What changed in this filing

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Item 1. Financial Statements

2024-10-30 compared with 2024-08-01 · 334 added, 296 removed, 880 unchanged (42% of the section changed)

3 unchanged sentences

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

Notes June 30, 2024 December 31, 2023

Notes September 30, 2024 December 31, 2023

Current assets:

7 unchanged sentences

Operating lease right-of-use assets 21 71,796 64,856

Restricted cash 7 5,820 4,386

Deferred tax assets, net 22 106,881 82,927

19 unchanged sentences

Commitments and contingencies 25

ExlService Holdings, Inc.

Stockholders’ equity:

2 unchanged sentences

Common stock, $ 0.001 par value;

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

400,000,000 shares authorized, 205,317,002 shares issued and 160,880,592 shares outstanding as of September 30, 2024 and 203,410,038 shares issued and 165,277,880 shares outstanding as of December 31, 2023

Additional paid-in capital 572,430 508,028

2 unchanged sentences

Total including shares held in treasury 1,681,330 1,464,854

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

44,436,410 shares as of September 30, 2024 and 38,132,158 shares as of December 31, 2023, held in treasury, at cost

19 ( 773,767 ) ( 575,417 )

5 unchanged sentences

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

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

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

Notes 2024 2023 2024 2023

17 unchanged sentences

Gain/(loss) from equity-method investment ( 34 ) 25 ( 71 ) 157

Net income attributable to ExlService Holdings, Inc.

stockholders $ 45,825 $ 49,068 $ 94,588 $ 100,399

Earnings per share attributable to ExlService Holdings, Inc.

stockholders (2) :

Net income $ 53,037 $ 43,876 $ 147,625 $ 144,275

Earnings per share:

Basic $ 0.33 $ 0.26 $ 0.90 $ 0.87

Diluted $ 0.33 $ 0.26 $ 0.90 $ 0.86

Weighted average number of shares used in computing earnings per share attributable to ExlService Holdings, Inc.

stockholders (2) :

Weighted average number of shares used in computing earnings per share:

Basic 161,732,872 166,159,619 163,197,767 166,707,599

1 unchanged sentence

(1) Exclusive of depreciation and amortization expense.

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

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

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

(In thousands)

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

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

Notes 2024 2023 2024 2023

18 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the three months ended June 30, 2024 and 2023

For the three months ended September 30, 2024 and 2023

(In thousands, except share count)

1 unchanged sentence

Notes Shares Amount Shares Amount

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

Stock issued against stock-based compensation plans 23 533,889 1 2,414 — — — — 2,415

2 unchanged sentences

Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — ( 412 ) ( 412 )

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

Accelerated share repurchase 19 — — 27,862 — — ( 820,433 ) ( 27,862 ) —

Other comprehensive income 15 — — — — 13,515 — — 13,515

Net income — — — 53,037 — — — 53,037

Balance as of September 30, 2024 205,317,002 $ 205 $ 572,430 $ 1,231,288 $ ( 122,593 ) ( 44,436,410 ) $ ( 773,767 ) $ 907,563

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

Notes Shares Amount Shares Amount

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

Common Stock (1)

Additional Paid-in Capital (1)

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

Notes Shares Amount Shares (1)

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 23 375,550 — 3,548 — — — — 3,548

1 unchanged sentence

Acquisition of treasury stock 19 — — — — — ( 1,021,041 ) ( 29,960 ) ( 29,960 )

Other comprehensive income 15 — — — — 7,340 — — 7,340

Other comprehensive loss 15 — — — — ( 12,658 ) — — ( 12,658 )

Net income — — — 43,876 — — — 43,876

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.

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

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the six months ended June 30, 2024 and 2023

For the nine months ended September 30, 2024 and 2023

(In thousands, except share count)

7 unchanged sentences

Accelerated share repurchase 19 — — 2,862 — — ( 4,170,517 ) ( 127,862 ) ( 125,000 )

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

Other comprehensive income 15 — — — — 4,447 — — 4,447

Net income — — — 147,625 — — — 147,625

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)

Balance as of September 30, 2024 205,317,002 $ 205 $ 572,430 $ 1,231,288 $ ( 122,593 ) ( 44,436,410 ) $ ( 773,767 ) $ 907,563

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

Notes Shares Amount Shares Amount

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

4 unchanged sentences

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

Balance as of June 30, 2023 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.

