What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-10-26 compared with 2023-07-27 · 153 added, 149 removed, 247 unchanged (55% of the section changed)

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We are a leading data analytics and digital operations and solutions company that partners with clients to improve business outcomes and unlock growth.

By bringing together deep domain expertise with robust data, powerful analytics, cloud, AI and ML, we create agile, scalable solutions and execute complex operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media, and retail, among others.

We deliver data analytics and digital operations and solutions to our clients, driving enterprise-scale business transformation initiatives that leverage our deep expertise in advanced analytics, AI, ML and cloud.

By bringing together deep domain expertise with robust data, powerful analytics, cloud, artificial intelligence, including generative AI, we create agile, scalable solutions and execute complex operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media, and retail, among others.

We manage and report financial information through our four strategic business units:

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We have operations centers in India, the United States, the United Kingdom, the Republic of Ireland, the Philippines, Bulgaria, Colombia, South Africa, Romania and the Czech Republic.

For the three months ended June 30, 2023, we generated revenues of $405.0 million compared to revenues of $346.8 million for the three months ended June 30, 2022, an increase of $58.2 million, or 16.8%.

For the six months ended June 30, 2023, we generated revenues of $805.6 million compared to revenues of $676.0 million for the six months ended June 30, 2022, an increase of $129.6 million, or 19.2%.

We serve cli ents mainly in the United States and the United Kingdom, with these two regions generating 84.1% and 10.8%, respectively, of our total revenues for the three months ended June 30, 2023, and 86.1% and 9.3%, respectively, of our total revenues for the three months ended June 30, 2022.

For the six months ended June 30, 2023, these two regions generated 84.4% and 10.6%, respectively, of our total revenues and 85.9% and 9.6%, respectively, of our total revenues for the six months ended June 30, 2022.

For the three months ended June 30, 2023 and 2022, our total revenues from our top ten clients accounted for 33.8% and 36.2% of our total revenues, respectively.

For the six months ended June 30, 2023 and 2022, our total revenues from our top ten clients accounted for 34.3% and 36.2% of our total revenues, respectively.

For the three months ended September 30, 2023, we generated revenues of $411.0 million compared to revenues of $361.4 million for the three months ended September 30, 2022, an increase of $49.6 million, or 13.7%.

For the nine months ended September 30, 2023, we generated revenues of $1,216.6 million compared to revenues of $1,037.3 million for the nine months ended September 30, 2022, an increase of $179.3 million, or 17.3%.

We serve cli ents mainly in the United States and the United Kingdom, with these two regions generating 83.5% and 11.3%, respectively, of our total revenues for the three months ended September 30, 2023, and 86.0% and 9.4%, respectively, of our total revenues for the three months ended September 30, 2022.

For the nine months ended September 30, 2023, these two regions generated 84.1% and 10.8%, respectively, of our total revenues and 85.9% and 9.5%, respectively, of our total revenues for the nine months ended September 30, 2022.

For the three months ended September 30, 2023 and 2022, our total revenues from our top ten clients accounted for 34.6% and 34.2% of our total revenues, respectively.

For the nine months ended September 30, 2023 and 2022, our total revenues from our top ten clients accounted for 34.2% and 33.7% of our total revenues, respectively.

Although we continue to develop relationships with new clients to diversify our client base, we believe that the loss of any of our top ten clients could have a material adverse effect on our financial performance.

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We provide our clients with a range of digital operations and solutions from our Insurance, Healthcare and Emerging Business strategic business units, which are focused on solving complex industry challenges such as the insurance claims life cycle, financial transactions processing and provider and member experiences.

This typically involves the use of agile delivery models to implement digital technologies and interventions like hyper-automation, customer experience transformation, advanced automation, robotics, enterprise architecture, end-to-end business function management and transformations.

This typically involves the use of agile delivery models to implement digital technologies and interventions like hyper-automation, customer experience transformation, advanced automation, generative AI, robotics, enterprise architecture, end-to-end business function management and transformations.

We either administer and manage these functions on an ongoing basis via longer-term arrangements or project work.

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We charge for our services using various pricing models like time-and-material pricing, full-time-equivalent pricing, transaction-based pricing, outcome-based pricing, subscription-based pricing and other alternative pricing models.

Outcome-based pricing arrangements are examples of non-linear pricing models where clients link revenues from platforms and solutions and the services we provide to usage or savings rather than the efforts deployed to provide these services.

based pricing arrangements are examples of non-linear pricing models where clients link revenues from platforms and solutions and the services we provide to usage or savings rather than the efforts deployed to provide these services.

We continue to observe a shift in the industry pricing models toward transaction-based pricing, outcome-based pricing and other alternative pricing models.

We believe this trend will continue and we use such alternative pricing models with some of our current clients and are seeking to move certain other clients from a full-time-equivalent pricing model to a transaction-based or other

alternative pricing model.

These alternative pricing models place the focus on operating efficiency in order to maintain or improve our gross margins.

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Our Analytics teams deliver predictive and prescriptive analytics in the areas of customer acquisition and life cycle management, risk underwriting and pricing, operational effectiveness, credit and operational risk monitoring and governance, regulatory reporting and data management.

We enhance, modernize and enrich structured and unstructured data and use a spectrum of advanced analytical tools and techniques, including our in-house AI and ML capabilities and proprietary solutions to create insights, improve decision making for our clients and address a range of complex industry-wide priorities.

Our acquisition of Clairvoyant AI, Inc.

(“Clairvoyant”) in December 2021 strengthened our data analytics capabilities with additional expertise in data and product engineering, cloud enablement and managed services, further supporting our clients in the insurance, healthcare, banking and financial services and retail industries.

We enhance, modernize and enrich structured and unstructured data and use a spectrum of advanced analytical tools and techniques, including our in-house and third party artificial intelligence, generative AI, and machine learning capabilities and proprietary solutions to create insights, improve decision making for our clients and address a range of complex industry-wide priorities.

We actively cross-sell and, where appropriate, integrate our analytics services with other digital operations and solutions as part of a comprehensive offering for our clients.

Our projects-based analytics services are cyclical and can be significantly affected by variations in business cycles.

In addition, our projects-based analytics services are documented in contracts with terms generally not exceeding one year and may not produce ongoing or recurring business for us once the project is completed.

Our project-based analytics services are cyclical and can be significantly affected by variations in business cycles.

In addition, our project-based analytics services are documented in contracts with terms generally not exceeding one year and may not produce ongoing or recurring business for us once the project is completed.

These contracts also usually contain provisions permitting termination of the contract after a short notice period.

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2023 Stock Split

On June 20, 2023, subsequent to the approval and recommendation of our board of directors, our stockholders approved an amendment to our 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 our common stock and an increase in the number of authorized shares of our common stock from 100,000,000 shares to 400,000,000 shares (see Note 26 – Subsequent Events to our unaudited consolidated financial statements herein for further details.)

On June 20, 2023, subsequent to the approval and recommendation of our board of directors, our stockholders approved an amendment to our 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 our common stock and an increase in the number of authorized shares of our 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.

See Note 19 – Capital Structure to our unaudited consolidated financial statements herein for further details.

Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies and estimates during the three and six months ended June 30, 2023, as compared to the critical accounting policies and estimates referred in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Critical Accounting Policies and Estimates” and Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

There have been no significant changes in our critical accounting policies and estimates during the three and nine months ended September 30, 2023, as compared to the critical accounting policies and estimates referred in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Critical Accounting Policies and Estimates” and Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Results of Operations

The following table summarizes our results of operations:

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

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

2023 2022 2023 2022

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Interest expense (3.4) (2.4) (10.0) (4.8)

Other income/(loss), net 2.6 (0.2) 5.8 2.2

Other income, net 0.8 2.3 6.6 4.5

Income before income tax expense and earnings from equity affiliates 58.0 51.5 181.9 145.5

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Due to rounding, the numbers presented in the tables included in this Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may not add up precisely to the totals provided.

Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

The following table summarizes our revenues by reportable segments:

Three months ended June 30, Percentage

Three months ended September 30, Percentage

2023 2022 Change

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Total revenues, net $ 411.0 $ 361.4 $ 49.6 13.7 %

Revenues for the three months ended June 30, 2023 were $405.0 million, up $58.2 million, or 16.8%, compared to the three months ended June 30, 2022, driven primarily by revenue growth from our new and existing clients in all of our reportable segments.

Revenues for the three months ended September 30, 2023 were $411.0 million, up $49.6 million, or 13.7%, compared to the three months ended September 30, 2022, driven primarily by revenue growth from our new and existing clients in all of our reportable segments.

Revenue growth in Insurance of $20.2 million was primarily driven by expansion of business from our new and existing clients of $20.4 million.

This was partially offset by a loss of $0.9 million, mainly attributable to the depreciation of the Australian dollar, the South African ZAR and the Indian rupee against the U.S.

dollar during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

Insurance revenues were 31.7% and 31.3% of our total revenues during the three months ended June 30, 2023 and June 30, 2022, respectively.

Revenue growth in Healthcare of $4.1 million was primarily driven by expansion of business from our new and existing clients during the three months ended June 30, 2023.

Healthcare revenues were 6.7% of our total revenues for each of the three months ended June 30, 2023 and June 30, 2022.

Revenue growth in Emerging Business of $13.2 million was primarily driven by expansion of business from our new and existing clients of $13.7 million.

This was partially offset by a loss of $0.5 million, mainly attributable to the depreciation of the Indian rupee against the U.S.

dollar during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

Emerging Business revenues were 16.6% and 15.5% of our total revenues during the three months ended June 30, 2023 and June 30, 2022, respectively.

Revenue growth in Analytics of $20.9 million was primarily driven by higher volumes in our annuity and project based engagements from our new and existing clients.

Analytics revenues were 45.0% and 46.5% of our total revenues during the three months ended June 30, 2023 and June 30, 2022, respectively.

This was partially offset by a loss of $0.2 million, mainly attributable to the depreciation of the Australian dollar, the South African rand and the Indian rupee against the U.S.

dollar during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

Insurance revenues were 33.2% and 32.2% of our total revenues during the three months ended September 30, 2023 and September 30, 2022, respectively.

Revenue growth in Healthcare of $3.4 million was primarily driven by expansion of business from our new and existing clients during the three months ended September 30, 2023.

Healthcare revenues were 6.4% and 6.3% of our total revenues during the three months ended September 30, 2023 and September 30, 2022, respectively.

Revenue growth in Emerging Business of $9.2 million was primarily driven by expansion of business from our new and existing clients of $8.2 million and an increase in revenues of $1.0 million, mainly attributable to the appreciation of the U.K.

pound sterling against the U.S.

dollar during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

Emerging Business revenues were 15.9% and 15.5% of our total revenues during the three months ended September 30, 2023 and September 30, 2022, respectively.

Revenue growth in Analytics of $16.8 million was primarily driven by higher volumes in our annuity and project based engagements from our new and existing clients of $15.7 million and an increase in revenues of $1.1 million, mainly attributable to the appreciation of the U.K.

pound sterling against the U.S.

dollar during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

Analytics revenues were 44.5% and 46.0% of our total revenues during the three months ended September 30, 2023 and September 30, 2022, respectively.

Cost of Revenues and Gross Margin :

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Cost of Revenues Gross Margin

Three months ended June 30, Change Percentage

change Three months ended June 30, Change

Three months ended September 30, Change Percentage

change Three months ended September 30, Change

2023 2022 2023 2022

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Total $ 256.0 $ 230.5 $ 25.5 11.1 % 37.7 % 36.2 % 1.5 %

For the three months ended June 30, 2023, cost of revenues was $253.2 million compared to $221.2 million for the three months ended June 30, 2022, an increase of $32.0 million, or 14.5%.

For the three months ended September 30, 2023, cost of revenues was $256.0 million compared to $230.5 million for the three months ended September 30, 2022, an increase of $25.5 million, or 11.1%.

The increase in cost of revenues was primarily due to increases in employee-related costs, partially offset by foreign exchange gain, net of hedging.

Our gross margin for the three months ended June 30, 2023 was 37.5%, compared to 36.2% for the three months ended June 30, 2022, an increase of 130 basis points (“bps”) primarily driven by higher revenues, operational efficiencies and foreign exchange gain, net of hedging during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

The increase in cost of revenues in Insurance of $13.7 million for the three months ended June 30, 2023 was primarily due to increases in employee-related costs of $13.8 million on account of higher headcount and wage inflation and higher technology costs of $2.0 million on account of increased use of the hybrid and remote working models, partially offset by foreign exchange gain, net of hedging of $2.1 million.

Gross margin in Insurance decreased by 50 bps during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to lower margins associated with higher costs during ramp-ups in certain existing and new clients and higher employee costs during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

The decrease in cost of revenues in Healthcare of $0.1 million for the three months ended June 30, 2023 was primarily due to lower other operating costs of $0.6 million and foreign exchange gain, net of hedging of $0.5 million, partially offset by increases in employee-related costs of $1.0 million on account of higher headcount and wage inflation.

Gross margin in Healthcare increased by 1,220 bps during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to higher revenues, operational efficiencies and foreign exchange gain, net of hedging during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

The increase in cost of revenues in Emerging Business of $6.6 million for the three months ended June 30, 2023 was primarily due to increases in employee-related costs of $6.1 million on account of higher headcount and wage inflation, higher technology costs of $1.0 million on account of increased use of the hybrid and remote working models and higher other operating costs of $0.6 million, partially offset by foreign exchange gain, net of hedging of $1.1 million.

Gross margin in Emerging Business increased by 160 bps during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to higher revenues and operational efficiencies during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

The increase in cost of revenues in Analytics of $11.8 million for the three months ended June 30, 2023 was primarily due to increases in employee-related costs of $15.6 million on account of higher headcount and wage inflation, partially offset by lower other operating costs of $1.9 million and foreign exchange gain, net of hedging of $1.9 million.

Gross margin in Analytics increased by 70 bps during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to higher revenues and foreign exchange gain, net of hedging during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

Our gross margin for the three months ended September 30, 2023 was 37.7%, compared to 36.2% for the three months ended September 30, 2022, an increase of 150 basis points (“bps”) primarily driven by higher revenues and operational efficiencies during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

The increase in cost of revenues in Insurance of $11.5 million for the three months ended September 30, 2023 was primarily due to increases in employee-related costs of $11.3 million on account of higher headcount and wage inflation and higher technology costs of $1.7 million on account of increased use of the hybrid and remote working models, partially offset by foreign exchange gain, net of hedging of $1.5 million.

Gross margin in Insurance increased by 120 bps during the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily due to higher revenues and operational efficiencies during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

The decrease in cost of revenues in Healthcare of $0.6 million for the three months ended September 30, 2023 was primarily due to lower other operating costs of $0.5 million and foreign exchange gain, net of hedging of $0.3 million, partially offset by increases in employee-related costs of $0.2 million on account of wage inflation.

Gross margin in Healthcare increased by 1,180 bps during the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily due to higher revenues and operational efficiencies during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

The increase in cost of revenues in Emerging Business of $5.2 million for the three months ended September 30, 2023 was primarily due to increases in employee-related costs of $5.5 million on account of higher headcount and wage inflation and higher technology costs of $1.0 million on account of increased use of the hybrid and remote working models, partially offset by foreign exchange gain, net of hedging of $0.8 million and lower travel costs of $0.5 million.

Gross margin in Emerging Business increased by 20 bps during the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily due to higher revenues and operational efficiencies during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

The increase in cost of revenues in Analytics of $9.4 million for the three months ended September 30, 2023 was primarily due to increases in employee-related costs of $11.5 million on account of higher headcount and wage inflation, partially offset by foreign exchange gain, net of hedging of $1.3 million and lower travel costs of $0.8 million.

Gross margin in Analytics increased by 70 bps during the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily due to higher revenues and operational efficiencies during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

Selling, General and Administrative (“SG&A”) Expenses.

Three months ended June 30, Change Percentage

Three months ended September 30, Change Percentage

(dollars in millions)

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As a percentage of revenues 20.2 % 18.4 %

The increase in SG&A expenses of $9.3 million was primarily due to higher employee-related costs of $5.9 million on account of higher headcount and wage inflation, higher technology costs of $1.2 million on account of increased use of the hybrid and remote working models, increase in travel costs of $0.8 million and higher other operating costs of $2.2 million.

This was partially offset by foreign exchange gain, net of hedging of $0.8 million, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

The increase in SG&A expenses of $16.8 million was primarily due to higher employee-related costs of $10.7 million on account of higher headcount and wage inflation, higher investment in digital capabilities of $3.7 million, higher allowance for expected credit losses of $1.9 million, primarily related to a customer bankruptcy event and increase in travel costs of $0.9 million.

This was partially offset by foreign exchange gain, net of hedging of $0.4 million during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

Depreciation and Amortization.

Three months ended June 30, Change Percentage

Three months ended September 30, Change Percentage

(dollars in millions)

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As a percentage of revenues 2.8 % 4.0 %

The decrease in depreciation expense of $1.1 million was primarily due to lower depreciation of $0.8 million on assets related to operations centers closed as a result of optimization of office space and increased use of the hybrid and remote working models and foreign exchange gain, net of hedging of $0.3 million during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

The increase in intangibles amortization expense of $0.1 million during the three months ended June 30, 2023, compared to the three months ended June 30, 2022 was primarily due to amortization of intangibles associated with our acquisition of Inbound Media Group, LLC in June 2022.

The decrease in depreciation expense of $1.7 million was primarily due to lower depreciation of $1.5 million on assets related to operations centers closed as a result of optimization of office space and increased use of the hybrid and remote working models and foreign exchange gain, net of hedging of $0.2 million during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

The decrease in intangibles amortization expense of $1.1 million during the three months ended September 30, 2023, compared to the three months ended September 30, 2022 was primarily due to end of useful lives for certain intangible assets.

Income from Operations.

Income from operations increased by $17.9 million, or 37.7%, from $47.0 million for the three months ended June 30, 2022 to $64.9 million for the three months ended June 30, 2023, primarily due to higher revenues, partially offset by higher cost of revenues and higher SG&A expenses during the three months ended June 30, 2023.

As a percentage of revenues, income from operations increased from 13.6% for the three months ended June 30, 2022 to 16.0% for the three months ended June 30, 2023.

Income from operations increased by $10.1 million, or 20.2%, from $50.1 million for the three months ended September 30, 2022 to $60.2 million for the three months ended September 30, 2023, primarily due to higher revenues and higher gross margins, partially offset by higher SG&A expenses during the three months ended September 30, 2023.

As a percentage of revenues, income from operations increased from 13.9% for the three months ended September 30, 2022 to 14.7% for the three months ended September 30, 2023.

Foreign Exchange Gain, net.

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dollar against the Indian rupee, the Philippine peso, the U.K.

pound sterling and the South African ZAR during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

pound sterling and the South African rand during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

The average exchange rate of the U.S.

dollar against the Indian rupee increased from 77.68 during the three months ended June 30, 2022 to 82.20 during the three months ended June 30, 2023.

dollar against the Indian rupee increased from 80.01 during the three months ended September 30, 2022 to 82.69 during the three months ended September 30, 2023.

The average exchange rate of the U.S.

dollar against the Philippine peso increased from 53.18 during the three months ended June 30, 2022 to 55.58 during the three months ended June 30, 2023.

dollar against the Philippine peso decreased from 56.63 during the three months ended September 30, 2022 to 56.02 during the three months ended September 30, 2023.

The average exchange rate of the U.K.

pound sterling against the U.S.

dollar increased from 1.24 during the three months ended June 30, 2022 to 1.25 during the three months ended June 30, 2023.

dollar increased from 1.16 during the three months ended September 30, 2022 to 1.26 during the three months ended September 30, 2023.

The average exchange rate of the U.S.

dollar against the South African ZAR increased from 15.94 during the three months ended June 30, 2022 to 19.02 during the three months ended June 30, 2023.

We recorded a foreign exchange gain, net of $1.4 million for the three months ended June 30, 2022 compared to a foreign exchange gain, net of $0.3 million for the three months ended June 30, 2023.

dollar against the South African rand increased from 17.21 during the three months ended September 30, 2022 to 18.49 during the three months ended September 30, 2023.

We recorded a foreign exchange gain, net of $1.5 million for the three months ended September 30, 2022 compared to a foreign exchange gain, net of $0.4 million for the three months ended September 30, 2023.

Interest expens e.

Interest expense increased from $1.5 million for the three months ended June 30, 2022 to $3.2 million for the three months ended June 30, 2023, primarily due to a higher effective interest rate of 6.2% during the three months ended June 30, 2023, compared to 2.0% during the three months ended June 30, 2022, partially offset by a lower average outstanding balance under our revolving credit facility during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

Other Income/(Loss), net.

Three months ended June 30, Change Percentage

Interest expense increased from $2.4 million for the three months ended September 30, 2022 to $3.4 million for the three months ended September 30, 2023, primarily due to a higher effective interest rate of 6.5% during the three months ended September 30, 2023, compared to 3.4% during the three months ended September 30, 2022, partially offset by a lower average outstanding balance under our revolving credit facility during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

Other Income, net.

Three months ended September 30, Change Percentage

(dollars in millions)

1 unchanged sentence

Interest and dividend income 2.1 1.5 0.6 44.5 %

Other, net (0.2) (1.7) 1.5 (94.7) %

Other income/(loss), net $ 2.6 $ (0.2) $ 2.8 (1,629.3) %

Other income/(loss), net increased by $2.8 million, from Other loss, net of $0.2 million for the three months ended June 30, 2022 to Other income, net of $2.6 million for the three months ended June 30, 2023.

The increase is primarily due to higher return on mutual fund investments of $0.4 million, higher interest income on our short-term and long-term investments of $0.6 million during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, and an increase of $1.0 million due to change in fair value of contingent consideration liability related to our Clairvoyant acquisition during the three months ended June 30, 2022.

Fair value changes of contingent consideration (2.5) — (2.5) (100.0) %

Others, net (0.1) (0.7) 0.6 (75.3) %

Other income, net $ 0.8 $ 2.3 $ (1.5) (65.6) %

Other income, net decreased by $1.5 million, from $2.3 million for the three months ended September 30, 2022 to $0.8 million for the three months ended September 30, 2023.

The decrease is primarily due to a fair value adjustment to recognize an increase in contingent consideration liability of $2.5 million related to our acquisition of Clairvoyant AI, Inc.

(“Clairvoyant”) in December 2021 as a result of strong operational performance.

This was partially offset by higher interest and dividend income on our investments and lower other expenses during the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

Income Tax Expense.

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.

We recorded income tax expense of $15.5 million and $11.1 million for the three 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 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.

Net income increased from $35.8 million for the three months ended June 30, 2022 to $49.1 million for the three months ended June 30, 2023, primarily due to increase in income from operations of $17.9 million and higher other income, net of $2.6 million partially offset by higher income tax expense of $4.4 million, higher interest expense of $1.7 million and lower foreign exchange gain, net of $1.1 million.

As a percentage of revenues, net income increased from 10.3% for the three months ended June 30, 2022 to 12.1% for the three months ended June 30, 2023.

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

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.

We recorded income tax expense of $14.2 million and $12.5 million 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.

Net income increased from $39.1 million for the three months ended September 30, 2022 to $43.9 million for the three months ended September 30, 2023, primarily due to increase in income from operations of $10.1 million, partially offset by higher income tax expense of $1.7 million, lower other income, net of $1.5 million, lower foreign exchange gain, net of $1.1 million and higher interest expense of $1.0 million.

As a percentage of revenues, net income decreased from 10.8% for the three months ended September 30, 2022 to 10.7% for the three months ended September 30, 2023.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

The following table summarizes our revenues by reportable segments:

Six months ended June 30, Percentage

Nine months ended September 30, Percentage

2023 2022 Change

5 unchanged sentences

Total revenues, net $ 1,216.6 $ 1,037.3 $ 179.3 17.3 %

Revenues for the six months ended June 30, 2023 were $805.6 million, up $129.6 million, or 19.2%, compared to the six months ended June 30, 2022, driven primarily by revenue growth from our new and existing clients in all of our reportable segments.

Revenues for the nine months ended September 30, 2023 were $1,216.6 million, up $179.3 million, or 17.3%, compared to the nine months ended September 30, 2022, driven primarily by revenue growth from our new and existing clients in all of our reportable segments.

Revenue growth in Insurance of $62.8 million was primarily driven by expansion of business from our new and existing clients of $65.3 million.

This was partially offset by a loss of $2.3 million, mainly attributable to the depreciation of the Australian dollar, the Indian rupee and the South African ZAR against the U.S.

dollar during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

Insurance revenues were 31.6% and 31.3% of our total revenues during the six months ended June 30, 2023 and June 30, 2022, respectively.

Revenue growth in Healthcare of $4.6 million was primarily driven by expansion of business from our new and existing clients during the six months ended June 30, 2023.

Healthcare revenues were 6.7% and 7.3% of our total revenues during the six months ended June 30, 2023 and June 30, 2022, respectively.

This was partially offset by a loss of $2.5 million, mainly attributable to the depreciation of the Australian dollar, the Indian rupee and the South African rand against the U.S.

dollar during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

Insurance revenues were 32.1% and 31.6% of our total revenues during the nine months ended September 30, 2023 and September 30, 2022, respectively.

Revenue growth in Healthcare of $7.9 million was primarily driven by expansion of business from our new and existing clients during the nine months ended September 30, 2023.

Healthcare revenues were 6.6% and 6.9% of our total revenues during the nine months ended September 30, 2023 and September 30, 2022, respectively.

Revenue growth in Emerging Business of $38.1 million was primarily driven by expansion of business from our new and existing clients of $39.2 million.

This was partially offset by a loss of $2.3 million, mainly attributable to the depreciation of the Indian rupee and the U.K.

pound sterling against the U.S.

dollar during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

Emerging Business revenues were 16.6% and 15.5% of our total revenues during the six months ended June 30, 2023 and June 30, 2022, respectively.

Revenue growth in Analytics of $53.7 million was primarily driven by higher volumes in our annuity and project based engagements from our new and existing clients of $54.5 million.

This was partially offset by a loss of $0.8 million, mainly attributable to the depreciation of the U.K.

This was partially offset by a loss of $1.1 million, mainly attributable to the depreciation of the Indian rupee against the U.S.

dollar during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

Emerging Business revenues were 16.3% and 15.5% of our total revenues during the nine months ended September 30, 2023 and September 30, 2022, respectively.

Revenue growth in Analytics of $70.5 million was primarily driven by higher volumes in our annuity and project based engagements from our new and existing clients of $70.2 million and an increase in revenues of $0.3 million, mainly attributable to the appreciation of the U.K.

pound sterling against the U.S.

dollar during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

Analytics revenues were 45.1% and 45.9% of our total revenues during the six months ended June 30, 2023 and June 30, 2022, respectively.

dollar during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

Analytics revenues were 45.0% and 46.0% of our total revenues during the nine months ended September 30, 2023 and September 30, 2022, respectively.

Cost of Revenues and Gross Margin :

1 unchanged sentence

Cost of Revenues Gross Margin

Six months ended June 30, Percentage change Six months ended June 30, Change

Nine months ended September 30, Percentage change Nine months ended September 30, Change

2023 2022 Change 2023 2022

5 unchanged sentences

Total $ 760.7 $ 659.2 $ 101.5 15.4 % 37.5 % 36.5 % 1.0 %

For the six months ended June 30, 2023, cost of revenues was $504.7 million compared to $428.7 million for the six months ended June 30, 2022, an increase of $76.0 million, or 17.7%.

For the nine months ended September 30, 2023, cost of revenues was $760.7 million compared to $659.2 million for the nine months ended September 30, 2022, an increase of $101.5 million, or 15.4%.

The increase in cost of revenues was primarily due to increases in employee-related costs, partially offset by foreign exchange gain, net of hedging.

Our gross margin for the six months ended June 30, 2023 was 37.4% compared to 36.6% for the six months ended June 30, 2022, an increase of 80 basis points (“bps”) primarily driven by higher revenues, operational efficiencies and foreign exchange gain, net of hedging during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

The increase in cost of revenues in Insurance of $30.9 million for the six months ended June 30, 2023 was primarily due to increases in employee-related costs of $30.8 million on account of higher headcount and wage inflation, higher technology costs of $4.9 million on account of increased use of the hybrid and remote working models and higher other operating cost of $2.0 million, partially offset by foreign exchange gain, net of hedging of $5.1 million, lower facilities cost of $0.9 million and lower travel cost of $0.8 million.

Gross margin in Insurance decreased by 140 bps during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to lower margins associated with higher costs during ramp-ups in certain existing and new clients during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

The increase in cost of revenues in Healthcare of $1.1 million for the six months ended June 30, 2023 was primarily due to increases in employee-related costs of $2.8 million on account of higher headcount and wage inflation, partially offset by lower other operating costs of $0.4 million and foreign exchange gain, net of hedging of $1.3 million.

Gross margin in Healthcare increased by 430 bps during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to higher revenues and foreign exchange gain, net of hedging during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

The increase in cost of revenues in Emerging Business of $13.4 million for the six months ended June 30, 2023 was primarily due to increases in employee-related costs of $13.2 million on account of higher headcount and wage inflation, higher technology costs of $1.8 million on account of increased use of the hybrid and remote working models and higher other operating costs of $1.2 million, partially offset by foreign exchange gain, net of hedging of $2.8 million.

Gross margin in Emerging Business increased by 240 bps during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to higher revenues and operational efficiencies during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

The increase in cost of revenues in Analytics of $30.6 million for the six months ended June 30, 2023 was primarily due to increases in employee-related costs of $36.4 million on account of higher headcount and wage inflation, partially offset by lower other operating costs of $1.0 million and foreign exchange gain, net of hedging of $4.8 million.

Gross margin in Analytics increased by 90 bps during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to higher revenues and foreign exchange gain, net of hedging during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

Our gross margin for the nine months ended September 30, 2023 was 37.5% compared to 36.5% for the nine months ended September 30, 2022, an increase of 100 basis points (“bps”) primarily driven by higher revenues, operational efficiencies and foreign exchange gain, net of hedging during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

The increase in cost of revenues in Insurance of $42.4 million for the nine months ended September 30, 2023 was primarily due to increases in employee-related costs of $42.0 million on account of higher headcount and wage inflation, higher technology costs of $6.7 million on account of increased use of the hybrid and remote working models and higher other operating cost of $2.6 million, partially offset by foreign exchange gain, net of hedging of $6.5 million, lower travel cost of $1.5 million and lower facilities cost of $0.9 million on account of optimization of office space.

Gross margin in Insurance decreased by 50 bps during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily due to lower margins associated with higher costs during ramp-ups in certain existing and new clients during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

The increase in cost of revenues in Healthcare of $0.5 million for the nine months ended September 30, 2023 was primarily due to increases in employee-related costs of $3.2 million on account of wage inflation, partially offset foreign exchange gain, net of hedging of $1.7 million and lower facilities cost of $1.0 million on account of optimization of office space.

Gross margin in Healthcare increased by 670 bps during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily due to higher revenues, operational efficiencies and foreign exchange gain, net of hedging during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

The increase in cost of revenues in Emerging Business of $18.6 million for the nine months ended September 30, 2023 was primarily due to increases in employee-related costs of $18.7 million on account of higher headcount and wage inflation, higher technology costs of $2.8 million on account of increased use of the hybrid and remote working models and higher other operating costs of $1.8 million, partially offset by foreign exchange gain, net of hedging of $3.5 million and lower travel costs of $1.2 million.

Gross margin in Emerging Business increased by 170 bps during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily due to higher revenues and foreign exchange gain, net of hedging during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

The increase in cost of revenues in Analytics of $40.0 million for the nine months ended September 30, 2023 was primarily due to increases in employee-related costs of $48.4 million on account of higher headcount and wage inflation and higher technology costs of $1.2 million on account of increased use of the hybrid and remote working models, partially offset by foreign exchange gain, net of hedging of $6.0 million, lower travel costs of $2.4 million and lower facilities cost of $1.2 million on account of optimization of office space.

Gross margin in Analytics increased by 90 bps during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily due to higher revenues, operational efficiencies and foreign exchange gain, net of hedging during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

Selling, General and Administrative (“SG&A”) Expenses.

Six months ended June 30, Percentage change

Nine months ended September 30, Percentage change

2023 2022 Change

4 unchanged sentences

As a percentage of revenues 19.2 % 18.8 %

The increase in SG&A expenses of $21.4 million was primarily due to higher employee-related costs of $17.0 million on account of higher headcount and wage inflation, increase in travel costs of $2.0 million, higher technology costs of $1.1 million on account of increased use of the hybrid and remote working models and higher other operating costs of $3.5 million.

This was partially offset by foreign exchange gain, net of hedging of $2.2 million, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

The increase in SG&A expenses of $38.3 million was primarily due to higher employee-related costs of $27.7 million on account of higher headcount and wage inflation, higher investment in digital capabilities of $4.6 million, higher sales and marketing spend of $3.6 million, increase in travel costs of $2.9 million and higher allowance for expected credit losses of $2.1 million, primarily related to a customer bankruptcy event.

This was partially offset by foreign exchange gain, net of hedging of $2.6 million during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

Depreciation and Amortization.

Six months ended June 30, Percentage change

Nine months ended September 30, Percentage change

2023 2022 Change

4 unchanged sentences

As a percentage of revenues 3.1 % 4.1 %

The decrease in depreciation expense of $0.8 million was primarily due to foreign exchange gain, net of hedging during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

The decrease in intangibles amortization expense of $0.3 million during the six months ended June 30, 2023, compared to the six months ended June 30, 2022 was primarily due to end of useful lives for certain intangible assets.

The decrease in depreciation expense of $2.5 million was primarily due to lower depreciation of $1.7 million on assets related to operations centers closed as a result of optimization of office space, increased use of the hybrid and remote working models and foreign exchange gain, net of hedging of $0.8 million during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

The decrease in intangibles amortization expense of $1.4 million during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022 was primarily due to end of useful lives for certain intangible assets.

Income from Operations.

Income from operations increased by $33.3 million, or 36.5%, from $91.0 million for the six months ended June 30, 2022 to $124.3 million for the six months ended June 30, 2023, primarily due to higher revenues, partially offset by higher cost of revenues and higher SG&A expenses during the six months ended June 30, 2023.

As a percentage of revenues, income from operations increased from 13.5% for the six months ended June 30, 2022 to 15.4% for the six months ended June 30, 2023.

Income from operations increased by $43.4 million, or 30.7%, from $141.1 million for the nine months ended September 30, 2022 to $184.5 million for the nine months ended September 30, 2023, primarily due to higher revenues and higher gross margins, partially offset by higher SG&A expenses during the nine months ended September 30, 2023.

As a percentage of revenues, income from operations increased from 13.6% for the nine months ended September 30, 2022 to 15.2% for the nine months ended September 30, 2023.

Foreign Exchange Gain, net.

1 unchanged sentence

dollar against the Indian rupee, the Philippine peso, the U.K.

pound sterling and the South African ZAR during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

pound sterling and the South African rand during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

The average exchange rate of the U.S.

dollar against the Indian rupee increased from 76.46 during the six months ended June 30, 2022 to 82.22 during the six months ended June 30, 2023.

dollar against the Indian rupee increased from 77.65 during the nine months ended September 30, 2022 to 82.38 during the nine months ended September 30, 2023.

The average exchange rate of the U.S.

dollar against the Philippine peso increased from 52.25 during the six months ended June 30, 2022 to 55.18 during the six months ended June 30, 2023.

dollar against the Philippine peso increased from 53.71 during the nine months ended September 30, 2022 to 55.46 during the nine months ended September 30, 2023.

The average exchange rate of the U.K.

pound sterling against the U.S.

dollar decreased from 1.29 during the six months ended June 30, 2022 to 1.24 during the six months ended June 30, 2023.

pound sterling remained unchanged at 1.25 for each of the nine months ended September 30, 2023 and September 30, 2022.

The average exchange rate of the U.S.

dollar against the South African ZAR increased from 15.54 during the six months ended June 30, 2022 to 18.46 during the six months ended June 30, 2023.

We recorded a net foreign exchange gain, net of $3.2 million for the six months ended June 30, 2022, compared to the net foreign exchange gain, net of $0.4 million for the six months ended June 30, 2023.

dollar against the South African rand increased from 16.10 during the nine months ended September 30, 2022 to 18.47 during the nine months ended September 30, 2023.

We recorded a foreign exchange gain, net of $4.7 million for the nine months ended September 30, 2022 compared to a foreign exchange gain, net of $0.8 million for the nine months ended September 30, 2023.

Interest expense.

Interest expense increased from $2.4 million for the six months ended June 30, 2022 to $6.6 million for the six months ended June 30, 2023, primarily due to a higher effective interest rate of 6.1% during the six months ended June 30, 2023, compared to 1.7% during the six months ended June 30, 2022, partially offset by a lower average outstanding

balance under our revolving credit facility during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

Other Income/(Loss), net.

Six months ended June 30, Percentage change

Interest expense increased from $4.8 million for the nine months ended September 30, 2022 to $10.0 million for the nine months ended September 30, 2023, primarily due to a higher effective interest rate of 6.2% during the nine months ended September 30, 2023, compared to 2.3% during the nine months ended September 30, 2022, partially offset by a lower average outstanding balance under our revolving credit facility during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

Other Income, net.

Nine months ended September 30, Percentage change

2023 2022 Change

1 unchanged sentence

Interest and dividend income 5.5 3.7 1.8 49.2 %

Other, net (0.3) (1.9) 1.6 (83.9) %

Fair value changes of contingent consideration (2.5) (1.0) (1.5) 150.0 %

Others, net (0.5) (1.6) 1.1 (69.5) %

Other income, net $ 6.6 $ 4.5 $ 2.1 46.6 %

Other income, net increased by $3.6 million, from $2.2 million for the six months ended June 30, 2022 to $5.8 million for the six months ended June 30, 2023.

The increase is primarily due to higher return on mutual fund investments of $0.8 million, higher interest income on our short-term and long-term investments of $1.5 million, higher dividend income on our investments in money market funds of $0.3 million during the six months ended June 30, 2023, partially offset by interest on income tax refunds of $0.7 million received during the six months ended June 30, 2022.

There was also an increase of $0.4 million due to higher amortization of actuarial losses related to our employee benefit plans and an increase of $1.0 million due to change in fair value of contingent consideration liability related to our Clairvoyant acquisition during the six months ended June 30, 2022.

Other income, net increased by $2.1 million, from $4.5 million for the nine months ended September 30, 2022 to $6.6 million for the nine months ended September 30, 2023.

The increase is primarily due to higher return on mutual fund investments of $0.7 million, higher interest income on our investments of $1.8 million and lower other expenses of $1.1 million during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

This was partially offset by an increase in fair value adjustment to recognize an increase in contingent consideration liability of $1.5 million related to our acquisition of Clairvoyant in December 2021 during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

Income Tax Expense.

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.

We recorded income tax expense of $23.6 million and $22.3 million for the six months ended June 30, 2023 and 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.

Net income increased from $72.0 million for the six months ended June 30, 2022 to $100.4 million for the six months ended June 30, 2023, primarily due to increase in income from operations of $33.3 million and higher other income, net of $3.4 million, partially offset by higher interest expense of $4.2 million, lower foreign exchange gain, net of $2.8 million and higher income tax expense of $1.3 million.

As a percentage of revenues, net income increased from 10.7% for the six months ended June 30, 2022 to 12.5% for the six months ended June 30, 2023.

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.

We recorded income tax expense of $37.8 million and $34.8 million 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 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.

Net income increased from $111.1 million for the nine months ended September 30, 2022 to $144.3 million for the nine months ended September 30, 2023, primarily due to increase in income from operations of $43.4 million and higher other income, net of $2.1 million, partially offset by higher interest expense of $5.2 million, lower foreign exchange gain, net of $3.9 million and higher income tax expense of $3.0 million.

As a percentage of revenues, net income increased from 10.7% for the nine months ended September 30, 2022 to 11.9% for the nine months ended September 30, 2023.

Liquidity and Capital Resources

Six months ended June 30,

Nine months ended September 30,

(dollars in millions)

5 unchanged sentences

Closing cash, cash equivalents and restricted cash $ 127.9 $ 98.3

As of June 30, 2023 and 2022, we had $250.0 million and $266.0 million, respectively, in cash, cash equivalents and short-term investments, of which $224.0 million and $242.0 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes.

As of September 30, 2023 and 2022, we had $274.2 million and $262.2 million, respectively, in cash, cash equivalents and short-term investments, of which $256.5 million and $237.5 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes.

We periodically evaluate opportunities to distribute cash among our group entities to fund our operations, expand our business and make strategic acquisitions in the United States and other geographies, and as and when we decide to distribute, we may have to accrue additional taxes in accordance with local tax laws, rules and regulations in the relevant foreign jurisdictions.

During the six months ended June 30, 2023, our subsidiaries in India, the United Kingdom and Australia repatriated $76.0 million (net of $4.0 million withholding taxes), $15.6 million and $9.1 million, respectively, to the United States.

During the nine months ended September 30, 2023, our subsidiaries in India, the United Kingdom and Australia repatriated $76.0 million (net of $4.0 million withholding taxes), $15.6 million and $9.1 million, respectively, to the United States.

These distributions do not constitute a change in our permanent reinvestment assertion.

Operating Activities:

Net cash provided by operating activities was $63.6 million for the six months ended June 30, 2023 as compared to net cash provided by operating activities of $53.1 million for the six months ended June 30, 2022, reflecting our cash earnings and effective management of working capital needs.

