EXLS - Earnings call transcript Q3 2019 | ExlService Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Quarter Three 2019 ExlService Holdings Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today Steven Barlow. sir. ahead go Please

Steve Barlow

today Good and quarter thanks call. XXXX Vice Officer. and With Barlow, Sidney. Kapoor, are joining Vice Chhibbar, our I'm everyone our EXL's EXL's Chairman me Relations. Investor third financial Executive President New morning you, York to Rohit Officer; and Chief for Steve in Vishal Thank results Financial conference Chief

XXXX opportunity earnings had hope an to review third morning. you've we release quarter issued this We our

in the also Relations our updated fact sheet We EXL's of Investor website. investor section

As this those you could that statements unknown keep or expressed that some discuss know and of the such from uncertainties forward-looking call in cause implied we'll by matters actual these are in known and Please subject results to are to statements. forward-looking. risks materially mind differ

include, with Securities uncertainties, on press in forth are obligation company periodic this other but factors assumes information EXL to, reports, the the call. to not Commission today's those conditions, no update general presented earnings the and the and risks and filed Such Exchange economic from set time-to-time. release in discussed limited documents

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

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

Rohit Kapoor

for hard our and to I significant our for and clients, basis work morning would that thank and milestone this to billion. everyone in earnings our delighted annualized on their a revenues dedication. third employees, I'm the which exceeded to and an Good welcome trust $X for Steve. our you, Thank quarter report quarter their history This like was our is XXXX call. third strong company's quarter

a million, $XXX.X X.X% the X.X% on on increase basis represent of an we revenues generated currency increase constant basis. a During reported which and quarter,

XX.X% quarter EPS to basis. X.X% Excluding a constant $X.XX. by the Health Integrated, on for currency increased Adjusted revenues grew

Excluding Health quarter the Integrated, was adjusted $X.XX. EPS for

constant the of to performed revenues the million XX.X% strong our months performance. a and the very year, basis overall currency has first on The by and XX.X% terms well nine $XXX.X is our year company $X.XX. grew in In of to grew by EPS

In our million $XXX.X XX.X% year-on-year in business a the up basis. Operations Management constant third quarter, reported and revenue, currency on X.X%

by grew the Excluding am since is in highest Health grew pleased Management that the the We a the I Integrated, with which vertical, Management quarter built and XXXX. which in Operations by of on currency Operations XX.X%. grew have growth our constant business. by rate basis, strong XX.X% vertical the which third momentum performance Insurance Healthcare up had XX.X% we

on first years. of the achieved highest is past months a constant four the currency of which rate a nine year, growth in In we the the X.X% basis,

industry geographies, across grown businesses. have We and verticals,

revenues of Management runway Operations great growth. annuity-based are a which creates in and approximately XX% for future comprises inherently This sticky our nature. our

our the overall revenues in quarter, on During currency which Health grew constant basis. Analytics to X.X% a organic on revenue quarter $XX.X year-over-year the revenue in are Analytics SCIO million. is This from by Analytics first basis an included

business some of engagements. this proactive a and non-strategic of by our of low-margin SCIO in rate client quarter Analytics rate growth and impacted The growth lower exit the small a was

As in a part of we manner. of these systematic prudent to actions portfolio types will continue management, drive

on the basis. constant of However, looking an grew currency SCIO, at the year first XX.X% organic excluding Analytics nine months

XX%. confident strong. new We as business continues remain win our clients XX% to of to be and growth well traditional SCIO business continue expectations of We at long-term combined our our both the pipeline Analytics Analytics in as to

long-term which to success. growth are to critical like imperatives sustainable would I and Now, our discuss two

company-wide efforts digital The ability to to leadership. as strategic two, our business talent reimagine enhance a transformation our due winning to models our are digital strategic first, large partner; deals and we and

Talking transformation. that about driving include deals business reimagining are models large end-to-end and first the imperative, winning strategic we

transformation with of platforms, capabilities and have to the understanding who ability partners and across full Our and knowledge clients technology like data a need EXL digital analytics, deep of stack domain business solutions. orchestrate their the

to ability driven reimagine a executives models C-suite Our large appetite who collaboration increased and with outcomes business have sustainable deliver drive change. strong to has scale

clients enabled take for value in also solving deliver a are of client enhanced accessing more on and technology. partnerships ultimately strategic pricing our problems niche tangible impacts for to innovative has deal long-term combination business We talent able clients. deliver models, us our to to through transparent constructs, and role business and a This

the and wins examples well This pipeline nature in is our as I to would share like today. recent of reflected such as our three

the strategic as the the the program. global scale work won. First, largest and a complexity It chosen leading of function This recently we the of is deal actuarial company. of to optimize the in terms the analytics insurance partner reimagine, of win build, and is were we ever insurance have significant a

established that automates and skilled have the scalable global talent skilled actuarial of model We portion the repetitive resources, of work a processes the redesigns highly reimagines significant leverages which actuaries. with align future unique function a right a to pool task, of actuarial

to deals with partnered We clients. plan global partnership leading this with leverage firm our other domain our drive insurance for to expertise, this consulting multiyear EXL talent, combine to capabilities a and transformation.

