What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-10-26 compared with 2023-07-27 · 340 added, 324 removed, 912 unchanged (42% of the section changed)

3 unchanged sentences

(In thousands, except per share amount and share count)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Current assets:

6 unchanged sentences

Property and equipment, net 96,729 82,828

Operating lease right-of-use assets 58,423 55,347

Operating lease right-of-use assets, net 56,817 55,347

Restricted cash 2,047 2,055

Deferred tax assets, net 79,767 55,791

Intangible assets, net 56,487 64,819

Goodwill 405,579 405,637

Other intangible assets, net 53,315 64,819

Long-term investments 5,273 34,779

22 unchanged sentences

Common stock, $ 0.001 par value;

100,000,000 shares authorized, 40,349,727 shares issued and 33,152,670 shares outstanding as of June 30, 2023 and 39,987,976 shares issued and 33,234,444 shares outstanding as of December 31, 2022

400,000,000 shares authorized, 202,124,185 shares issued and 165,117,859 shares outstanding as of September 30, 2023 and 199,939,880 shares issued and 166,172,220 shares outstanding as of December 31, 2022 (1)

Additional paid-in capital (1)

492,577 444,948

Retained earnings 1,043,380 899,105

1 unchanged sentence

Total including shares held in treasury 1,399,354 1,200,110

7,197,057 shares as of June 30, 2023 and 6,753,532 shares as of December 31, 2022, held in treasury, at cost

37,006,326 shares as of September 30, 2023 and 33,767,660 shares as of December 31, 2022, held in treasury, at cost (1)

( 543,267 ) ( 441,931 )

1 unchanged sentence

Total liabilities and stockholders’ equity $ 1,402,493 $ 1,346,119

(1) Prior period information has been adjusted to reflect the 5 -for-1 forward stock split of the Company’s common stock effected in August 2023.

Refer to Note 19 – Capital Structure to the unaudited consolidated financial statements for further details.

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

(In thousands, except per share amount and share count)

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

12 unchanged sentences

Interest expense ( 3,405 ) ( 2,442 ) ( 10,030 ) ( 4,820 )

Other income/(loss), net 2,661 ( 174 ) 5,816 2,237

Other income, net 778 2,261 6,594 4,498

Income before income tax expense and earnings from equity affiliates 58,012 51,434 181,891 145,528

13 unchanged sentences

(1) Exclusive of depreciation and amortization expense.

(2) Prior period information has been adjusted to reflect the 5 -for-1 forward stock split of the Company’s common stock effected in August 2023.

Refer to Note 19 – Capital Structure to the unaudited consolidated financial statements for further details.

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

(In thousands)

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

2 unchanged sentences

Unrealized gain/(loss) on cash flow hedges ( 7,903 ) ( 13,489 ) 8,242 ( 28,638 )

Foreign currency translation gain/(loss) ( 136 ) ( 22,782 ) 5,177 ( 30,227 )

Foreign currency translation loss ( 7,782 ) ( 19,144 ) ( 2,605 ) ( 49,371 )

Reclassification adjustments

9 unchanged sentences

Refer to Note 17 - Derivatives and Hedge Accounting to the unaudited consolidated financial statements.

(2) These are reclassified to net income and are included in other income/(loss), net in the unaudited consolidated statements of income.

(2) These are reclassified to net income and are included in other income, net in the unaudited consolidated statements of income.

Refer to Note 20 - Employee Benefit Plans to the unaudited consolidated financial statements.

4 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the three months ended June 30, 2023 and 2022

For the three months ended September 30, 2023 and 2022

(In thousands, except share count)

Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income/(loss) Treasury Stock Total

Shares Amount Shares Amount

Balance as of March 31, 2023 40,334,368 $ 40 $ 460,527 $ 950,436 $ ( 131,487 ) ( 7,012,913 ) $ ( 484,294 ) $ 795,222

Common Stock (1)

Additional Paid-in Capital (1)

Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total

Shares Amount Shares (1)

Balance as of June 30, 2023 201,748,635 $ 202 $ 471,962 $ 999,504 $ ( 124,147 ) ( 35,985,285 ) $ ( 513,307 ) $ 834,214

Stock issued against stock-based compensation plans 375,550 — 3,548 — — — — 3,548

3 unchanged sentences

Net income — — — 43,876 — — — 43,876

Balance as of September 30, 2023 202,124,185 $ 202 $ 492,577 $ 1,043,380 $ ( 136,805 ) ( 37,006,326 ) $ ( 543,267 ) $ 856,087

Common Stock (1)

Additional Paid-in Capital (1)

Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total

Shares Amount Shares (1)

Balance as of June 30, 2022 198,975,805 $ 199 $ 420,147 $ 828,161 $ ( 133,374 ) ( 33,355,630 ) $ ( 429,480 ) $ 685,653

Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total

Shares Amount Shares Amount

Balance as of March 31, 2022 39,794,154 $ 40 $ 406,966 $ 792,315 $ ( 98,306 ) ( 6,465,410 ) $ ( 400,674 ) $ 700,341

Stock issued against stock-based compensation plans 18,975 — — — — — — —

3 unchanged sentences

Net income — — — 39,095 — — — 39,095

Balance as of June 30, 2022 39,795,161 $ 40 $ 420,306 $ 828,161 $ ( 133,374 ) ( 6,671,126 ) $ ( 429,480 ) $ 685,653

Balance as of September 30, 2022 198,994,780 $ 199 $ 432,333 $ 867,256 $ ( 154,203 ) ( 33,739,675 ) $ ( 441,001 ) $ 704,584

(1) Prior period information has been adjusted to reflect the 5 -for-1 forward stock split of the Company’s common stock effected in August 2023.

Refer to Note 19 – Capital Structure to the unaudited consolidated financial statements for further details.

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the six months ended June 30, 2023 and 2022

For the nine months ended September 30, 2023 and 2022

(In thousands, except share count)

Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income/(loss) Treasury Stock Total

Shares Amount Shares Amount

Common Stock (1)

Additional Paid-in Capital (1)

Retained Earnings Accumulated Other Comprehensive Income/(loss) Treasury Stock Total

Shares Amount Shares (1)

January 1, 2023 199,939,880 $ 200 $ 444,948 $ 899,105 $ ( 144,143 ) ( 33,767,660 ) $ ( 441,931 ) $ 758,179

4 unchanged sentences

Net income — — — 144,275 — — — 144,275

Balance as of June 30, 2023 40,349,727 $ 40 $ 472,124 $ 999,504 $ ( 124,147 ) ( 7,197,057 ) $ ( 513,307 ) $ 834,214

Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total

Shares Amount Shares Amount

Balance as of September 30, 2023 202,124,185 $ 202 $ 492,577 $ 1,043,380 $ ( 136,805 ) ( 37,006,326 ) $ ( 543,267 ) $ 856,087

Common Stock (1)

Additional Paid-in Capital (1)

Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total

Shares Amount Shares (1)

January 1, 2022 197,541,700 $ 198 $ 395,584 $ 756,137 $ ( 89,474 ) ( 31,084,290 ) $ ( 369,289 ) $ 693,156

4 unchanged sentences

Net income — — — 111,119 — — — 111,119

Balance as of June 30, 2022 39,795,161 $ 40 $ 420,306 $ 828,161 $ ( 133,374 ) ( 6,671,126 ) $ ( 429,480 ) $ 685,653

Balance as of September 30, 2022 198,994,780 $ 199 $ 432,333 $ 867,256 $ ( 154,203 ) ( 33,739,675 ) $ ( 441,001 ) $ 704,584

(1) Prior period information has been adjusted to reflect the 5 -for-1 forward stock split of the Company’s common stock effected in August 2023.

