- Earnings call transcript Q3 2022

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Operator

Good day and thank you for standing by. Welcome to the ExlService Holdings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Steven Barlow, Vice President, Investor Relations. Please go ahead.

Steve Barlow

Kurt. you, Thank everyone. Good morning, for Conference joining XXXX you Third EXL's Results Call. Financial Thank Quarter Barlow. I'm Steven

On are our call to issued Executive We the this today you've review Officer; and Vice hope earnings and Chief our Chairman morning. QX Maurizio release an Nicolelli, had Chief XXXX Officer. Rohit Financial opportunity Kapoor, we our

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

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

Chief turn of can call provide release certain During which measures believe measures may Officer. the Rohit investors. as on useful Executive well EXL’s these as Rohit? sheet. be GAAP Reconciliation now the over information fact reference non-GAAP to found I’ll we in for press call we today, financial our Kapoor, investor the to

Rohit Kapoor

XXXX call. you doing are you, Steven. everyone. of all Thank I well. hope our morning, to earnings Good Welcome QX

to report QX. quarter the first half Following XXXX, our am in of in great strong pleased I another performance

X.X% XX.X% third revenue up from and QX up $XXX.X year-over-year. Our quarter was million,

year-over-year. is was share which adjusted $X.XX quarter, up EPS the For per XX.X%

and to drive year-over-year. million growth, XX% up Analytics sequentially X.X% in revenue business $XXX.X for the quarter, Our generating continues revenue

nine accounts our XX% XX.X% the now For months Analytics total for Analytics our of XXXX, grew year-over-year. business of revenue. first

quarter to at growth, reported a $XXX.X and basis. third in also million had XX.X% Operations the business Solutions strong on Digital growing Our

year-on-year first faster Operations our For of XX.X% expectations. which is XXXX, revenue increased the Digital than months nine and Solutions

quarter are strategically volatility environment, growth Business growth heightened our macroeconomic our business uncertainty experience. of in In Solutions looking Operations generated and year-over-year our improve the even XX.X%. clients customer Emerging was reduce they year-over-year strong third streamline important insurance The Digital In which growth facing due costs clients. in and grew our operations, business double-digit are and for become relevant model and to which end and environment, our XX.X% more revenue this has our business current to and

to drive in We better have intelligence decisions, our the all operations. streamline embed the make helping and we data, tools harnessing necessary workflow business this By clients transformation. are

tremendous to I improved containment are few like share create improve experience. We and clients a rapidly of help illustrate costs doing to analyzing speed with unstructured customer developed that transformed impact, an how major to experience. terms client the By and disconnects cost we inefficiencies we and immediately driving identify interaction and to customer solution customer our a in help reduce utility of U.K.-based customer examples scaling solutions recent both this that were a a creating poor operational that engagement. office service front to completely recently We user office data, their able the powerful were engagement. back immediate with are would engagements between

in those the and reducing data-led handoffs of to causing the and manual that error-prone processes finding gaps Our problems. resulted number approach closing eliminated were

of and U.S.-based with to wide By times customer traditional cut insurance example, AI a service also a introduced we multiline seamless engaging We helped solution insurance customer view opportunities, data XXX-degree the its collaborating the offer customers. true then a capturing range network. right a detailed create sales have the channel distribution we've with that right sets, a processing and and used matching created cross-sell journey. more the life another upsell agent view to carrier conversational to user personalized This can at result more experience. that of and to right policies expand customer targeted, a large In been efficient able is time. nontraditional optimize customer been end more is The

in have modeling bank. us industry. for robust the launched new a is goal capabilities of this The a products. operational We risk engagement lending initiative multinational unsecured and that our for decisions to is key develop supports smarter with major our also leverages strategy advanced risk logo risk a decisioning which deep This new expertise an credit banking

lending the we to data-led form valuable again, incredibly improving side real-time current become market has the environment. while of the our experience approvals. are in credit strategy This Here, on deploying streamline customer combination decisioning in operations

I talk would Now, our to about like and employee talent engagement.

