EXL’s third quarter results were met with a negative market reaction despite outperforming Wall Street’s revenue and non-GAAP earnings expectations. Management pointed to accelerated adoption of its data and AI-led solutions, which now comprise over half of total revenue, as a primary driver of growth. CEO Rohit Kapoor emphasized, “Our data and AI-led revenue grew 18% year-over-year, reaching 56% of total revenue,” highlighting increased client demand for AI-powered workflow transformation. The Insurance, Healthcare and Life Sciences, and Banking segments all contributed to top-line gains, with particular strength in Healthcare.

Is now the time to buy EXLS? Find out in our full research report (it’s free for active Edge members).

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 Q3 Earnings Call

• Surinder Thind (Jefferies) asked about changes in demand for innovation spending and the sustainability of double-digit growth. CEO Rohit Kapoor said demand is strong and highlighted that the shift to AI-led services is visible in the financials, with increased market share and new clients.
• Surinder Thind (Jefferies) followed up on whether AI-driven productivity could be deflationary for revenue. Kapoor clarified that deeper client relationships and new AI service areas offset potential revenue declines, as clients award incremental work to EXL.
• Bryan Bergin (TD Cowen) questioned the outlook for the Digital Operations segment and the strength of top clients. Kapoor explained that AI-enabled operations cause revenue to shift out of Digital Operations, but overall client engagement and potential for growth remain high.
• Margaret Nolan (William Blair) inquired about changes in client relationship management and confidence in market share gains. Kapoor described the company’s efforts to train sales teams in AI and expand engagement across more client decision-makers, including partnerships with technology providers.
• David Koning (RW Baird) asked if Healthcare could sustain its rapid growth and about margin trends. Kapoor stated that Healthcare has significant headroom and Nicolelli said margins should improve steadily, with investments focused on sales and capability development.

Catalysts in Upcoming Quarters

Over the coming quarters, the StockStory team will be watching (1) the pace of adoption and monetization for the new EXLdata.ai platform and related AI services, (2) whether international markets and Healthcare sustain their current growth trajectories, and (3) the balance between investment in front-end sales and margin improvement. Additionally, client wins and expansion of recurring, high-value contracts will be critical indicators of execution.

EXL currently trades at $39.16, down from $41.47 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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