Refer to Note 19 – Capital Structure to the unaudited consolidated financial statements for further details.

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

(In thousands)

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities:

4 unchanged sentences

Amortization of operating lease right-of-use assets 15,171 17,365

Unrealized (gain)/loss on investments 7,222 ( 275 )

Unrealized foreign currency exchange (gain)/loss, net 1,288 ( 10,280 )

Unrealized loss/(gain) on investments 6,003 ( 475 )

Unrealized foreign currency exchange gain, net ( 862 ) ( 16,813 )

Deferred income tax benefit ( 26,555 ) ( 5,621 )

16 unchanged sentences

Proceeds from sale of property and equipment 640 197

Investment in equity affiliate ( 600 ) —

Business acquisition (net of cash and cash equivalents acquired) — ( 3,322 )

8 unchanged sentences

Payment of contingent consideration ( 5,000 ) —

Proceeds from ESPP contribution 3,800 —

Proceeds from exercise of stock options 85 —

Proceeds from ESPP contribution and exercise of stock options 4,690 —

Net cash used for financing activities ( 140,972 ) ( 61,820 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 288 ) ( 9,626 )

Net decrease in cash, cash equivalents and restricted cash ( 24,961 ) ( 28,610 )

Net increase/(decrease) in cash, cash equivalents and restricted cash 2,338 ( 45,539 )

Cash, cash equivalents and restricted cash at the beginning of the period 125,621 143,810

9 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

September 30, 2023

(In thousands, except per share amount and share count)

20 unchanged sentences

Accounting policies of the respective individual subsidiaries and equity affiliates are aligned wherever necessary, so as to ensure consistency with the accounting policies that are adopted by the Company under U.S.

(b) Use of Estimates

The preparation of the unaudited consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the unaudited consolidated statements of income during the reporting period.

Although these estimates are based on management’s best assessment of the current

(b) Stock Split

The Company recognizes the effects of a forward stock split in the financial statements if there are changes in the total par value of the increased shares upon such forward stock split.

The Company reclassifies an amount equal to the par value of the increased shares resulting from the forward stock split from “Additional paid-in capital” to “Common stock.” The Company presents the effects of a forward stock split on earnings per share in the financial statements retroactively for all the periods

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

September 30, 2023

(In thousands, except per share amount and share count)

business environment, actual results may be different from those estimates.

The significant estimates and assumptions that affect the unaudited consolidated financial statements include, but are not limited to, estimates of the fair value of the identifiable intangible assets and contingent consideration, purchase price allocation, including revenue projections and the discount rate applied within the discounted cash flow model for business acquisitions, credit risk of customers, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, and variable consideration in a customer contract, expected recoverability from customers with contingent fee arrangements, estimated costs to complete fixed price contracts, recoverability of dues from statutory authorities, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments, stock-based awards, and debt instruments, assumptions used to calculate stock-based compensation expense, assumptions used to determine the incremental borrowing rate to calculate lease liabilities and right-of-use (“ROU”) assets, lease term to calculate amortization of ROU, depreciation and amortization periods, and recoverability of long-lived assets, goodwill and intangibles.

The Company has an option to present other effects of the forward stock split, including changes in the total par value of the increased shares and count of shares of common stock, in the consolidated financial statements either retroactively for all the periods presented or only for the period in which the forward stock split of the common stock becomes effective.

The Company has elected to present the effects of the forward stock split retroactively for all the periods presented.

The preparation of the unaudited consolidated financial statements in conformity with U.S.

Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from those estimates.

The significant estimates and assumptions that affect the unaudited consolidated financial statements include, but are not limited to, estimates of the fair value of the identifiable intangible assets and contingent consideration, purchase price allocation, including revenue projections and the discount rate applied within the discounted cash flow model for business acquisitions, credit risk of customers, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, and variable consideration in a customer contract, expected recoverability from customers with contingent fee arrangements, estimated costs to complete fixed price contracts, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments, and stock-based awards, useful life of long-lived assets and other intangible assets, assumptions used to calculate stock-based compensation expense, assumptions used to determine the incremental borrowing rate to calculate lease liabilities and right-of-use (“ROU”) assets, lease term to calculate amortization of ROU, methods to calculate depreciation and amortization for long-lived assets and other intangible assets, and recoverability of long-lived assets, goodwill and other intangible assets.

(d) Recent Accounting Pronouncements

In March 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2023-01, Leases (“ASC Topic 842”):

2023-01, Leases (“Accounting Standards Codification (“ASC”) Topic 842”):

Common Control Arrangements .

4 unchanged sentences

The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

(d) Recently adopted Accounting Pronouncements

(e) Recently adopted Accounting Pronouncements

In October 2021, FASB issued ASU No.

6 unchanged sentences

The adoption of this ASU is applicable for future business combinations.

In July 2023, the FASB issued ASU No.

2023-03, Presentation of Financial Statements (“ASC Topic 205”), Income Statement-Reporting Comprehensive Income (“ASC Topic 220”), Distinguishing Liabilities from Equity (“ASC Topic 480”), Equity (“ASC Topic 505”), and Compensation-Stock Compensation (“ASC Topic 718”) pursuant to SEC Staff Accounting Bulletin No.

120 and amends various SEC paragraphs in the ASC.

The ASU is effective immediately upon issuance and did not have a material impact on the Company’s unaudited consolidated financial statements.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

Segment and Geographical Information

7 unchanged sentences

The Company manages these assets on a total Company basis, not by operating segment, and therefore asset information and capital expenditures by operating segment are not presented.

Revenues and cost of revenues for the three months ended June 30, 2023 and 2022, respectively, for each of the reportable segments, are as follows:

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

Three months ended June 30, 2023

Revenues and cost of revenues for the three months ended September 30, 2023 and 2022, respectively, for each of the reportable segments, are as follows:

Three months ended September 30, 2023

Insurance Healthcare Emerging Business Analytics Total

10 unchanged sentences

(1) Exclusive of depreciation and amortization expense.

Three months ended June 30, 2022

Three months ended September 30, 2022

Insurance Healthcare Emerging Business Analytics Total

10 unchanged sentences

(1) Exclusive of depreciation and amortization expense.

Revenues and cost of revenues for the six months ended June 30, 2023 and 2022, respectively, for each of the reportable segments, are as follows:

Six months ended June 30, 2023

Revenues and cost of revenues for the nine months ended September 30, 2023 and 2022, respectively, for each of the reportable segments, are as follows:

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

Nine months ended September 30, 2023

Insurance Healthcare Emerging Business Analytics Total

10 unchanged sentences

(1) Exclusive of depreciation and amortization expense.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

Six months ended June 30, 2022

Nine months ended September 30, 2022

Insurance Healthcare Emerging Business Analytics Total

11 unchanged sentences

Revenues, net by service type, were as follows:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

6 unchanged sentences

The Company attributes the revenues to regions based upon the location of its customers.

Three months ended June 30, Six months ended June 30,

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

7 unchanged sentences

Long-lived assets by geographic area, which consist of property and equipment, net and operating lease right-of-use assets were as follows:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Long-lived assets

4 unchanged sentences

Long-lived assets $ 153,546 $ 138,175

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

Revenues, net

2 unchanged sentences

The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Accounts receivable, net $ 303,378 $ 259,222

3 unchanged sentences

Consideration received for process transition activities $ 13,893 $ 5,423

Accounts receivable includes $ 148,370 and $ 126,027 as of June 30, 2023 and December 31, 2022, respectively, representing unbilled receivables.