X,XXX ahead expand particularly we of to and we employees more our Much AI data strategy, talent engineering, than workforce. continue capabilities domain. been talent that acquired our intersection talent areas We the year we and in data-led as science, at analytics and demand, entire growing business complex data and of such In the on cloud. added our excels in-demand added has of acquisition digital. Year-to-date, to that base to of data focused in stay of XXXX. That's have the light of

through third in Approximately a population learning strategy learning with digitally high. platform. development. our been on-demand and learning new on in very engagement base talent alone. earned learning driven is with XX% also has well-planned X,XXX internal our employees of About building have the quarter strong the engagement successful have platform of Employee regular our employee a platforms We certifications

grow in EXL and our invest employees thrive resources creating continue heavily and the at to professionals. as need We to

attrition now stabilized to pre-pandemic employee levels. has rate company-wide our Our

talent We, Analytics rate for retention quality an in employee remain Our attractive continues consistently EXL to believe been a talent. high-demand in has therefore, encouraging market environment. destination

is of strong with Digital deals Solutions. clients pipeline numerous Analytics large and Our opportunities with strategic and Operations in

business all year-to-date new have across logos lines. We also XX added

our remain I optimistic prospects. forward, Going continued growth about

to you over in-person an to look are Maurizio. hosting you. vision to Analyst sharing call Park Investor over that, updated I strategic forward growth the we Day XXX that turn November our XX I’ll call and of the I morning the With Before with Avenue. to on hand remind wanted Maurizio, for We at

Maurizio Nicolelli

Thank Analytics, provide into and XXXX and XXXX for businesses, client by travel $XX.X an of our followed grew currency $XXX.X us revenue On across of healthcare revenue Digital both from revenue on Emerging volumes client up revised three Including year-over-year. for Clairvoyant million, Solutions Sequentially and XX.X% Solutions grew everyone, businesses, Insurance second XX% XX.X% Rohit year-over-year. Operations sequentially. basis. revenue quarter hereafter wins mentioned currency year-over-year XX.X%. $XXX.X will Operations revenue as Clairvoyant, and growth Operations up financial up by in revenue XX.X% quarter and Healthcare up in Revenue Digital and quarter our wins constant and million, banking currency $XX.X generated organic by performance grew year-over-year Digital segments, vertical, constant quarter, All business. was had and Adjusted year-over-year. down X.X%. on XXXX. from outlook first reported $X.XX, from a excluding defined of solid reportable the growth We our our revenue client lower of quarter year-over-year, demand of integrity. Emerging of vertical, million, up a driven thanks, was up I was of million basis, insurance grew driven basis. volumes was XXXX. in Operations insights of up generated and and year-over-year, the third and Analytics strong in for numbers Analytics new existing million, relationships by both X.X% XX.X% XX.X% $XX.X This third in with was in XX.X% our revenue X.X% and year-over-year. driven million, $XXX.X year-over-year. the new Analytics transportation X.X%, a payment financial months services and was XXXX, the in revenue EPS third consisting consisting year-over-year. are of you, morning. new expansion and XXXX XX.X% Analytics casualty demonstrating by second joining in our million, this reported our Solutions a grew annuities, the contributed Analytics vertical, nine The and our XXXX. and volumes The XX.X% and increased services. in up on of the and $XXX.X XX.X% and businesses, businesses, constant property consisting Sequentially Digital The in life client third by and Growth Analytics and reported basis. XXXX, XXXX services Solutions Analytics driven higher of quarter. wins clinical

SG&A points driven XX.X% decreased primarily basis by to Our XXX year-over-year by leverage. operating expenses

office. new of XX down driven as for to operating the we quarter year-over-year, margin ramp-up higher client in the XX.X%, operating by adjusted wins Our return the basis expenses investments points and was

Our due to XX rate in mix, change was was XX%, basis higher year-over-year. tax the profit a increase for credits. higher driven offset taxes effective in certain by tax jurisdictions by quarter up This points

Our on adjusted up quarter basis. for EPS $X.XX, reported the XX.X% a was year-over-year

now. performance nine-month our to Turning

Adjusted by In $X.XX currency expenses basis. margin wins, months higher an as by new digital basis Analytics, basis. Insurance. XX.X% nine return reported for driven a basis for and line ramp-up year-over-year investments client the down constant driven period was on The on revenue and office. XX.X%, period XX for operating up Emerging $X.XX, EPS first was Our a for and was XX.X% the the the XX.X% year-over-year, adjusted our up billion, needed points up was expectations, of to with growth organic on we currency operating the constant capabilities year-over-year

balance sheet strong. Our remains

from due year, and the on net the short- million higher million. first $XXX investments the we cash including higher operations and generated position last September revolver same In $XX flow of to million cash million taxes. $XXX million $XXX of and Our debt period in year months to a for XX $XXX of our long-term variable was cash compared nine compensation was cash and

expenditures performance and current the the Based we $XX for in for the repurchased shares and fourth first at increasing nine XXXX. million $XXX. we of of strong first months, outlook the are our cost spent average our quarter, million nine of $XX capital on an guidance on During the year our months