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

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

(In thousands)

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities:

8 unchanged sentences

Others, net ( 341 ) 6,328

Change in operating assets and liabilities, net of effects of acquisitions:

Change in operating assets and liabilities:

Accounts receivable ( 28,900 ) ( 46,488 )

10 unchanged sentences

Proceeds from sale of property and equipment 172 640

Investment in equity affiliate ( 600 ) ( 600 )

Business acquisition (net of cash acquired) ( 24,466 ) —

Purchases of investments ( 225,555 ) ( 165,021 )

8 unchanged sentences

Proceeds from issuance of common stock 3,524 4,690

Payment of debt issuance costs ( 593 ) —

Net cash used for financing activities ( 52,171 ) ( 140,972 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,330 ( 288 )

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

Net increase in cash, cash equivalents and restricted cash 17,863 2,338

Cash, cash equivalents and restricted cash at the beginning of the period 145,401 125,621

10 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 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

3 unchanged sentences

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)

June 30, 2024

September 30, 2024

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

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.

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.

31 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.

2 unchanged sentences

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 Company has early

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

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.

14 unchanged sentences

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

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

Three months ended June 30, 2024

The August 2024 acquisition of Incandescent Technologies, Inc.

(“ITI Data”) is included in the Analytics reportable segment.

Refer to Note 10 - Business Combinations, Goodwill and Other Intangible Assets to the unaudited consolidated financial statements for further details.

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

Three months ended September 30, 2024

Insurance Healthcare Emerging Business Analytics Total

12 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

September 30, 2024

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

Three months ended June 30, 2023

Three months ended September 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

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

Nine months ended September 30, 2024

Insurance Healthcare Emerging Business Analytics Total

10 unchanged sentences

(1) Exclusive of depreciation and amortization expense.

Six months ended June 30, 2023

Nine months ended September 30, 2023

Insurance Healthcare Emerging Business Analytics Total

12 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

September 30, 2024

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

Revenues, net by service type, were as follows:

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

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

2024 2023 2024 2023

6 unchanged sentences

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

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

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

2024 2023 2024 2023

7 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Long-lived assets

1 unchanged sentence

The United States 57,307 61,592

The Philippines 25,636 21,952

South Africa 27,783 20,890

The Philippines 27,600 21,952

Rest of World 5,486 6,982

Long-lived assets $ 179,191 $ 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:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Accounts receivable, net $ 340,904 $ 308,108

3 unchanged sentences

Consideration received for process transition activities $ 18,710 $ 12,411

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

Accounts receivable includes $ 168,420 and $ 148,735 as of September 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 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,

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

Revenue recognized during the three and nine months ended September 30, 2024 and 2023, which was included in the contract liabilities balance at the beginning of the respective periods:

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

2024 2023 2024 2023

4 unchanged sentences

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

Three months ended Nine months ended Year ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 December 31, 2023

Opening Balance $ 1,990 $ 2,183 $ 2,122 $ 1,095 $ 1,095

2 unchanged sentences

Closing Balance $ 1,778 $ 2,065 $ 1,778 $ 2,065 $ 2,122

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

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

Three months ended Nine months ended Year ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 December 31, 2023

Opening Balance $ 30,404 $ 21,445 $ 24,673 $ 13,871 $ 13,871

2 unchanged sentences

Closing Balance $ 33,221 $ 24,357 $ 33,221 $ 24,357 $ 24,673

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

There was no significant impairment for contract acquisition and contract fulfillment costs as of September 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:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Accounts receivable, including unbilled receivables $ 344,778 $ 311,811

1 unchanged sentence

Accounts receivable, net $ 340,904 $ 308,108

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

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

Three months ended Six months ended Year ended

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

Three months ended Nine months ended Year ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 December 31, 2023

Opening Balance $ 3,560 $ 1,800 $ 3,703 $ 1,332 $ 1,332

4 unchanged sentences

Customer and credit risk concentration

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.

No single customer accounted for more than 10% of the Company's revenues, net during the three and nine months ended September 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 June 30, 2024 and December 31, 2023.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

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

Earnings Per Share

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

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

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

2024 2023 2024 2023

4 unchanged sentences

Diluted weighted average common shares outstanding 163,187,733 167,688,374 164,620,081 168,591,612

Earnings per share attributable to ExlService Holdings, Inc.

stockholders (1) :

Earnings per share:

Basic $ 0.33 $ 0.26 $ 0.90 $ 0.87

1 unchanged sentence

Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share 1,790,695 2,899,035 2,762,178 1,564,844

(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.

