What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-02-25 compared with 2024-02-29 · 496 added, 525 removed, 1506 unchanged (40% of the section changed)

32 unchanged sentences

Rule 10b5-1 Trading Plans

During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

During the three months ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K, except as described below:

Name and Title Character of Trading Arrangement (1)

Date Adopted Duration (2)

Aggregate Number of Shares of Common Stock to be Sold Pursuant to Trading Arrangement

Anita Mahon , Executive Vice President and Business Head, Healthcare

Trading Arrangement November 04, 2024 July 31, 2025 37,817

Ajay Ayyappan ,

Executive Vice President, General Counsel & Corporate Secretary

Trading Arrangement November 12, 2024 May 30, 2025 32,156

(1) Except as indicated by footnote, each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended (the “Rule”).

(2) Except as indicated by footnote, each trading arrangement permits transactions through and including the earlier to occur of (a) the completion of all sales or (b) the date listed in the table.

Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” only permits transactions upon expiration of the applicable mandatory cooling-off period under the Rule.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information

The following table provides information as of December 31, 2024 with respect to the shares of our common stock that may be issued under our existing equity compensation plans.

For a description of our equity compensation plans, see Note 23 - Stock-Based Compensation to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data.”

Plan Category Number of Securities

to be Issued Upon

Exercise/Vesting of

Options, Warrants and Rights* Weighted

Average Exercise

Options, Warrants and Rights Number of Securities

Remaining Available for Future

Issuance Under Equity

Compensation Plans (Excluding Securities

Reflected in Column 1)

Equity compensation plans approved by security holders 7,926,565 $ 30.14 1,813,592

Equity compensation plans not approved by security holders — — —

Total 7,926,565 $ 30.14 1,813,592

* This includes outstanding options and unvested restricted stock units, which include time-based restricted stock units and performance-based restricted stock units.

This also includes vested time-based restricted stock units and performance-based restricted stock units for which the underlying common stock was not issued as of December 31, 2024.

See Note 23 - Stock-Based Compensation to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” for further details.

We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, including under the heading “Principal Stockholders.”

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Signature Title Date

/ S / R OHIT K APOOR

Chief Executive Officer, Vice-Chairman and Director (Principal Executive Officer) February 29, 2024

/ S / M AURIZIO N ICOLELLI

Chief Financial Officer (Principal Financial and Accounting Officer) February 29, 2024

/S/ ROHIT KAPOOR Chairman and Chief Executive Officer (Principal Executive Officer) February 25, 2025

/S/ MAURIZIO NICOLELLI Chief Financial Officer (Principal Financial and Accounting Officer) February 25, 2025

Maurizio Nicolelli

/ S / V IKRAM S.

Chairman of the Board February 29, 2024

/ S / A NDREAS F IBIG

Director February 29, 2024

/S/ VIKRAM S.

PANDIT Director February 25, 2025

/S/ THOMAS BARTLETT Director February 25, 2025

Thomas Bartlett

/S/ ANDREAS FIBIG Director February 25, 2025

Andreas Fibig

/ S / S OM M ITTAL

Director February 29, 2024

/ S / K RISTY P IPES

Director February 29, 2024

/S/ N ITIN S AHNEY

Director February 29, 2024

/ S / J AYNIE M.

Director February 29, 2024

/ S / S ARAH K.

Director February 29, 2024

/S/ KRISTY PIPES Director February 25, 2025

/S/ NITIN SAHNEY Director February 25, 2025

/S/ JAYNIE M.

STUDENMUND Director February 25, 2025

WILLIAMSON Director February 25, 2025

INDEX TO EXHIBITS

The following exhibits are being filed as part of this report or incorporated by reference as indicated therein:

3.1 Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q (File No.

1-33089) filed on October 26, 2023).

3.1 Fourth Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (File No.

1-33089) filed on June 25, 2024).

3.2 Sixth Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K (File No.

19 unchanged sentences

10.7+ ExlService Holdings, Inc.

2006 Omnibus Plan (incorporated by reference to Exhibit 10.20 of Amendment 3 to the Company’s Registration Statement on Form S-1 (Registration No.

333-121001) filed July 28, 2006).

10.8+ Form of Non-Qualified Stock Option Agreement under the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.32 of Amendment 5 to the Company’s Registration Statement on Form S-1 (Registration No.

333-121001) filed October 4, 2006).

10.9+ ExlService Holdings, Inc.

2006 Omnibus India Subplan 2 (incorporated by reference to Exhibit 10.38 of Amendment 6 to the Company’s Registration Statement on Form S-1 (Registration No.

333-121001) filed October 17, 2006).

10.10+ Form of Non-Qualified Stock Option Agreement under the 2006 Omnibus India Subplan 2 (incorporated by reference to Exhibit 10.39 of Amendment 5 to the Company’s Registration Statement on Form S-1 (Registration No.

333-121001) filed October 4, 2006).

10.11+ Amendment to ExlService Holdings, Inc.

2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.43 of Amendment 5 to the Company’s Registration Statement on Form S-1 (Registration No.

333-121001) filed October 4, 2006).

10.12+ Amendment No.

2 to ExlService Holdings, Inc.

2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.46 of Amendment 6 to the Registration Statement on Form S-1 (Registration No.

333-121001) filed October 17, 2006).

10.13+ Amendment No.

3 to ExlService Holdings, Inc.

2006 Omnibus Award Plan (incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form S-8 (Registration No.

333-157076) filed February 2, 2009).

10.14+ Form of Restricted Stock Unit Agreement (U.S.) under the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No.

1-33089) filed on May 1, 2014).

10.15+ ExlService Holdings, Inc.

2015 Amendment and Restatement of the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No.

26 unchanged sentences

1-33089) filed on April 20, 2022).

10.18 First Amendment to Amended and Restated Credit Agreement, dated August 9, 2024, by and among the Company and the other loan parties party thereto, the lenders party thereto, and Citibank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No.

1-33089) filed on August 15, 2024) .

10.19 Master Confirmation – Variable Tenor Accelerated Stock Repurchase, dated as of March 15, 2024, between ExlService Holdings, Inc.

and Citibank, N.A.

(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No.

1-33089) filed on March 18, 2024).

10.20+ Offer Letter, effective as of April 1, 2025, between ExlService Holdings, LLC and Anita Mahon.

19.1 ExlService Holdings, Inc.

Securities Trading Policy.

21.1 Subsidiaries of the Company .

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97 ExlService Holdings, Inc.

Clawback Policy.

Clawback Policy (incorporated by reference to Exhibit 97 to the Company’s Annual Report on Form 10-K (File No.

1-33089) filed on February 29, 2024.

101.INS Inline XBRL Instance Document*

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of ExlService Holdings, Inc.

To the shareholders and the Board of Directors of ExlService Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ExlService Holdings, Inc.

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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Critical Audit Matter Description

Revenue is recognized when services are provided to the Company’s customers, in an amount that reflects the consideration which the Company expects to be entitled to in exchange for the services provided.

Revenue is measured based on consideration specified in a contract with a customer and excludes discounts and amounts collected on behalf of third parties.

Revenues under time-and-material, transaction and outcome-based contracts are recognized as the services are performed.

At the inception of a new contract with a customer, the Company evaluates the revenue recognition principles, including judgments in identifying performance obligations in a contract and determining the timing of revenue recognition.

The Company’s contracts may be modified to add, remove or change existing performance obligations, which require judgment to evaluate and determine whether they are to be accounted for on a prospective basis either as a separate contract, or as a termination of existing contract and creation of a new contract.

Auditing revenue recognition requires significant audit effort resulting from the number of customers and related contracts that require evaluation and auditor judgment as to whether revenue was recorded in accordance with the terms of the contracts and revenue recognition principles under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”).

Revenues from payment integrity services having contingent fee arrangements are recognized by the Company at the point in time when a performance obligation is satisfied, which is when it identifies an overpayment claim.

In such contracts, the Company’s consideration is contingent upon the actual collections made by its customers and net of any subsequent retraction claims.

Based on guidance on variable consideration in Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), the Company uses its historical experience and projections to determine the expected amount of revenue to be recognized based on the expected consideration to be received from its customers.

Any adjustment required due to change in estimates are recorded in the period in which such change is identified.

We identified revenue recognized under contracts for the Company’s payment integrity services as a critical audit matter because of the judgments necessary for management to determine the transaction price, represented by the amount of expected recoveries from its customers.

This required extensive audit effort and a high degree of auditor judgment when performing

audit procedures to audit management’s estimates of transaction price used to recognize revenue and evaluating the results of those procedures.

______________________________________________________________________________________________________

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to whether revenue was recorded in accordance with the terms of the contracts with the Company’s customers and met the criteria for revenue recognition in accordance with ASC Topic 606 included the following, among others:

• We tested the effectiveness of internal controls over revenue, specifically management’s controls over the identification of performance obligations within the customer contracts and determining timing of revenue recognition for new customer contracts and contracts with significant scope modifications.

• We selected a sample of recorded revenue transactions from new customer contracts and evaluated the appropriateness of the performance obligations identified within the customer contracts and assessed if the revenue recognition principles applied are in accordance with ASC Topic 606.

• We selected a sample of recorded revenue transactions related to the Company’s contracts that were modified to add, remove or change existing performance obligations and (1) assessed whether the services added to an existing contract are distinct and whether the pricing is at a standalone selling price;

and (2) services added that are distinct and at standalone selling price are accounted for on a prospective basis either as a separate contract, or as a termination of existing contract and creation of a new contract.

Our audit procedures related to testing the transaction price of the Company’s contracts to provide payment integrity services included the following, among others:

• We tested the effectiveness of the internal controls related to the assumptions used to determine the transaction price that is probable of recovery, including subsequent changes to amounts earned.

• We selected a sample of transactions and performed the following procedures for evaluating management’s estimate and underlying data used for deriving transaction price:

• Read the underlying contract with the customer and agreed the commission rate for the selected transaction to the Company’s computation used to determine the amount of revenue recognized.

• Tested management’s estimate used to determine the transaction price that is probable of recovery, including subsequent changes to amounts earned.

• Tested the accuracy and completeness of the underlying data (i.e.

historical experience) used by management to support such estimate.

• Tested the mathematical accuracy of the Company’s estimate analysis.

• We evaluated management’s ability to estimate the transaction price accurately by comparing actual recoveries to management’s historical estimates.

/s/ Deloitte & Touche LLP

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of ExlService Holdings, Inc.

To the shareholders and the Board of Directors of ExlService Holdings, Inc.

Opinion on Internal Control over Financial Reporting

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Current portion of operating lease liabilities 21 16,491 12,780

Income taxes payable, net 22 1,213 2,945

Total current liabilities 290,116 326,403

5 unchanged sentences

Commitments and contingencies 25

ExlService Holdings, Inc.

Stockholders’ equity:

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Additional paid-in capital 588,583 508,028

508,028 444,948

Retained earnings 1,281,960 1,083,663

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Total liabilities and stockholders’ equity $ 1,618,403 $ 1,441,972

(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 consolidated financial statements for further details.

See accompanying notes to consolidated financial statements.

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Other income/(expense), net 6 16,092 10,834 ( 10 )

Loss on settlement of convertible notes 18 — — ( 12,845 )

Income before income tax expense and earnings from equity affiliates 261,347 237,941 190,099

1 unchanged sentence

Income before earnings from equity affiliates 198,411 184,405 142,534

Gain from equity-method investment 153 434 47

Net income attributable to ExlService Holdings, Inc.

stockholders $ 184,558 $ 142,968 $ 114,758

Earnings per share attributable to ExlService Holdings, Inc.

stockholders (2) :

Gain/(loss) from equity-method investment ( 114 ) 153 434

Net income $ 198,297 $ 184,558 $ 142,968

Earnings per share:

Basic $ 1.22 $ 1.11 $ 0.86

Diluted $ 1.21 $ 1.10 $ 0.85

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 162,718,840 166,341,213 166,651,585

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 consolidated financial statements for further details.

See accompanying notes to consolidated financial statements.

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Unrealized gain/(loss) on cash flow hedges 17 ( 14,513 ) 14,403 ( 27,333 )

Loss on net investment hedges 17 — — ( 1,134 )

Foreign currency translation gain/(loss) 652 ( 47,734 ) ( 11,134 )

Currency translation adjustments ( 17,484 ) 652 ( 47,734 )

Retirement benefits 20 ( 1,414 ) 1,337 2,574

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

(3) These are income tax effects recognized on cash flow hedges, retirement benefits and foreign currency translation gain/(loss).

(3) These are income tax effects recognized on cash flow hedges, retirement benefits and currency translation adjustments.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(In thousands, except share count)

Common Stock (1)

Additional Paid-in Capital (1)

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

Notes Shares Amount Shares (1)

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

Notes Shares Amount Shares Amount

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

2 unchanged sentences

Acquisition of treasury stock 19 — — — — — ( 2,683,370 ) ( 72,642 ) ( 72,642 )

Issuance of treasury stock — — 19,436 — — 1,551,970 17,306 36,742

Settlement of convertible notes — — ( 84,000 ) — — — — ( 84,000 )

Other comprehensive loss 15 — — — — ( 54,669 ) — — ( 54,669 )

4 unchanged sentences

Acquisition of treasury stock 19 — — — — — ( 4,364,498 ) ( 133,268 ) ( 133,268 )

Other comprehensive loss 15 — — — — ( 54,669 ) — — ( 54,669 )

Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — ( 218 ) ( 218 )

Other comprehensive income 15 — — — — 17,103 — — 17,103

Net income — — — 184,558 — — — 184,558

3 unchanged sentences

Acquisition of treasury stock 19 — — — — — ( 2,406,700 ) ( 81,790 ) ( 81,790 )

Other comprehensive income 15 — — — — 17,103 — — 17,103

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

Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — ( 1,096 ) ( 1,096 )

Other comprehensive loss 15 — — — — ( 27,682 ) — — ( 27,682 )

Net income — — — 198,297 — — — 198,297

Balance as of December 31, 2024 206,510,587 $ 206 $ 588,583 $ 1,281,960 $ ( 154,722 ) ( 44,709,375 ) $ ( 786,165 ) $ 929,862

(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 consolidated financial statements for further details.

(2) Inclusive of excise tax for the year ended December 31, 2023.

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

See accompanying notes to consolidated financial statements.

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Reduction in the carrying amount of operating lease right-of-use assets 21,764 20,188 21,783

Fair value mark-to-market of short-term investments 17,044 ( 1,209 ) 5,139

Fair value mark-to-market on investments ( 1,514 ) 17,044 ( 1,209 )

Unrealized foreign currency exchange gain, net ( 5,136 ) ( 1,363 ) ( 16,643 )

Deferred income tax benefit ( 19,885 ) ( 31,742 ) ( 19,552 )

Allowance/(reversal) for expected credit losses 2,453 683 ( 464 )

Loss on settlement of convertible notes — — 12,845

Fair value changes in contingent consideration 1,900 8,250 —

Amortization of non-cash interest expense related to convertible notes — — 1,795

Others, net ( 680 ) 5,301 9,443

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

Change in operating assets and liabilities:

Accounts receivable 4,647 ( 49,242 ) ( 68,121 )

Other current assets ( 9,506 ) ( 7,709 ) ( 1,179 )

Other current and non-current assets ( 48,373 ) ( 24,339 ) ( 18,432 )

Income taxes payable, net ( 26,204 ) ( 18,282 ) 8,779

Other assets ( 14,833 ) ( 10,723 ) 227

Accounts payable ( 2,757 ) 2,385 ( 614 )

Accounts payable, accrued expenses and other liabilities 20,509 7,326 16,860

Deferred revenue 7,002 ( 877 ) 2,473

Accrued employee costs 21,708 14,090 5,551

Accrued expenses and other liabilities 10,083 14,475 2,934

Payment of contingent consideration ( 11,000 ) — —

Operating lease liabilities ( 20,489 ) ( 20,181 ) ( 23,227 )

3 unchanged sentences

Proceeds from sale of property and equipment 215 739 266

Business acquisition (net of cash and cash equivalents acquired) — ( 3,872 ) ( 76,831 )

Business acquisition (net of cash acquired) ( 24,299 ) — ( 3,872 )

Purchases of investments ( 289,012 ) ( 235,369 ) ( 212,607 )

9 unchanged sentences

Proceeds from issuance of common stock 5,023 5,566 1,060

Payment of debt issuance costs ( 622 ) — —

Net cash used for financing activities ( 119,101 ) ( 181,450 ) ( 81,724 )

8 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

Settlement of portion of convertible notes through issuance of treasury stock $ — $ — $ 36,742

Additions to property and equipment not yet paid $ 2,062 $ 4,137 $ 4,032

Assets acquired under finance lease $ 1,325 $ 461 $ 312

6 unchanged sentences

(“ExlService Holdings”) is organized as a corporation under the laws of the State of Delaware.

ExlService Holdings, together with its subsidiaries and affiliates (collectively, the “Company”), is a leading data analytics and digital operations and solutions company.

The Company partners with clients using a data and AI-led approach to reinvent business models, drive better business outcomes and unlock growth with speed.

The Company harnesses the power of data, analytics, artificial intelligence (“AI”), and deep industry knowledge to transform operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media and retail, among others.

ExlService Holdings, together with its subsidiaries and affiliates (collectively, the “Company”), is a global data and artificial intelligence (“AI”) company that offers services and solutions to reinvent client business models, drive better outcomes and unlock growth with speed.

The Company harnesses the power of data, AI, and deep industry knowledge to transform businesses, including the world’s leading corporations in industries including insurance, healthcare, banking and capital markets, retail, communications and media, and energy and infrastructure, among others.

The Company’s clients are located principally in the United States of America (“U.S.”) and the United Kingdom (“U.K.”).

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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 consolidated financial statements include, but are not limited to, estimates of the fair value of the identifiable intangible assets and contingent consideration, purchase price allocation, including revenue projections and the discount rate applied within the discounted cash flow model for business acquisitions, credit risk of customers, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, and variable consideration in a customer contract, expected recoverability from customers with contingent fee arrangements, estimated costs to complete fixed price contracts, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments and stock-based awards, and useful life of long-lived assets and other intangible assets.

The significant estimates that affect the consolidated financial statements include, but are not limited to, estimates of the fair value of the identifiable intangible assets and contingent consideration, purchase price allocation, including revenue projections and the discount rate applied within the discounted cash flow model for business acquisitions, credit risk of customers, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, 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

26 unchanged sentences

Type of Contracts and Basis of Recognition

a) Revenues under time-and-material, transaction and outcome-based contracts are recognized as the services are performed.

Revenues under time-and-material and transaction based contracts are recognized as the services are performed.

When the terms of the client contract specify service level parameters that must be met (such as turnaround time or accuracy), the Company monitors such service level parameters to determine if any service credits or penalties have been incurred.

Revenues are recognized net of any penalties or service credits that are due to a client.

b) Revenues from arrangements involving subcontracting, either in part or whole of the assigned work, are recognized after the Company’s assessment of “Principal versus agent considerations.” The Company evaluates whether it is in control of the services before the same are transferred to the customer to assess whether it is principal or agent in the arrangement.

Revenues are recognized on a gross basis if the Company is in the capacity of principal and on a net basis if it falls in the capacity of an agent.

Revenues for the Company’s fixed-price contracts, which include business support services provided on a fixed price basis or implementation of applications or solutions, are recognized considering costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the Company’s performance obligations.

1 unchanged sentence

The use of this method requires significant judgment to estimate the stage of completion and/or cost required to complete the contracted scope of work, including assumptions and estimates relative to the length of time to complete the project and the nature and complexity of the work to be performed and resources engaged.

The Company regularly monitors these estimates throughout the execution of the project and records changes in the

The Company regularly monitors these estimates throughout the execution of the project and records changes in the period in which a change in an estimate is determined.

If a change in an estimate results in a projected loss on a project, such loss is recognized in the period in which it is first identified.

Revenue from the Company’s software and related services contracts, which are not significant, are primarily related to annual maintenance renewals or incremental license fees for additional users.

Maintenance revenues are generally recognized on a straight-line basis over the annual contract term.

Fees for incremental license without any associated services are recognized at the point in time upon delivery of the related incremental license.

EXLSERVICE HOLDINGS, INC.

2 unchanged sentences

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

period in which a change in an estimate is determined.

If a change in an estimate results in a projected loss on a project, such loss is recognized in the period in which it is first identified.

Revenue from the Company’s software and related services contracts, which are not significant, are primarily related to annual maintenance renewals or incremental license fees for additional users.

Maintenance revenues are generally recognized on a straight-line basis over the annual contract term.

Fees for incremental license without any associated services are recognized upon delivery of the related incremental license.

To a lesser extent, certain contracts may include offerings such as sale of licenses, which may be perpetual or subscription-based.

2 unchanged sentences

Revenue from any associated maintenance or ongoing support services is recognized over the term of the contract.

Revenues from reimbursement optimization services having contingent fee arrangements are recognized by the Company at the point in time when a performance obligation is satisfied, which is when it identifies an overpayment claim.

In such contracts, the Company’s consideration is contingent upon the actual collections made by its customers and net of any subsequent retraction claims.

Based on guidance on “variable consideration” in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), the Company uses its historical experience and projections to determine the expected recoveries from its customers and recognizes revenue based upon such expected recoveries.

Based on guidance on “variable consideration” in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), the Company uses its historical experience and projections to determine the expected amount of revenue to be recognized based on the expected consideration to be received from its customers.

Any adjustment required due to change in estimates are recorded in the period in which such change is identified.

The estimated amount of revenue to be collected from our customers are presented as contract assets within “Other Current Assets”.

Modification to Contracts

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Variable Consideration

Variability in the transaction price arises primarily due to service level agreements, volume discounts entailing variability in revenue earned, and contracts under the Company’s reimbursement optimization services whereby variability in revenue is attributable to the amount the Company enables its customers to recover.

Variability in the transaction price arises primarily due to service level agreements, volume discounts entailing variability in revenue earned, and contracts under the Company’s payment integrity services whereby the transaction price is based on the estimated amount the Company enables its customers to recover.

The Company considers its historical experience, including trends with similar transactions and expectations regarding the contract in estimating the amount of variable consideration that should be recognized during a period.

The Company believes that the expected value method is most appropriate for determining the variable consideration since the Company has a large number of contracts with a similar nature of transactions/services.

Unbilled Receivables

Unbilled receivables represents revenues recognized for services rendered between the last billing date and the balance sheet date.

EXLSERVICE HOLDINGS, INC.

2 unchanged sentences

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

The Company believes that the expected value method is most appropriate for determining the variable consideration since the Company has large number of contracts with similar nature of transactions/services.

Unbilled Receivables

Unbilled receivables represents revenues recognized for services rendered between the last billing date and the balance sheet date.

Unbilled receivables also include revenues recognized from reimbursement optimization services where the Company identifies an overpayment claim.

In such contracts, Company’s consideration is contingent upon and collectable only when the actual collections are made by its customers.

Based on guidance on “variable consideration” in ASC Topic 606, Company use its historical experience and projections to determine the expected recoveries from its customers and recognize revenue and receivables based upon such expected recoveries.

Accordingly, the amounts for which services have been performed and for which invoices have not been issued to customers on the balance sheet date, (i.e.

unbilled receivables) are presented under accounts receivable, net.

Deferred Revenue and Contract Fulfillment Costs

5 unchanged sentences

Contract Acquisition Costs

Direct and incremental costs incurred for acquiring contracts, such as sales commissions are contract acquisition costs and thereby classified under “Other current assets” and “Other assets” in the consolidated balance sheets.

Incremental costs incurred for acquiring contracts, such as sales commissions are contract acquisition costs and thereby classified under “Other current assets” and “Other assets” in the consolidated balance sheets.

Such costs are amortized over the expected duration of the relationship with customers and recorded under Selling and marketing expenses in the consolidated statements of income.

10 unchanged sentences

The Company does not disclose the value of remaining performance obligations as a result of applying the practical expedient provided in ASC Topic 606, for contracts that meet any of the following criteria:

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

Contracts with an original expected length of one year or less as determined under ASC Topic 606,

5 unchanged sentences

These investments are accounted for in accordance with the fair value option under ASC Topic 825, Financial Instruments .

The fair value is represented by original cost on the acquisition date and the net asset value (“NAV”) as quoted, at each reporting period and any changes in fair value are included in other income/(expense), net.

Gain or loss on the disposal of these investments is calculated using the weighted average cost of the investments sold and is included in other income/(expense), net.

The fair value is represented by original cost on the acquisition date and the net asset value (“NAV”) as quoted, at each reporting period and any changes in fair value

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

are included in other income/(expense), net.

Gain or loss on the disposal of these investments is calculated using the first in, first out (“FIFO”) method and is included in other income/(expense), net.

Restricted cash includes any cash and cash equivalents that are legally restricted as to withdrawal or usage for the Company’s operations.

7 unchanged sentences

Gain or loss on the disposal of these investments is calculated using the weighted average cost of the investments sold and is included in other income/(expense), net.

Gain or loss on the disposal of these investments is calculated using the FIFO method and is included in other income/(expense), net.

Investments in equity affiliates are initially recorded at cost and any excess purchase consideration paid over proportionate share of the fair value of the net assets of the investee at the acquisition date is recognized as goodwill.

8 unchanged sentences

Accounts receivable balances are written-off against the allowance for expected credit losses after all means of collection have been exhausted and the potential for recovery is considered remote.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

Accounts receivable include unbilled accounts receivable which represent revenues on contracts to be billed, in subsequent periods, as per the terms of the related contracts.

4 unchanged sentences

Advances paid towards acquisition of property and equipment and the cost of property and equipment not yet placed in service before the end of the reporting period, net of impairment, if any, are classified as capital work in progress.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

Depreciation is computed using the straight-line method over the estimated useful lives of the assets and is presented under “Depreciation and amortization expense” in the consolidated statements of income.

Property and equipment which are abandoned and disposed other than by sale, are assessed for revision of their useful life, thereby revising the future depreciation to reflect the use of property and equipment over the remaining shortened life.

The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.

6 unchanged sentences

The Company exercises judgment in determining the point at which various projects may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized.

Implementation costs in cloud computing arrangements (“CCAs”), such as software as a service and other hosting arrangements are evaluated to ascertain if the arrangement includes a license to internal-use software.

If a CCA does not provide a contractual right to the Company to take possession of the software at any time during the hosting period without significant penalty, and it is not feasible to either run the software on the Company’s own hardware, then implementation costs incurred are accounted for as a service contract.

In case of the existence of such a contractual right to take possession of the software and the Company is able to run the software on its own hardware, then such implementation costs are capitalized as software development costs.

The Company amortizes capitalized implementation costs in a CCA over the life of the service contract.

Annual amortization of internally developed software products meant for sale, lease or otherwise marketing is the greater of the amount computed using the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or the straight-line method over the remaining estimated economic life of the software product, generally estimated to be up to 5 years from the date the product became available for use.

2 unchanged sentences

(j) Business Combinations, Goodwill and Other Intangible Assets

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

ASC Topic 805, Business Combinations, requires that the acquisition method of accounting be used for all business combinations.

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Goodwill represents the cost of the acquired businesses in excess of the fair value of identifiable tangible and intangible net assets purchased in a business combination.

The Company undertakes studies to determine the fair values of assets and liabilities acquired and allocate purchase consideration to assets and liabilities, including property and equipment, goodwill and other identifiable intangibles.

The Company undertakes studies to determine the fair values of assets and liabilities acquired and allocates purchase consideration to assets and liabilities, including property and equipment, goodwill and other identifiable intangibles.

Goodwill is not amortized but is tested for impairment at least on an annual basis, relying on a number of factors including operating results, business plans and estimated future cash flows of the reporting units to which it is assigned.

The Company examines the carrying value and fair value of the reporting unit that includes goodwill as and when the circumstances warrant, to determine whether there are any impairment losses.

Refer to Note 10 - Goodwill and Other Intangible Assets to the consolidated financial statements for discussion of the Company's goodwill impairment testing.

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

The Company performs an assessment of qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Based on the assessment of events or circumstances, the Company performs a quantitative assessment of goodwill impairment if it determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Based on the assessment of events or circumstances, the Company performs a quantitative assessment of goodwill impairment

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

if it determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If, based on the quantitative impairment analysis, the carrying value of the goodwill of a reporting unit exceeds the fair value of such goodwill, an impairment loss is recognized in an amount equal to the excess, limited to the total amount of goodwill allocated to that reporting unit.

In addition, the Company performs a quantitative assessment of goodwill impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

In addition, the Company performs a qualitative assessment of goodwill impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Intangible assets acquired in a business combination are initially valued and recognized at fair market value using generally accepted valuation methods appropriate for the type of intangible asset.

8 unchanged sentences

Trade names and trademarks 2 - 10

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

(k) Impairment of Long-lived Assets

(k) Impairment of Long-lived Asset s

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

11 unchanged sentences

The resultant foreign exchange gain/(loss) upon settlement of cash flow hedges of forecasted transactions are recorded in the consolidated statements of income along with the underlying hedged item in the same line as part of “Cost of revenues,” “General and administrative expenses,” “Selling and marketing expenses,” and “Depreciation and amortization expense,” as applicable.

The accumulated changes in the fair value of interest rate swaps recognized in AOCI are reclassified to the consolidated statements of income and are presented as a part of “Interest expense” over the term of the contract.

The accumulated changes in the fair value of interest rate swaps

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

recognized in AOCI are reclassified to the consolidated statements of income and are presented as a part of “Interest expense” over the term of the contract.

The Company evaluates hedge effectiveness of cash flow hedges at the time a contract is entered into as well as on an ongoing basis.

9 unchanged sentences

There is no financial collateral (including cash collateral) provided or received by the Company related to these contracts.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

(m) Employee Benefits

9 unchanged sentences

The interest cost, expected return on plan assets and amortization of actuarial gains/loss, are included in “ Other income/(expense), net.

” Refer to Note 20 - Employee Benefit Plans to the consolidated financial statements for details.

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

The Company recognizes its liabilities for compensated absences depending on whether the obligation is attributable to employee services already rendered, rights to compensated absences vest or accumulate and payment is probable and estimable.

1 unchanged sentence

The Company recognizes stock-based compensation expense in the consolidated statements of income for awards of equity instruments to employees and non-employee directors based on the grant-date fair value of those awards.

The Company recognizes these compensation costs on straight-line basis over the requisite service period of the award, or to the date on which retirement eligibility is achieved, if shorter.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

recognizes these compensation costs on straight-line basis over the requisite service period of the award, or to the date on which retirement eligibility is achieved, if shorter.

Forfeitures are accounted when the actual forfeitures occur.

10 unchanged sentences

All compensation expense related to the MU will be recognized if the requisite performance period is fulfilled, regardless of the extent of the market condition achieved.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

Stock-based compensation expense associated with the Company's 2022 Employee Stock Purchase Plan (“ESPP”) is measured at fair-value using a Black-Scholes option-pricing model at the commencement of each offering period and recognized over that offering period.

(o) Forward Stock Split

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

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

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

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

(p) Income Taxes

(o) Income Taxes

The Company accounts for income taxes using the asset and liability method of accounting for income taxes.

6 unchanged sentences

The Company establishes provisions for uncertain tax provisions and related interest and penalties when the Company believes those tax positions are not more likely than not of being sustained, if challenged.

The Company intends to indefinitely reinvest earnings from its foreign subsidiaries and has not recorded deferred tax liabilities for the indefinitely reinvested earnings.

The Company has indefinitely reinvested earnings from its foreign subsidiaries through December 31, 2023, and has not recorded deferred tax liabilities for such earnings.

Beginning 2024, the Company is not indefinitely investing current year earnings of the Company’s foreign disregarded subsidiaries and is not recording any deferred tax liabilities.

However, the Company continues to indefinitely reinvest earnings from its controlled foreign corporation subsidiaries and has not recorded deferred tax liabilities for such earnings.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

The Company recognizes the tax effects of Global Intangible Low-Taxed Income of certain foreign subsidiaries as a period cost.

(q) Concentration of Credit Risk in Financial Instruments

(p) Concentration of Credit Risk in Financial Instruments

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, time deposits, mutual fund investments, accounts receivable and derivative financial instruments.

4 unchanged sentences

The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

(r) Fair value measurements

(q) Fair value measurements

ASC Topic 820, Fair Value Measurements and Disclosures defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.

The fair value should be calculated based on

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

assumptions that market participants would use in pricing the asset or liability as against assumptions specific to the entity.

The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability as against assumptions specific to the entity.

In addition, the fair value of liabilities should include consideration of non-performance risk, including the Company’s own credit risk.

18 unchanged sentences

Lease terms includes the effects of options to extend or terminate the lease when it is reasonably certain at commencement of the lease that the Company will exercise that option.

Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term reflecting single operating lease cost.

Lease expense for operating lease arrangements is recognized on a

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

straight-line basis over the lease term reflecting single operating lease cost.

The Company evaluates lease agreements to determine lease and non-lease components, which are accounted for separately.

6 unchanged sentences

However, if the carrying amount of the ROU assets is reduced to zero as a result of modification, any remaining amount of the remeasurement is recognized as an expense in consolidated statements of income.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

The Company reviews ROU assets for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable.

(t) Government Grants

Government grants are recognized at their fair value when there is a reasonable assurance that the conditions attached to them shall be complied with and the grants will be received.

Government grants relating to income are recognized as a reduction of expenses in the consolidated statements of income.

Government grants relating to a property and equipment are recognized as a reduction from the cost of acquisition of such property and equipment.

The grant is subsequently measured in the consolidated statements of income over the life of the property and equipment in the form of reduced depreciation expense.

(u) Earnings per share

(s) Earnings per share

Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding, adjusted for outstanding shares that are subject to repurchase during the period.

Diluted earnings per share is computed using the weighted average number of common shares issued and outstanding during the period plus the potentially dilutive effect of common stock equivalents, including, outstanding stock options, restricted stock, restricted stock units and employee stock purchase plans.

For the purposes of calculating diluted earnings per share, the treasury stock method is used for stock-based awards and outstanding convertible notes except where the results would be anti-dilutive.

For the purposes of calculating diluted earnings per share, the treasury stock method is used for stock-based awards.

The Company includes performance stock unit awards in dilutive potential common shares when they become contingently issuable and have a dilutive impact per authoritative guidance and excludes such awards when they are not contingently issuable.

The Company calculates the dilutive effect of convertible notes using the treasury stock method through the maturity date of the convertible notes, if it has the intent and ability to settle the principal amount of the outstanding convertible notes in cash.

Under the treasury stock method, the convertible notes shall have a dilutive impact related to the conversion premium, if any, on diluted earnings per share to the extent the issuance is dilutive based on the average market price of the Company’s common stock for a reporting period being greater the conversion price.

(v) Commitments and Contingencies

(t) Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recognized when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.

3 unchanged sentences

Capital commitments are disclosed in the financial statements.

(w) Recent Accounting Pronouncements

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

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

Common Control Arrangements .

This ASU provides guidance in ASC Topic 842 that leasehold improvements associated with common control leases should be (i) amortized by the lessee over the useful life of the leasehold improvements to the common control group, regardless of the lease term, as long as the lessee controls the use of the underlying asset through a lease, and (ii) accounted for as a transfer between entities under common control through an adjustment to equity if and when the lessee no longer controls the use of the underlying asset.

The ASU is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted for both interim and annual financial statements that have not yet been issued.

When adopted in an interim period, it must be adopted from the beginning of the year that includes that interim period.

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

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements :

(u) Recent Accounting Pronouncements

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-06, Disclosure Improvements :

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative .

1 unchanged sentence

Certain of the amendments represent clarifications to or technical corrections of the current requirements.

For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

The amendments in this ASU should be applied prospectively.

For all entities, if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.

EXLSERVICE HOLDINGS, INC.

2 unchanged sentences

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

subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

The amendments in this ASU should be applied prospectively.

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

The Company will continue to monitor for SEC action, and plan accordingly for adoption.

In November 2023, FASB issued ASU No.

2023-07, Segment Reporting (“ASC Topic 280”) :

Improvements to Reportable Segment Disclosures .

This ASU improves reportable segment disclosure requirements on an annual and interim basis for all public entities by requiring disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment's profit or loss and assets.

The ASU also allows, in addition to the measure that is most consistent with U.S.

GAAP, the disclosure of additional measures of segment profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

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

In December 2023, FASB issued ASU No.

2023-09, Income Taxes (“ASC Topic 740”) , Improvements to Income Tax Disclosures.

2023-09, Income Taxes (“Accounting Standards Codification (“ASC”) Topic 740”) , Improvements to Income Tax Disclosures.

This ASU expands disclosures relating to the entity’s income tax rate reconciliation, income taxes paid and certain other disclosures related to income taxes.

1 unchanged sentence

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

(x) Recently Adopted Accounting Pronouncements

In October 2021, FASB issued ASU No.

2021-08, Business Combinations (“ASC Topic 805”) :

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

This ASU provides guidance in ASC Topic 805 to require the acquirer entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contract with Customers , as if it had originated the contracts.

Generally, this should result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements, if the acquiree prepared financial statements in accordance with U.S.

The ASU is effective for fiscal years beginning after December 15, 2022.

An entity may early adopt the ASU including adoption in an interim period, with retrospective application to all business combinations within the fiscal year that includes such interim period.

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

In July 2023, the FASB issued ASU No.

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

120 and amends various SEC paragraphs in the ASC.

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

In November 2024, FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income (“ASC Topic 220”):

Expense Disaggregation Disclosures .

This ASU improves disclosures relating to the disaggregation of income statement expenses, requires additional disclosures about the nature of expenses in commonly presented financial statement captions on an annual and interim basis for all public business entities.

The ASU will be effective for annual periods beginning after December 15, 2026, with early adoption permitted.

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

(v) Recently Adopted and Applicable Accounting Pronouncements

In November 2023, FASB issued ASU No.

2023-07, Segment Reporting (“ASC Topic 280”):

Improvements to Reportable Segment Disclosures .

This ASU improves reportable segment disclosure requirements for all public entities by requiring disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss and other segment items.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company has adopted this ASU, the impact of which is reflected in Note 3 - Segment and Geographical Information to the 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 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 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 consolidated financial statements.

Segment and Geographical Information

3 unchanged sentences

These business units develop client-specific solutions, build capabilities, maintain a unified go-to-market approach and are integrally responsible for service delivery, customer satisfaction, growth and profitability.

The CODM generally reviews financial information such as revenues, cost of revenues and gross profit, disaggregated by the operating segments to allocate an overall budget among the operating segments.

The Company does not allocate and therefore the CODM does not evaluate, certain operating expenses, interest expense or income taxes by segment.

Many of the Company’s assets are shared by multiple operating segments.

The Company manages

The Company’s Chief Executive Officer has been identified as the Chief Operating Decision Maker ("CODM").

The CODM generally reviews financial information such as revenues, cost of revenues and gross profit to allocate an overall budget and measure segment performance.

The CODM uses revenue, cost of revenues and gross profit for each segment predominantly in the annual budgeting and forecasting process.

The CODM considers budget-to-actual variances on a quarterly basis for making decisions about the allocation of operating and capital resources to each segment.

The CODM also uses segment gross profit for evaluating pricing strategy and performance of each individual segment.

EXLSERVICE HOLDINGS, INC.

2 unchanged sentences

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

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

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 consolidated financial statements for further details.

Revenues and cost of revenues for the years ended December 31, 2024, 2023 and 2022, respectively, for each of the reportable segments, are as follows:

3 unchanged sentences

Cost of revenues (1)

Employee costs (2)

320,335 63,597 147,316 416,293 947,541

Infrastructure and technology costs 58,415 11,049 29,813 27,582 126,859

Other costs (3)

11,600 3,288 4,278 53,793 72,959

Gross profit (1)

3 unchanged sentences

Income tax expense 62,936

Gain from equity-method investment 153

Loss from equity-method investment ( 114 )

Net income $ 198,297

(1) Exclusive of depreciation and amortization expense.

(2) Employee costs include restructuring costs of $ 607 , $ 16 , $ 73 and $ 2,382 for Insurance, Healthcare, Emerging Business and Analytics segments respectively.

Refer to Note 26 – Restructuring Costs to the consolidated financial statements for further details.

(3) Other costs primarily include travel and entertainment costs and direct expenses related to lead generation and direct marketing business which are a part of analytics business segment.

Year ended December 31, 2023

2 unchanged sentences

Cost of revenues (1)

Employee costs 281,108 56,026 121,278 382,550 840,962

Infrastructure and technology costs 49,633 9,872 25,922 20,046 105,473

Other costs (2)

11,044 3,375 3,743 58,305 76,467

2 unchanged sentences

Operating expenses 369,011

Foreign exchange gain, net, interest expense and other expense, net ( 2,063 )

Foreign exchange gain, net, interest expense and other income, net ( 814 )

Income tax expense 53,536

6 unchanged sentences

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

(2) Other costs primarily include travel and entertainment costs and direct expenses related to lead generation and direct marketing business which are a part of analytics business segment.

Year ended December 31, 2022

2 unchanged sentences

Cost of revenues (1)

Employee costs 236,963 55,532 101,978 333,876 728,349

Infrastructure and technology costs 41,126 11,889 22,556 19,340 94,911

Other costs (2)

9,645 3,530 3,483 56,677 73,335

2 unchanged sentences

Operating expenses 323,287

Loss on settlement of convertible notes, foreign exchange gain, net, interest expense and other income, net ( 9,320 )

Foreign exchange gain, net, interest expense and other expense, net ( 2,063 )

Income tax expense 47,565

2 unchanged sentences

(1) Exclusive of depreciation and amortization expense.

(2) Other costs primarily include travel and entertainment costs and direct expenses related to lead generation and direct marketing business which are a part of analytics business segment.

Revenues, net by service type, were as follows:

7 unchanged sentences

Refer to the reportable segment disclosure above.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

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

8 unchanged sentences

Revenues, net $ 1,838,372 $ 1,630,668 $ 1,412,044

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

(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:

1 unchanged sentence

Long-lived assets

The United States $ 61,592 $ 60,709

India $ 63,040 $ 53,813

The United States 52,510 61,592

The Philippines 25,881 21,952

13 unchanged sentences

Accounts receivable includes $ 121,817 and $ 148,735 as of December 31, 2024 and 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 December 31, 2023 and 2022.

