ExlService Holdings’ second quarter saw revenue and non-GAAP earnings outpace Wall Street expectations, driven by strong demand for its data analytics and artificial intelligence solutions. Management pointed to momentum across all major operating segments, with insurance, health care, and international markets showing particular strength. CEO Rohit Kapoor cited the company’s continued shift toward complex, domain-specific AI offerings as a key differentiator, emphasizing, “Our results demonstrate significant momentum across all our operating segments.” The team also highlighted that over 75% of revenue is recurring, providing a stable foundation for growth.
Is now the time to buy EXLS? Find out in our full research report (it’s free).
EXL (EXLS) Q2 CY2025 Highlights:
- Revenue: $514.5 million vs analyst estimates of $506.5 million (14.7% year-on-year growth, 1.6% beat)
- Adjusted EPS: $0.49 vs analyst estimates of $0.45 (8.2% beat)
- Adjusted EBITDA: $111.6 million vs analyst estimates of $108.6 million (21.7% margin, 2.7% beat)
- The company slightly lifted its revenue guidance for the full year to $2.06 billion at the midpoint from $2.05 billion
- Management raised its full-year Adjusted EPS guidance to $1.88 at the midpoint, a 1.1% increase
- Operating Margin: 15.8%, up from 13.7% in the same quarter last year
- Market Capitalization: $6.87 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From EXL’s Q2 Earnings Call
- Bryan C. Bergin (TD Cowen) asked about the slower insurance growth compared to other sectors and whether health care regulatory risks could impact the outlook. CEO Rohit Kapoor emphasized the strong insurance pipeline and resilience of health care due to continued demand for efficiency and AI solutions.
- Bergin (TD Cowen) also inquired about the impact of AI adoption on revenue and margin profiles. Kapoor explained the company’s 94% success rate in AI solution deployment and outlined the potential for improved margins as commercial models shift to usage-based and outcome-based metrics.
- Surinder Singh Thind (Jefferies LLC) questioned the sustainability of EXL’s proprietary advantage and intellectual property protections. Kapoor stressed the importance of proprietary data sets and accelerated patent creation as key competitive moats.
- Matt S. Dezort (William Blair) asked about the drivers of sustainable organic growth and the balance between existing client expansion and new client additions. Kapoor pointed to the mission-critical nature of services and a healthy mix of growth from both existing and new clients.
- David Michael Grossman (Stifel Europe) raised concerns about the implied EPS trend in the second half of the year and the impact of ongoing investments. CFO Maurizio Nicolelli explained that increased investment in AI and analytics is planned to drive longer-term revenue growth, even as near-term margins moderate.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be closely watching (1) the pace and scale of client adoption for newly launched proprietary AI solutions, (2) the company’s ability to convert a growing sales pipeline into expanded contracts across verticals, and (3) the impact of continued investment in AI talent and technology on future operating margins. Progress on expanding international market share and deepening strategic partnerships will be additional markers of successful execution.
EXL currently trades at $42.35, in line with $42.20 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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