Accounts receivable includes $ 152,425 and $ 126,027 as of September 30, 2023 and December 31, 2022, respectively, representing unbilled receivables.

The Company has accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers and considers no significant performance risk associated with its unbilled receivables.

2 unchanged sentences

The Company’s assessment did not indicate any impairment losses on its contract assets for the periods presented.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

Contract liabilities represent that portion of deferred revenue for which payments have been received in advance from customers.

The Company also defers revenues attributable to certain process transition activities for which costs have been capitalized by the Company as contract fulfillment costs.

Consideration received from customers, if any, relating to such transition activities are classified under contract liabilities and are included within “Deferred revenues” and “Other non-current liabilities” in the consolidated balance sheets.

Consideration received from customers, if any, relating to such transition activities are classified under contract liabilities and are included within “Deferred revenue” and “Other non-current liabilities” in the consolidated balance sheets.

The revenues are recognized as (or when) the performance obligation is fulfilled under the contract with customer.

Revenue recognized during the three and six months ended June 30, 2023 and 2022, which was included in the contract liabilities balance at the beginning of the respective periods:

Three months ended June 30, Six months ended June 30,

Revenue recognized during the three and nine months ended September 30, 2023 and 2022, which was included in the contract liabilities balance at the beginning of the respective periods:

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

1 unchanged sentence

Consideration received for process transition activities $ 373 $ 706 $ 1,381 $ 1,370

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

Contract acquisition and fulfillment costs

1 unchanged sentence

Contract Acquisition Costs

Three months ended Six months ended Year ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 December 31, 2022

Three months ended Nine months ended Year ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 December 31, 2022

Opening Balance $ 2,183 $ 983 $ 1,095 $ 511 $ 511

3 unchanged sentences

Contract Fulfillment Costs

Three months ended Six months ended Year ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 December 31, 2022

Three months ended Nine months ended Year ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 December 31, 2022

Opening Balance $ 21,445 $ 10,167 $ 13,871 $ 5,795 $ 5,795

2 unchanged sentences

Closing Balance $ 24,357 $ 11,961 $ 24,357 $ 11,961 $ 13,871

There was no impairment for contract acquisition and contract fulfillment costs as of June 30, 2023 and December 31, 2022.

There was no impairment for contract acquisition and contract fulfillment costs as of September 30, 2023 and December 31, 2022.

The capitalized costs are amortized over the expected period of benefit of the contract.

3 unchanged sentences

In calculating expected credit loss, the Company also considered past payment trends, credit rating and other related credit information for its significant customers to estimate the probability of default in the future.

June 30, 2023 December 31, 2022

Accounts receivable, including unbilled receivables $ 290,105 $ 260,554

Allowance for expected credit losses ( 1,800 ) ( 1,332 )

Accounts receivable, net $ 288,305 $ 259,222

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

September 30, 2023

(In thousands, except per share amount and share count)

September 30, 2023 December 31, 2022

Accounts receivable, including unbilled receivables $ 307,074 $ 260,554

Allowance for expected credit losses ( 3,696 ) ( 1,332 )

Accounts receivable, net $ 303,378 $ 259,222

The movement in “Allowance for expected credit losses” on customer balances was as follows:

Three months ended Six months ended Year ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 December 31, 2022

Three months ended Nine months ended Year ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 December 31, 2022

Opening Balance $ 1,800 $ 844 $ 1,332 $ 573 $ 573

5 unchanged sentences

To reduce credit risk, the Company conducts ongoing credit evaluations of its customers.

No customer accounted for more than 10% of accounts receivable, net, as of June 30, 2023 and December 31, 2022.

No customer accounted for more than 10% of accounts receivable, net, as of September 30, 2023 and December 31, 2022.

Earnings Per Share

3 unchanged sentences

The following table sets forth the computation of basic and diluted earnings per share:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

2 unchanged sentences

Basic weighted average common shares outstanding 166,159,619 166,189,165 166,707,599 166,801,730

Dilutive effect of share-based awards 333,095 427,128 412,329 439,979

Dilutive effect of stock-based awards 1,528,755 2,699,580 1,884,013 2,366,455

Diluted weighted average common shares outstanding 167,688,374 168,888,745 168,591,612 169,168,185

4 unchanged sentences

Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share (1)

2,899,035 4,680 1,564,844 3,365

(1) Prior period information has been adjusted to reflect the 5 -for-1 forward stock split of the Company’s common stock effected in August 2023.

Refer to Note 19 – Capital Structure to the unaudited consolidated financial statements for further details.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

September 30, 2023

(In thousands, except per share amount and share count)

Other Income/(Loss), net

Other income/(loss), net consists of the following:

Three months ended June 30, Six months ended June 30,

Other Income, net

Other income, net consists of the following:

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

1 unchanged sentence

Interest and dividend income 2,106 1,457 5,480 3,674

Fair value changes of contingent consideration* ( 2,500 ) — ( 2,500 ) ( 1,000 )

Others, net ( 165 ) ( 667 ) ( 462 ) ( 1,517 )

Other income/(loss), net $ 2,661 $ ( 174 ) $ 5,816 $ 2,237

Other income, net $ 778 $ 2,261 $ 6,594 $ 4,498

* Refer to Note 16 - Fair Value Measurements to the unaudited consolidated financial statements for further details.

Cash, Cash Equivalents and Restricted Cash

For the purposes of unaudited statements of cash flows, cash, cash equivalents and restricted cash consist of the following:

June 30, 2023 June 30, 2022 December 31, 2022

September 30, 2023 September 30, 2022 December 31, 2022

Cash and cash equivalents $ 122,655 $ 89,262 $ 118,669

6 unchanged sentences

Investments consist of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Short-term investments

9 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

September 30, 2023

(In thousands, except per share amount and share count)

Property and Equipment, net

Property and Equipment

Property and equipment, net consists of the following:

Estimated useful lives (Years) June 30, 2023 December 31, 2022

Estimated useful lives (Years) September 30, 2023 December 31, 2022

Owned Assets:

21 unchanged sentences

Property and equipment, net $ 96,729 $ 82,828

*Depreciation on assets held under finance leases are computed using the straight-line method over the shorter of the assets estimated useful lives or the lease term.

Capital work in progress represents advances paid towards acquisition of property and equipment and costs incurred on internally developed software not yet ready to be placed in service.

During the three and six months ended June 30, 2023, there were no material changes in estimated useful lives of property and equipment during the ordinary course of operations.

Capital work in progress represents advances paid towards acquisition of property and equipment and costs incurred on internally developed software not yet ready for its intended use.

During the three and nine months ended September 30, 2023, there were no material changes in estimated useful lives of property and equipment during the ordinary course of operations.

The depreciation and amortization expense, excluding amortization of acquisition-related intangibles, recognized in the unaudited consolidated statements of income was as follows:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Depreciation and amortization expense $ 8,426 $ 10,137 $ 26,682 $ 29,182

The effect of foreign exchange loss upon settlement of cash flow hedges recorded under depreciation and amortization expense, was as follows:

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Effect of foreign exchange loss $ ( 37 ) $ ( 126 ) $ ( 182 ) $ ( 64 )

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

September 30, 2023

(In thousands, except per share amount and share count)

The effect of foreign exchange gain/(loss) upon settlement of cash flow hedges recorded under depreciation and amortization expense, was as follows:

Three months ended June 30, Six months ended June 30,

2023 2022 2023 2022

Effect of foreign exchange gain/(loss) $ ( 66 ) $ ( 5 ) $ ( 145 ) $ 62

Internally developed software costs, included under Software, was as follows:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Cost $ 42,585 $ 31,544

2 unchanged sentences

The amortization expense on internally developed software recognized in the unaudited consolidated statements of income was as follows:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Amortization expense $ 2,311 $ 1,832 $ 6,711 $ 4,414

As of June 30, 2023 and December 31, 2022, the Company believes no impairment exists because the long-lived asset's future undiscounted net cash flows expected to be generated exceeds its carrying value;

As of September 30, 2023 and December 31, 2022, the Company believes no impairment exists because the long-lived asset's future undiscounted net cash flows expected to be generated exceeds its carrying value;

however, there can be no assurance that long-lived assets will not be impaired in future periods.

