI, generative AI and agentic AI could render offerings uncompetitive or obsolete.
• Acquisition integration — The pending iMerit acquisition and any future acquisitions carry integration, impairment and execution risks.
• Geopolitical and currency — Operations span six continents, exposing EXL to currency fluctuations, immigration restrictions and geopolitical volatility.

Outlook

Management increased full-year 2026 organic revenue growth guidance to 13% to 14%, up from 10% to 12%. Including an anticipated $28.0 million to $32.0 million from the iMerit acquisition expected to close July 31, 2026, total 2026 revenue is guided to $2.390 billion to $2.415 billion, or 14% to 16% reported growth. Adjusted diluted EPS is guided to $2.25 to $2.29, a 16% to 18% increase over 2025. The CEO cited good visibility into the balance of the year.