benefits client's of the life direct expertise a strong awarded deep the operate of transformation employee services of consequence recently our client. the strength front-office customer benefit win mandate a annuities to and and were employees' is the in the transform business. our our for and understanding digital center This space, we large capabilities, Second,

of of of same engagement the currently the engagements other have over the and service pursuing time. benefits practice employee our client offerings. with the Moreover, trajectory trust built underscores maturity back the and the growth are our of we our we delivery This on also quality

framework, we space, delivery our addressing and Bogota, organization center have experience experience our customer with of supported relationship by expanded eligibility, the claims Colombia. a commercial their Leveraging in Healthcare in Company. members Third, XX from we EXL's the Fortune recently benefit, services

Our member team to enhance departments able with resolutions is other the and experience. to tightly coordinate also expedite complete

in results profound their and business digital from experiencing shifts Our clients tangible expect their investments. are

be to ability we that our acquire, partner digital EXL, and organize base a have a their key strategy on develop, transformation thoughtful Our and as talent we of advantage. talent to develop. At deliberate depends the competitive source strategic

strategy development on talent three mindset. is and and digital and technologies founded digital Our comprehensive methodologies, digital leadership, culture and pillars;

from context in their to the of partner orchestrate proactively tangible digital on These strategy are consult ability clients solutions proficient Digital leaders developing to execution. deliver and in leadership and acquiring to on professionals technology. solutions is and business clients industries digital means This both end-to-end with the outcomes. transformation opportunities who

and methodologies technologies technologies, required Digital execute to our frameworks specific tools, develop expertise for projects and around successfully clients.

technologies as cloud, on methodologies AI, tools, training such towards directed are efforts and big as agile and automation, frameworks. capability such data solution Our development

for digital a digital is collaboration innovation creating and in beyond. the Finally, developing DNA to mindset This think right high and culture a and performance about all of and traits a includes, of agility economy. and re-imagine fostering mindset culture speed creating

for Digital also our culture builds and amongst desire self-learning of employees. spurs change the of all foundation the

our pursuing attracting technologies intelligence certification on framework. are our trained more on integrated and and solutions. to have model, and market-leading XX,XXX digital organizing an a All addition than that domains, employees digital program leaders teams we in digital is In talent our client-facing e-accelerator focused

experts advanced through and our ahead More stay of the on programs of data automation. management digital analytics market self-learning than and analytics X,XXX and

client-facing on implement re-imagine change and models to blueprints through and large-scale regularly go Our through leaders programs management how digital business diagnostics.

our we this always be and differentiating investment, our continue to with clients. factor. And a talent confidence We of of the market the to believed remain ahead have enjoy

the and row analyst Services responded in noted Everest Leader in Additionally, Care Group We positively their very as has was Insurance category and were also to the Everest Pensions fourth for leadership our EXL as XXXX Life capability. a the PEAK in Leaders specifically recognized a of digital our PEAK strategic for transformational position and community BPO delivery talent. Matrix, year BPO. Management vision Clinical positioned Matrix in which by

with pipeline integrated and technology-enabled constructs. our with end-to-end strategic includes deal solutions, strong, the remains innovative of transformation, closing, scale and In and proposition scope engagements larger

We have Management segments, in geographies. across verticals, Operations a market and healthy pipeline industry

a multiyear of pipeline offerings, interest strong data deep stack continue analytics management demand our for a business, large full have see and that our end-to-end in with market and We along demonstrates of deals to analytics Analytics solutions.

excited Overall, evolving. market we I'm are remains aspirations. and to bullish as and positioned opportunity the our meet the growth very well growing activity keeps space

know contributions and you after him pursue success years as in him decided endeavors. his wish Lastly, EXL other his has future We Vishal opportunities. to for XX-plus thank with

with an we'll and firm, appropriate. global when We working are executive update search a provide

over With will Vishal. that, hand it I to

Vishal Chhibbar

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

aware, of exclude results underscore Integrated will As Health discussion the and to the XX. of we revenues performance financial Health business. are Integrated of core by are down December My business winding substantially you in expenses the encompassing impact order

discuss generated All $XXX.X a on in currency up revenues my X.X% revenue year-over-year. numbers constant later million, mentioned Health X.X%. remarks. Sequentially, We separately will are herein of Integrated after I revenues basis. growth grew

up five XX.X% was reportable segments. as segments, from This year-over-year. from is XX our growth growth revenues in the and & Healthcare the million, driven clients excluding Finance defined Analytics rate quarter, For by the business $XXX.X This quarters. Operations last Insurance highest were Accounting by Management

