Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ExlService Holdings Inc (NASDAQ:EXLS) reported a 16% year-over-year increase in revenue for Q4 2024, reaching $481 million.
• The company achieved a 26% year-over-year growth in adjusted EPS, reaching $0.44 per share.
• Strong growth was observed in both analytics and digital operations, with analytics revenue increasing by 14% year-over-year.
• The new operating model is expected to enhance client relationships and improve operational efficiency by leveraging data and AI capabilities.
• EXLS has expanded partnerships with major tech companies like Nvidia, AWS, Microsoft, and Google to enhance AI development and deployment.

Negative Points

• The company faces risks and uncertainties related to general economic conditions and market volatility.
• There is a need for significant investment in AI and digital solutions, which could impact short-term profitability.
• The transition to a new operating model and financial reporting segments may pose initial challenges and require careful management.
• Clients' readiness for AI adoption varies, with some requiring substantial infrastructure modernization.
• The competitive landscape in AI and data services is intense, with clients potentially opting for in-house solutions.

Q & A Highlights

• Warning! GuruFocus has detected 8 Warning Signs with CORZ.

Q: Can you comment on client spending sentiment through Q4 and any changes observed year-to-date amid macro volatility? A: Rohit Kapoor, CEO: The demand environment remains strong, with a significant shift towards AI and IT spending on data and AI. Clients are embedding AI into workflows, which aligns with our strengths. Our pipeline is developing well, and we are in a good position from both demand and execution standpoints.

Q: Can you elaborate on the operating model change and its impact on leadership and sales structure? A: Rohit Kapoor, CEO: The new operating model brings us closer to clients, allowing for deeper relationships and faster capability deployment. Leadership impact is minimal, with portfolios reallocated among existing leaders. Client-facing roles remain unchanged, but groupings will differ. More details will be shared at our investor day on May 6th.

Q: Is there a greater emphasis on IP development in the current technology cycle compared to pre-pandemic times? A: Rohit Kapoor, CEO: Yes, innovation and IP development are now more strategically important. The shift in IT spend towards AI and AI enablement in workflows is significant. We aim to develop our own IP and integrate it into client workflows to create value.

Q: How are you addressing clients' infrastructure readiness for AI solutions? A: Rohit Kapoor, CEO: We assist clients in three areas: cloud migration, modernization of legacy platforms, and data asset availability. Our solutions, like Court Harbor for code conversion, help clients modernize and leverage AI effectively, addressing the heavy lift required for unstructured data management.

Q: How widely are your 100 data assets and accelerators used across your customer base? A: Rohit Kapoor, CEO: Our accelerators, built using machine learning and advanced analytics, are deployed with clients and tested in practical workflows. While penetration is still low, there's significant opportunity to embed these into more client workflows, especially with our new Eaccelerate.AI platform.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.