This reported as Our to previous represents guidance is year-over-year revised million foreign of follows: constant to a to $XX and to a billion increase $X.X guidance of $X.XX currency on $X XX% the organic XX% XXXX billion million of from basis. of an exchange This to billion. on range of at includes is expected headwind is $X.XX in midpoint billion. XX% be which $X.XX an Revenue XX% basis growth the the

to EPS foreign and range the range in our of $X in $X.XX, million, above, our between $X the expect to between gain be Based $X expense a and up to to effective XX% exchange million we million XX% to on expect be interest rate adjusted net We $X.XX $X the million of and XX%. tax XX%.

expect We of the million. capital expenditures to be $XX million in range to $XX

rise, As flows debt. interest of allocate buyback rates both cash repayment free to and to we continue will

As demand Solutions in in strategic Rohit mentioned, we remain believe more the even concern. for Analytics environment. pressures our verticals and and services of will Digital current Inflation become Operations a relevant and the our

However, our to the commitments we and be we customers to our take without I to culture, have tools our sacrificing questions. costs happy Rohit believe manage will stockholders. your now and

Operator

[Operator first from comes from Bryan Instructions] Bergin Cowen. Our question

Bryan Bergin

can certainty? conversations, around start really touch to of Has And demand. changed ago? tone the that client in you within client pipeline you helpful, non-U.S. color too just days can there macro composition wanted be on your changes XX decision-making? on if material Any Any too. all versus the this with would give I just high updated

Rohit Kapoor

Bryan. Sure,

So our to demand do as we strong. We Digital environment our it's being well for strong very see and the us of demand remain strong It and for that deals see verticals continues Data services the The across industry clients pipeline Operations for is Solutions across Analytics We actually our business. business strong as in a larger operate in. pipeline. very cross-section robust for that healthy. is

and XXXX non-U.S. get environment most ever continues we're pushed decision-making therefore, making and well-advertised also very While in We're surprised cautious ahead actually very strong and we has we've closely the recession-free been activity not healthy. like being present. one analytics our of is clients Australia seeing feels might want -- adequate at that and client for change it deals U.K. This really their we any And that there and And Zealand that. looking the areas is accelerated We where remain deals is and in prospects pleasantly marketing have seeing were have and pipeline the where be where depth it actually be measure. that's about. everybody planned some to probably good for area that the traction region terms there seen. concerns. are point at that to decision-making off, to also has very New clients spend. in been And in that APAC been were of of plans can't Non-U.S.

So we watchful. continue to remain

monitor closely. very situation to the that we But seen really we haven't so along as far, kind of continue We concern. very, us go causes anything

Bryan Bergin

base to at thoughts you margin the give on potential latest return same were you stand And expense Shifting expenses hear. the roughly as forward. not and understand can understanding more travel Just potentially headwinds that forward adjusted XQ relates but new and may much to you relative us that's base have you good normal more you in term? against and to Okay, going how move office do operating margin that to as trying facility to to may a return going it to world, as in a side, just work on you future think today through longer to the OpEx you hybrid about pre-pandemic then, expenses? expense where

Maurizio Nicolelli

is Maurizio. Sure, Bryan. This

where year, low an we XX% out ended in -- margin that's we adjusted range for the We've our we up. been started we when year. adjusted the about operating So XX.X% margin. calendar ended with QX the have operating talked being And

XX.X%. it's year-to-date, For

of baseline talked incorporated we're And So the line, in be. above right XXXX the about also year. our where would guidance slightly for we our rest in that's for

We bring X/X model employees we and to working of hybrid employees being But to about the employees do do X/X back Going office. have being a just home, globally, X/X home. about back office. our continue to of forward, hybrid the we talk working X/X from our from being

the low a XX% employees the And starting buckets. from our so coming XXXX range But We as portion as a expense margin of our see essentially of to we good XXXX. still X/X a and a have that office. do breakout incremental for three between for good back point baseline,

Operator

Please from have We available now. Instructions] JPMorgan. welcome [Operator Puneet our question next Jain

Puneet Jain

Great which be see are or some of there areas you any in needs, quarter pace. in the moving at decision-making to a the Are and acceleration it good seeing could deals faster current large environment? common pipeline, was client in where

Rohit Kapoor

Thanks, Puneet.

seeing are deals in we So larger the pipeline.