our further and growth expansion license rate existing $X.X revenue growth client were million. is This multiple its of revenues boosted wins. continued XXXX ramp-ups driven double-digit with Insurance quarterly was XX.X% growth. relationships since by highest Revenues in sale year-over-year This XXXX. performance approximately by of growth

quarters. client was strong by expansions the business showed XX.X%. improvement a growth This with rate new of is growth XX relationships. and last existing highest This in year-over-year Healthcare the growth driven

wins. an client expansion and by or banking by verticals. organic existing basis. continued revenues Analytics relationships, Accounting of finance grew Sequentially, perform year-over-year year-over-year, driven X.X% on This X.X% grew in year-to-date and and up driven Analytics million, with in ramp-ups growth well to XXXX XX.X% $XX.X utility of Finance client new wins, was X.X%.

investments primarily Adjusted due in client digital Adjusted and capabilities. was operating the operating in for made sequentially, ramp-ups. by QX was to basis operating points year-over-year, XX.X%, points XX margin investments XX up for leverage basis margin quarter driven down

Our adjusted year-over-year. compared quarter million, up year, for to EBITDA $XX.X last $XX.X the million X.X% was

quarter for Our GAAP was tax XX%. the rate

the Excluding normalized the period namely prior revaluation XX.X%. was discrete items, taxes, our and of deferred of rate benefits impact tax

XX.X% Our the XX.X%. expected tax rate range to is for

Our $X.XX, up EPS for diluted adjusted quarter year-over-year. XX.X% the was

to performance, moving excluding Integrated. nine-month Now Health

with X.X%, million, and in Insurance, On XX.X% Management Accounting growth X.X% driven double-digit XX.X% the organic up period basis, EXL Analytics Our revenues grew year-over-year. segments. were Healthcare, by & for Operations $XXX.X was year-over-year. growth This Finance growing Analytics and an

Our was up $XX,XXX, year-over-year. revenue employee per X.X%

margin period for months digital million million The operating last in EBITDA of Adjusted cash $X.XX, $XXX compared investments was basis by the the points the flat better capabilities of by flow was the generated for XX solutions. for $XX management. down EPS XX same to and driven in were year-over-year, period was higher period strong operations XX.X% XXXX, Adjusted DSOs We and year-over-year. working first from nine up increase increased driven at capital days. year. XX.X%,

months and under and the down million in and of investments shares million of -- XXXX. program repurchased $XX During $XX.X million, $XX.X million $XX expenditures spent our $XXX.X XXth repurchase $XX of nine and cash paid on credit as September year, million share on for of had cash the of million resulting first short-term revolving We net we borrowing capital we facility. $XXX.X million the XXX,XXX

that when I confirm, XXXX business. hence will our no will be like I'm Now, wound material to the happy as to we revenues to complete contractual Integrated be impact Health commitments. in Health XXXX. XXst no would December, earnings down in our substantially briefly of discuss There and Integrated

of $X on of Revenues adjusted for quarter to points Integrated our loss an impact for compared Health in the XXX million EPS leading a for Integrated million year-to-date. $X.XX margin, adjusted QX operating and $X.X had $X.XX quarter, dilutive were the basis Health to XXXX.

impairment $XXX,XXX of quarter, charges the we restructuring excluded is and the recorded which from adjusted addition, EPS. In for

of full million loss charges the XXXX, $X.X For recorded from we expect charges we of adjusted incur $X.XX, midpoint million. given the $XX revenues range of expect impairment restructuring restructuring of last a quarter. $XX unchanged on as mentioned basis, the and And have Year-to-date, $X.X quarter. EPS we approximately pretax year to to million million and guidance last in approximately of

with of As are excluded in costs $X in of not costs, million exit the to EPS Cash be communicated the adjusted as connection million part to expenditures are onetime earlier. $X are down range wound and our estimated from they guidance. our are

guidance Now, XXXX. for moving to our

$XXX first narrowing performance of million $XXX million revenue guidance million year. our visibility revenues. to $XX $XXX are from We to nine the our based rest to months This increased includes million for upon Integrated of the million $XXX Health and

guidance a of previous $X the constant million, growth, increased XX% $XXX owing Our XX% year-over-year declined represents by million of guidance midpoint last currency $X from headwind since million to XX%. to guidance FX This XX% our guidance. our to to a

Sequentially, no in the for anticipation by we expect quarter. driven revenue QX, be and flattish, of sale to license seasonality

