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    EXLS
    Earnings call· Dec 2025(Q4 FY25)

    ExlService Holdings Q4 FY25 earnings call EXLS

    Feb 25, 2026 Source

    Executive summary

    ExlService Holdings, Inc. Q4 FY25 — Strong AI-led Growth and Strategic Wins

    ExlService Holdings delivered a strong Q4 and full year 2025, driven by robust demand for its data and AI-led services, which now constitute 57% of total revenue. The company is strategically positioned as an outcome-focused partner, leveraging its domain expertise to operationalize AI end-to-end for clients. Management anticipates continued strong momentum into 2026, supported by a robust pipeline and significant client wins, despite minor headwinds from new labor codes.

    Highlights

    5

    • Full year 2025 revenue increased 14% to nearly $2.1 billion.

    • Adjusted EPS grew 18% year-over-year to $1.95 per share for FY25.

    • Q4 revenue reached $543 million, representing 13% year-over-year organic growth.

    • Data and AI-led revenue grew 21% year-over-year and now represents 57% of total revenue.

    • Dollar volume of wins in Q4 was more than double that of any other quarter in 2025.

    Concerns

    2

    • India labor code changes resulted in a one-time increase of $10.3 million in defined benefit liability and an expected $0.02 to $0.03 dilution to adjusted EPS in 2026.

    • SG&A expenses as a percentage of revenue increased by 130 basis points year-over-year to 21.2% in Q4 2025.

    Guidance & targets

    7
    CategoryTargetConfidence
    Revenue
    $2.275 billion to $2.315 billion
    high materiality
    High
    Adjusted diluted EPS
    $2.14 to $2.19
    high materiality
    High
    Foreign exchange gain
    approximately $2 million
    low materiality
    Medium
    Net interest expense
    approximately $1 million
    low materiality
    Medium
    Effective tax rate
    21% to 22%
    medium materiality
    Medium
    Capital expenditures
    $50 million to $55 million
    medium materiality
    Medium
    Common stock repurchase program authorization
    $500 million
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Insurance
    Growth primarily driven by expansion in existing client relationships. The insurance vertical, including revenue from international growth markets, grew 6.7% year-over-year with revenue of $215.2 million.
    		$185.8 million7.2%2.9%—
    Healthcare and Life Sciences
    Broad-based growth, driven by higher volumes in Payment Services business and expansion in existing client relationships. The Healthcare and Life Sciences vertical, including revenue from international growth markets, grew 26.1% year-over-year with revenue of $142.5 million.
    		$142.2 million26.2%5.1%—
    Banking, Capital Markets and Diversified Industries
    Growth driven by the expansion of existing client relationships, primarily in banking capital markets and new client wins. The Banking Capital Markets and Diversified Industries vertical, including revenue from international growth markets, grew 10.6% year-over-year with revenue of $185 million.
    		$122.6 million10.8%1.3%—
    International Growth Markets
    Growth primarily driven by higher volumes with existing clients in banking capital markets and diversified industries and new client wins.
    		$92 million8.1%——

    Operational metrics

    14
    Data and AI-led revenue
    21%year-over-year
    Q4 FY25

    Represents 57% of total revenue in Q4. Grew 18% year-over-year for FY25.

    Digital operations revenue
    4%year-over-year
    Q4 FY25

    Represents 43% of total revenue in Q4.

    Total operations revenue
    11%year-over-year
    Q4 FY25

    Includes data and AI-led operations and digital operations revenue. Grew 14% for the full year.

    SG&A expenses as % of revenue
    21.2%increased by 130 basis points year-over-year
    Q4 FY25

    Driven by investments in sales and marketing.

    Adjusted operating margin
    18.8%flat year-over-year
    Q4 FY25

    Q4 flat due to investments in sales, marketing, solutions, and services. Full year adjusted operating margin was 19.5%, up 10 basis points year-over-year.

    Effective tax rate
    21.6%down 70 basis points year-over-year
    FY25

    Driven by higher profitability in lower tax jurisdictions.

    Capital expenditures
    $53 million
    FY25
    Shares repurchased
    7.5 million shares
    FY25
    Cash and investments balance
    $331 million
    as of 2025-12-31

    Includes short- and long-term investments.

    Revolver debt
    $299 million
    as of 2025-12-31
    Net cash position
    $32 million
    as of 2025-12-31
    Employee headcount growth
    9.8%
    FY25

    Much lower than revenue growth rate of 14%.

    India labor code impact
    $10.3 millionone-time increase
    Q4 FY25

    Resulted from consolidation of existing legislations into a unified framework.

    Recurring revenue percentage
    More than 75%
    current

    Revenue is recurring or annuity-like, providing stability and predictability.

    Industry KPIs

    2
    MetricValueDetails
    Retention rateMore than 75%%
    New business bookings growthmore than doublex

    Product announcements

    2
    ProductTypeDetails
    EXLdata.ailaunch
    AI agents on life and annuities platformupdate

    Deals & partnerships

    4
    Large North American insurance carrierEnterprise transformation, data and AI partnership.multiyear

    Deploy agentic AI into operational workflows, build a comprehensive data strategy powered by EXLdata.ai, and deliver end-to-end customer experience transformation. This was a new client.