6 unchanged sentences

Currency translation adjustments 11 ( 2 ) ( 66 ) ( 1 ) ( 58 )

Balance as of June 30, 2023 $ 50,048 $ 21,880 $ 47,243 $ 286,732 $ 405,903

As of June 30, 2023, the Company performed an assessment to determine whether events or circumstances exist that may lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The Company considered current and forecasted economic and market conditions and qualitative factors, such as the Company’s performance during the first half of the current fiscal year, business forecasts for the remainder of the year, stock price movements, generation and availability of cash and expansion plans.

Balance as of September 30, 2023 $ 49,940 $ 21,873 $ 47,035 $ 286,731 $ 405,579

As of September 30, 2023, the Company performed an assessment to determine whether events or circumstances exist that may lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The Company considered current and forecasted economic and market conditions and qualitative factors, such as the Company’s performance during nine months of the current fiscal year, business forecasts for the remainder of the year, stock price movements, generation and availability of cash and expansion plans.

The Company reviewed key assumptions, including revisions of projected future revenues for reporting units against the results of the annual impairment test performed during the fourth quarter of 2022.

The Company did not identify any triggers or indications of potential impairment for its reporting units as of June 30, 2023.

The Company did not identify any triggers or indications of potential impairment for its reporting units as of September 30, 2023.

The recoverability of goodwill is dependent upon the continued growth of cash flows from the Company’s business activities.

1 unchanged sentence

The Company continues to maintain its focus on cultivating long-term client relationships as well as attracting new clients.

Other Intangible Assets

Information regarding the Company’s intangible assets is set forth below:

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

September 30, 2023

(In thousands, except per share amount and share count)

Other Intangible Assets

Information regarding the Company’s intangible assets is set forth below:

As of June 30, 2023

As of September 30, 2023

Carrying Amount Accumulated

21 unchanged sentences

The amortization expense recognized in the unaudited consolidated statements of income was as follows:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Amortization expense $ 3,157 $ 4,243 $ 11,510 $ 12,875

The remaining weighted average life of intangible assets is as follows:

Customer relationships 5.0

Developed technology 1.9

Trade names and trademarks (finite lived) 1.1

Non-compete agreements 2.3

Estimated future amortization expense related to finite-lived intangible assets as of September 30, 2023 was as follows:

2023 (October 1 - December 31) $ 3,147

2028 and thereafter 6,707

Total $ 52,415

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

September 30, 2023

(In thousands, except per share amount and share count)

Estimated future amortization expense related to finite-lived intangible assets as of June 30, 2023 was as follows:

2023 (July 1 - December 31) $ 6,315

2028 and thereafter 6,697

Total $ 55,587

Other Current Assets

Other current assets consist of the following:

June 30, 2023 December 31, 2022

Prepaid expenses $ 19,811 $ 18,132

September 30, 2023 December 31, 2022

Advance income tax, net $ 26,630 $ 5,716

Receivables from statutory authorities 15,996 15,724

Derivative instruments 5,062 1,526

Advances to suppliers 2,851 1,944

Prepaid expenses 15,066 18,132

Deferred contract fulfillment costs 3,091 1,178

Derivative instruments 2,757 1,526

Contract assets 2,286 904

Advances to suppliers 1,299 1,944

Others 3,572 5,855

1 unchanged sentence

Other assets consist of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Deferred contract fulfillment costs $ 21,266 $ 12,693

Lease deposits 6,925 6,621

Deposits with statutory authorities 6,318 6,276

Contract assets 8,800 1,864

Deposits with statutory authorities 7,272 6,276

Lease deposits 5,828 6,621

Derivative instruments 2,265 820

1 unchanged sentence

Other assets $ 51,398 $ 32,069

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Accrued expenses $ 55,071 $ 47,854

1 unchanged sentence

Contingent consideration 15,600 5,000

Accrued capital expenditures 7,021 4,032

Client liabilities 5,251 5,110

Derivative instruments 5,089 10,059

Other current liabilities 7,205 2,867

Accrued capital expenditures 3,978 4,032

Others 3,674 2,867

Accrued expenses and other current liabilities $ 107,730 $ 95,352

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

Other Non-Current Liabilities

Other non-current liabilities consist of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Retirement benefits $ 13,210 $ 12,982

11 unchanged sentences

Fair value changes related to net investment hedges are included in AOCI and are reclassified to unaudited consolidated statements of income when a foreign operation is disposed or partially disposed.

The following table sets forth the changes in AOCI during the six months ended June 30, 2023 and 2022:

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

The following table sets forth the changes in AOCI during the nine months ended September 30, 2023 and 2022:

Accumulated Other Comprehensive Income/(Loss)

1 unchanged sentence

Balance as of January 1, 2023 $ ( 133,139 ) $ ( 11,303 ) $ 299 $ ( 144,143 )

Gains recognized during the period 5,177 16,145 — 21,322

Gains/(losses) recognized during the period ( 2,605 ) 8,242 — 5,637

Reclassification to net income (1)

2 unchanged sentences

466 ( 2,900 ) ( 56 ) ( 2,490 )

Accumulated other comprehensive income/(loss) as of June 30, 2023 $ ( 129,098 ) $ 4,737 $ 214 $ ( 124,147 )

Accumulated other comprehensive income/(loss) as of September 30, 2023 $ ( 135,278 ) $ ( 1,700 ) $ 173 $ ( 136,805 )

Balance as of January 1, 2022 $ ( 95,437 ) $ 8,420 $ ( 2,457 ) $ ( 89,474 )

4 unchanged sentences

8,898 5,948 ( 136 ) 14,710

Accumulated other comprehensive income/(loss) as of June 30, 2022 $ ( 124,685 ) $ ( 6,444 ) $ ( 2,245 ) $ ( 133,374 )

Accumulated other comprehensive income/(loss) as of September 30, 2022 $ ( 135,910 ) $ ( 16,151 ) $ ( 2,142 ) $ ( 154,203 )

(1) Refer to Note 17 - Derivatives and Hedge Accounting and Note 20 - Employee Benefit Plans to the unaudited consolidated financial statements for reclassification to net income.

1 unchanged sentence

Refer to Note 22 - Income Taxes to the unaudited consolidated financial statements.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

Fair Value Measurements

5 unchanged sentences

Inputs Significant Other

As of June 30, 2023 (Level 1) (Level 2) (Level 3) Total

As of September 30, 2023 (Level 1) (Level 2) (Level 3) Total

Cash equivalents - Money market funds (1)

1 unchanged sentence

Mutual funds (2)

76,476 — — 76,476

Derivative financial instruments — 5,022 — 5,022

4 unchanged sentences

Total $ — $ 6,623 $ 16,189 $ 22,812

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

Quoted Prices in

6 unchanged sentences

Mutual funds (2)

110,964 — — 110,964

Derivative financial instruments — 2,346 — 2,346

7 unchanged sentences

(3) Contingent consideration is presented under “Accrued Expenses and Other Current Liabilities” and “Other Non-Current Liabilities,” as applicable, in the consolidated balance sheets.

