EXLS - Earnings call transcript Q1 2019 | ExlService Holdings, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2019 EXLService Holdings, Inc. Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, Steve Barlow. begin may you Sir,

Steven Barlow

our me Good Quarter thanks Call. XXXX Vice Chairman Relations. Barlow, Lauren. Rohit York joining our Kapoor, I'm everyone EXL's EXL's Vice to on our With this XXXX QX earnings Investor Investor of First we Financial Chief issued Vishal Executive President Officer. of in hope our Officer; morning, you, Chhibbar, EXL's and sheet you've New to review We We've are and and for investor also Relations section updated morning. Financial the Chief Steve had fact today Thank Results an opportunity website. Conference release

those to matters forward-looking. uncertainties and and could you statements. some mind or unknown cause forward-looking in that As and differ to such limited reports uncertainties forth information and include, periodic to the Securities actual not by expressed filed on press Such subject this are other these company's those this no we'll in on risks Please and of materially known but economic call. documents to, assumes from keep implied to with call from are obligation factors discussed the time. the time risks that know, results Commission today's presented are update the discuss set release, statements on Exchange conditions, EXL general

to of release investor measures financial we press believe which as these the measures, can provide in today, non-GAAP for During fact certain call information investors. reference well our Reconciliation will we be as useful sheet. our GAAP found

Executive to EXL's Officer. over turn Now the Chief call Kapoor, I'll Rohit? Rohit

Rohit Kapoor

the $XXX.X quarter, XXXX and Adjusted represents everyone, XX.X% million, we for increase was earnings welcome reported Good call. Steve. first you, $X.XX. of quarter Thank quarter the to EPS a year-on-year. which revenues morning, first In our

is our XX Integrated, by in organic basis. an constant-currency growth Health X.X% excluding highest past quarters. This grew strong is and on business, rate core Our the

outstanding in quarter. had Revenues EPS Organically, achieved XX.X% XX.X% to Excluding $XX million. of grew increased an Analytics XXXX. we $X.XX. year-on-year adjusted to Health XX.X% an Analytics Integrated, compared year-on-year

reported business basis. X.X% Management X.X% up Operations million constant-currency organic on $XXX.X revenues, in and Our year-on-year an

by double Excluding strong I of by brief Today, Health key Insurance X.X%. to would We Health our also both and Management and X will our on progress which like Operations a & engines: Finance in on digits. provide grew Accounting, growth Separately, Analytics. of Integrated, performance grew update Integrated and Insurance I SCIO. had discuss

grew represents has our growth of business quarter, Our been inception and the our first our Insurance since by Insurance vertical of a XX% XX%. revenues. In cornerstone total

and the expand We with time, X revenues existing the pipeline more continue than in client built to strong past Insurance. clients doubled. has vertical Insurance relationships have in of number In clients within contributing the at a $XX million years, the annual same new

the strongest Our geographies. client in increasing Insurance our pipeline of positioning new lines all the across has quarters industry. global this leadership past The within of with as in a X multiple been across EXL's demand combined market result service is and growth

span that property segments. founded is deep life clients insurance retirement, our position domain capability the annuities, and chain. across broker across and serves EXL leadership and Our reinsurance on casualty, end-to-end expertise value and

than and actuaries. outcomes specialists, professionals experts, professionals more at bring analytics than to include expertise, processes. insurance Together, technology excellence insurance tangible insurance, XXX operational implementation rigor scale more and and Our complex across finance XX,XXX and data accounting they deliver

partner enables us further proprietary client to processes. are solutions strengthened with platforms visibility of offer solve technology-enabled suite Our complex. specific greater business to that This clients by challenges us that are into a

expand technology-enabled the and proposition value our accounting clients. to & our processes deliver finance Today, in XX solutions. in perfect to of we Accounting traction as of strong insurance top operations continuously insurance wide opportunity accounting result our us Our and see a Finance where example insurance-specific the XX market capabilities we reputation A in range business. of services and gives and is finance

in industry. Our integrated the insurance capabilities one digital in of most the are advanced

support helping acquisitions driven by them automated for we digital clients and marketing engines. this campaigns, customer targeted end-to-end example, design journeys couple underwriting our digital For with customer