On March 15, 2024, the Company entered into a master confirmation (the “Master Accelerated Share Repurchase Confirmation”) and a supplemental confirmation (together with the Master Accelerated Share Repurchase Confirmation, the “2024 ASR Agreement”), with Citibank, N.A.

1 unchanged sentence

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

During the three months ended March 31, 2024, the Company recorded the initial delivery of shares in treasury stock at cost, which resulted in an immediate reduction of its outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share.

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 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.

During the nine months ended September 30, 2024, the Company recorded the initial delivery and final settlement of shares in treasury stock, which resulted in an immediate reduction of its outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

September 30, 2024

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

1 unchanged sentence

Other income, net consists of the following:

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

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

2024 2023 2024 2023

2 unchanged sentences

Fair value changes of contingent consideration (1)

— ( 2,500 ) 589 ( 2,500 )

Others, net 61 ( 165 ) 137 ( 462 )

3 unchanged sentences

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

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

September 30, 2024 September 30, 2023 December 31, 2023

Cash and cash equivalents $ 150,102 $ 122,655 $ 136,953

Restricted cash (current) (1)

7,342 3,257 4,062

Restricted cash (non-current) (2)

5,820 2,047 4,386

Cash, cash equivalents and restricted cash $ 163,264 $ 127,959 $ 145,401

(1) 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.”

The corresponding liability against the same is included under “Accrued Expenses and other current liabilities.” Restricted cash also includes funds held as collateral in a dedicated bank account for irrevocable letters of credit issued in favor of third parties for facility leases.

(2) Restricted cash (non-current) represents deposits 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.

Investments consist of the following:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Short-term investments

4 unchanged sentences

Term deposits $ 9,464 $ 239

Restricted term deposits (1)

Investment in equity affiliate 4,720 4,191

Total Long-term investments $ 14,184 $ 4,430

(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)

June 30, 2024

September 30, 2024

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

1 unchanged sentence

Property and equipment consists of the following:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Property, plant and equipment, gross $ 357,102 $ 324,038

1 unchanged sentence

Property, plant and equipment, net $ 107,395 $ 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.

During the three and nine months ended September 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 June 30, Six months ended June 30,

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

2024 2023 2024 2023

Depreciation and amortization expense $ 10,350 $ 8,426 $ 29,449 $ 26,682

Internally developed software costs was as follows:

June 30, 2024 December 31, 2023

Internally developed software costs included in property and equipment was as follows:

September 30, 2024 December 31, 2023

Cost $ 59,286 $ 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 June 30, Six months ended June 30,

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

2024 2023 2024 2023

Amortization expense $ 2,961 $ 2,311 $ 8,408 $ 6,711

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

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

Business Combinations, Goodwill and Other Intangible Assets

Incandescent Technologies, Inc.

On August 1, 2024, the Company, through its wholly owned subsidiary Clairvoyant AI, Inc., completed the acquisition of ITI Data, a Nebraska corporation, pursuant to an equity securities purchase agreement dated July 31, 2024 (the "Purchase Agreement").

The Company purchased 100 % of the issued and outstanding equity securities in ITI Data.

ITI Data is a data management solutions firm that works with the global banks, financial services and healthcare companies.

It delivers enterprise business solutions for clients processing significant data volumes with complex data management requirements.

The acquisition strengthens the Company’s ability to deliver reliable, data-driven insights to its clients and ultimately drive greater value and innovation across their operations.

The base purchase consideration payable at the closing of the transaction was $ 26,000 , excluding cash acquired, debt and other estimated post-closing adjustments.

The Purchase Agreement also allows the seller the ability to earn up to $ 13,000 of

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

contingent consideration, based on the achievement of certain performance goals by ITI Data during the two years ending July 31, 2026.

The contingent consideration had an estimated fair value of $ 7,700 , and has been presented as contingent consideration under “Accrued expenses and other current liabilities” and “Other non-current liabilities,” as applicable in the consolidated balance sheets.

A portion of the purchase consideration otherwise payable was placed into escrow as security for the post-closing working capital adjustments and the indemnification obligations under the Purchase Agreement.

To finance the acquisition, the Company utilized its available cash on hand.

The Company’s preliminary purchase price allocation to net tangible and intangible assets of ITI Data as of August 1, 2024 is as follows:

Intangible assets $ 10,720

Other assets, net 581

Goodwill 22,035

Total purchase consideration* $ 33,336

* Includes contingent consideration of $ 7,700 recognized at fair value as of the date of acquisition.

The fair value of assets acquired and liabilities assumed from the acquisition of ITI Data is based on a preliminary valuation and, as such, the Company's estimates and assumptions are subject to change within the measurement period.

The Company is in the process of finalizing the adjustments related to debt, working capital position and other post-closing adjustments, which, when determined, may result in the recognition of additional assets or liabilities as of the acquisition date, and shall accordingly lead to finalization of the purchase consideration.

The measurement period will not exceed one year from the acquisition date.

In connection with this acquisition, the Company recorded $ 10,420 in customer-related intangibles which are being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated weighted average amortization period of 5 years.

The ITI Data acquisition is treated as a stock acquisition for tax purposes.

The goodwill recognized represents the acquired capabilities, operating synergies and other benefits expected to result from combining the acquired operations with the Company’s existing operations.

The goodwill has been assigned to the Company’s Analytics reportable segment based upon the Company’s assessment of nature of services rendered by ITI Data.

The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s unaudited consolidated financial statements with effect from the date of the acquisition.

The acquisition did not materially impact the Company's financial position, results of operations or cash flows, and therefore, the Company has not provided unaudited supplemental pro forma results.

The following table sets forth details of changes in goodwill by reportable segment of the Company:

1 unchanged sentence

Balance as of January 1, 2024 $ 50,035 $ 21,872 $ 47,001 $ 286,731 $ 405,639

Acquisition — — — 22,035 22,035

Currency translation adjustments 112 ( 5 ) ( 118 ) — ( 11 )

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

Balance as of September 30, 2024 $ 50,147 $ 21,867 $ 46,883 $ 308,766 $ 427,663

As of September 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 nine months ended September 30, 2024, business forecasts for the remainder of the year,

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

September 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.

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 June 30, 2024.

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

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

3 unchanged sentences

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

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

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

Amount Accumulated

12 unchanged sentences

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

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

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

2024 2023 2024 2023

Amortization expense $ 3,449 $ 3,157 $ 9,606 $ 11,510

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

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

2024 (October 1 - December 31) $ 3,431

2028 and thereafter 10,017

Total $ 50,391

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

September 30, 2024

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

1 unchanged sentence

Other current assets consist of the following:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Advance income tax, net $ 31,632 $ 23,269

Prepaid expenses 25,556 18,171

Receivables from statutory authorities 21,854 18,500

Prepaid expenses 18,179 18,171

Derivative instruments 8,492 4,308

Advances to suppliers 4,085 1,883

Deferred contract fulfillment costs 4,208 3,303

Advances to suppliers 3,149 1,883

Contract assets 2,465 2,830

2 unchanged sentences

Other assets consist of the following:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Deferred contract fulfillment costs $ 29,013 $ 21,370

7 unchanged sentences

Accrued expenses and other current liabilities consist of the following:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Accrued expenses $ 62,552 $ 58,736

1 unchanged sentence

Client liabilities 7,105 6,909

Derivative instruments 5,153 2,009

Contingent consideration 2,800 15,000

Accrued capital expenditures 2,791 4,134

Income taxes payable, net 1,249 1,213

Contingent consideration — 15,000

Derivative instruments 991 2,009

Others 4,228 5,521

2 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

September 30, 2024

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

1 unchanged sentence

Other non-current liabilities consist of the following:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Retirement benefits $ 17,185 $ 16,666

Deferred transition revenue 15,645 10,195

Derivative instruments 2,487 216

Unrecognized tax benefits 1,474 1,262

Contingent consideration 4,900 589

Unrecognized tax benefits 1,580 1,262

Derivative instruments 504 216

Others 2,861 2,534

6 unchanged sentences

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

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

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

Accumulated Other Comprehensive Income/(Loss)

1 unchanged sentence

Balance as of January 1, 2024 $ ( 132,643 ) $ 4,198 $ 1,405 $ ( 127,040 )

Losses recognized during the period ( 6,253 ) ( 2,840 ) — ( 9,093 )

Gains / (losses) recognized during the period ( 483 ) 7,257 — 6,774

Reclassification to net income (1)

2 unchanged sentences

146 ( 1,165 ) ( 3 ) ( 1,022 )

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

Accumulated other comprehensive income/(loss) as of September 30, 2024 $ ( 132,980 ) $ 9,440 $ 947 $ ( 122,593 )

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

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

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

Reclassification to net income (1)

2 unchanged sentences

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

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

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

(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)

June 30, 2024

September 30, 2024

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

6 unchanged sentences

Inputs Significant Other

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

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

Cash equivalents - Money market funds (1)

5 unchanged sentences

Derivative financial instruments $ — $ 1,495 $ — $ 1,495

Contingent consideration (3)

— — 7,700 7,700

Total $ — $ 1,495 $ 7,700 $ 9,195

23 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

September 30, 2024

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

4 unchanged sentences

The Company estimated the fair value of the contingent consideration based on the Monte Carlo simulation model and scenario-based method.

Refer to Note 10 - Business Combinations, Goodwill and Other Intangible Assets to the unaudited consolidated financial statements for further details.

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

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

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

2024 2023 2024 2023

Opening balance $ — $ 13,689 $ 15,589 $ 18,689

Acquisitions 7,700 — 7,700 —

Fair value changes — 2,500 ( 589 ) 2,500

1 unchanged sentence

Closing balance $ 7,700 $ 16,189 $ 7,700 $ 16,189

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

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

Financial Instruments Not Carried at Fair Value :

The Company’s other financial instruments not carried at fair value consist primarily of cash and cash equivalents (except investments in money market funds, as disclosed above), short-term investments (except investments in mutual funds, as disclosed above), restricted cash, accounts receivable, net, long-term investments, accrued capital expenditures, accrued expenses, client liabilities and interest payable on borrowings for which fair values approximate their carrying amounts.

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.

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

Derivatives and Hedge Accounting

3 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Foreign currency forward contracts denominated in:

dollar (USD) 868,200 722,800

pound sterling (GBP) 1,500 —

Interest rate swaps (Floating to fixed) denominated in:

USD 75,000 75,000

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.

The Company estimates that approximately $ 7,631 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 September 30, 2024, could be reclassified into earnings within the next twelve months.

As of September 30, 2024, the maximum outstanding term of the cash flow hedges was approximately 42 months.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

September 30, 2024

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

7 unchanged sentences

Foreign currency forward contracts denominated in:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Sell USD 200,322 170,543

2 unchanged sentences

Sell AUD 6,887 3,452

Sell ZAR — 150,150

Buy USD 10,944 —

2 unchanged sentences

relationships Derivatives not designated as hedging

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

September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023

Other current assets $ 8,474 $ 4,216 $ 18 $ 92

4 unchanged sentences

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

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

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

Derivative financial instruments:

6 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

September 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 June 30,

Three months ended September 30,

As per unaudited consolidated

19 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

September 30, 2024

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

Six months ended June 30,

Nine months ended September 30,

As per unaudited consolidated

18 unchanged sentences

The following tables summarizes the Company’s debt position:

June 30, 2024 December 31, 2023

Revolving credit facility

September 30, 2024 December 31, 2023

Revolving credit facility Term loan facility Total Revolving credit facility Term loan facility Total

Current portion of long-term borrowings $ — $ 5,000 $ 5,000 $ 65,000 $ — $ 65,000

Unamortized debt issuance costs — ( 109 ) ( 109 ) — — —

Total current portion of long-term borrowings

— 4,891 4,891 65,000 — 65,000

Long-term borrowings

245,000 95,000 340,000 135,000 — 135,000

Unamortized debt issuance costs — ( 172 ) ( 172 ) — — —

Total long-term borrowings

245,000 94,828 339,828 135,000 — 135,000

Total borrowings $ 245,000 $ 99,719 $ 344,719 $ 200,000 $ — $ 200,000

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.

Unamortized debt issuance costs for the Company’s revolving credit facility of $ 978 and $ 903 as of September 30, 2024 and December 31, 2023, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

Credit Agreement

2 unchanged sentences

The revolving credit facility originally had a maturity date of November 21, 2022 and was voluntarily pre-payable from time to time without premium or penalty.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

On April 18, 2022, the Company and each of the Company’s wholly owned material domestic subsidiaries entered into an Amendment and Restatement Agreement with Citibank, N.A.

4 unchanged sentences

dollar borrowings.

The 2022 Credit Agreement provides an option to increase the commitments by up to $ 200,000 , subject to certain approvals and conditions.

On August 9, 2024, the Company and each of the Company’s wholly owned material domestic subsidiaries entered into a First Amendment to Amended and Restated Credit Agreement with Citibank, N.A., as Administrative Agent, and certain lenders (the “2024 Credit Agreement”), pursuant to which the parties thereto amended and restated the 2022 Credit Agreement.