Derivative Financial Instruments:

Fair Value of Derivative Financial Instruments:

The Company’s derivative financial instruments consist of foreign currency forward contracts and interest rate swaps.

1 unchanged sentence

Refer to Note 17 - Derivatives and Hedge Accounting to the unaudited consolidated financial statements for further details.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

Fair Value of Contingent Consideration:

4 unchanged sentences

The following table summarizes the changes in the fair value of contingent consideration:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

4 unchanged sentences

Closing balance $ 16,189 $ 11,439 $ 16,189 $ 11,439

During the three and six months ended June 30, 2023 and 2022, there were no transfers among Level 1, Level 2 and Level 3.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

During the three and nine months ended September 30, 2023 and 2022, there were no transfers among Level 1, Level 2 and Level 3.

Financial Instruments Not Carried at Fair Value :

5 unchanged sentences

These contracts qualify as cash flow hedges under ASC Topic 815, Derivatives and Hedging , and are with counterparties that are highly rated financial institutions.

For derivatives in cash flow hedging relationships as of June 30, 2023 and December 31, 2022, the Company had outstanding foreign currency forward contracts totaling $ 831,250 and $ 841,620 , respectively and interest rate swaps totaling $ 75,000 , each.

The Company estimates that approximately $ 1,578 of derivative gains, net, excluding tax effects, included in AOCI, representing changes in the value of cash flow hedges based on exchange rates prevailing as of June 30, 2023, could be reclassified into earnings within the next twelve months.

As of June 30, 2023, the maximum outstanding term of the cash flow hedges was approximately 39 months.

For derivatives in cash flow hedging relationships as of September 30, 2023 and December 31, 2022, the Company had outstanding foreign currency forward contracts totaling $ 797,400 and $ 841,620 , respectively and interest rate swaps totaling $ 75,000 , each.

The Company estimates that approximately $ 2,399 of derivative losses, net, excluding tax effects, included in AOCI, representing changes in the value of cash flow hedges based on exchange rates prevailing as of September 30, 2023, could be reclassified into earnings within the next twelve months.

As of September 30, 2023, the maximum outstanding term of the cash flow hedges was approximately 36 months.

The Company also enters into foreign currency forward contracts to hedge its intercompany balances and other monetary assets and liabilities denominated in currencies other than functional currencies, against the risk of fluctuations in foreign currency exchange rates associated with remeasurement of such assets and liabilities to functional currency.

3 unchanged sentences

pound sterling (GBP).

The Company also has exposure to Colombian pesos (COP), the Euro (EUR), South African ZAR, the Australian dollar (AUD), the Canadian dollar (CAD) and other local currencies in which it operates.

The Company also has exposure to Colombian pesos (COP), the Euro (EUR), South African rand (ZAR), the Australian dollar (AUD), the Canadian dollar (CAD) and other local currencies in which it operates.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

The following table sets forth the aggregate notional principal amounts of outstanding foreign currency forward contracts for derivatives not designated as hedging instruments:

Foreign currency forward contracts denominated in:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

dollar (USD) 175,445 163,990

2 unchanged sentences

Australian dollar (AUD) 3,991 1,951

South African ZAR 102,249 —

South African rand (ZAR) 122,188 —

Colombian peso (COP) 2,286,550 —

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

The following table sets forth the fair value of the foreign currency forward contracts and interest rate swaps and their location on the consolidated balance sheets:

1 unchanged sentence

relationships Derivatives not designated as hedging

June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022

Other current assets $ 2,542 $ 1,271 $ 215 $ 255

4 unchanged sentences

The following table sets forth the effect of foreign currency forward contracts and interest rate swaps on AOCI and the unaudited consolidated statements of income:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

Derivative financial instruments:

6 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

September 30, 2023

(In thousands, except per share amount and share count)

The following table sets forth the location and amount of gain/(loss) recognized in unaudited consolidated statements of income for derivatives in cash flow hedging relationships and derivatives not designated as hedging instruments:

Three months ended June 30,

Three months ended September 30,

As per unaudited consolidated

19 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

September 30, 2023

(In thousands, except per share amount and share count)

Six months ended June 30,

Nine months ended September 30,

As per unaudited consolidated

18 unchanged sentences

The following table summarizes the Company’s debt position:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Revolving credit facility

3 unchanged sentences

Total borrowings $ 210,000 $ 250,000

Unamortized debt issuance costs for the Company’s revolving credit facility of $ 1,040 and $ 1,177 as of June 30, 2023 and December 31, 2022, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.

Credit Agreement

Unamortized debt issuance costs for the Company’s revolving credit facility of $ 972 and $ 1,177 as of September 30, 2023 and December 31, 2022, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

September 30, 2023

(In thousands, except per share amount and share count)

Credit Agreement

The Company held a $ 300,000 revolving credit facility pursuant to its credit agreement (the “Credit Agreement”), dated as of November 21, 2017 with certain lenders and Citibank N.A.

13 unchanged sentences

The revolving credit facility carried an effective interest rate as shown below:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Effective Interest Rate 6.5 % 3.4 % 6.2 % 2.3 %

As of June 30, 2023 and December 31, 2022, the Company was in compliance with all financial and non-financial covenants listed under the revolving credit facility.

Expected payments for all of the Company’s borrowings as of June 30, 2023 were as follows:

As of September 30, 2023 and December 31, 2022, the Company was in compliance with all financial and non-financial covenants listed under the revolving credit facility.

Expected payments for all of the Company’s borrowings as of September 30, 2023 were as follows:

Revolving credit facility

Payments Interest

2023 (July 1 - December 31) $ 30,000 $ 6,216

2023 (October 1 - December 31) $ 35,000 $ 3,029

2024 15,000 10,659

3 unchanged sentences

Total $ 210,000 $ 37,602

* Interest payments are based on interest rate prevailing as of June 30, 2023.

Letters of Credit

In the ordinary course of business, the Company provides standby letters of credit to third parties primarily for facility leases.

As of each of June 30, 2023 and December 31, 2022, the Company had outstanding letters of credit of $ 461 , that were not recognized in the consolidated balance sheets.

* Interest payments are based on interest rate prevailing as of September 30, 2023.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

September 30, 2023

(In thousands, except per share amount and share count)

Letters of Credit

In the ordinary course of business, the Company provides standby letters of credit to third parties primarily for facility leases.

As of each of September 30, 2023 and December 31, 2022, the Company had outstanding letters of credit of $ 461 , that were not recognized in the consolidated balance sheets.

Capital Structure

The Company has one class of common stock outstanding.

On June 20, 2023, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation, which upon filing with the State of Delaware on August 1, 2023, and effectiveness thereof, effected a 5 -for-1 forward stock split of the Company’s common stock (the “2023 Stock Split”) and an increase in the number of authorized shares of the Company’s common stock from 100,000,000 shares to 400,000,000 shares.

The par value of each share of common stock, $ 0.001 , remained unchanged.

Pursuant to the 2023 Stock Split, each stockholder of record on July 25, 2023 holding shares of the Company’s common stock received four additional shares of the Company’s common stock for every one share held.

The additional shares were distributed after the close of business on August 1, 2023.

The common shares began trading on the Nasdaq Global Select Market on a post-split basis on August 2, 2023.

All share count and per share amounts in the unaudited consolidated financial statements have been retrospectively adjusted from January 1, 2022 to reflect the 2023 Stock Split as if it occurred at the beginning of the earliest period presented.