We and the areas speed administration quality, like and processes business cost also policy improve of in claims.

solutions, AI. analytics BPaas and technology-led So automation, advanced

clients, in industry top as such leaders. We us right-hand its are operations the quadrant In management as revenue analysts Firms casualty reasons our I consistently our growth, recognized reach solutions leadership for our well for Matrix business. annuities Insurance and insurance. as as geographic insurance our our in the most Group support, prospects remain PEAK the chain life about rank capabilities ranking. by of market our excited Group across property of value Everest and our Everest our cited and as capabilities digital Overall, recent

which discuss The Analytics, I EXL's is second revenues. area represents like now would to XX% total of

industries inorganic and business performance advanced advanced strategy XXXX, and Healthcare through AI. and strengthened This analytics market. across past, management Analytics our acquisition stack: the has allowed and data position in the investments Analytics have analytics capabilities geographies. a to analytics delivered strong we to In In leadership to to of organic and our differentiated the us full of build across discussed SCIO. Our from build continues further data has grown practice the deliver we

digital adoption data to the impediments the remains analytics AI, clean of change their and transformation are clients and the a they and As architecture, enterprise-wide biggest absence of embrace towards agendas to data. visage migrates complete discovering our modern advanced

services solutions. the in to are unlock are well data capabilities data-enabled to our very tools resonating We value marketplace. help able these clients These management new enterprise our and

well-governed understanding data new Our management which entire the be data utilized targeted consumption help deliver We enterprise business our data combine our create high-quality, can businesses assets, advanced our to management assets by organization. enterprise then technology data clients with for methodologies, expertise, services outcomes. clients' enterprise to easy of

data By modern cloud-based a support for omnichannel consistent silos assets the across customers. to are For helping will required be experience customer build a insurer they enabling a achieve digital example, end the we into organization. legacy environment, view able to their a U.K. customer data transforming

They superior without insights. hire and external data capabilities to external a as are our to data one-stop talent clients data integrate having shop. to analytics Our our This for own and deliver data-enabled the use analytics and outcomes algorithms analytics specific predictive invest acquire to provide solutions advanced to streams models. with helps able proprietary use it cases in data, realize infrastructure maintain end-to-end build

credit insurer offline analytics, behavior. operations U.S. we well end-to-end are technology combine assets and leverage marketing, online cross-sell a and We include as risk, customer new combine example, demographic variables We execute third-party and up-sell cost-effective that For helping proprietary as X,XXX to on capabilities. acquisition and scores than and more business, data deliver strategies.

and uniquely financial capitalize as have this expanded at across market continue we positioned well. the in on trend. health clients We and to will this of clients center to agendas, services sit are care Data digital successfully transformation

Next, the deliver Health Integrated. the which expected I wind is want why this we to business. results, to strategic discuss asset decided the fails have at rationale to Notwithstanding investment, time the particular of down

responsible business Our with goal is to exit professionalism manner. and in the a

EXL to integration which like complete. on the portions of SCIO, some would our impact been limit gained strategic on of moving the the to taken business. expeditiously now with of is the remain and fully SCIO organization. leadership excited the refocus has are on the We broader into about nearly team I SCIO base and role more acquisition. leadership larger team a integrated exit an We the client provide we energies and within The have update our the

chain. SCIO with force of have the the aligned across strategy go-to-market EXL care sales value front-end health We streamline our to entire

unified expect approach strong go-to-market create among payers opportunities new large pipeline care management. cross-sell generate We this and a to in

business on also quarter, common to ecosystem. well. been and adjusted EPS are strategic out of acquisition integrate under operating is has accretive the SCIO We pace the rationale our playing to the full every

on comments Finally, with I end will our pipeline. a few

see among environment continue new Management demand cross-sell and for have Operations We Analytics of to continue the stack. robust Management, prospects business existing areas In their a Analytics, lines. among demand Operations expand clients particularly to opportunities Analytics. In full we into new new pipeline favorable is with strong and to our service in

We our successful management our over products, are closing, turn XXXX and learning the solutions. to In of also advanced data seeing I offerings With EXL. call and machine forward to year new data for being another increase and adoption look our an AI will services I Vishal. such as that,