Our from from to $X.XX from $X.XX increased adjusted has a previous of guidance to $X, guidance. up $X.XX EPS midpoint for to $X.XX $X.XX our

ranges to our adjusted $X.XX. EPS Integrated increased $X.XX to Excluding Health

Health on delivered Health $X.XX up constant excluding we and year-over-year In XX.X% mentioned, Adjusted conclusion year-over-year. EPS was our X-month of as revenue organic Rohit healthy growth basis is X.X% Integrated. currency excluding Integrated business the have

is the business trends. with well performing revenue growth improving Our

will the are confident XXXX. year with winter We that we exit for strong

Now to take be Rohit would and questions. I happy

Operator

[Operator Please Instructions] your proceed And comes with our & Mayank from first Tandon question. Company. with question Needham

Kyle Peterson

Hey should Thank place? see for that commentary Is Mayank. Want rate for something was you Or the fell think It kind to sustainable kind we a morning, as this were growth of The the inflecting came wins how Peterson its this and want everything few to just of stronger. about Ops about there a potentially Management. growth in actually question. on the deal we touch bit the think like moving positive. all on seems good of forward? business? Kyle is piece kind into and of should Just taking being

Rohit Kapoor

Kyle. Sure

Ops some are pleased business and clients new of very their we've on with And our some is ramping So our Management the are the we accelerating. how how very, pipeline developing, the certainly with business, is had momentum us. of how up wins

had growth of The license as onetime sale third the growth mentioned we normal. much rate include rest a of the was business but that million, the $X.X quarter in XX.X% of did Vishal which pretty

are So as Ops our to to growth is move going continue going the expectations remain forward. we rate to business that be the of strong Management

well in of that would are rate verticals got and was and opportunity as the seen You strong. our leadership as size is enormous. growth the have where the Insurance in areas market out These Healthcare Management we've Operations particularly strong industry positioning here

Longer continue So Management we currency are expectations very our grow constant on to our from to the X% confident an rate X% of between being term build growth rate business basis. and and able here. business growth organic to Operations continue to remain

Kyle Peterson

like soft. Great, And that demand either to Or seasonality came you I something Analytics that's a or mentioned anything follow-up that? anything guys of little helpful processing? be the kind or lumpiness, there SCIO color. know -- then just revenue kind of we the in claims piece, should about concerned a with client is headwinds or on Was related in the just just

Rohit Kapoor

Yes.

in SCIO what expected. third softer had we from than the certainly revenues So quarter was

that by SCIO that visible the new already We've of pipeline growth really is to number of and won implementation onwards. deals think a I the inspired QX what is in we the some and is business However, more much are in us strong.

had implementation So forward. that, And the client that's wins that we contribute our business. the that growth this about which SCIO we've of drive think just to execution is the the these something going in growth and nicely will will

Kyle Peterson

Thanks right. All guys.

Operator

with question Thank Koning you. question. Baird. Dave And comes Please our next with from your proceed

Dave Koning

Yes. you congrats and on quarter. Hey guys, good a thank

Rohit Kapoor

Thanks Dave.

Dave Koning

of headwinds then obviously little like of there of for that's next or and that think a stuff year? tailwind are a And Health grow make the and of sure all, I part I just but nice a as this that understand it EPS basically maybe little too? of start Yes. year? to headwinds $X.XX year there and the gains about taxes with next $X.XX mean, Integrated to next of year take and XXXX so is guess out we fair first base to the And are

Vishal Chhibbar

So hi. Dave Vishal. is This --

You're right.

my our don't as we Integrated Health any we mentioned XXXX. And mentioned I Integrated in remarks impact in as expect midpoint Health Excluding clearly $X.XX. guidance our of is of

a So at that would it. way look to be fair

which the then. -- in the India the actually from reviewing new headwinds are XXXX in in been rate tax There's laws Any taxes we of because we reduced. have India rate tax has

reviewing we'll those we So and details XXXX. we are color have probably in when better our guidance give

Dave Koning

there higher Or Okay. Great. off onetime other there a that sustainable? was than I falls And Was lot know we then QX? in thing related expected. the one is in anything or income just interest gain that -- anything level QX in

Vishal Chhibbar

QX income investments because get the conditions fund, yields interest that higher India can depending the invest volatile we where because So -- -- was short-term market in we in mutual are but not sometimes on the mutual be of quite in funds which the and slightly short-term fact the yield volatile.

probably in get benefits did for we return some QX. and So that will a more yield QX in normalized have we

Dave Koning

you. Well, job. Nice thank Okay.

Operator

Foresi Thank from question. question Please with Cantor Fitzgerald. you. our next Joseph with And comes your proceed

Joseph Foresi

sorry Hi. in color us give you I'm organic XX.X%. be? what if growth missed what would could was growth next your quarter? rate it I the year on know expectations but just organic for the gave some And I you maybe the

Vishal Chhibbar

quarter rate The organic Health Vishal. the for growth excluding Integrated is was This Yes. X.X%.

Joseph Foresi

Okay.

Vishal Chhibbar

Yes.