insurance of is the There be demand be out in embedded Insurance model pathway they that there a of to integrated, involve in a work and area the seeing more as more pipeline And which -- in I with that being of and mean Solutions seem The lot pipeline business around of lot are being into lot more and legacy business are needs Operations deals certainly deals that well. modernized. needs that automation our on change by analytics happen and our is the to the We carriers there's moving integrated terms a seeing business. the Digital rapidly. digital, pretty simultaneously where we -- strength to

in traditional logistics. good that Emerging also use is use automation, the travel, in reduce which utilities, costs, where industries digital And customer space. seeing to traction of experience Business activity. we're across seeing the so that's transportation and vertical good again, of our we're We're to most the seeing and And like traction improve of

the than higher frankly at up and in And that to which that's and that rate year. continue. likely beginning strong, Operations this trend our So the Digital think what Solutions much growth segment has were expectations is -- a gone seeing stable you're we our of

Puneet Jain

side that healthcare where the sort impact specific suggests any – and your it. decline? QX Got it. could QX in sequential is that Or on on Is management macro guidance analytics of sequential operations have related there of marketing business? decline client, then weakness and And some revenue. maybe Got analytics implied you to guidance expect

Maurizio Nicolelli

for guidance of fairly year Puneet, higher when you end in QX, of look range, at our the flat rest QX. the at with the the it's

bit just The have the but year. pipeline the puts XX% of guidance The higher on that. in our own a at we out rest a the our you higher uncertainty you just -- at at overall market a is the growth organic rate to come around puts than uncertainty of bit end look with When for we so look internal in what's that little little the And the just midpoint right basis. guidance still of in also market. year-over-year guidance,

a there’s today. just So level this uncertainty because that operate we overall just of in guidance our market in of conservatism the in

Operator

Wedbush comes with question Katri next Our Securities. from Moshe

Moshe Katri

very on my numbers. add me congrats Let strong

big ‘XX, the terms model, how we’re versus bit at the cetera. maybe you And the about – of approaching question. in during customers just business do What last were a resiliency especially talk that to, terms slowdown? downturn? from can can the the kind the a about So where picture your end in From ‘XX time the perspective, talk to markets, can perspective, about a et talk the frame, feel business of how your of of you decision-makers, you compare the as you cycle feel we bit you

Rohit Kapoor

think Thanks, in of actually make investments which a works partners strategic we very streamlining to as of way make dramatic data help clients resilient. economic our certainly, their At was positioned very in the the and and services become continue are not model well. to have to be a the seeing it works the we is pockets our is a entirely point our why do this where and we environment continue automation gone well create just much, healthy really our that's in frame, terms analytics, our business of economic the investments where for to that's difficult continuing to Look, in has we've data think operations. at It's and of Sure. now. are time, investments them. clients in time clients environment leveraging right that seeing as compared industry. demand are more terms to And make exactly a impact that actually different Moshe. point 'XX -- financial going And we We well much which for in data-led time ability leveraging where to business value strategy, 'XX, we I there there There down. this think

where are So has areas. those down don't significantly. But down those gone gone have to quite much banking certainly areas quite have for fees example, plays significantly. mortgage exposure the and Investment not certainly we EXL

good feel think, that very we the We streamlined framework model manner. very value our the about that frankly, feel So a about have go I framework in a pretty business portfolio. through data-led cycle, the creation good and to of actually us allows we

Moshe Katri

cetera. All just pause kind your right. be maybe slowdown. terms for recruits, a for had as peers et of or slowdown? to EXL’s pausing And of seem a guess offers of kind new I getting maybe for follow-up, that strategy in here they’ve getting of What’s clearly ready they’re ready of some kind that some that

Rohit Kapoor

approach want a have don't right demand have now, is we supply side. the miss in still think on frankly, that to challenge we out we the And environment. of I terms the

everything take got we've slowdown of supply the might any a So side. place. on same But are the disciplined and watchful time, gear extremely that for we into high kicking at sign

of is are we structure to is good XX% prepared that to so XX% our it. variable be thing And cost our business cost structure. model act about a on to well able almost The

and short is that manage at our cycles with So actually short good. to very notice ability

continuing at So of to able the are can still of requirements manage we add time, our meet talent demand be well. we point quite we But think that to clients. to this

Operator

William is speaker next Our Blair. Nolan with Maggie

Kate Kronstein

growth much a how preferences? is for This function do growth kind that, digital question you on current first quarter. and in is Kronstein of of a on And operations of the everyone. Maggie how of moving a Nolan. forward? macro Kate My this see more spending great is on the level Hi, Congrats of changing follow-up sustainable