Vishal Chhibbar

by you, X.X% million, up for year-over-year and performance EPS updated start a Rohit, our followed thanks, to We guidance. joining of first of on with would up XX.X% Thank everyone, and us a morning. year-over-year. revenues like adjusted constant-currency basis had into $X.XX, quarter this $XXX.X strong by XXXX, for quarter the insight I financial providing

is encompassing results the the - Sequentially, business. will numbers impact Integrated Integrated to hereafter Integrated X.X% are All later winding be we As in in - of at a organic we highest $XXX.X an - This year-over-year grew constant-currency with rate QX XX.X% the mentioned or to X.X%. up My the growth you will down the growth are basis. Health are core and discussion year Integrated, on on start excluding business. Health excluding We Health year XXXX. financial remarks. on on of great revenues separately discuss basis. performance had revenue the my underscore million, excluded a expenses organic of the Health revenues of order I since - aware, and revenues

rent Health in growth by relationships Healthcare, margin and defined for its up and with existing up client reportable Analytics by continues XX.X% year grew revenue grew and driven fifth steady XX.X%. up Finance quarter quarter prior its For year-over-year growth XX.X% $XX.X excluding existing clients of the margin our XXX growth consecutive in Insurance million, by basis X points productivity driven clients. Analytics to was Insurance better driven expansion $XXX.X million & from year-over-year. Analytics, an Management basis, mix, This for This was performance resulting was & of organic by growth This strong ramp as XX% including Gross Finance & utilization. Finance by expansion by million, segments, ramp existing growth XX% Accounting of Banking improved This year-over-year. in improved year-over-year. Insurance, business product segments. XXXX verticals. of in X.X% expansion Analytics grew the and On growth revenues Sequentially, from expansion of SCIO X.X%. segment. $XX up in clients. year-over-year, year-over-year. revenues This the driven strong This & driven by was was rent momentum continued primarily the was quarter, from of growth is Accounting Analytics. Operations Finance broad-based double-digit Accounting

and XX.X% revenues. the increased our SG&A in increased of we digital to capabilities, which sales investment our During frontline quarter, expenses

operating flat for quarter adjusted margin our result, the year-over-year. a was As XX.X% at

represents which year-over-year. year, for was $XX.X quarter million adjusted Our the last growth EBITDA of compared a XX% $XX.X to million

Our GAAP was tax rate for XX.X%. quarter the

item, investments million We on Excluding cash benefit debt resulting an impact our tax for rate of had the namely normalized was and XX. of discrete net and the short-term million $XXX.X excess March tax recognized XX.X%. stock of of in borrowing $XX.X as $XXX.X million, of quarter compensation,

$XX.X $XX and on we repurchase million program. capital the under For spent quarter, expenditures share shares million XXX,XXX the for repurchased

Excluding $X.XX year-over-year. XX.X% Health in versus quarter Integrated, up $X.XX was the QX our EPS adjusted for of XXXX,

to had basis to Health the Health of adjusted a like QX $X.XX. would business. to margin, XXX operating $X.X Integrated this Integrated quarter million I EPS $X.X an Integrated loss Now revenues on Health impact million of of leading generated performance in adjusted compared dilutive of points discuss XXXX.

assets, charge of quarter. which for impairment reported million $X.X In fixed is excluded an EPS this from on addition, adjusted we

will For expect $XX $X.X revenues range in generate Health the Integrated XXXX, for to million $XX the including million we QX. of now million,

top on will has impact and not base the any end. increase and impact Health $X.XX winding of cost million was due previous requirement. our on for to Structurally, does $XX $X.XX business higher regulatory Integrated expected down This end bottom guidance a have The to non-vectoring increase Health adjusted Integrated is $X.XX not that negative the guidance expenses $X.XX, the to the $X.XX to an $XX to previous to of loss Our EPS to EPS. of compliance on fixed any compared the million. of loss include adjusted

which have not transition. to Therefore, the fulfill full we transition normal mentioned with clients a addition, lines, over as In will are revenue winding down as revenues operating our The on step EPS contractual the transition quarter of based client estimates time adjusted the the year. during earlier current change course and cost decline delivered obligation services decrease we our in may out to process.

estimates respective adjusted We with EPS are may clients ongoing to accordingly. having once out and revenues And finalized, discussions our adjust find the time their we lines.