An amount equal to the par value of the increased shares resulting from the 2023 Stock Split was reclassified from “Additional paid-in capital” to “Common stock.”

Share Repurchases

The Company purchased shares of its common stock from employees in connection with withholding tax payments related to the vesting of restricted stock units and performance-based restricted stock units, as below:

Shares repurchased Total consideration Weighted average purchase price per share (1)

Three months ended June 30, 2023 — $ — $ —

Three months ended June 30, 2022 — $ — $ —

Six months ended June 30, 2023 38,356 $ 6,529 $ 170.22

Six months ended June 30, 2022 27,219 $ 3,191 $ 117.23

Three months ended September 30, 2023 45,267 $ 1,324 $ 29.25

Three months ended September 30, 2022 — $ — $ —

Nine months ended September 30, 2023 237,047 $ 7,853 $ 33.13

Nine months ended September 30, 2022 136,095 $ 3,191 $ 23.45

(1) The weighted average purchase price per share is based on the closing price of the Company’s common stock on the Nasdaq Global Select Market on the trading day prior to the applicable vesting date of the shares of restricted stock.

3 unchanged sentences

The Company purchased shares of its common stock, for a total consideration including commissions, under the 2022 Repurchase Program, as below:

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

Shares repurchased Total consideration Weighted average purchase price per share

Three months ended June 30, 2023 184,144 $ 29,013 $ 157.56

Three months ended June 30, 2022 205,716 $ 28,806 $ 140.03

Six months ended June 30, 2023 405,169 $ 64,847 $ 160.05

Six months ended June 30, 2022 427,049 $ 57,000 $ 133.47

Three months ended September 30, 2023 975,774 $ 28,636 $ 29.35

Three months ended September 30, 2022 384,045 $ 11,521 $ 30.00

Nine months ended September 30, 2023 3,001,619 $ 93,483 $ 31.14

Nine months ended September 30, 2022 2,519,290 $ 68,521 $ 27.20

Repurchased shares have been recorded as treasury shares and will be held until the Company’s board of directors designates that these shares be retired or used for other purposes.

5 unchanged sentences

Actuarial gains or losses or prior service costs, if any, resulting from amendments to the plans are recognized and amortized over the remaining period of service of the employees.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

The India Plan is partially funded whereas the Philippines Plan is unfunded.

9 unchanged sentences

Effect of exchange rate changes ( 78 )

Plan assets as of June 30, 2023

* Benefits payments were substantially made through the plan assets during the six months ended June 30, 2023.

Plan assets as of September 30, 2023

* Benefits payments were substantially made through the plan assets during the nine months ended September 30, 2023.

Components of net periodic benefit costs recognized in unaudited consolidated statements of income and actuarial (gain)/loss reclassified from AOCI, were as follows:

Three months ended June 30, Six months ended June 30,

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

10 unchanged sentences

The Company’s accrual for contribution to the 401(k) Plans was as follows:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

1 unchanged sentence

The Company’s contribution for various defined social security contribution plans on behalf of employees in foreign subsidiaries of the Company was as follows:

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

5 unchanged sentences

As part of the Company’s efforts to optimize its existing network of operations centers, the Company continued to evaluate its office facilities to determine where it can exit or consolidate its use of office space.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

Supplemental balance sheet information

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Operating Lease

Operating lease right-of-use assets $ 58,423 $ 55,347

Operating lease right-of-use assets, net $ 56,817 $ 55,347

Operating lease liabilities - Current $ 14,008 $ 14,978

8 unchanged sentences

Total finance lease liabilities $ 676 $ 519

Finance lease liabilities are presented as a part of “Accrued expenses and other current liabilities” and “Other non-current liabilities,” as applicable, in the Company’s consolidated balance sheets.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

The components of lease cost, which are included in the Company’s unaudited consolidated statements of income, are as follows:

Lease cost Three months ended June 30, Six months ended June 30,

Lease cost Three months ended September 30, Nine months ended September 30,

Finance lease:

9 unchanged sentences

Supplemental cash flow and other information related to leases are as follows:

Six months ended June 30,

Nine months ended September 30,

Cash payments for amounts included in the measurement of lease liabilities :

10 unchanged sentences

Operating lease 7.4 % 7.0 %

The Company modified certain of its operating leases, resulting in a decrease of its lease liabilities by $ 2,466 and an increase of its lease liabilities by $ 263 , during the six months ended June 30, 2023 and June 30, 2022, respectively, with a corresponding adjustment to ROU assets.

As of June 30, 2023 and December 31, 2022, the Company did not have any significant leases that have not yet commenced but that create significant rights and obligations for the Company.

Maturities of lease liabilities as of June 30, 2023 were as follows:

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

The Company modified certain of its operating leases, resulting in a net decrease of its lease liabilities by $ 1,876 and a net increase of its lease liabilities by $ 209 , during the nine months ended September 30, 2023 and 2022, respectively, with a corresponding adjustment to ROU assets.

As of September 30, 2023 and December 31, 2022, the Company did not have any significant leases that have not yet commenced but that create significant rights and obligations for the Company.

Maturities of lease liabilities as of September 30, 2023 were as follows:

Operating Leases Finance Leases

2023 (July 1 - December 31) $ 9,445 $ 133

2023 (October 1 - December 31) $ 4,632 $ 72

2024 17,468 241

6 unchanged sentences

Present value of lease liabilities $ 62,453 $ 676

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

Maturities of lease liabilities as of December 31, 2022 were as follows:

11 unchanged sentences

Each quarter, the Company updates its estimate of annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment.

The effective tax rate increased from 23.8 % during the three months ended June 30, 2022 to 24.1 % during the three months ended June 30, 2023.

The Company recorded income tax expense of $ 15,554 and $ 11,125 for the three months ended June 30, 2023 and 2022, respectively.

The increase in income tax expense was primarily as a result of higher profit during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, and an increase in non-deductible expenses during the three months ended June 30, 2023, partially offset by higher excess tax benefits related to stock-based compensation during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

The effective tax rate decreased from 23.7 % during the six months ended June 30, 2022 to 19.1 % during the six months ended June 30, 2023.

The Company recorded income tax expense of $ 23,612 and $ 22,327 for the six months ended June 30, 2023 and June 30, 2022, respectively.

The increase in income tax expense was primarily as a result of higher profit during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, and an increase in non-deductible expenses, partially offset by higher excess tax benefits related to stock-based compensation during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

During the six months ended June 30, 2023, the Company’s subsidiaries in India, the United Kingdom and Australia repatriated $ 76,000 (net of $ 4,015 withholding taxes), $ 15,598 and $ 9,081 , respectively, to the United States.

The effective tax rate increased from 24.2 % during the three months ended September 30, 2022 to 24.4 % during the three months ended September 30, 2023.

The Company recorded income tax expense of $ 14,161 and $ 12,447 for the three months ended September 30, 2023 and 2022, respectively.

The increase in income tax expense was primarily as a result of higher profit during the three months ended September 30, 2023, compared to the three months ended September 30, 2022, and an increase in non-deductible expenses during the three months ended September 30, 2023, partially offset by higher excess tax benefits related to stock-based compensation, and higher tax credits during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

The effective tax rate decreased from 23.9 % during the nine months ended September 30, 2022 to 20.8 % during the nine months ended September 30, 2023.

The Company recorded income tax expense of $ 37,773 and $ 34,774 for the nine months ended September 30, 2023 and 2022, respectively.