Rohit Kapoor

clients, we've is do of so that our business the get and our and us, that with existing the expanding of that work the that of existing Solutions clients so Digital part XXXX. us new on growth our up signed from growth seen early Yes. account they far amount Kate, clients for we the largely in in Operations and we XXXX

implement know, in takes win the be lead new So it lengthy fairly factor client Operations that. really and so XX and client us months because, a in Digital it into is much time economic as you it Solutions, and to a the to doesn't onboard X and execute to for new to environment us able

are play think focused where they that improving on of these are experience. having the Some are And will customer some deals. larger and saying of over ones the couple deals the cost dual the that And are mandate now, we those of are conversations we I of containment next quarters. end up

Kate Kronstein

just And helpful. one then more That's question. great. Okay,

it On you what drivers the to sequential forward? growth the Healthcare you segment? are do expect segment return the Healthcare the gives segment, moving And will that of within what confidence growth

Rohit Kapoor

Sure.

which services and a there. nicely at out it's payment integrated take our which So on integrated overall analytics. at the X.X% our clinical business business we look got think business, that about It's growing that's way Healthcare, we about in our still about business care very this revenues, XX% health an when is which year. actually integrity healthcare the represents has And of got

previously. had a mentioned we've transitioning have was which client We that

us banking use is verticals. So can just large. It's some to limited industry happen in that healthcare. we've and that as industry happen very behind automation still -- well. for of in and What place other seen is industry in will any we opportunity healthcare vertical. and, healthcare the always And other feel financial services even is to take about and data, that lags verticals good behind of not technology fact, The in lagging

out value in able a value position addition. the to tremendous clients, invest and that of and be we for are can for to data hope area we continuing growth this our And to amount is we there's tremendous. opportunity in that frankly, therefore, create leveraging ourselves So And here set healthcare. that think we

Operator

Research. Vincent next question is and from Barrington this our up person Colicchio setting We're

Vincent Colicchio

Is your going or I sequentially. due something and there? top on concentration top there your the X had client question to declined else X, on that is healthcare a client,

Rohit Kapoor

Right, Vincent. there. No, there's nothing going on out

is portfolio, timing out X when top and certainly matter think And it's just and -- a relationships clients. a on that of continue kicks great right unusual and to broadening opportunity we out our great in grow, I still it's We we just expanding. of to there now. our grow have nothing going but matter as

Vincent Colicchio

And ago? new is any XX clients currently your there new with developments economy versus days

Rohit Kapoor

For clients us, still a represents very the economy fraction small Vincent, new of our overall portfolio.

So And not finance accounting out seen do heavily again, any work out is very that such. clients are largely we is exposed our shared change work there. with and also the and we stable and hasn't of the really as there services around which some

nothing that with of concern part causes business. So that us the

Operator

cut don't or next Instructions] Bamberger. if And Our he question know Robby not. lost there. is Vincent currently connection I with off Robby Robert was [Operator is Baird.

Robert Bamberger

is rate. other to to like looked before. $XX at million talk been expectation? $XX outperformed looking this seems $XX.X it’s your had performing maybe you’re you Clairvoyant about then this like run million million now? at initial was any Can your And acquisition running and it quarter that It M&A given how And

Maurizio Nicolelli

Sure, Rob.

what year. gone Clairvoyant, the calendar had we acquisition well as very early in about planned talked So has the from

us more importantly, important about which we Obviously, Clairvoyant well well operations it came of for integrating between really talked job cross-selling revenue of higher QX, done that look rest side million With very should first the our at done XXXX range. have capabilities and at to also, very even in three you $XX in to be If was We on good for a strategically end adding the when million. quarters, it in Clairvoyant, with of the the acquisition. the their in to it $XX $XX the revenue our coming and terms overall analytics very from group. we that's the made integration middle in we've nicely. million But of

then sales the of feel the line. integration, adding also our with and So we of and overall team the good the just performance analytics also bottom of very terms the to about in but immaterially rest Clairvoyant revenue cross-sell

Robert Bamberger

Yes, that year-over-year that a makes acceleration to causing continue? U.K., there? terms it sequential are of then the nice that And there. looked And like expecting sense. you Anything in growth

Rohit Kapoor

Sure, good to in some Robby. in we the portfolio traction clients and strategic there. see U.K. out We won continue our

Utilities in expansion And Some clients the the pipeline we’ve growth of dialogue won think clients with healthy. is our as have our giving is the good. clients that us that of business there is Emerging nice segment. with we some we our quite in those well as The there

And continue. so that we’d trend expect to

Operator

Thank you disconnect. may program the today's participation conclude This conference. in does for Instructions] you [Operator your now and

ExlService (EXLS) 30 Oct 222022 Q3 Earnings call transcript