to unable estimate finalized, In addition, winding clients we have the any until on down will adjusted be impact EPS. are to which the those incurred, are expenses not

guidance our for moving Now XXXX. to

We to $XXX of to to $X $XXX a $XX the represents XX% million $XXX earlier. Integrated $XX our guidance billion. million are basis. from on revenue million XX% includes This mentioned Health This revenues growth to to revising of guidance a million as constant-currency million

there Integrated, no guidance. is Health change our Excluding in core

EPS $X.XX Integrated earlier. Integrated, guidance was to reflect losses as of $X.XX EPS to of Excluded with to - our is adjusted guidance for line $X.XX the to core we trends, Integrated. adjusted expect higher Health $XX.X EPS excluding revenues annual in year-over-year in million. to from $X.X to growth of $X.XX range our XXXX prior In constant-currency at the business from basis excluding of a in an Health impact X.X% expect adjusted the EPS organic Our marginal Health from to to well QX conclusion, mentioned flattish $X.XX of second and $X.XX on Health - $X.XX million on revised owing to a the to to we performing a In adjusted increases, an revenue million same $X.XX remains growth basis. due underlying Health $X.XX. business, decline quarter, Integrated with rate loss year and $X.X all $X.XX of revenue Integrated, Sequentially, year-over-year

for was $X.XX, XX.X% Excluding EPS year-over-year. Health our quarter the Integrated, adjusted up

to revenue very now, our questions. meet positive be business profitability And We visibility XXXX. high have and and in goals I in will our happy to Rohit are core take

Operator

[Operator Instructions].

from with Maggie William question Blair. Nolan comes first Our

Margaret Nolan

further laid a Is to how $XX down thus that that million far of to you've decrease Integrated. the that be progressing and could to outlined what contribution trying you've get million Health Was by just guidance that far? your efforts seen there downside downside and wind wind down the the to about there thus business? $XX driven question to I'm potential A really you've sense out. that is

Rohit Kapoor

Thanks, Maggie. This is Rohit.

of place the disciplined point So on top for Integrated business revised line pretty we've and Health The at format. that us, to taking provided our estimate the of is both and down the wind structured time. a line is in this guidance bottom the best you

$X.X As from had see of in quarter. million the in first Health Integrated. provided Vishal, comments Integrated revenue the expect you by the can And we quarter, of we revenue approximately second Health in million from $X.X

in revenue So year. half that's $X.X first of million the of the

is on asset. half as gradually $XX volatility wind fully of We in And in soon down wind down it at that expect that. somewhere we greater get as this thing certainly and updates we more is side. to that in the come certainty will EPS more everybody have we And there, million the as perhaps as year. the on estimate our we provide the will cost, this the down cost second The between to million color $XX wind get on we to to

Margaret Nolan

segment. Okay. detail. That's about great to I then Analytics the ask And wanted

You're obviously seeing there. growth great

course see the wondering year the that's we where basis, going can revenue year-over-year if look basis? this last kind to increase something getting as into to year that a well, margins of strong help in kind year. of the growth expand trend improvement you the an especially profile at over expect are saw is in of we margin and on I'm that as You a year-over-year on a And

Rohit Kapoor

Certainly. Yes.

adjusted XX.X%, our Health quarter in of excluding Integrated. first year, operating the So the margin was

increase adjusted would the somewhere year. guidance XX.X% therefore, operating operating for about that calls anticipate increase, second we the year second the an for Health the margin basically increased margin And of the going our volume year is to come stabilization and half to half our full expect Our pertaining to revenue XX% fundamentally to operating in and efforts to close in of our for from year adjusted be we of of a the adjusted margins the full Integrated. to

Vishal Chhibbar

I'll Maggie, also is this - Vishal. So

profile by business. better for Your is and core in had in better improvement can - do utilization adjusted as driven company a Analytics try for our a total to tailwind And QX, we level. margin better also, for on productivity on point expect be Analytics that That is the right. year we the we our SCIO operating as we a And business. to margins get Analytics our will that number margin

Operator

comes question and from Cowen with Bryan Bergin next Our Co.