The increase in income tax expense was primarily as a result of higher profit during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, and an increase in

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

non-deductible expenses, partially offset by higher excess tax benefits related to stock-based compensation, and higher tax credits during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

During the nine months ended September 30, 2023, the Company’s subsidiaries in India, the United Kingdom and Australia repatriated $ 76,000 (net of $ 4,015 withholding taxes), $ 15,598 and $ 9,081 , respectively, to the United States.

These distributions do not constitute a change in the Company’s permanent reinvestment assertion.

Deferred income taxes recognized in AOCI were as follows:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

5 unchanged sentences

Total $ 3,017 $ 10,090 $ ( 2,490 ) $ 14,710

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

Stock-Based Compensation

Prior period information has been adjusted to reflect the 5 -for-1 forward stock split of the Company’s common stock effected in August 2023.

Refer to Note 19 – Capital Structure to the unaudited consolidated financial statements for further details.

Stock-based compensation expense by nature of function, as below, are included in the unaudited consolidated statements of income:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

3 unchanged sentences

Total $ 17,067 $ 12,186 $ 42,985 $ 36,750

Income tax benefit related to share-based compensation (1)

Income tax benefit related to stock-based compensation (1)

$ 4,340 $ 2,833 $ 16,959 $ 8,855

(1) Includes $ 190 and $ 14 during the three months ended June 30, 2023 and 2022, respectively, and $ 12,710 and $ 3,624 during the six months ended June 30, 2023 and 2022, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No.

(1) Includes $ 462 and ($ 92 ) during the three months ended September 30, 2023 and 2022, respectively, and $ 13,172 and $ 3,532 during the nine months ended September 30, 2023 and 2022, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No.

2016-09, Compensation - Stock Compensation.

As of June 30, 2023 and December 31, 2022, the Company had 678,615 and 1,324,755 shares, respectively, available for grant under the 2018 Omnibus Incentive Plan.

As of September 30, 2023 and December 31, 2022, the Company had 3,284,270 and 6,623,775 shares, respectively, available for grant under the 2018 Omnibus Incentive Plan.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

Stock Options

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Forfeited — — — —

Outstanding as of June 30, 2023 331,336 $ 150.75 $ 103 10.0

Vested and exercisable as of June 30, 2023

Weighted average grant date fair value of Stock options granted during the period $ 60.13

Stock options granted under the 2018 Omnibus Incentive Plan during the three and six months ended June 30, 2023, have a contractual period of ten years and vest ratably over four years .

Outstanding as of September 30, 2023 1,790,695 $ 30.14 $ — 9.7

Vested and exercisable as of September 30, 2023

Weighted average grant date fair value of per unit of stock option granted during the period $ 12.03

Stock options granted under the 2018 Omnibus Incentive Plan during the three and nine months ended September 30, 2023, have a contractual period of ten years and vest ratably over four years .

The fair value of each stock option granted to employees is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Three and Six months ended June 30, 2023

Nine months ended September 30, 2023

Dividend yield —

2 unchanged sentences

Volatility for expected life 32.4 %

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model.

As of June 30, 2023, unrecognized compensation cost of $ 19,801 is expected to be expensed over a weighted average period of 4.0 years.

The total grant date fair value of stock options exercised during the three and six months ended June 30, 2023 and 2022, was $ 30 and $ nil , respectively.

As of September 30, 2023, unrecognized compensation cost of $ 20,070 is expected to be expensed over a weighted average period of 3.8 years.

The total grant date fair value of stock options exercised during the nine months ended September 30, 2023 and 2022, was $ 30 and $ nil , respectively.

Share Matching Program

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Restricted Stock Units (SMP)

Number Weighted Average

Number Weighted Average Fair Value

Outstanding as of December 31, 2022 238,115 $ 24.95

Forfeited ( 20,885 ) 24.95

Outstanding as of June 30, 2023 43,446 $ 124.76

As of June 30, 2023, unrecognized compensation cost of $ 3,165 is expected to be expensed over a weighted average period of 1.8 years.

Outstanding as of September 30, 2023 217,230 $ 24.95

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

As of September 30, 2023, unrecognized compensation cost of $ 2,710 is expected to be expensed over a weighted average period of 1.5 years.

Restricted Stock Units

6 unchanged sentences

Forfeited ( 332,035 ) 21.30

Outstanding as of June 30, 2023* 793,174 $ 123.29

* As of June 30, 2023 and December 31, 2022 restricted stock units vested for which the underlying common stock is yet to be issued are 130,528 and 174,490 respectively.

As of June 30, 2023, unrecognized compensation cost of $ 77,100 is expected to be expensed over a weighted average period of 2.7 years.

Outstanding as of September 30, 2023* 3,697,465 $ 24.89

* As of September 30, 2023 and December 31, 2022 restricted stock units vested for which the underlying common stock is yet to be issued are 652,640 and 872,450 respectively.

As of September 30, 2023, unrecognized compensation cost of $ 66,970 is expected to be expensed over a weighted average period of 2.5 years.

Performance Based Stock Awards

Under the 2018 Plan, the Company grants performance-based restricted stock units (“PRSUs”) to executive officers and other specified employees.

During the six months ended June 30, 2023, the Company granted 40 % of each award recipient’s equity grants in the form of PRSUs that cliff vest at the end of a three-year period based on an aggregated revenue target for a three-year period (“PU”).

During the nine months ended September 30, 2023, the Company granted 40 % of each award recipient’s equity grants in the form of PRSUs that cliff vest at the end of a three-year period based on an aggregated revenue target for a three-year period (“PU”).

The remaining 60 % of each award recipient’s equity grants are PRSUs that are based on market conditions, contingent on the Company’s meeting a total shareholder return relative to a group of peer companies specified under the 2018 Plan, and are measured over a three-year performance period (“MU”).

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

PRSU activity under the Company’s stock plans is shown below:

6 unchanged sentences

Forfeited ( 27,495 ) 25.59 ( 87,010 ) 28.33

Outstanding as of June 30, 2023 88,140 $ 145.86 227,309 $ 159.98

As of June 30, 2023, unrecognized compensation cost of $ 35,048 is expected to be expensed over a weighted average period of 2.1 years.

Outstanding as of September 30, 2023 439,955 $ 29.17 1,135,430 $ 31.99

As of September 30, 2023, unrecognized compensation cost of $ 29,509 is expected to be expensed over a weighted average period of 1.9 years.

Employee Stock Purchase Plan

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The 2022 ESPP allows eligible employees to purchase the Company’s shares of common stock through payroll deductions at a pre-specified discount to the lower of closing price of the Company’s common shares on the date of offering or the last business day of each purchase interval.

The dollar amount of shares of common stock that can be purchased under the 2022 ESPP must not exceed 15 % of the participating employee’s compensation during the offering period, subject to a cap of $ 25 per employee per calendar year.

The Company has reserved 800,000 shares of common stock for issuance over the term of the 2022 ESPP.

The second offering period under the 2022 ESPP commenced on January 1, 2023 with a term of six months .

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

$ 25 per employee per calendar year.

The Company has reserved 4,000,000 shares of common stock for issuance under the 2022 ESPP.

The third offering period under the 2022 ESPP commenced on July 1, 2023 with a term of six months .

Activity under the Company’s 2022 ESPP is shown below:

Number of Shares Total Proceeds Received

Number Total Proceeds Received

Shares available for issuance as of December 31, 2022 4,000,000

Issuance of common stock related to the first offering period ( 7,636 ) $ 1,060

Shares available for issuance as of June 30, 2023 792,364

Issuance of common stock related to the second offering period made subsequent to June 30, 2023 26,099 $ 3,800

Issuance of common stock related to the:

First offering period ( 38,180 ) $ 1,013

Second offering period ( 130,495 ) $ 3,548

Shares available for issuance as of September 30, 2023 3,831,325

Contributions received for the third offering period up to September 30, 2023 $ 1,112

The ESPP is compensatory and results in compensation expense.