Joseph Foresi

given you be there expect Is thinking in model we some as But we to talk those long-term should then about as that start business. And about I for else out XXXX? year? hold XXXX, to each growth anything you've know, rates we do

Vishal Chhibbar

with SCIO Analytics between mentioned be So XXXX, rate should to -- modeling X% X% combined growth of our XX%. go that and growth XX% Management growth we expect Ops for would will the that year we rate Rohit rates to as between

Joseph Foresi

for question last then me. And it. Got

a Will XXX said just I'm with point margin but XXX I margin starting I a On front that to trying moving was basis I get start that guess, points you point year? sense you're Integrated of basis drag. get of the back next think the full you parts? some going know Health XX, X, to

Vishal Chhibbar

think about for impact quarter. basis XXX XXX for I But it's The points. the points the year was basis

So that should next come back year.

Joseph Foresi

Got it.

Okay. Thank you.

Operator

Thank next your Please Cowen. Bryan question you. with question. with comes our from proceed Bergin And

Bryan Bergin

quantify you. of was impact how Hi. quarter? during the exits Thank you analytics Good the Can the the within morning. much that you mentioned strategic

Rohit Kapoor

sorry, I'm Bryan.

You want us impact quantify the of? to

Vishal Chhibbar

The strategic...

Bryan Bergin

pipeline. guess exits that long you the strategic The had. I

Rohit Kapoor

Yes.

but something terms a do not we on, profitable our which are at of that's how should disclosure So exercise portfolio of which and provide relationships. evaluating entire clients of are portfolio an which is in clients ongoing as this clients we which look something taking we our overall manage strategic,

relationships few know which we low rate there focus we the create and our you our a and be is were which value are in very business kind business decided strong exit clients because strategic those relationships those can Analytics So client as can we where and were margin able want we non-strategic, of nicely. and to on to grow to growth

So the of half basically think that we an this second falling year. I this undertake. that impact exercise the And is ongoing in is of

Vishal Chhibbar

see will benefit some the that you in of Bryan, And margin in coming quarters. through coming line the

Bryan Bergin

just margin. XX% actually was far That next gross question pretty to I here or that under think as been my -- be or it's consistent going so Okay. as

curious should that how I going So thinking target be level we was about forward?

Rohit Kapoor

Yes.

we the our reasons the profile portfolio. factors be there are business. margin the optimizing trends one be I improving And Analytics as in the and So for of would way mentioned would

Bryan Bergin

today just Analytics on Just recurring? Can Okay. mix? mix embedded how much update portfolio how sense an much of is versus a that stand-alone give is of me the far you as as the

Vishal Chhibbar

Yes.

of report analytics clients It rate What had stand-alone revenues we are to Management that. our we basis. Management some But report for part the stand-alone and growth numbers. don't better that. all ability outcome the terms stand-alone probably numbers in impact Analytics we on in on Ops is the our the revenues embedded of is deliver disclose the So for all Operations are

Rohit Kapoor

all on our XXX% stand-alone of we is separately be clear Analytics to for The revenue is part any is Management doubly which report Analytics that just segment. Analytics Bryan revenue So us. Operations revenue embedded that

Bryan Bergin

Okay.

one-third, mix that two-third recurring. versus So project it's still

Vishal Chhibbar

Yes.

and -- about based. and in over as recurring So energy annuity of have talking remains been revenue levels two-third terms being we consistently recurring that -- the the one-third

Bryan Bergin

Good Vishal. Thanks, Okay. luck, guys.

Vishal Chhibbar

you. Thank

Operator

with Thank Nolan you. question. your And comes our Please from next William Blair. proceed with Maggie question

Maggie Nolan

contract spoke of contract the Thank In you. of types pricing, can length, those win, seeing? or type rebuild similar And of in structure engagements this of through, the you program is terms of from different terms in a maybe margin of talk how deal that either large is the analytics profile you change things? typical the the actuarial you're that of

Rohit Kapoor

Absolutely Maggie.

a we is business. this I deal it's a the unique Analytics are yes, of beginning So, very that in trend also but the seeing think

So will a well. which which consulting It is a firm deal, partnership forward. is the actuarial as for revenues long-term and we the the it major where win years. year deal transaction, across a next in for implementation going kick in is a And us multiyear goes done with five have

pieces So can much of clients. our business this larger created for is impact that a unique business and we've model we

on on done transaction pricing basis. this deal pricing is The a

basically a because it work will doing be out part out to up the as that us There automated. here reconfiguration we this be some of the allows So of we'll work increase able of volume get ramp is associated here. to

done this And to doesn't the rest fully by require this of of will the do global leveraging with be delivery part business set, be will Some qualified model. right which on actuaries it skill done our work. actuaries

much by that and Analytics and of us seeing we engagements much in how business. analytics the sized larger generate pipeline, So this reflective will growth it in are for is we excited the stronger deals remain

Maggie Nolan

and trends you're based there? remind much Great. transaction seeing or can the that And consolidated how the then for company, you is us outcome