    Top 5 health care payerSignificant expansion of existing relationship for AI-powered payment integrity solution.

    Client selected EXL's AI-powered payment integrity solution to reengineer clinical auditing processes. This client has been with EXL for many years.

    Leading financial services companyRenewal and expansion of multiyear engagement with expanded scope of AI services.multiyear

    Expanded scope of AI services spans risk strategy, regulatory modeling, forecasting, collections, and fraud. EXL will also design and deliver the company's first-ever governance framework for generative AI models.

    SonosCollaboration with AWS to deploy agentic AI for IT service management workflows.

    Collaborated with AWS to deploy agentic AI for Sonos' IT service management workflows.

    Risks & headwinds

    2
    Impact of new Indian labor codesQ4 FY25 (balance sheet), FY26 (EPS dilution)

    one-time increase of $10.3 million in our defined benefit liability in Q4 2025; prospective increase in employee costs for the year, resulting in an approximately $0.02 to $0.03 dilution to adjusted EPS in 2026.

    Mitigation: incorporated in our guidance for 2026.

    Talent constraint for data and AI-led businessOngoing

    our data and AI-led business today is constrained for growth due to talent.

    Mitigation: working very actively on to make sure that we have adequate talent resources to be able to leverage the full potential of the data and AI piece.

    What to watch in Q1 FY26

    5

    H2 2026 growth visibility

    H2 FY26
    Currentvisibility into the first half of '26 is much better than the second half of '26
    TargetDevelopment of visibility for H2 2026

    Why it matters

    Management will update guidance based on this, impacting full-year performance.

    at this point of time, clearly, the visibility into the first half of '26 is much better than the second half of '26, just because of the timing perspective... we're going to wait and see how the visibility develops in the second half of the year. And based on that, we will update our guidance accordingly.

    Q&A highlights

    8

    Is the accelerated client decision-making due to recent AI news flow (Anthropic, agentic solutions), or other factors?

    Rohit Kapoor confirmed accelerated decision-making, noting a shift from proof-of-concepts to scaled enterprise AI adoption. He highlighted a focus shift from cost takeout to growth, making the environment more active for EXL.

    “There's also a change in terms of shifting the focus from a cost takeout to growth. And I think using AI for growth allows companies to be a lot more competitive and to be able to build up their businesses.”

    asked by Puneet Jain · answered by Rohit Kapoor

    2 min read6 chapters

    Detailed Narrative

    01

    AI-led Growth and Strategic Advantage

    EXL's data and AI-led revenue grew 21% YoY, now comprising 57% of total revenue, highlighting a successful pivot. The company positions itself as a trusted partner orchestrating enterprise workflows and making AI real, particularly in complex, data-intensive, and regulated industries. This integrated approach, combining domain expertise, data mastery, and AI application, differentiates EXL from traditional service providers and new tech entrants.

    02

    Market Opportunity and Client Adoption

    The market is seeing accelerated decision-making for AI adoption, shifting focus from cost takeout to growth. Clients are increasingly seeking partners who can deliver tangible business outcomes and ROI from AI implementations, a role EXL claims to fulfill effectively. This trend is driving significant client wins, with Q4 2025 dollar volume of wins more than double any other quarter in the year.

    03

    Segment Performance Highlights

    Healthcare and Life Sciences was the fastest-growing segment at 26% YoY, driven by demand for data and AI solutions and payment services. Insurance, the largest vertical, grew 7% YoY, with a notable multiyear enterprise transformation win. Banking, Capital Markets, and Diversified Industries grew 11% YoY, focusing on risk strategy, regulatory modeling, and generative AI governance.

    04

    EXLdata.ai and Platform Innovation

    EXL launched EXLdata.ai, an agentic Data Solutions suite, which is gaining strong market traction by helping clients establish robust data foundations for AI. Recent wins include modernizing a fintech's tech stack and creating a centralized governed contract repository for a healthcare payer. Additionally, EXL embedded new AI agents into its life and annuities platform, automating complex tasks for insurers.

    05

    Ecosystem Partnerships and Talent Development

    EXL expanded co-innovation with hyperscalers like AWS, Google, Microsoft, and NVIDIA, with 16 solutions now available on marketplaces. The company is also building an "AI native workforce" through training, certifications, and internal innovation programs like Idea Tank, which generated over 11,000 employee ideas.

    06

    Financial Strength and Capital Allocation

    EXL reported strong full-year 2025 financial performance with 14% revenue growth and 18% adjusted EPS growth. The balance sheet remains strong with $331 million in cash and short-term investments, and a net cash position of $32 million. The Board authorized a new $500 million common stock repurchase program for a two-year period, reflecting confidence in future growth and free cash flow generation.

    AI-generated summary of the company’s earnings call. Not investment advice.