Among other things, the 2024 Credit Agreement (a) provides for a $ 100,000 increase to the revolving credit commitments such that the aggregate amount of revolving credit commitments available to the Company is now equal to $ 500,000 ;

and (b) provides for the issuance of a new term loan facility in the aggregate amount of $ 100,000 with an annual amortization of 5 %.

The increased credit facility and the new term loan facility both mature on April 18, 2027.

The 2024 Credit Agreement includes a letter of credit sub facility and is voluntarily pre-payable from time to time without premium or penalty.

Borrowings under the 2022 Credit Agreement can be used for working capital and general corporate purposes, including permitted acquisitions.

Obligations under the 2022 Credit Agreement are guaranteed by the Company’s material domestic subsidiaries and are secured by all or substantially all of the Company’s and its material domestic subsidiaries’ assets.

The 2022 Credit Agreement contains customary affirmative and negative covenants, including, but not limited to, restrictions on the ability to incur indebtedness, create liens, make certain investments, make certain dividends and related distributions, enter into, or undertake, certain liquidations, mergers, consolidations or acquisitions and dispose of certain assets or subsidiaries.

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

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

Borrowings under the revolving credit facility can be used for working capital and general corporate purposes, including permitted acquisitions.

Borrowings under the term loan facility can be used to repay the borrowings outstanding under the revolving facility on August 9, 2024, being the effective date of the 2024 Credit Agreement.

Obligations under the 2024 Credit Agreement are guaranteed by the Company’s wholly-owned material domestic subsidiaries and are secured by all or substantially all of the Company’s and its material domestic subsidiaries’ assets.

The 2024 Credit Agreement contains customary affirmative and negative covenants, including, but not limited to, restrictions on the ability to incur indebtedness, create liens, make certain investments, make certain dividends and distributions, enter into, or undertake, certain liquidations, mergers, consolidations or acquisitions and dispose of certain assets or subsidiaries.

The Company has fully drawn $ 100,000 under its term loan facility based on adjusted SOFR, and repaid the borrowings outstanding under its revolving credit facility to that extent.

The effective interest rates of the revolving credit facility and the term loan facility are as follows:

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

2024 2023 2024 2023

Effective Interest Rate 6.5 % 6.2 % 6.6 % 6.1 %

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 6.4 % 6.5 % 6.3 % 6.2 %

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

Term loan facility 6.8 % — 6.8 % —

As of September 30, 2024 and December 31, 2023, the Company was in compliance with the financial covenants under the applicable credit agreement.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

The maturity profile of the Company’s long-term borrowings, excluding debt issuance costs, outstanding as of September 30, 2024 were as follows:

Revolving credit facility Term loan facility

2024 (October 1 - December 31) $ — $ 1,250

2027 245,000 88,750

Total $ 245,000 $ 100,000

1 unchanged sentence

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

As of each of June 30, 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 September 30, 2024 and December 31, 2023, the Company had outstanding letters of credit of $ 741 and $ 461 , respectively, 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)

June 30, 2024

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

of authorized shares of the Company’s common stock from 100,000,000 shares to 400,000,000 shares.

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

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

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

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

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

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

Share Repurchases

1 unchanged sentence

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

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

Three months ended September 30, 2024 91,565 $ 3,346 $ 36.54

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

Nine months ended September 30, 2024 291,967 $ 9,721 $ 33.29

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

(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.

5 unchanged sentences

The 2024 ASR Agreement is accounted for as a treasury stock transaction and forward stock purchase agreement indexed to the Company’s common stock.

The forward stock purchase agreement is classified as an equity instrument under ASC 815-40, Contracts in Entity's Own Equity ("ASC 815- 40") and deemed to have a fair value of zero at the effective date.

Under the terms of the 2024 ASR Agreement, the ultimate number of shares of Common Stock that the Company will repurchase, will be based on the average of the daily volume-weighted average prices of the Common Stock during the term of the 2024 ASR Agreement, less a discount and subject to adjustments pursuant to the terms and conditions of the 2024 ASR Agreement.

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.

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.

The forward stock purchase agreement was classified as an equity instrument under ASC Topic 815-40, Contracts in Entity's Own Equity , and deemed to have a fair value of zero at the effective date.

The prepayment of $ 25,000 was initially recorded in additional paid-in

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

September 30, 2024

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

capital, which reflected the pending settlement of the 2024 ASR Agreement.

Under the terms of the 2024 ASR Agreement, the ultimate number of shares of Common Stock that the Company repurchased was based on the average of the daily volume-weighted average prices of the Common Stock during the term of the 2024 ASR Agreement, less a discount and subject to adjustments pursuant to the terms and conditions of the 2024 ASR Agreement.

The additional shares received were recorded as treasury stock at a fair market value of $ 33.96 per share, and $ 2,862 was recorded in additional paid-in capital.

Under the Company’s two repurchase programs, shares may be purchased by the Company from time to time from the open market and through private transactions, or otherwise, as determined by the Company’s management as market conditions warrant.

2 unchanged sentences

Shares repurchased Total consideration Weighted average purchase price per share

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

Three months ended September 30, 2024 1,738,114 $ 59,346 $ 34.14

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

Nine months ended September 30, 2024 6,012,285 $ 187,599 $ 31.20

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

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 $ 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.

The Company recognized excise tax of $ 412 and $ 1,030 , respectively, on repurchase of common stock as a part of cost of such repurchases for the three and nine months ended September 30, 2024.

Employee Benefit Plans

9 unchanged sentences

The Company expects to earn a return of approximately 7.2 % per annum on the India Plan for the year ending on December 31, 2024.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

Change in Plan Assets

4 unchanged sentences

Currency translation adjustments ( 134 )

Plan assets 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)

Plan assets as of September 30, 2024

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

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

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

2024 2023 2024 2023

10 unchanged sentences

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

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

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

2024 2023 2024 2023

6 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)

September 30, 2024

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

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

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

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

2024 2023 2024 2023

6 unchanged sentences

Variable lease costs 1,240 1,170 3,329 3,334

Sub lease income ( 49 ) — ( 49 ) —

Total lease cost $ 7,350 $ 6,084 $ 20,763 $ 18,695

(1) Includes short-term leases, which are immaterial.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

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

Six months ended June 30,

Nine months ended September 30,

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

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 $ 3,377 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:

The Company modified certain of its operating leases, resulting in an increase of its lease liabilities by $ 3,383 and a decrease of its lease liabilities by $ 1,876 , during the nine months ended September 30, 2024 and 2023, respectively, with a corresponding adjustment to ROU assets.

As of September 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.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

Maturities of lease liabilities as of September 30, 2024 were as follows:

Operating Leases Finance Leases

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

2024 (October 1 - December 31) $ 5,621 $ 146

2025 22,142 565

8 unchanged sentences

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

The effective tax rate 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)

June 30, 2024

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

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.

The effective tax rate decreased from 24.4 % during the three months ended September 30, 2023 to 22.6 % during the three months ended September 30, 2024.

The Company recorded income tax expense of $ 15,460 and $ 14,161 for the three months ended September 30, 2024 and 2023, respectively.

The increase in income tax expense was primarily as a result of higher profit during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, partially offset by higher excess tax benefits related to stock-based compensation during the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

The effective tax rate increased from 20.8 % during the nine months ended September 30, 2023 to 22.6 % during the nine months ended September 30, 2024.

The Company recorded income tax expense of $ 43,086 and $ 37,773 for the nine months ended September 30, 2024 and 2023, respectively.

The increase in income tax expense was primarily as a result of higher profit during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 and lower excess tax benefits related to stock-based compensation during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

During the nine months ended September 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 June 30, Six months ended June 30,

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

2024 2023 2024 2023

5 unchanged sentences

Total $ ( 1,317 ) $ 3,017 $ ( 1,022 ) $ ( 2,490 )

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 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 June 30, Six months ended June 30,

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

2024 2023 2024 2023

5 unchanged sentences

$ 5,830 $ 4,340 $ 15,807 $ 16,959

(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.

(1) Includes $ 1,673 and $ 462 during the three months ended September 30, 2024 and 2023, respectively, and $ 9,214 and $ 13,172 during the nine months ended September 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 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.

As of September 30, 2024 and December 31, 2023, the Company had 1,774,815 and 4,096,102 shares, respectively, available for grant under the 2018 Omnibus Incentive Plan.

Stock Options

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)

Stock option activity under the Company’s stock-based compensation plans is shown below:

Stock Options

Number Weighted Average

Outstanding as of December 31, 2023 1,790,695 $ 30.14

Vested 447,655 30.14

Forfeited — —

Outstanding as of September 30, 2024* 1,343,040 $ 30.14

*As of September 30, 2024 and December 31, 2023 the number of stock options vested and not yet exercised are 447,655 and nil , respectively.