Rohit Kapoor

Yeah.

overall and at based is pricing transaction for XX%. outcome the So model based company, the

Maggie Nolan

So there? were there trends to call out

Rohit Kapoor

Yeah.

executing on related business and we to to impact, that tying clients are our looking which compensation outcome. something, business the in digital as is terms quite and for to increase comfortable transformation. this a likely think embrace particularly continue implementing I realizable is and and of is which They're tangible

but is ready because pace that years, over we actually bit will for of many service are are for models, thinking the a outcome based even fully is going ready increase to provider a based though the this our continue pricing not as transaction gradual it. change percentage of be to clients and So our

So XX%. will up the inch from should the change but it take gradually place

Maggie Nolan

you. Thank

Operator

our Thank Justin from question Please Wells comes question. next with Donati with you. And your Fargo. proceed

Justin Donati

Hi, thanks for taking question. my

in you're Just to large of deals, and advantage us of of growing level you of making the demand that on this some environment? year? Do digital of light end-to-end this take investments number can digital R&Ds update the you to need investments accelerate see those healthy a

Vishal Chhibbar

is this Justin Hi, Vishal.

had in make and disclose steady solutions As prepared in those that solutions. digital capabilities we'll capabilities of to that to investments. digital to don't I remarks my we've continue these We R&D investments the in mentioned increase we develop and number but invest and building continue a

Justin Donati

around any Okay, you Accounting similar thank in of offerings? you clients last insurance level provide talked you. your & using Finance of granularity verticals then offerings. quarter that Healthcare And using multiple about -- number multiple of Can and some clients a are

Rohit Kapoor

Yes.

I think penetration existing of we the see the with that's one us. trend, and continues And, to clients -- that using multiple are we our offerings and therefore, continue relationship clients. the where see to which depth service from expand actually

out across These we're quickly scale, leadership that on here. on and multiple We're are industry some also replicable positioning solutions. advantage seeing clients. as our therefore, an integrated seeing on And, we develop size

in is of we our of industry that penetration the developing. clients, both with greater Healthcare and being based new these we by work a as So growth do solutions adoption frankly driven of well the are some that integrated Insurance as

Justin Donati

I color. appreciate Thank the you.

Rohit Kapoor

Thank you.

Operator

Barrington comes Vincent with your with Please Thank you. question. from question Colicchio And our proceed next Research.

Vincent Colicchio

Is I declined bit year-over-year. Rohit, the that going in there little anything on U.K. think Yes. the mix a there?

Rohit Kapoor

Vincent. there out no No the in real change There's U.K.

Our attractive clients positioning new is strong. we continue to win very there. out out to and there remain continues pipeline The

As is hedged. that for know you UK FX of most us our also revenue

any impact So of business. portion currency really our We real up doesn't a substantial on don't moving of down, material Brexit that see out really or impact have a the there.

our operating normal we and business much to business continue is pretty Our grow as there. build and

Vincent Colicchio

the tax about decision in question treat to a India, economic special Vishal, how there a on has been And zones? situation

Vishal Chhibbar

want So, higher which benefit. are -- tax special zone the there, we laws as But to our laws you with have have compared we new is the tax we corporate retain rate why tax some a introduced, have huge been benefits whether That's amount benefits the to new lower to which a economic economic are tax which or level. to is of you zone our those of have peers. rate choose go which special on don't tax

in India. are when entities So I give guidance the -- some that's our performing a study have we for a earlier, color legal to that's all better as give in And impact said annual would XXXX. we we tax

Vincent Colicchio

Okay. Nice guys. quarter

Vishal Chhibbar

Thanks, Vincent.

Operator

Thank question you. And our question. your with Jain next comes from Puneet with JPMorgan. Please proceed

Puneet Jain

within business Operations is environment question. much and about to spending within Management? your of Analytics to spending? project-based exposure talk my exposed Consulting macro taking Can for Thanks you Hi. How

Rohit Kapoor

Sure, Puneet.

of and to we reduce benefits times is clients amount looking a greater first global rate defensive introduce model are is economic business costs our So conditions, the at of that transformation overall all, growth and the business slower, do economic on think based And that model. us. when

the that we are revenue there Analytics expenses Consulting. discretionary have However, within and and within

is Consulting, In entirely discretionary. it pretty and much project-based

However, that project-based third In a a business subject revenues. the us business our Analytics, volatility. of that the our about good portion of of represents Consulting for is news and to is kind overall small is

of is be whenever been our sort be much time the However, of. the global economic at there's an should And pretty adopting the to have expectation there this we a in that smooth we impact and -- growth an analytics, during not downturn. of which seen pace even economic past, growth clients are

Puneet Jain

for talk expect $X.X Got the about And should benefit million margin license revenue of from it. we how quarter? what full talked year? And viewed also do revenue the that you license And the about in much for can you revenue, non-recurring? be as

Rohit Kapoor

Yeah.

kicking revenue. So, revenue of to that's record And have to license sales a each as expect We our some license this where revenue we look year. several years, the any impact margin material is new for expect license track would do at way we high license further year is in. get best every which the I our the in coming of revenue get on The a profitability the it revenue, we a certainly, have year our will for amount take quarter in been us. the not QX client because last revenue license guess revenue in business,

This we continue year year-on-year, already but So, financials. can't on is got in on basis. our included whatever and which will quarter-on-quarter predict is a episodic this we've this something is

Puneet Jain

I But year any you level license specific -- agreed. year? have in baseline No, of any agree, the what's revenue

Rohit Kapoor

typically We It that we take relationship couple year. sign up. each the client of the that license size a have place on of sales depends

So to or again, license number with with a sales. a baseline it's provide the associated you very difficult

disclosed, got quarter, that we sales like For third the we in quarter. the license $X.X it's third million of

Puneet Jain

Got it. that your be clear model, is And solutions-based correct? based. Is license of like business most just to BPaaS on on not

Rohit Kapoor

some business. revenue percentage our overall is of combination and revenue we solutioning platforms certainly along with along larger -- do have that. the license both. associated But and of services It's the BPaaS revenue with

Puneet Jain

you. Thank it. Got

Operator

proceed next our And with Citi. Instructions] question your Ashwin with Shirvaikar [Operator Please you. question. comes Thank from

Ashwin Shirvaikar

Vishal. Rohit. Hi, Hi, Thanks.

by start Vishal, me working a it's with pleasure you. been Let saying

Vishal Chhibbar

Thanks.

Ashwin Shirvaikar

in stay So, touch. can we yeah. Hopefully

trends. of So an towards the on back this OM that all I investments made, revenue me pipeline. the all more It to on side you've be guess given -- should you're question given peer is industry the it of more comments growth. sustainable is sustainability guess about seems the getting I And

it pruning I of also things, confirm after on then the it true. normalized multiple of down seems those all getting more impact wanted kinds would And just a considering investments. that be you're in analytics, into organic -- normal that rate that growth back is of both and inorganic and to the years

So would that assumption? be a fair

Rohit Kapoor

So Ashwin, think absolutely I correct. that's

Management I think these of we for be at is when a to for Operations demand the strong. continued segments biggest for look area us confidence and take Both of Analytics. very environment the

Operations are In larger seeing we deals. Management,

our therefore, where attractive be business kind out We deals, to we clients. of model our resonating are transformative work end-to-end the much more are more and do we work to seems seeing there. more And is that quite nicely seeing

is a demand actually able the data, explosive lot in that insight of one which and generation. data the capabilities we it's analytics. stack need has full to to very There's few Analytics, a vertical is And management, and of modeling be predictive strong. of companies utilize something environment are very In

strong and the executives. with seeing and the us also having And the also environment get seeing our more Now is the conversations CEO clients C-level that demand but now elevated. these prospects conversations actually with are And much large with we're we are deals. are they the win

how strategic much good And these these both therefore performing. more So businesses we as they're feel are to about conversations.

Ashwin Shirvaikar

operating well I was Integrated. run it. trying Got Insurance. The Other? question business Health margin some seems there obviously, margin doing the segments There kind if various at drop-off know And gross a across on Finance and margin of in be out, drivers I'm because currency. look any to about you're gross but Accounting have basis the overall trajectory then into as making. an is you that of just either to investment in you're of are I figure to looking an Healthcare, what's I I'm of the sort assuming or All & because that

Rohit Kapoor

Right.

correct that. include absolutely you're think I Integrated. So The does Health business Healthcare on

Health segment utilities, Financial out that impact includes Banking reflective The Consulting. margin report out there Services & gross we the of is and All So the of Integrated. Other

So that's we've what there. got

But Financial the us, will customer management Banking mix on again, there. quarter. drive margins I well. Wherever of impact there portfolio performing we're is take something we'll continue revenues And an think our particular overall on of our in place which that's good be the and Services, is impact an out for traction so to & the in there that seeing that

Ashwin Shirvaikar

last then you putting at some are Got on as it. And newer process for yourself, again look Health M&A Or to is, question you the beginning and time so to and are obviously, forth? so away you here? going stay start with and behind Integrated

Rohit Kapoor

Right.

integrate a to always growth at can we assets is So in which strategic for and acquire M&A ways them. look to will pathway us and continue we

realize Our But general been assets, right it have value them fully of when the and asset. to some good that these make experience investments we has sometimes we've in time us that the shown integrate strategic that strategic made. takes

forward. M&A, we'll doing terms So to we'll in but going also focused prudent remain continue doing on acquisitions be of

Vishal Chhibbar

of healthcare And gross negative. XXX Ashwin Integrated Health the on to margin basis for impact about add, was just points

Ashwin Shirvaikar

guys. Thank it. Got you, Understood.

