ExlService Raises Outlook as Revenue Growth Accelerates
Second-quarter revenue reached $594.8 million as healthcare demand led growth.
ExlService Holdings Inc. (EXLS), a data analytics and digital operations company, reported faster revenue growth in the second quarter and raised its full-year outlook.
Revenue growth accelerated for a third consecutive quarter, while profitability tightened as weaker margins in insurance and banking offset gains in healthcare. New-client wins increased to 17 from 16 in the first quarter and 13 a year earlier.
Revenue rose 15.6% from a year earlier and 4.3% sequentially, compared with year-over-year growth of 13.8% in the first quarter and 12.7% in the fourth quarter. GAAP diluted earnings rose 4.9% to $0.42 a share, while adjusted earnings increased 22.3% to $0.59 a share.
Healthcare and Life Sciences led the advance, with revenue rising 22.0% to $158.0 million. Its gross margin expanded to 46.9%, the highest level reported across the five compared quarters, from 45.3% in the first quarter and 43.5% a year earlier. International Growth Markets recorded the strongest sequential revenue increase, up 8.2% to $105.1 million.
The gains came alongside broader margin pressure. Total gross margin narrowed to 38.0% from 38.9% in the first quarter, while GAAP operating margin fell to 14.7% from 16.1%. Insurance gross margin dropped to 34.6%, and the Banking, Capital Markets and Diversified Industries margin declined to 34.8%, extending its retreat from 38.8% in the fourth quarter.
ExlService now expects organic revenue growth of 13% to 14%, up from its previous forecast of 10% to 12%. Total revenue guidance increased to $2.390 billion to $2.415 billion, including $28 million to $32 million from the pending iMerit acquisition, while adjusted diluted earnings guidance rose to $2.25 to $2.29 a share.
The iMerit transaction also began weighing on reported costs. ExlService recorded $1.9 million of acquisition expenses and a $3.0 million contingent-consideration adjustment during the quarter, items that were absent in the first quarter. The raised outlook leaves revenue growth accelerating as the company absorbs those acquisition costs and manages pressure across two of its largest segments.