The fair value of common stock to be issued under the ESPP was determined using the Black-Scholes option pricing model with the following assumptions:

Six months ended June 30, 2023

Second offering period of

January 1, 2023 to June 30, 2023 Third offering period of

July 1, 2023 to December 31, 2023

Dividend yield — —

3 unchanged sentences

Discount for illiquidity 10.3 % 8.9 %

The weighted average fair value of employee stock purchase rights granted pursuant to the ESPP during the six months ended June 30, 2023 was $ 25.86 .

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

Related Party Disclosures

In April 2022, the Company entered into a service contract for providing analytics services to The Vanguard Group Inc.

which beneficially owns more than 10% of the Company’s common stock as of June 30, 2023.

During the three months ended June 30, 2023 and 2022, the Company recognized revenues, net of $ 379 and $ 574 , respectively, related to this service contract.

During the six months ended June 30, 2023 and 2022, the Company recognized revenues, net of $ 1,330 and $ 574 , respectively, related to this service contract.

The Company had outstanding accounts receivable, net of $ 383 and $ 856 , related to this service contract as of June 30, 2023 and December 31, 2022, respectively.

which beneficially owns more than 10% of the Company’s common stock as of September 30, 2023.

During the three months ended September 30, 2023 and 2022, the Company recognized revenues, net of $ 354 and $ 814 , respectively, related to this service contract.

During the nine months ended September 30, 2023 and 2022, the Company recognized revenues, net of $ 1,684 and $ 1,388 , respectively, related to this service contract.

The Company had outstanding accounts receivable, net of $ 240 and $ 856 , related to this service contract as of September 30, 2023 and December 31, 2022, respectively.

Commitments and Contingencies

Capital Commitments

As of June 30, 2023, the Company had committed to spend approximately $ 6,600 under agreements to purchase property and equipment.

As of September 30, 2023, the Company had committed to spend approximately $ 9,400 under agreements to purchase property and equipment.

This amount is net of capital advances paid which are recognized in unaudited consolidated balance sheets as “Capital work in progress” under “Property and equipment, net.”

On June 15, 2023, the Company, along with other limited partners, entered into a limited partnership agreement with the general partner, PNP Financial Services Fund GP I, LLC and initial limited partner and outgoing partner, to form a partnership with the name Plug and Play Financial Services Fund I, L.P.

(the “Partnership”) for the primary purpose of making investments in growth-stage technology companies.

The Company is committed under the Partnership to make investments up to an amount of $ 4,000 .

(the “Partnership”) for the primary purpose of making investments

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

in growth-stage technology companies.

During the three months ended September 30, 2023, the Company invested $ 600 in the Partnership and is committed under the Partnership to make further investments up to an amount of $ 3,400 .

Other Commitments

12 unchanged sentences

The Company is currently involved in transfer pricing and related income tax disputes with Indian tax authorities.

The aggregate amount demanded by Indian tax authorities (net of advance payments) as of June 30, 2023 and December 31, 2022 is $ 37,130 and $ 37,088 , respectively.

The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 7,328 and $ 7,532 , as of June 30, 2023 and December 31, 2022, respectively.

The aggregate amount demanded by Indian tax authorities (net of advance payments) as of September 30, 2023 and December 31, 2022 is $ 36,682 and $ 37,088 , respectively.

The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 7,242 and $ 7,532 , as of September 30, 2023 and December 31, 2022, respectively.

The Company believes that its positions will more likely than not be sustained upon final examination by the tax authorities, and accordingly has not accrued any liabilities with respect to these matters in its consolidated financial statements.

India’s Value Added Tax (“VAT”) regime ended in June 2017 and was replaced by the current Goods and Service Tax (“GST”) regime.

Pursuant to reviewing the Company’s annual VAT filings, the Indian tax authorities raised aggregate VAT demands for tax years 2015 and 2017, in the amounts of $ 5,572 and $ 5,526 , as of June 30, 2023 and December 31, 2022, respectively.

The GST authorities rejected the Company’s refunds claims in the amounts of $$ 4,305 and $ 3,866 as of June 30,

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

2023 and December 31, 2022, respectively.

Pursuant to reviewing the Company’s annual VAT filings, the Indian tax authorities raised aggregate VAT demands for tax years 2015 and 2017, in the amounts of $ 5,504 and $ 5,526 , as of September 30, 2023 and December 31, 2022, respectively.

The GST authorities rejected the Company’s refunds claims in the amounts of $ 4,203 and $ 3,866 as of September 30, 2023 and December 31, 2022, respectively.

The Company has filed appeals against these matters and believes that it is more likely than not that upon final examination its position will be sustained based on its technical merits.

Accordingly, no provision was recognized as of June 30, 2023 and December 31, 2022, respectively.

Accordingly, no provision was recognized as of September 30, 2023 and December 31, 2022, respectively.

One of the Company’s subsidiaries in India has undergone an assessment with the statutory authority with respect to defined social security contribution plan.

6 unchanged sentences

The Company will complete its evaluation once the subject rules are notified and will give appropriate impact in the financial statements in the period in which, the Indian Social Security Code becomes effective and the related rules to determine the financial impact are published.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2023

(In thousands, except per share amount and share count)

From time to time, the Company, its subsidiaries, and/or their present officers or directors, may be or have been, named as a defendant in litigation matters, including employment-related claims.

6 unchanged sentences

The Company will continuously monitor these matters to assess potential impacts to the financial statements.

Subsequent Events

On June 20, 2023, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation, which upon filing with the State of Delaware, and effectiveness thereof, will effect a 5 -for-1 forward stock split of the Company’s common stock (the “2023 Stock Split”) and an increase in the number of authorized shares of the Company’s common stock from 100,000,000 shares to 400,000,000 shares.

The par value of each share of common stock, $ 0.001 , shall remain unchanged.

The 2023 Stock Split was considered to not have been consummated as the common shares were not trading on Nasdaq Global Select Market on a post-split basis as of the date of issuance of the consolidated financial statements.

Pursuant to the 2023 Stock Split, each stockholder of record on July 25, 2023 holding shares of the Company’s common stock will receive four additional shares of the Company’s common stock for every one share held.

The additional shares are to be distributed after the close of business on August 1, 2023.

All share count and per share amounts in these consolidated financial statements are presented on a pre-split basis.

Below are the pro forma weighted average common stock outstanding and earnings per share (basic and diluted) as if 2023 Stock Split had been effective for all years presented:

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2023

(In thousands, except per share amount and share count)

Pro Forma (Unaudited)

Three months ended June 30, Six months ended June 30,

2023 2022 2023 2022

Net income $ 49,068 $ 35,846 $ 100,399 $ 72,024

Basic weighted average common shares outstanding 166,776,770 167,017,055 166,986,130 167,113,090

Dilutive effect of share based awards 1,665,475 2,135,640 2,061,645 2,199,895

Diluted weighted average common shares outstanding 168,442,245 169,152,695 169,047,775 169,312,985

Earnings per share attributable to ExlService Holdings, Inc.

stockholders:

Basic $ 0.29 $ 0.21 $ 0.60 $ 0.43

Diluted $ 0.29 $ 0.21 $ 0.59 $ 0.43

Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share 1,249,155 — 897,750 2,705

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements