What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-01 compared with 2024-05-02 · 404 added, 346 removed, 772 unchanged (49% of the section changed)

3 unchanged sentences

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

Notes March 31, 2024 December 31, 2023

Notes June 30, 2024 December 31, 2023

Current assets:

7 unchanged sentences

Operating lease right-of-use assets 21 72,822 64,856

Restricted cash 7 4,376 4,386

Deferred tax assets, net 22 100,993 82,927

12 unchanged sentences

Current portion of operating lease liabilities 21 15,404 12,780

Income taxes payable, net 22 4,894 1,213

Total current liabilities 286,862 326,403

10 unchanged sentences

Common stock, $ 0.001 par value;

400,000,000 shares authorized, 204,734,988 shares issued and 162,425,610 shares outstanding as of March 31, 2024 and 203,410,038 shares issued and 165,277,880 shares outstanding as of December 31, 2023

400,000,000 shares authorized, 204,783,113 shares issued and 162,176,382 shares outstanding as of June 30, 2024 and 203,410,038 shares issued and 165,277,880 shares outstanding as of December 31, 2023

Additional paid-in capital 520,922 508,028

2 unchanged sentences

Total including shares held in treasury 1,563,269 1,464,854

42,309,378 shares as of March 31, 2024 and 38,132,158 shares as of December 31, 2023, held in treasury, at cost

42,606,731 shares as of June 30, 2024 and 38,132,158 shares as of December 31, 2023, held in treasury, at cost

19 ( 710,663 ) ( 575,417 )

5 unchanged sentences

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

Three months ended March 31,

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

Notes 2024 2023 2024 2023

34 unchanged sentences

(In thousands)

Three months ended March 31,

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

Notes 2024 2023 2024 2023

18 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the three months ended March 31, 2024 and 2023

For the three months ended June 30, 2024 and 2023

(In thousands, except share count)

1 unchanged sentence

Notes Shares Amount Shares Amount

Balance as of January 1, 2024 203,410,038 $ 203 $ 508,028 $ 1,083,663 $ ( 127,040 ) ( 38,132,158 ) $ ( 575,417 ) $ 889,437

Balance as of March 31, 2024 204,734,988 $ 204 $ 502,827 $ 1,132,426 $ ( 130,436 ) ( 42,309,378 ) $ ( 701,766 ) $ 803,255

Stock issued against stock-based compensation plans 23 48,125 — — — — — — —

1 unchanged sentence

Acquisition of treasury stock 19 — — — — — ( 297,353 ) ( 8,823 ) ( 8,823 )

Accelerated share repurchase 5, 19 — — ( 25,000 ) — — — — ( 25,000 )

Other comprehensive income 15 — — — — ( 3,396 ) — — ( 3,396 )

Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — ( 74 ) ( 74 )

Other comprehensive loss 15 — — — — ( 5,672 ) — — ( 5,672 )

Net income — — — 45,825 — — — 45,825

Balance as of March 31, 2024 204,734,988 $ 204 $ 502,827 $ 1,132,426 $ ( 130,436 ) ( 42,309,378 ) $ ( 701,766 ) $ 803,255

Balance as of June 30, 2024 204,783,113 $ 204 $ 520,922 $ 1,178,251 $ ( 136,108 ) ( 42,606,731 ) $ ( 710,663 ) $ 852,606

Common Stock (1)

2 unchanged sentences

Notes Shares Amount Shares (1)

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

Balance as of March 31, 2023 201,671,840 $ 202 $ 460,365 $ 950,436 $ ( 131,487 ) ( 35,064,565 ) $ ( 484,294 ) $ 795,222

Stock issued against stock-based compensation plans 23 76,795 — 86 — — — — 86

3 unchanged sentences

Net income — — — 49,068 — — — 49,068

Balance as of March 31, 2023 201,671,840 $ 202 $ 460,365 $ 950,436 $ ( 131,487 ) ( 35,064,565 ) $ ( 484,294 ) $ 795,222

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

(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.

(2) Inclusive of excise tax for the three months ended March 31, 2024.

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the six months ended June 30, 2024 and 2023

(In thousands, except share count)

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

Notes Shares Amount Shares Amount

January 1, 2024 203,410,038 $ 203 $ 508,028 $ 1,083,663 $ ( 127,040 ) ( 38,132,158 ) $ ( 575,417 ) $ 889,437

Stock issued against stock-based compensation plans 23 1,373,075 1 1,947 — — — — 1,948

Stock-based compensation 23 — — 35,947 — — — — 35,947

Acquisition of treasury stock 19 — — — — — ( 4,474,573 ) ( 134,628 ) ( 134,628 )

Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — ( 618 ) ( 618 )

Accelerated share repurchase 5, 19 — — ( 25,000 ) — — — — ( 25,000 )

Other comprehensive loss 15 — — — — ( 9,068 ) — — ( 9,068 )

Net income — — — 94,588 — — — 94,588

Balance as of June 30, 2024 204,783,113 $ 204 $ 520,922 $ 1,178,251 $ ( 136,108 ) ( 42,606,731 ) $ ( 710,663 ) $ 852,606

Common Stock (1)

Additional Paid-in Capital (1)

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

Notes Shares Amount Shares (1)

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

Stock issued against stock-based compensation plans 23 1,808,755 2 1,096 — — — — 1,098

Stock-based compensation 23 — — 25,918 — — — — 25,918

Acquisition of treasury stock 19 — — — — — ( 2,217,625 ) ( 71,376 ) ( 71,376 )

Other comprehensive income 15 — — — — 19,996 — — 19,996

Net income — — — 100,399 — — — 100,399

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

(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.

3 unchanged sentences

(In thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

Net income $ 94,588 $ 100,399

Adjustments to reconcile net income to net cash provided by/(used for) operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense 25,230 26,464

4 unchanged sentences

Deferred income tax benefit ( 17,076 ) ( 18,283 )

(Reversal)/allowance for expected credit losses ( 240 ) 342

Fair value changes in contingent consideration ( 589 ) —

Others, net ( 70 ) 1,681

1 unchanged sentence

Accounts receivable ( 20,008 ) ( 28,375 )

Other current assets ( 11,394 ) ( 6,046 )

Other current and non-current assets ( 14,507 ) ( 17,159 )

Income taxes payable, net ( 4,922 ) ( 10,610 )

Other assets ( 3,575 ) ( 4,172 )

Accounts payable ( 1,936 ) ( 4,445 )

Deferred revenue 3,138 5,380

Accrued employee costs ( 35,128 ) ( 24,331 )

Accrued expenses and other liabilities 10,307 26,931

Accounts payable, accrued expenses and other liabilities ( 639 ) ( 5,538 )

Operating lease liabilities ( 9,645 ) ( 10,829 )

Payment of contingent consideration ( 11,000 ) —

Net cash (used for)/provided by operating activities ( 21,873 ) 16,025

Net cash provided by operating activities 53,037 63,559

Cash flows from investing activities:

3 unchanged sentences

Proceeds from redemption of investments 139,844 151,178

Net cash provided by investing activities 4,689 43,341

Net cash (used for)/provided by investing activities ( 43,249 ) 11,786

Cash flows from financing activities:

2 unchanged sentences

Repayments of borrowings ( 45,000 ) ( 100,000 )

Payment of contingent consideration ( 4,000 ) —

Acquisition of treasury stock ( 160,647 ) ( 70,638 )

Payment of contingent consideration ( 4,000 ) ( 5,000 )

Proceeds from issuance of common stock 2,474 3,885

Net cash used for financing activities ( 27,305 ) ( 101,833 )

Effect of exchange rate changes ( 1,212 ) 1,282

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 1,844 ) 1,510

Net decrease in cash, cash equivalents and restricted cash ( 19,361 ) ( 24,978 )

11 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 2024

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

19 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.

For purposes of comparability, certain prior period amounts have been reclassified to conform to the current year presentation in accordance with U.S.

(b) Use of Estimates

2 unchanged sentences

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 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

The significant estimates that affect the unaudited consolidated financial statements include, but are not limited to, estimates of the fair value of

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

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, and useful life of long-lived assets and other intangible assets.

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, and useful life of long-lived assets and other intangible assets.

The significant assumptions underneath these estimates include, but are not limited to assumptions to calculate stock-based compensation expense, determine incremental borrowing rate to calculate lease liabilities and right-of-use (“ROU”) assets, determine lease term to calculate single operating lease cost, determine pattern of generation of economic benefits to calculate depreciation and amortization for long-lived assets and other intangible assets, and recoverability of long-lived assets, goodwill and other intangible assets.

22 unchanged sentences

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

In March 2024, FASB issued ASU No.

2024-01, Compensation-Stock Compensation (“ASC Topic 718”).

This ASU clarifies how to evaluate whether profits interest and similar awards given to employees and non-employees are within the scope of share-based payment arrangement under ASC 718.

The ASU will be effective for annual periods beginning after December 15, 2024, including interim periods within those years.

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

In March 2024, FASB issued ASU No.

2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements .

This ASU contains amendments to the ASC that remove references to various FASB Concepts Statements.

The ASU will be effective for annual periods beginning after December 15, 2024, with early adoption permitted.

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

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

(d) Recently adopted Accounting Pronouncements

7 unchanged sentences

The Company does not have any lease arrangements with entities under common control and the adoption of this ASU did not have a material impact on its unaudited consolidated financial statements.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

In March 2024, FASB issued ASU No.

2024-01, Compensation-Stock Compensation (“ASC Topic 718”) .

This ASU clarifies how to evaluate whether profits interest and similar awards given to employees and non-employees are within the scope of share-based payment arrangement under ASC Topic 718.

The ASU will be effective for annual periods beginning after December 15, 2024, including interim periods within those years, with early adoption permitted.

The Company has early adopted this ASU beginning January 1, 2024.

The adoption of this ASU did not have a material impact on the Company’s unaudited consolidated financial statements.

In March 2024, FASB issued ASU No.

2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements .

This ASU contains amendments to the ASC that remove references to various FASB Concepts Statements.

The ASU will be effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company has early adopted this ASU beginning January 1, 2024.

The adoption of this ASU did not have a material impact on the Company’s unaudited consolidated financial statements.

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 March 31, 2024 and 2023, respectively, for each of the reportable segments, are as follows:

Three months ended March 31, 2024

Revenues and cost of revenues for the three months ended June 30, 2024 and 2023, respectively, for each of the reportable segments, are as follows:

Three months ended June 30, 2024

Insurance Healthcare Emerging Business Analytics Total

12 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

Three months ended March 31, 2023

Three months ended June 30, 2023

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, 2024 and 2023, respectively, for each of the reportable segments, are as follows:

Six months ended June 30, 2024

Insurance Healthcare Emerging Business Analytics Total

Revenues, net $ 294,436 $ 54,348 $ 151,577 $ 384,512 $ 884,873

Cost of revenues (1)

187,816 36,119 86,048 245,547 555,530

Gross profit (1)

$ 106,620 $ 18,229 $ 65,529 $ 138,965 $ 329,343

Operating expenses 206,370

Foreign exchange gain, net, interest expense and other income, net ( 722 )

Income tax expense 27,626

Loss from equity-method investment ( 37 )

Net income $ 94,588

(1) Exclusive of depreciation and amortization expense.

Six months ended June 30, 2023

Insurance Healthcare Emerging Business Analytics Total

Revenues, net $ 254,393 $ 53,859 $ 133,361 $ 364,026 $ 805,639

Cost of revenues (1)

166,646 36,349 73,815 227,879 504,689

Gross profit (1)

$ 87,747 $ 17,510 $ 59,546 $ 136,147 $ 300,950

Operating expenses 176,691

Foreign exchange gain, net, interest expense and other income, net ( 380 )

Income tax expense 23,612

Gain from equity-method investment 132

Net income $ 100,399

(1) Exclusive of depreciation and amortization expense.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

Revenues, net by service type, were as follows:

Three months ended March 31,

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

2024 2023 2024 2023

Digital operations and solutions (1)

5 unchanged sentences

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

Three months ended March 31,

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

2024 2023 2024 2023

Revenues, net

5 unchanged sentences

Revenues, net $ 448,366 $ 404,996 $ 884,873 $ 805,639

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

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

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Long-lived assets

The United States $ 60,177 $ 61,592

India $ 61,157 $ 53,813

The United States 58,184 61,592

The Philippines 25,636 21,952

2 unchanged sentences

Long-lived assets $ 176,300 $ 165,229

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

Revenues, net and Accounts Receivable, net

2 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Accounts receivable, net $ 327,613 $ 308,108

3 unchanged sentences

Consideration received for process transition activities $ 16,440 $ 12,411

Accounts receivable includes $ 170,386 and $ 148,735 as of March 31, 2024 and December 31, 2023, respectively, representing unbilled receivables.

Accounts receivable includes $ 168,408 and $ 148,735 as of June 30, 2024 and December 31, 2023, 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.

There was no significant impairment of contract assets as of March 31, 2024 and December 31, 2023.

Revenue recognized during the three months ended March 31, 2024 and 2023, which was included in the contract liabilities balance at the beginning of the respective periods:

Three months ended March 31,

Deferred revenue (consideration received in advance)

There was no significant impairment of contract assets as of June 30, 2024 and December 31, 2023.

Revenue recognized during the three and six months ended June 30, 2024 and 2023, 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,

2024 2023 2024 2023

Deferred revenue (consideration received in advance) $ 1,231 $ 2,990 $ 8,292 $ 15,992

Consideration received for process transition activities $ 647 $ 305 $ 1,279 $ 1,008

Contract acquisition and fulfillment costs

The following table provides details of the Company’s contract acquisition and fulfillment costs:

Contract Acquisition Costs

Three months ended Six months ended Year ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 December 31, 2023

Opening Balance $ 1,901 $ 1,994 $ 2,122 $ 1,095 $ 1,095

Additions 364 397 371 1,476 1,841

Amortization ( 275 ) ( 208 ) ( 503 ) ( 388 ) ( 814 )

Closing Balance $ 1,990 $ 2,183 $ 1,990 $ 2,183 $ 2,122

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

Contract acquisition and fulfillment costs

The following table provides details of the Company’s contract acquisition and fulfillment costs:

Contract Acquisition Costs Contract Fulfillment Costs

Three months ended Year ended Three months ended Year ended

March 31, 2024 March 31, 2023 December 31, 2023 March 31, 2024 March 31, 2023 December 31, 2023

Contract Fulfillment Costs

Three months ended Six months ended Year ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 December 31, 2023

Opening Balance $ 27,287 $ 17,873 $ 24,673 $ 13,871 $ 13,871

2 unchanged sentences

Closing Balance $ 30,404 $ 21,445 $ 30,404 $ 21,445 $ 24,673

There was no significant impairment for contract acquisition and contract fulfillment costs as of March 31, 2024 and December 31, 2023.

There was no significant impairment for contract acquisition and contract fulfillment costs as of June 30, 2024 and December 31, 2023.

Allowance for expected credit losses

The following table provides information about accounts receivable, net of allowance for expected credit losses:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Accounts receivable, including unbilled receivables $ 331,173 $ 311,811

2 unchanged sentences

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

Three months ended March 31, Year ended

2024 2023 December 31, 2023

Three months ended Six months ended Year ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 December 31, 2023

Opening Balance $ 3,358 $ 1,671 $ 3,703 $ 1,332 $ 1,332

1 unchanged sentence

Reductions due to write-off of accounts receivable — ( 5 ) ( 76 ) ( 8 ) ( 79 )

Currency translation adjustments 1 — 1 ( 1 ) —

Closing Balance $ 3,560 $ 1,800 $ 3,560 $ 1,800 $ 3,703

Customer and credit risk concentration

No single customer accounted for more than 10% of the Company's revenues, net during the three months ended March 31, 2024 and 2023.

No single customer accounted for more than 10% of the Company's revenues, net during the three and six months ended June 30, 2024 and 2023.

The Company’s management believes that the loss of any of its top ten clients could have a material adverse effect on its financial performance.

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 March 31, 2024 and December 31, 2023.

No customer accounted for more than 10% of accounts receivable, net, as of June 30, 2024 and December 31, 2023.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

1 unchanged sentence

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

Three months ended March 31,

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

2024 2023 2024 2023

Net income $ 45,825 $ 49,068 $ 94,588 $ 100,399

15 unchanged sentences

The forward contracts indexed to the Company's own common stock met the criteria for equity classification, and prepayment of $ 25,000 was initially recorded in additional paid-in capital, which reflects the pending settlement of the 2024 ASR Agreement.

Had the 2024 ASR Agreement been settled as of March 31, 2024, determined based on the volume-weighted average price per share since its effective date, Citibank would have been required to deliver additional estimated shares to the Company.

Had the 2024 ASR Agreement been settled as of June 30, 2024, determined based on the volume-weighted average price per share since its effective date, Citibank would have been required to deliver additional estimated shares to the Company.

The effect of the potential share settlement under the 2024 ASR Agreement was excluded from the computation of diluted earnings per share as its inclusion would have been anti-dilutive.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

Other Income, net

Other income, net consists of the following:

Three months ended March 31,

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

2024 2023 2024 2023

Gain on sale and fair value mark-to-market on investments $ 1,162 $ 1,095 $ 2,178 $ 2,739

4 unchanged sentences

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

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

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:

March 31, 2024 March 31, 2023 December 31, 2023

June 30, 2024 June 30, 2023 December 31, 2023

Cash and cash equivalents $ 115,303 $ 93,960 $ 136,953

Restricted cash (current) 6,351 4,628 4,062

Restricted cash (non-current) 4,376 2,069 4,386

Cash, cash equivalents and restricted cash $ 121,654 $ 98,588 $ 141,015

Restricted cash (current) primarily represents funds held on behalf of customers in dedicated bank accounts.

The corresponding liability against the same is included under “Accrued Expenses and other current liabilities.” Restricted cash (non-current) represents amounts on deposit with banks against bank guarantees issued through banks in favor of relevant statutory authorities for equipment imports, deposits for obtaining indirect tax registrations and for demands against pending income tax assessments.

These deposits with banks will mature one year after the balance sheet date.

The corresponding liability against the same is included under “Accrued Expenses and other current liabilities.”

Investments consist of the following:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Short-term investments

4 unchanged sentences

Term deposits $ 9,333 $ 239

Restricted term deposits (1)

Investment in equity affiliate 4,154 4,191

Total Long-term investments $ 19,239 $ 8,816

(1) Restricted term deposits represent deposit with banks against bank guarantees issued through banks in favor of relevant statutory authorities for equipment imports, deposits for obtaining indirect tax registrations and for demands against pending income tax and Value Added Tax (“VAT”) assessments.

These deposits with banks will mature one year after the balance sheet date.

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

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

1 unchanged sentence

Property and equipment consists of the following:

Estimated useful lives (Years) March 31, 2024 December 31, 2023

Owned Assets:

Network equipment and computers 3 - 5

$ 153,955 $ 149,975

Software 2 - 5

98,957 94,279

Leasehold improvements 3 - 8

42,238 41,933

Office furniture and equipment 3 - 8

21,629 21,199

Motor vehicles 2 - 5

Land — 624 625

Capital work in progress — 10,990 12,276

330,029 321,929

June 30, 2024 December 31, 2023

Property, plant and equipment, gross $ 340,313 $ 324,038

Accumulated depreciation and amortization ( 236,835 ) ( 223,665 )

$ 100,629 $ 99,596

ROU assets under finance leases:

Network equipment and computers 58 58

Leasehold improvements 602 604

Office furniture and equipment 425 427

Motor vehicles 1,262 1,020

Accumulated depreciation ( 1,354 ) ( 1,332 )

Property and equipment, net $ 101,622 $ 100,373

During the three months ended March 31, 2024, there were no changes in estimated useful lives of property and equipment during the ordinary course of operations.

Property, plant and equipment, net $ 103,478 $ 100,373

During the three and six months ended June 30, 2024, there were no 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 March 31,

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

2024 2023 2024 2023

Depreciation and amortization expense $ 9,833 $ 8,918 $ 19,099 $ 18,256

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 March 31,

Effect of foreign exchange gain/(loss) $ ( 9 ) $ ( 79 )

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

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

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

March 31, 2024 December 31, 2023

Internally developed software costs was as follows:

June 30, 2024 December 31, 2023

Cost $ 57,916 $ 46,625

2 unchanged sentences

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

Three months ended March 31,

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

2024 2023 2024 2023

Amortization expense $ 2,927 $ 2,425 $ 5,447 $ 4,400

As of March 31, 2024 and December 31, 2023, 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.

Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which undiscounted cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount, the asset’s residual value, if any.

It is reasonably possible that the judgments and estimates described above could change in future periods.

There were no indicators of impairment related to long-lived assets as of June 30, 2024 and December 31, 2023.

Goodwill and Other Intangible Assets

3 unchanged sentences

Currency translation adjustments ( 21 ) ( 2 ) ( 35 ) — ( 58 )

Balance as of March 31, 2024 $ 50,010 $ 21,870 $ 46,963 $ 286,731 $ 405,574

As of March 31, 2024, 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 three months ended March 31, 2024, business forecasts for the remainder of the year, stock price movements, generation and availability of cash and expansion plans.

Balance as of June 30, 2024 $ 50,014 $ 21,870 $ 46,966 $ 286,731 $ 405,581

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

As of June 30, 2024, 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 six months ended June 30, 2024, 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 2023.

The Company did not identify any triggers or indications of potential impairment for its reporting units as of March 31, 2024.

The Company did not identify any triggers or indications of potential impairment for its reporting units as of June 30, 2024.

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.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

(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 March 31, 2024

Carrying Amount Accumulated

Amortization Net Carrying

Finite-lived intangible assets:

Customer relationships $ 99,050 $ ( 53,898 ) $ 45,152

Developed technology 3,539 ( 2,721 ) 818

Trade names and trademarks 1,400 ( 1,321 ) 79

Non-compete agreements 336 ( 205 ) 131

104,325 ( 58,145 ) 46,180

Indefinite-lived intangible assets:

Trade names and trademarks 900 — 900

Total intangible assets $ 105,225 $ ( 58,145 ) $ 47,080

As of December 31, 2023

Carrying Amount Accumulated

Amortization Net Carrying

As of June 30, 2024 As of December 31, 2023

Amount Accumulated

Amortization Net

Amount Gross Carrying

Amount Accumulated Amortization Net

Finite-lived intangible assets:

8 unchanged sentences

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

Three months ended March 31,

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

2024 2023 2024 2023

Amortization expense $ 3,077 $ 4,204 $ 6,157 $ 8,353

Estimated future amortization expense related to finite-lived intangible assets as of March 31, 2024 was as follows:

2024 (April 1 - December 31) $ 9,049

Estimated future amortization expense related to finite-lived intangible assets as of June 30, 2024 was as follows:

2024 (July 1 - December 31) $ 5,964

Total $ 43,103

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

1 unchanged sentence

Other current assets consist of the following:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Advance income tax, net $ 27,022 $ 23,269

Prepaid expenses 25,556 18,171

Receivables from statutory authorities 20,699 18,500

Advance income tax, net 15,508 23,269

Derivative instruments 6,232 4,308

5 unchanged sentences

Other assets consist of the following:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Deferred contract fulfillment costs $ 26,693 $ 21,370

Contract assets 7,284 6,835

Deposits with statutory authorities 7,179 6,960

1 unchanged sentence

Derivative instruments 4,166 3,299

Contract assets 3,741 6,835

Others 5,604 5,901

2 unchanged sentences

Accrued expenses and other current liabilities consist of the following:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Accrued expenses $ 57,488 $ 58,736

1 unchanged sentence

Client liabilities 6,388 6,909

Accrued capital expenditures 3,789 4,134

Derivative instruments 5,153 2,009

Accrued capital expenditures 3,243 4,134

Income taxes payable, net 54 1,213

Contingent consideration — 15,000

3 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

1 unchanged sentence

Other non-current liabilities consist of the following:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Retirement benefits $ 17,343 $ 16,666

Deferred transition revenue 13,640 10,195

Unrecognized tax benefits 1,368 1,262

Derivative instruments 2,487 216

Unrecognized tax benefits 1,474 1,262

Contingent consideration — 589

7 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 three months ended March 31, 2024 and 2023:

The following table sets forth the changes in AOCI during the six months ended June 30, 2024 and 2023:

Accumulated Other Comprehensive Income/(Loss)

6 unchanged sentences

1,227 ( 930 ) ( 2 ) 295

Accumulated other comprehensive income/(loss) as of March 31, 2024 $ ( 135,188 ) $ 3,503 $ 1,249 $ ( 130,436 )

Accumulated other comprehensive income/(loss) as of June 30, 2024 $ ( 137,669 ) $ 460 $ 1,101 $ ( 136,108 )

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

4 unchanged sentences

( 1,136 ) ( 4,334 ) ( 37 ) ( 5,507 )

Accumulated other comprehensive income/(loss) as of March 31, 2023 $ ( 128,964 ) $ ( 2,778 ) $ 255 $ ( 131,487 )

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

(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.

3 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

2 unchanged sentences

The following table sets forth the Company’s assets and liabilities that were recognized at fair value:

Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Other Unobservable Inputs

As of March 31, 2024 (Level 1) (Level 2) (Level 3) Total

Quoted Prices in

Active Markets for

Identical Assets Significant Other

Inputs Significant Other

As of June 30, 2024 (Level 1) (Level 2) (Level 3) Total

Cash equivalents - Money market funds (1)

6 unchanged sentences

Total $ — $ 7,640 $ — $ 7,640

Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Other Unobservable Inputs

Quoted Prices in

Active Markets for

Identical Assets Significant Other

Inputs Significant Other

As of December 31, 2023 (Level 1) (Level 2) (Level 3) Total

12 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.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

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

Fair Value of Derivative Financial Instruments:

2 unchanged sentences

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)

June 30, 2024

(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 March 31,

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

2024 2023 2024 2023

Opening balance $ — $ 18,689 $ 15,589 $ 18,689

2 unchanged sentences

Closing balance $ — $ 13,689 $ — $ 13,689

During the three months ended March 31, 2024 and 2023, there were no transfers among Level 1, Level 2 and Level 3.

During the three and six months ended June 30, 2024 and 2023, there were no transfers among Level 1, Level 2 and Level 3.

Financial Instruments Not Carried at Fair Value :

1 unchanged sentence

The carrying value of the Company’s outstanding revolving credit facility approximates its fair value because the Company’s interest rate yield is near current market rates for comparable debt instruments.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

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

Derivatives and Hedge Accounting

3 unchanged sentences

The following table sets forth the aggregate notional amount of derivatives in cash flow hedging relationship:

March 31, 2024 December 31, 2023

Foreign currency forward contracts

June 30, 2024 December 31, 2023

Foreign currency forward contracts denominated in:

dollar (USD) 832,900 722,800

pound sterling (GBP) 1,500 —

Interest rate swaps

Interest rate swaps (Floating to fixed) denominated in:

USD 75,000 75,000

The Company estimates that approximately $ 1,765 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 March 31, 2024, could be reclassified into earnings within the next twelve months.

As of March 31, 2024, the maximum outstanding term of the cash flow hedges was approximately 45 months.

The Company estimates that approximately $ 953 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, 2024, could be reclassified into earnings within the next twelve months.

As of June 30, 2024, the maximum outstanding term of the cash flow hedges was approximately 45 months.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

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.

6 unchanged sentences

Foreign currency forward contracts denominated in:

March 31, 2024 December 31, 2023

USD 189,760 170,543

GBP 15,994 14,544

EUR 4,637 5,231

AUD 5,141 3,452

ZAR 157,291 150,150

COP 2,747,748 —

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

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

June 30, 2024 December 31, 2023

Sell USD 181,450 170,543

Sell GBP 17,745 14,544

Sell EUR 5,901 5,231

Sell AUD 4,819 3,452

Buy USD 11,688 8,161

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:

Derivatives in cash flow hedging relationships Derivatives not designated as hedging instruments

March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

Derivatives in cash flow hedging

relationships Derivatives not designated as hedging

June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

Other current assets $ 5,925 $ 4,216 $ 307 $ 92

Other assets $ 4,166 $ 3,299 $ — $ —

Accrued expenses and other current liabilities $ 2,071 $ 1,859 $ 101 $ 150

Accrued expenses and other

current liabilities $ 4,972 $ 1,859 $ 181 $ 150

Other non-current liabilities $ 2,487 $ 216 $ — $ —

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

Three months ended March 31,

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,

Derivative financial instruments:

2024 2023 2024 2023

Unrealized gain/(loss) recognized in OCI

4 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

(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 March 31,

As per unaudited consolidated statements of income Gain/(loss) on derivative financial instruments As per unaudited consolidated statements of income Gain/(loss) on derivative financial instruments

Three months ended June 30,

As per unaudited consolidated

statements of

income Gain/(loss) on derivative financial instruments As per unaudited consolidated

statements of

income Gain/(loss) on derivative financial instruments

Derivatives in cash flow hedging relationships

12 unchanged sentences

$ 36 $ ( 2,113 ) $ 324 $ ( 370 )

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

Six months ended June 30,

As per unaudited consolidated

statements of

income Gain/(loss) on derivative financial instruments As per unaudited consolidated

statements of

income Gain/(loss) on derivative financial instruments

Derivatives in cash flow hedging relationships

Location in unaudited consolidated statements of income where gain/(loss) was reclassified from AOCI

Cost of revenues $ 555,530 $ ( 582 ) $ 504,689 $ ( 3,896 )

General and administrative expenses $ 109,700 79 $ 92,351 ( 375 )

Selling and marketing expenses $ 71,414 14 $ 57,731 ( 32 )

Depreciation and amortization expense $ 25,256 ( 26 ) $ 26,609 ( 166 )

Interest expense $ 8,619 483 $ 6,625 240

Total before tax ( 32 ) ( 4,229 )

Income tax effects on above ( 309 ) 765

Net of tax $ ( 341 ) $ ( 3,464 )

Derivatives not designated as hedging instruments

Location in unaudited consolidated statements of income where gain/(loss) was recognized

Foreign exchange gain/(loss), net $ 395 $ ( 2,073 ) $ 429 $ 2,158

$ 395 $ ( 2,073 ) $ 429 $ 2,158

The following tables summarizes the Company’s debt position:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Revolving credit facility

1 unchanged sentence

Long-term borrowings

260,000 135,000

Total borrowings $ 335,000 $ 200,000

Unamortized debt issuance costs for the Company’s revolving credit facility of $ 835 and $ 903 as of March 31, 2024 and December 31, 2023, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.

Unamortized debt issuance costs for the Company’s revolving credit facility of $ 766 and $ 903 as of June 30, 2024 and December 31, 2023, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.

Credit Agreement

4 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

11 unchanged sentences

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

Three months ended March 31,

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

2024 2023 2024 2023

Effective Interest Rate 6.5 % 6.2 % 6.6 % 6.1 %

As of March 31, 2024 and December 31, 2023, the Company was in compliance with all financial covenants under the 2022 Credit Agreement.

Expected payments for all of the Company’s borrowings as of March 31, 2024 were as follows:

As of June 30, 2024 and December 31, 2023, the Company was in compliance with all financial covenants under the 2022 Credit Agreement.

Expected payments for all of the Company’s borrowings outstanding as of June 30, 2024 were as follows:

Revolving credit facility

Principal Payments Interest Payments (1)

2024 (April 1 - December 31) $ 65,000 $ 14,612

2025 — 17,645

2026 — 17,645

2027 280,000 6,617

2024 (July 1 - December 31) $ 75,000

Total $ 335,000

(1) Interest payments are based on interest rate prevailing as of March 31, 2024.

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 March 31, 2024 and December 31, 2023, the Company had outstanding letters of credit of $ 461 , that were not recognized in the consolidated balance sheets.

As of each of June 30, 2024 and December 31, 2023, 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.

Forward Stock Split

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

Forward Stock Split

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.

7 unchanged sentences

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

Three months ended March 31, 2024 200,402 $ 6,375 $ 31.81

Three months ended March 31, 2023 191,780 $ 6,529 $ 34.04

Three months ended June 30, 2024 — $ — $ —

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

Six months ended June 30, 2024 200,402 $ 6,375 $ 31.81

Six months ended June 30, 2023 191,780 $ 6,529 $ 34.04

(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.

8 unchanged sentences

At final settlement, Citibank may be required to deliver additional shares of Common Stock to the Company, or, under certain circumstances, the Company may be required to make a cash payment or deliver shares of Common Stock, at its election, to Citibank.

The final settlement of the 2024 ASR Agreement is expected to be completed on July 18, 2024, subject to acceleration at Citibank’s discretion, which could be completed as early as June 17, 2024.

On July 19, 2024, upon final settlement of the 2024 ASR Agreement, the Company received 820,433 additional shares of its common stock based on a daily volume-weighted average price of $ 29.97 per share during the term of the 2024 ASR Agreement.

The additional shares received were subsequently recorded as treasury stock.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

3 unchanged sentences

Shares repurchased Total consideration Weighted average purchase price per share

Three months ended March 31, 2024 3,976,818 $ 119,430 $ 30.03

Three months ended March 31, 2023 1,105,125 $ 35,834 $ 32.43

Three months ended June 30, 2024 297,353 $ 8,823 $ 29.67

Three months ended June 30, 2023 920,720 $ 29,013 $ 31.51

Six months ended June 30, 2024 4,274,171 $ 128,253 $ 30.01

Six months ended June 30, 2023 2,025,845 $ 64,847 $ 32.01

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.

Pursuant to the Inflation Reduction Act, effective January 1, 2023, the Company is required to pay a 1% excise tax on the fair market value of each share of common stock repurchased, net of stock issuances.

The Company recognized excise tax of $ 544 on repurchase of common stock as a part of cost of such repurchases for the three months ended March 31, 2024.

The Company recognized excise tax of $ 74 and $ 618 , respectively, on repurchase of common stock as a part of cost of such repurchases for the three and six months ended June 30, 2024.

Employee Benefit Plans

15 unchanged sentences

Currency translation adjustments ( 38 )

Plan assets as of March 31, 2024 $ 17,154

Plan assets as of June 30, 2024

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

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 March 31,

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

2024 2023 2024 2023

Service cost $ 1,100 $ 953 $ 2,208 $ 1,909

6 unchanged sentences

Amortization of actuarial (gain)/loss, net of tax $ ( 148 ) $ ( 41 ) $ ( 304 ) $ ( 85 )

The Company maintains several 401(k) plans (the “401(k) Plans”) under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), covering all eligible employees, as defined in the Code as a defined social security contribution plan.

The Company may make discretionary contributions of up to a maximum of 3.0 % of employee compensation within certain limits.

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

Three months ended March 31,

The Company’s contributions to various defined contribution plans was as follows:

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

2024 2023 2024 2023

Contribution to the 401(k) Plans $ 1,190 $ 1,178 $ 3,633 $ 3,564

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

Three months ended March 31,

Contributions to the defined social security contribution plans $ 6,749 $ 5,392

Contributions to the defined contribution plans on behalf of employees in foreign subsidiaries of the Company

$ 6,891 $ 5,604 $ 13,640 $ 10,996

The Company conducts its operations using facilities leased under operating lease agreements that expire at various dates.

2 unchanged sentences

The Company had performed an evaluation of its contracts with suppliers in accordance with ASC Topic 842, Leases , and had determined that, except for leases for office facilities, motor vehicles and other equipment as described above, none of the Company’s contracts contain a lease.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

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

Supplemental balance sheet information:

March 31, 2024 December 31, 2023

Operating Lease

Operating lease ROU assets $ 66,799 $ 64,856

Operating lease liabilities - Current

$ 13,486 $ 12,780

Operating lease liabilities - Non-current

59,876 58,175

Total operating lease liabilities $ 73,362 $ 70,955

Finance Lease

Property and equipment, gross $ 2,347 $ 2,109

Accumulated depreciation ( 1,354 ) ( 1,332 )

Property and equipment, net $ 993 $ 777

Finance lease liabilities - Current

Finance lease liabilities - Non-current

Total finance lease liabilities $ 1,029 $ 804

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

Three months ended March 31,

Lease cost 2024 2023

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

2024 2023 2024 2023

Finance lease:

1 unchanged sentence

Interest on lease liabilities 45 18 81 38

128 57 231 115

Operating lease (1)

5,743 5,449 11,093 10,332

Variable lease costs 1,105 1,157 2,089 2,164

3 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

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

Three months ended March 31,

Six months ended June 30,

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

11 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.

The Company modified certain of its operating leases, resulting in an increase of its lease liabilities by $ 3,228 during the three months ended March 31, 2024 and a decrease of its lease liabilities by $ 3,094 during the three months ended March 31, 2023, with a corresponding adjustment to ROU assets.

As of March 31, 2024 and December 31, 2023, 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 March 31, 2024 were as follows:

The Company modified certain of its operating leases, resulting in an increase of its lease liabilities by $ 3,377 and a decrease of its lease liabilities by $ 2,466 , during the six months ended June 30, 2024 and 2023, respectively, with a corresponding adjustment to ROU assets.

As of June 30, 2024 and December 31, 2023, 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, 2024 were as follows:

Operating Leases Finance Leases

2024 (April 1 - December 31) $ 14,029 $ 287

2024 (July 1 - December 31) $ 10,503 $ 238

2025 20,810 442

6 unchanged sentences

Present value of lease liabilities $ 79,816 $ 1,251

The Company determines the tax provision for interim periods using an estimate of its annual effective tax rate.

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 decreased from 24.1 % during the three months ended June 30, 2023 to 23.2 % during the three months ended June 30, 2024.

The Company recorded income tax expense of $ 13,873 and $ 15,554 for the three months ended June 30, 2024 and 2023, respectively.

The decrease in income tax expense was primarily as a result of lower profit during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, partially offset by higher credits during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

June 30, 2024

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

Maturities of lease liabilities as of December 31, 2023 were as follows:

Operating Leases Finance Leases

2024 $ 17,806 $ 297

2025 16,878 256

2026 16,220 222

2027 13,712 191

2028 10,132 98

2029 and thereafter 14,018 —

Total lease payments 88,766 1,064

Imputed interest 17,811 260

Present value of lease liabilities $ 70,955 $ 804

The Company determines the tax provision for interim periods using an estimate of its annual effective tax rate.

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 13.6 % during the three months ended March 31, 2023 to 22.0 % during the three months ended March 31, 2024.

The Company recorded income tax expense of $ 13,753 and $ 8,058 for the three months ended March 31, 2024 and 2023, respectively.

The increase in income tax expense was primarily as a result of higher profit during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, and lower excess tax benefits related to stock-based compensation during the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

During the three months ended March 31, 2024, one of the Company’s subsidiaries in India repatriated $ 18,255 (net of $ 996 withholding taxes) to the United States.

The effective tax rate increased from 19.1 % during the six months ended June 30, 2023 to 22.6 % during the six months ended June 30, 2024.

The Company recorded income tax expense of $ 27,626 and $ 23,612 for the six months ended June 30, 2024 and 2023, respectively.

The increase in income tax expense was primarily as a result of lower excess tax benefits related to stock-based compensation during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, and an increase in non-deductible expenses, partially offset by lower profit during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

During the six months ended June 30, 2024, the Company’s subsidiaries in India repatriated $ 18,255 (net of $ 996 withholding taxes) to the United States.

Deferred income taxes recognized in OCI were as follows:

Three months ended March 31,

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

2024 2023 2024 2023

Deferred taxes benefit / (expense) recognized on:

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Total $ ( 33 ) $ ( 2,516 ) $ 295 $ ( 5,507 )

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

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

Stock-Based Compensation

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

Three months ended March 31,

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

2024 2023 2024 2023

Cost of revenues $ 3,858 $ 3,341 $ 7,807 $ 6,907

2 unchanged sentences

Total $ 18,095 $ 11,511 $ 35,947 $ 25,918

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

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

$ ( 4,619 ) $ 2,789 $ ( 9,977 ) $ 12,619

(1) Includes $ 7,523 and $ 12,520 during the three months ended March 31, 2024 and 2023, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No.

(1) Includes $ 18 and $ 190 during the three months ended June 30, 2024 and 2023, respectively, and $ 7,541 and $ 12,710 during the six months ended June 30, 2024 and 2023, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No.

2016-09, Compensation - Stock Compensation.

As of March 31, 2024 and December 31, 2023, the Company had 537,304 and 3,249,875 shares, respectively, available for grant under the 2018 Omnibus Incentive Plan.

As of June 30, 2024 and December 31, 2023, the Company had 1,684,495 and 4,096,102 shares, respectively, available for grant under the 2018 Omnibus Incentive Plan.

Stock Options

During the three months ended March 31, 2024 and 2023, there was no stock option activity under the Company’s stock-based compensation plans.

The number of stock options that were unvested as of each of March 31, 2024 and December 31, 2023 were 1,790,695 units.

The number of stock options that were vested and exercisable as of each of March 31, 2024 and December 31, 2023 were nil units.

As of March 31, 2024, unrecognized compensation cost of $ 17,378 is expected to be expensed over a weighted average period of 3.3 years.

During the three and six months ended June 30, 2024, there was no stock option activity under the Company’s stock-based compensation plans.

The number of stock options that were unvested as of June 30, 2024 and December 31, 2023 were 1,376,540 and 1,790,695 units, respectively.

The number of stock options that were vested and exercisable as of June 30, 2024 and December 31, 2023 were 414,155 and nil units, respectively.

As of June 30, 2024, unrecognized compensation cost of $ 16,040 is expected to be expensed over a weighted average period of 3.0 years.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

Share Matching Program

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Forfeited — —

Outstanding as of March 31, 2024* 144,845 $ 24.95

* As of March 31, 2024 and December 31, 2023 restricted stock units vested for which the underlying common stock is yet to be issued are 72,385 and nil , respectively.

As of March 31, 2024, unrecognized compensation cost of $ 1,805 is expected to be expensed over a weighted average period of 1.0 year.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

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

Outstanding as of June 30, 2024* 144,845 $ 24.95

* As of June 30, 2024 and December 31, 2023 restricted stock units vested for which the underlying common stock is yet to be issued are 72,385 and nil , respectively.

As of June 30, 2024, unrecognized compensation cost of $ 1,355 is expected to be expensed over a weighted average period of 0.8 years.

Restricted Stock Units

6 unchanged sentences

Forfeited ( 189,962 ) 28.31

Outstanding as of March 31, 2024* 3,855,981 $ 27.86

* As of March 31, 2024 and December 31, 2023 restricted stock units vested for which the underlying common stock is yet to be issued are 326,590 and 324,125 , respectively.

As of March 31, 2024, unrecognized compensation cost of $ 91,761 is expected to be expensed over a weighted average period of 3.0 years.

Outstanding as of June 30, 2024* 3,717,560 $ 27.82

* As of June 30, 2024 and December 31, 2023 restricted stock units vested for which the underlying common stock is yet to be issued are 373,521 and 324,125 , respectively.

As of June 30, 2024, unrecognized compensation cost of $ 80,859 is expected to be expensed over a weighted average period of 2.9 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 three months ended March 31, 2024, 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”).

During the six months ended June 30, 2024, 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.

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.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

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

6 unchanged sentences

Forfeited ( 24,886 ) 28.16 ( 37,261 ) 37.64

Outstanding as of March 31, 2024 780,550 $ 29.71 1,170,177 $ 40.53

As of March 31, 2024, unrecognized compensation cost of $ 55,900 is expected to be expensed over a weighted average period of 2.4 years.

Outstanding as of June 30, 2024 757,649 $ 29.73 1,135,881 $ 40.69

As of June 30, 2024, unrecognized compensation cost of $ 47,030 is expected to be expensed over a weighted average period of 2.2 years.

Employee Stock Purchase Plan

4 unchanged sentences

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

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

The fourth offering period under the 2022 ESPP commenced on January 1, 2024 with a term of six months .

2 unchanged sentences

Shares available for issuance as of December 31, 2023 3,831,325

Issuance of common stock related to the third offering period 71,645 $ 1,948

Shares available for issuance as of March 31, 2024 3,759,680

Contributions received for the fourth offering period up to March 31, 2024 $ 1,550

Issuance of common stock related to the:

Third offering period 71,645 $ 1,948

Shares available for issuance as of June 30, 2024 3,759,680

Issuance of common stock related to the fourth offering

period made subsequent to June 30, 2024 86,936 $ 2,414

Related Party Disclosures

In April 2022, the Company entered into a service contract for providing analytics services to The Vanguard Group Inc., which reported that it beneficially owns more than 10% of the Company’s common stock as of December 31, 2023.

During the three months ended March 31, 2024 and 2023, the Company recognized revenues, net of $ 166 and $ 951 , respectively, related to this service contract.

The Company had outstanding accounts receivable, net of $ nil and $ 209 , related to this service contract as of March 31, 2024 and December 31, 2023, respectively.

During the three months ended June 30, 2024 and 2023, the Company recognized revenues, net of $ 210 and $ 379 , respectively, related to this service contract.

During the six months ended June 30, 2024 and 2023, the Company recognized revenues, net of $ 376 and $ 1,330 , respectively, related to this service contract.

The Company had outstanding accounts receivable, net of $ 170 and $ 209 , related to this service contract as of June 30, 2024 and December 31, 2023, respectively.

In February 2024, the Company entered into a service contract for providing analytics services to Corridor Platforms, Inc., which is an equity affiliate of the Company.

During the three months ended March 31, 2024, the Company recognized revenues, net of $ 151 related to this service contract.

The Company had outstanding accounts receivable, net of $ 151 related to this service contract as of March 31, 2024.

During the three and six months ended June 30, 2024, the Company recognized revenues, net of $ 151 and $ 302 , respectively, related to this service contract.

The Company had outstanding accounts receivable, net of $ 151 related to this service contract as of June 30, 2024.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

Commitments and Contingencies

Capital Commitments

As of March 31, 2024, the Company had committed to spend approximately $ 9,000 under agreements to purchase property and equipment.

As of June 30, 2024, the Company had committed to spend approximately $ 5,100 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.”

1 unchanged sentence

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

The Company is committed under the Partnership to make further investments up to an amount of $ 3,400 .

Subsequent to June 30, 2024, the Company further invested $ 600 in the Partnership and is committed under the Partnership to make further investments up to an amount of $ 2,800 .

Other Commitments

9 unchanged sentences

Accordingly, the Company determines and documents pricing for controlled intercompany transactions based on an economic analysis as prescribed in the respective regulations.

The tax authorities have jurisdiction to

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2024

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

review the Company’s transfer pricing.

The tax authorities have jurisdiction to review the Company’s transfer pricing.

If the Company’s transfer pricing is challenged by the authorities, they could assess additional tax, interest and penalties, thereby impacting the Company’s profitability and cash flows.

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 March 31, 2024 and December 31, 2023 is $ 36,109 and $ 36,694 , respectively.

The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 7,213 and $ 7,227 , as of March 31, 2024 and December 31, 2023, respectively.

The aggregate amount demanded by Indian tax authorities (net of advance payments) as of June 30, 2024 and December 31, 2023 is $ 36,116 and $ 36,694 , respectively.

The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 7,520 and $ 7,227 , as of June 30, 2024 and December 31, 2023, 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 $ 5,481 and $ 5,493 , as of March 31, 2024 and December 31, 2023, respectively.

The Company has provided bank guarantees against these demands in the amounts of $ 4,559 and $ 4,570 , as of March 31, 2024 and December 31, 2023, respectively.

The GST authorities rejected the Company’s refunds claims in the amounts of $ 4,737 and $ 4,748 as of March 31, 2024 and December 31, 2023, respectively.

India’s 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 $ 5,482 and $ 5,493 , as of June 30, 2024 and December 31, 2023, respectively.

The Company has provided bank guarantees against these demands in the amounts of $ 5,482 and $ 4,570 , as of June 30, 2024 and December 31, 2023, respectively.

The GST authorities rejected the Company’s refunds claims in the amounts of $ 5,285 and $ 4,748 as of June 30, 2024 and December 31, 2023, 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 March 31, 2024 and December 31, 2023, 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.

Except for some components of the assessment for which the Company has recognized a provision in the financial statements, the Company believes that the amount demanded by such authority is not a meaningful indicator of the potential liabilities of the Company, and that the matter is without merit.

The Company is defending against the assessment order and has accordingly instituted an appeal against the order before the relevant tribunal while also making a payment under protest of the amount demanded.

As of the reporting date, the Company’s management does not believe that the ultimate assessment will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.

The Company will continue to monitor and evaluate its position based on future events and developments in this matter.

Accordingly, no provision was recognized as of June 30, 2024 and December 31, 2023, respectively.

Some of the Company’s subsidiaries in India have undergone assessments with the statutory authority with respect to defined contribution plan.

Except for some components of the assessments for which the Company has recognized a provision in the financial statements, the Company believes that the amount demanded by such authority is not a meaningful indicator of the potential liabilities of the Company, and that these matters are without merit.

The Company is defending against the

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

assessment orders and in one case, has instituted an appeal against the order before the relevant tribunal while also making a payment under protest of the amount demanded.

As of the reporting date, the Company’s management does not believe that the ultimate assessments in any of these matters will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.

The Company will continue to monitor and evaluate its position based on future events and developments on these matters.

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.

3 unchanged sentences

The outcomes of legal actions are unpredictable and subject to significant uncertainties, and thus it is inherently difficult to determine the likelihood of the Company incurring a material loss or quantification of any such loss.

With respect to pending litigation matters as of the reporting date, based on information currently available, including the Company’s assessment of the facts underlying each matter and advice of counsel, the amount or range of reasonably possible losses, if any, cannot be reasonably estimated.

With respect to certain pending litigation matters as of the reporting date, the Company has made provisions based on information currently available, including its evaluation of the facts underlying each matter and legal counsel’s advice on the estimated losses or range of reasonably possible losses.

Based on the Company’s assessment, including the availability of insurance recoveries, the Company’s management does not believe that currently pending litigation, individually or in aggregate, will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.

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

Restructuring Costs

In second quarter of 2024, the Company initiated a strategic restructuring plan to align its workforce with market opportunities, business strategies and evolving customer needs.

A substantial part of this plan was executed in the second quarter of 2024, which affected less than 1 % of the Company’s global workforce.

The restructuring costs include costs in relation to employee severance and other associated costs including legal fees and outplacement support costs.

These costs have been recognized under cost of revenues (across all reporting segments), general & administrative and selling & marketing expenses in the unaudited consolidated statements of income.

The following table summarizes the activity related to the restructuring costs incurred and paid during the three months ended June 30, 2024:

Employee-Related Costs Other Associated Costs Total

Balance as of April 1, 2024 $ — $ — $ —

Costs incurred during the period 4,397 365 4,762

Payments made during the period 3,760 10 3,770

Balance as of June 30, 2024 $ 637 $ 355 $ 992

Subsequent Event

In April 2024, the Company initiated a restructuring plan to align its workforce with market opportunities, business strategies and evolving customer needs.

As part of this plan, the Company expects a reduction in its workforce impacting less than 2 % of its global workforce and to record employee severance and related charges.

The Company expects the plan to be substantially completed by the end of the second quarter ending June 30, 2024.

The Company’s management does not believe that the restructuring plan will have a material adverse impact on its unaudited consolidated financial statements, results of operations or cash flows.

On July 31, 2024, the Company, through its wholly owned subsidiary Clairvoyant AI, Inc., entered into an equity securities purchase agreement to acquire 100 % of the equity securities of Incandescent Technologies, Inc., a Delaware Corporation (“ITI”) for cash consideration of $ 26,000 , subject to certain post-closing adjustments and contingent consideration of $ 13,000 , based on the achievement of certain performance goals by ITI during the two years ending July 31, 2026.

ITI is a data management solutions firm servicing primarily Global 1000 companies in the banking, financial services and healthcare industries.

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