As of September 30, 2024, unrecognized compensation cost of $ 14,683 is expected to be expensed over a weighted average period of 2.8 years.

Share Matching Program

2 unchanged sentences

Restricted stock unit activity under the SMP is shown below:

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

Restricted Stock Units (SMP)

3 unchanged sentences

Forfeited — —

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.

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

* As of September 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 September 30, 2024, unrecognized compensation cost of $ 900 is expected to be expensed over a weighted average period of 0.5 years.

Restricted Stock Units

6 unchanged sentences

Forfeited ( 250,827 ) 28.26

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.

Outstanding as of September 30, 2024* 3,275,479 $ 28.98

* As of September 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 September 30, 2024, unrecognized compensation cost of $ 71,783 is expected to be expensed over a weighted average period of 2.7 years.

Performance Based Stock Awards

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

During the six months ended June 30, 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.

During the nine months ended September 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 ( 26,338 ) 29.72 ( 39,436 ) 39.89

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.

Outstanding as of September 30, 2024 756,197 $ 29.72 1,133,706 $ 40.69

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

As of September 30, 2024, unrecognized compensation cost of $ 36,698 is expected to be expensed over a weighted average period of 1.9 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.

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

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

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

3 unchanged sentences

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

Fourth offering period 86,936 $ 2,414

Shares available for issuance as of September 30, 2024 3,672,744

Contributions received for the fifth offering period up to September 30, 2024 $ 1,146

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 March 31, 2024.

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

During the three months ended September 30, 2024 and 2023, the Company recognized revenues, net of $ 140 and $ 354 , respectively, related to this service contract.

During the nine months ended September 30, 2024 and 2023, the Company recognized revenues, net of $ 516 and $ 1,684 , respectively, related to this service contract.

The Company had outstanding accounts receivable, net of $ 84 and $ 209 , related to this service contract as of September 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 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)

During the three and nine months ended September 30, 2024, the Company recognized revenues, net of $ 80 and $ 382 , respectively, related to this service contract.

The Company had outstanding accounts receivable, net of $ 65 related to this service contract as of September 30, 2024.

Commitments and Contingencies

Capital Commitments

As of June 30, 2024, the Company had committed to spend approximately $ 5,100 under agreements to purchase property and equipment.

As of September 30, 2024, the Company had committed to spend approximately $ 6,300 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.”

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

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

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 .

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

in growth-stage technology companies.

During the nine months ended September 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

12 unchanged sentences

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

The aggregate amount demanded by Indian tax authorities (net of advance payments) as of June 30, 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 aggregate amount demanded by Indian tax authorities (net of advance payments) as of September 30, 2024 and December 31, 2023 is $ 37,144 and $ 36,694 , respectively.

The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 7,669 and $ 7,227 , as of September 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 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.

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 $ 5,455 and $ 5,493 , as of September 30, 2024 and December 31, 2023, respectively.

The Company has provided bank guarantees against these demands in the amounts of $ 5,455 and $ 4,570 , as of September 30, 2024 and December 31, 2023, respectively.

The GST authorities rejected the Company’s refunds claims in the amounts of $ 5,023 and $ 4,748 as of September 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 June 30, 2024 and December 31, 2023, respectively.

Accordingly, no provision was recognized as of September 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.

The Company is defending against the 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.

2 unchanged sentences

The plaintiffs in those cases seek damages, including, where applicable, compensatory damages, punitive damages and attorney’s fees.

With respect to pending litigation matters as of the reporting date, the Company believes that the damages claimed are without merit, and the Company intends to vigorously defend them.

With respect to pending litigation matters as of the reporting date, the Company believes that the damages claimed are without merit, and the Company intends to vigorously

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

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

5 unchanged sentences

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.

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 $ — $ — $ —

The following table summarizes the activity related to the restructuring costs incurred and paid:

Three months ended September 30, 2024 Nine months ended September 30, 2024

Employee-Related Costs Other Associated Costs Total Employee-Related Costs Other Associated Costs Total

Opening balance $ 637 $ 355 $ 992 $ — $ — $ —

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

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.

Payments during the period 547 226 773 4,307 236 4,543

Closing balance $ 90 $ 129 $ 219 $ 90 $ 129 $ 219

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