Bryan Bergin

on contribution. to the I wanted ask SCIO

Curious was we aware be I need think million performance that I sure business. in expectations. so heard it seasonality $XX.X that in line thought of I $XX any about if if million. with your there's not last quarter, to was I'm

Vishal Chhibbar

this Bryan, for last year. is had had benefits which QX in adopted repeatable to coming of that for XXX, which in year, mind this in to Yes. a QX. quarter which is Hi, SCIO the Vishal. them QX benefit ASC revenue and Typically, not bear first Also, compared QX, is accrued they in softer

Bryan Bergin

lot us of then some you just be And you solutions potentially solutions. of Okay. profitability how Can those standpoint? a develop? data And about talked thinking from of management we about should - give a sense you the a those sense scale

Vishal Chhibbar

Sure.

enterprise their important. management and becoming more try AI and end is more wide a you of the the digital as they point platforms and management has having And marketplace well and clients data they challenge capability this incomplete time. can't for that significant is therefore, is on at and of have. is more we're seeing is this space, it So activity try customers, these clean, know, across spec organizations legacy this a start what we predictive where lot and every prospect in almost very today transformation, single large this increased off And try use a than a customized is client lot on larger and size area, Bryan, The as data not data in modeling. of the which important. services and deals as what which connect analytics around the seeing and we and being data embrace And more leverage previously winning have offerings space providing are we are a and had done much more deals just as reason analytics is activity the more becoming for is

size a deals these and lot of So market domain how much of knowledge of and verticals resonating clients. more bigger. functional stronger. and our our valuable make is data is what's are that opportunity the in our the industry And understanding apply lot The the use to a for

profitability with the rest in that's management, business. our of In of line the terms of pretty of profitability much data

As global strong will give we forward. for in leverage India, data as the in to leverage terms margins a more of platform we've management, a of be capability this around leverage more we move we a able cost structure already up built to that and lot delivery management. for And data that us hope

Operator

comes with Joseph The from next Cantor Fitzgerald. question Foresi

Joseph Foresi

decision I in was and And why the Integrated. just completely you to a acquisition? the curious on what wrong - went did decide did exit could you the give us sort Health on make business? maybe you of with When postmortem

Rohit Kapoor

Sure, Joe.

and asset client that transitioning large were of to time a into aware of a I this that we the was diligence would fix business decision underlying some April large and And a us. how when our been were the the asset date because put is release guess not there that the shut was going fully to thing that's was too this the client of strategic we out of remained. see particular masking. decided do. actually was of the meeting able did take didn't would prudent the not at took transitioned much was we business of that, this for basically it this we X, pose think the way we have X-K profitability to this in structurally particular acquisition out, large that and client to that challenges rationale doing to knew the business. we when is the long us out, down would an profitability close So asset, and We press why The reason and that recognize on that down time the the we business

which we something and why that's decided exit we've to that's think business. recognized I this

we this analytics to health data the For care strategically which lot have that focus Healthcare us, more strongly. something more more something capability for And going be provides that be on going forward upon, the that focus a clients and to and and us, us in and were able in which that's to build SCIO to applying seeking. that's be balance to want were going we're and our segment. to And leveraging a is felt much lot to going prudent therefore, our we the efforts areas grow

Joseph Foresi

a get the variable in as of could that cadence like and improve And given about takes? you and of the particular to of to on throughout on for Okay. progress year sounds Can keep just the then you've like And or one it about the variables want you going side, then factors towards what swing sort Integrated's what the is Health that puts the throughout I guidance. margins talk could Maybe it it quarters? margin talk are talk any way margin mind should Can another. to move you next what couple they're going sounds and side. we for how the year, a well. about sense

Vishal Chhibbar

Hi, This Yes. is Joe. Vishal.

prepared Health decline the in mentioned my we Integrated. remarks, in as a I So revenues do continued expect for

revenues to million, further and $X.XX a will that the $X.XX adjusted year. in range of decline. QX, in the expect that the $X.X that The be on QX QX, I said expect million. we my do I EPS for $X.XX; be the be $X.X prepared We accordingly to between in revenues around will we Health - million remarks that for $XX to As Integrated said will midpoint, at around midpoint, already have

had another of of QX. loss and we $X.XX in So in already loss QX, expect do to $X.XX we $X.XX

the operating second our level XX.X%. to quarter, XX% we Integrated, operating the margin core we margins in business quarter that that be do - second do we half, have our XX.X% in for margin between improved on this business to level. adjusted adjusted the were the Health and Excluding - expect will our And expect also

the the year, So will that points improvement. had at of we XX we given basis that guidance beginning deliver