Net cash provided by operating activities was $132.2 million for the nine months ended September 30, 2023, as compared to net cash provided by operating activities of $101.1 million for the nine months ended September 30, 2022, reflecting higher cash earnings, partially offset by higher working capital needs.

The major drivers contributing to the increase of $31.1 million year-over-year included the following:

• Increase in cash earnings including adjustments for non-cash and other items contributed higher cash flow of $29.0 million during the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

These adjustments comprise of deferred tax effects, depreciation and amortization of long-lived assets and intangibles acquired in business combinations, share-based employee compensation, unrealized foreign currency exchange gain/(loss), unrealized gain/(loss) on investments, among others.

• Changes in accounts receivable, including advance billings, contributed higher cash flow of $19.1 million in the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

Collections in accounts receivable, including advance billings, was driven by revenue growth during the six months ended June 30, 2023.

This was partially offset by increase in our days sales outstanding which was 63 days as of June 30, 2023 as compared to 60 days as of June 30, 2022.

• Higher income tax payments, net of refunds, contributed higher cash payouts of $39.0 million, partially offset by provision for income tax and changes in deferred tax assets and liabilities of $19.7 million during the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

• Changes in other assets, accounts payables including other liabilities contributed higher cash payouts of $18.3 million during the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

• Increase in cash earnings including adjustments for non-cash and other items contributed higher cash flow of $38.6 million during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

These adjustments comprise of deferred tax effects, unrealized foreign currency exchange gain/(loss), unrealized gain/(loss) on investments, stock-based employee compensation, depreciation and amortization of long-lived assets and intangibles acquired in business combinations, fair value changes in contingent consideration, among others.

• Changes in accounts receivable, including advance billings, contributed higher cash flow of $21.8 million during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

Collections in accounts receivable, including advance billings was driven by revenue growth during the nine months ended September 30, 2023.

This was partially offset by increase in our days sales outstanding which was 64 days as of September 30, 2023, as compared to 63 days as of September 30, 2022.

• Higher income tax payments, net of refunds, contributed higher cash payouts of $41.6 million, partially offset by provision for income tax and changes in deferred tax assets and liabilities of $25.5 million during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

• Changes in other assets, accounts payables including other liabilities contributed higher cash payouts of $13.2 million during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

Investing Activities:

Cash provided by investing activities were $11.8 million for the six months ended June 30, 2023 as compared to cash used for investing activities of $41.0 million for the six months ended June 30, 2022.

The increase in cash provided by investing activities of $52.8 million year-over-year is mainly due to higher net redemption of investments of $37.4 million during six months ended June 30, 2023 as compared to net purchase of investments of $13.5 million during the six months ended June 30, 2022.

The increase was also due to acquisition-related payouts of $2.6 million during the six months ended June 30, 2022 with no corresponding payouts during the six months ended June 30, 2023.

Cash provided by investing activities were $11.4 million for the nine months ended September 30, 2023, as compared to cash used for investing activities of $75.2 million for the nine months ended September 30, 2022.

The increase in cash provided by investing activities of $86.6 million year-over-year is mainly due to net redemption of investments of $52.5 million during nine months ended September 30, 2023, as compared to net purchase of investments of $40.0 million during the nine months ended September 30, 2022.

The increase was also due to acquisition-related payouts of $3.3 million during the nine months ended September 30, 2022 with no corresponding payouts during the nine months ended September 30, 2023.

This was partially offset by higher capital expenditures in infrastructure, technology assets, software and product

developments of $9.0 million during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

Financing Activities:

Cash used for financing activities were $101.8 million during the six months ended June 30, 2023 as compared to cash used for financing activities of $35.3 million during the six months ended June 30, 2022.

The increase in cash used of $66.5 million year-over-year was primarily due to net repayment of our borrowings under our revolving credit facility of $30.0 million during the six months ended June 30, 2023 as compared to net proceeds of our borrowings of $25.0 million during the six months ended June 30, 2022.

The increase was also due to higher purchases of treasury stock by $10.4 million under our share repurchase program, payment of contingent consideration related to our Clairvoyant acquisition of $5.0 million during the six months ended June 30, 2023, partially offset by employees’ contributions under the employee stock purchase plan of $3.8 million during the six months ended June 30, 2023.

Cash used for financing activities were $141.0 million during the nine months ended September 30, 2023, as compared to cash used for financing activities of $61.8 million during the nine months ended September 30, 2022.

The increase in cash used for financing activities of $79.2 million year-over-year was primarily due to net repayment of our borrowings under our revolving credit facility of $40.0 million during the nine months ended September 30, 2023, as compared to net proceeds of our borrowings of $10.0 million during the nine months ended September 30, 2022.

The increase was also due to higher purchases of treasury stock by $28.8 million under our share repurchase program during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

We expect to use cash from operating activities to maintain and expand our business by making investments, primarily related to building new digital capabilities and purchase telecommunications equipment and computer hardware and software in connection with managing client operations.

We incurred $26.1 million of capital expenditures during the six months ended June 30, 2023.

We incurred $41.1 million of capital expenditures during the nine months ended September 30, 2023.

We expect to incur total capital expenditures of between $50.0 million to $55.0 million in 2023, primarily to meet our growth requirements, including additions to our facilities as well as investments in technology applications, product development, digital technology, advanced automation, robotics and infrastructure.

In connection with any tax assessment orders that have been issued, or may be issued against us or our subsidiaries, we may be required to deposit additional amounts with the relevant authorities with respect to such assessment orders (see Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements herein for further details).

See Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements herein for further details.

We believe that our existing cash, cash equivalents and short-term investments and sources of liquidity will be sufficient to satisfy our cash requirements over the next 12 months.

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

As of June 30, 2023 and December 31, 2022, we had outstanding letters of credit of $0.5 million, each, that were not recognized in our consolidated balance sheets.

As of September 30, 2023 and December 31, 2022, we had outstanding letters of credit of $0.5 million, each, that were not recognized in our consolidated balance sheets.

These are unlikely to have, a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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The following table summarizes our debt position:

As of June 30,2023 As of December 31, 2022

As of September 30,2023 As of December 31, 2022

(dollars in millions)

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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 2. Management’s Discussion and Analysis