Operator

Thank you.

question. Our with Please with next your Stifel. question comes from proceed David Grossman

David Grossman

Thank you. Good morning.

Just a couple of that questions have the quick follow-ups to some of asked. already been

can looks you of First, bookings disclose and that to on a anymore. a you XXXX, into backlog what going you But you new the – year. and know the basis, give sense going executed be basis? year-over-year fourth don't just on the on Can us in that the how the bookings into kind business a, know going momentum in Rohit, next year-over-year backlog quarter are I

Rohit Kapoor

David. -- hi So

bookings are continues to our our progress and continues nicely, look, backlog to increase. So, and

So terms have year. next we of visibility good in revenues for our a

The year. size quite significantly from has of expanded the actually pipeline last

win coming seeing are a into pipeline. have And able larger larger deals be more, we deals So opportunity we are that to to the out here.

on the with comments we momentum we where in currently And are about I businesses. we positioned. are growth both that feel seeing progression So line the the is, good think in my

David Grossman

you And basis right, you thank -- I that. think, think heard from Health mean, I headwind mentioned XXX margins, I a the Vishal Integrated. Great, on it I if point for just

numbers year. around that margins, would this So you put right XX% round for

I expansion just high at basis, you. look but we level, into year. next for year, a starting a pretty that as like seems So, to to good year, force not guidance a on next at point, just into you pigeonhole And going providing not into that next year-over-year mean

programs you're base? that, expand much are of that in point then XXXX? on assume do just to base expect Or starting that expansion that on going there you investment we that's really you think Should your kind

Vishal Chhibbar

Hi. David.

terms before Analytics in we As pruning of doing mentioned portfolio have on are I that, always how improve mentioned we levers our our to you some how And margins. we margins. improve that to

versus take give, you investment. we the need a XXXX. when I think, And as what an guidance always on balance our more we'll give bottom-line you you to what is there But would between color bring that in prudent guidance and call

ramp-ups, is a off. is But And portfolio of are There to all benefit year. costs obviously, paying have of the investment of levers margins. you that this strategy improve optimization. the is, There the for there benefit benefits a our us taken there

come those. to a We'll continue when give have all we to guidance at for balanced with And look approach, XXXX.

David Grossman

Right, but right? just to us be on think basis, XXXX, clear, pro want you about to that forma do

Vishal Chhibbar

Yeah. of Health be and will Integrated The the that there. impact margins, the definitely on benefit

David Grossman

most have just is margin, clearly, lastly, the you presence emerging in on then, the terms Healthcare. an domain second expertise kind the that, question and in Insurance of and scale in Right is and of

Healthcare. margin, I said the XXX think, on you in basis point headwinds gross

the XX%, margins that other gross Healthcare you to in XX% the are in think and Insurance somewhere low the affect should So among mix, in margins. Insurance the XXs. know I continues? the things is trend And range. But that favorably strength puts mix on if going I

Vishal Chhibbar

you if look So at...

David Grossman

reported, I'm talking corporate about blended margin. the

Vishal Chhibbar

Insurance I this think, has can gross sequentially. and year-over-year clearly improved, see you sequentially Healthcare, quarter, improved. right, margins, both the margins also

year-over-year. it's Health Excluding improved Integrated

and XXXX. expect we takes. to expand. get segments overall, And two will to we and there. more scale other we margin especially benefits puts Healthcare, the we I these But the be in do think a as gross But some have margin segments So tailwind get in

David Grossman

Thanks great. very much. okay, right, All

Operator

concludes like it back Mr. further to This any now you. Kapoor Thank remarks. would turn to, with session. our Q&A I

Rohit Kapoor

Thank you.

year, about And more have we getting third think built-up, of you the quarter importantly, XXXX. thank So all exiting we are growth the our XXXX for excited that about and call. as earnings attending momentum into strong but business our we this

last I Vishal? as I to the call to the end turn going remain such. to we future excited want call for before good. company about the think Vishal, is our is ,as it prospects going over forward. we do And his be

Vishal Chhibbar

wonderful like meeting Thank the analysts discuss creating you, would our I and of in theses, CFO investors to value. the a as XX shareholder all I for really of thank Rohit. and years investment EXL's EXL. success you, enjoyed to

I forward with will I keep interactions. truly in But to miss your do all. look touch our friendship and you

I growth Rohit for the you and of especially few thank Rohit look to and a next friend. mentor forward years. EXL, years, management being team over the seeing a Finally, a XX wonderful continued for

you. Thank

Operator

conference. Thank today's this gentlemen, concludes you for participating. and Ladies

disconnect. now may You

ExlService (EXLS) 29 Oct 192019 Q3 Earnings call transcript