Operator

from Puneet with [Operator The JPMorgan. Jain next question Instructions]. comes

Puneet Jain

So to if in that anything or impact Health earnings down you also flow should talked see I'd this we year? like wind and Integrated, of beyond from about consider

Rohit Kapoor

Hi, Puneet.

down remarks, So a prepared Integrated a business, are do to this manner. of but Health sure winding we're possible we and that and as disruption There little I've professional our going clients transition causes we said clients. as serve, we as to number the want possible the in our responsible do make in are that and is for as smooth as

to going we're our with in expeditious an So clients work manner.

we'll will be you think estimate wind provide down I able hard think point includes which that's to this that trying better this explore of something come it timing from point of when And And time. is there very to input report you to do. in going a and servicing our them this with share to give for a complete. the that of supporting we and we forms to we're back creative at our we with and difficult sidelines, of number are of clear time, the and whether a numbers, be QX be clients. position to arrangements we'll that automated with alternative At when are us as much

Puneet Jain

you Can to of also year? rest share you And seems talk you remain the those they about it. can and verticals for travel, what transportation do do weak like this utilities expect outlook quarter. It continue verticals? Got in to

Rohit Kapoor

Yes.

want and are the our portfolio verticals taking that look, growing Accounting larger business. Analytics for - Those growth us on; tremendous pieces a that's which for focus the that our are we is business; X are think our Insurance; & nicely to of Finance the there which of I businesses and Healthcare business, strongly amount us place. are in

And Our in lines Travel, Logistics is to been Transportation there. utilities in convert & resonating as industry our solutions. towards are our there that we're these service actually Logistics to some Travel analytics use well limited well the business we in what provide very which verticals. increased of data that seeing also industry other service Transportation and playing We've we offerings some an of areas business & is are our as out able of

example, now, our a So using freight service as for in on completely analytics is transaction-based provide technology-enabled Logistics, pricing which solutions. Transportation Travel, a advanced and we billing & using

to this I kinds out think into So we'd as year and we continue this well, year. are perform working and next forward those to go expect of solutions

Operator

Our with next Barrington Research. Colicchio Vincent from question comes

Vincent Colicchio

Yes. Rohit, mix. a flow? nothing U.K. there see business the or was Is and or off Brexit the bit factor from ebb to other in any just there

Rohit Kapoor

Yes. No. Hi, Vincent.

will As and our of you XX% for endeavor business Brexit in pretty that the we part place U.K. also as XX% data there that think do We're on expanded the in pipeline or in our get further. to to is even Australia. traction, other of grow the presence starts to more out U.K., a traction, our We because very the build U.K. It's of on mentioned more business around we where any our business somewhere are management I The seeing capabilities stable contributes know, also continues really see And We're revenues. strong us. impact and gain earlier, any not grow. as to seeing reasons. analytics and we would U.K. to continue adding And

Vincent Colicchio

on And the any your, for Analytics the business? there growth to X side, year X change been say, in expectation has

Rohit Kapoor

No.

next the Analytics the be years. continue expectations continues that's mid-teens, to in something business several grow rate low- and for for business Our to to expect which to we'd this growth the

Operator

time. at speakers questions any showing call And our back I'd to the turn to I'm for further like now not remarks. this any closing

Rohit Kapoor

really earnings appreciate for you you, being call. attending We our Thank here. QX Thanks, Lauren. everyone,

from back we'd you well. take to As message core continues our like to that perform mentioned, we the key that call this is business

a As we in XXXX. you. manage be able that and terrific to our manner. We confident grow forward QX more Health core forward we Thank wind look an meaningful the we'd you look on down Integrated providing business, to much in business and a to are call the update significant our of this

Operator

program, and today's in you Everyone, you have wonderful Ladies and conference. a day. today's conclude participating does may thank gentlemen, all disconnect. for This

ExlService (EXLS) 1 May 192019 Q1 Earnings call transcript