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

Contract assets as of December 31, 2024, includes receivables of $ 33,472 from our payment integrity services.

There are no performance risks associated with these contract assets.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

There were no significant cumulative catch-up impact or impairment related to contract assets as of December 31, 2024 and 2023.

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

4 unchanged sentences

$ 2,657 $ 1,762

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

Contract acquisition and fulfillment costs

17 unchanged sentences

Opening Balance $ 3,703 $ 1,332

Additions 2,450 815

Reductions due to write-off of accounts receivables ( 79 ) ( 60 )

Additions/(reductions) ( 39 ) 2,450

Reductions due to write-off of accounts receivable ( 135 ) ( 79 )

Currency translation adjustments ( 1 ) —

Closing Balance $ 3,528 $ 3,703

Concentration of credit risk

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 December 31, 2023 and 2022.

EXLSERVICE HOLDINGS, INC.

2 unchanged sentences

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

Customer and credit risk concentration

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

Earnings Per Share

6 unchanged sentences

Dilutive effect of stock-based awards 1,602,816 1,820,158 2,517,705

Dilutive effect of conversion premium on the Notes (2)

— — 1,432,550

Diluted weighted average common shares outstanding 164,321,656 168,161,371 169,169,290

Earnings per share attributable to ExlService Holdings, Inc.

stockholders (1) :

Earnings per share:

Basic $ 1.22 $ 1.11 $ 0.86

1 unchanged sentence

Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share 2,073,990 1,628,932 2,830

1,628,932 2,830 53,525

(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.

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.

(“Citibank”).

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

(2) Represents dilution effect related to the conversion premium of the convertible senior notes in the calculation of diluted weighted average shares outstanding for the portion of the period until actual settlement during the third quarter of 2021.

Refer to Note 18 – Borrowings to the consolidated financial statements for further details.

During the year ended December 31, 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.

Other Income/(Expense), Net

18 unchanged sentences

Restricted cash (current) (1)

9,972 4,062 4,897

Restricted cash (non-current) (2)

8,071 4,386 2,055

Cash, cash equivalents and restricted cash $ 171,398 $ 145,401 $ 125,621

(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.” 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.

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.

38 unchanged sentences

Accumulated depreciation ( 1,556 ) ( 1,332 )

$ 1,712 $ 777

Property and equipment, net $ 101,837 $ 100,373

4 unchanged sentences

Depreciation and amortization expense $ 41,589 $ 35,812 $ 39,173

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

Year ended December 31,

2023 2022 2021

Effect of foreign exchange gain/(loss) $ ( 210 ) $ ( 180 ) $ 524

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

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

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

December 31, 2024 December 31, 2023

2 unchanged sentences

Internally developed software, net $ 22,204 $ 21,212

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

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

2 unchanged sentences

Amortization expense $ 12,849 $ 9,282 $ 5,958

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

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

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.

Goodwill and Other Intangible Assets

During the years ended December 31, 2024 and 2023, the Company performed an impairment test of its capitalized software for recoverability and determined that the carrying values of certain software were not fully recoverable.

The Company recorded impairment charges amounting to $ 1,187 and $ nil for the years ended December 31, 2024 and 2023, respectively under “ Depreciation and amortization ” expense in the consolidated statements of income.

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.

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

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

Intangible assets $ 12,800

Other assets, net 220

Goodwill 15,335

Total purchase consideration (1)

(1) Includes contingent consideration of $ 2,700 recognized at fair value as of the date of acquisition.

In connection with this acquisition, the Company recorded $ 12,500 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 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 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 any supplemental pro forma results.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

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

1 unchanged sentence

Balance as of January 1, 2023 $ 49,929 $ 21,875 $ 47,101 $ 286,732 $ 405,637

Acquisition — — — 1,992 1,992

Measurement period adjustments — — — 2,229 2,229

Currency translation adjustments 106 ( 3 ) ( 100 ) ( 1 ) 2

Balance as of December 31, 2023 50,035 21,872 47,001 286,731 405,639

Acquisition — — — 22,035 22,035

Measurement period adjustments — — — ( 6,700 ) ( 6,700 )

Currency translation adjustments ( 50 ) ( 5 ) ( 531 ) ( 1 ) ( 587 )

Balance as of December 31, 2024 $ 49,985 $ 21,867 $ 46,470 $ 302,065 $ 420,387

During the year ended December 31, 2024, the Company recognized measurement period adjustments, which led to decrease in goodwill in an amount of $ 6,700 .

These adjustments primarily relate to a change in fair value of contingent consideration and customer-related intangible assets and did not have any significant impact on “Depreciation and amortization” expense in the consolidated statements of income for the year ended December 31, 2024.

During 2024 and 2023, the Company performed an assessment to determine whether events or circumstances exist that may lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Based on such assessment, the Company concluded that it is not more likely than not that the fair values of any of the Company’s reporting units are less than their carrying amounts.

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

This growth is based on business forecasts and improvement in profitability of its reporting units.

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

The Company believes there are significant opportunities for adding new customers and additional growth and expansion within its existing customers by:

• Increasing the depth and breadth of the services, including adoption of new technology, for instance, generative AI, the Company provides across its customers’ value chains and geographies;

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

• Offering the full suite of the Company's services, which includes AI-powered digital operations and solutions and data and analytics;

• Supporting the Company's customers’ geographic expansion leveraging its global footprint.

The Company also considers selective strategic relationships with industry leaders that add new long-term client relationships, enhance the depth and breadth of its services and solutions, and complement its business strategy.

Through its various partnership programs, the Company expands its technology and innovation ecosystem with select partnerships, alliances or investments that the Company expects will enhance go-to-market opportunities and expand the scope and effectiveness of the Company’s services and solutions by adding digital assets and intellectual property, which will help the Company to win new customers or allowing it to enter new industry verticals and geographic markets.

There can be no assurances that goodwill will not be impaired in future periods.

Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results.

These estimates and judgements may not be within the control of the Company and accordingly it is reasonably possible that the judgments and estimates described above could change in future periods.

The duration of market volatility is highly uncertain and, as such, the impact on cash flows, long-term debt-free net cash flow growth rate in the terminal year and discount rates are subject to significant judgments and may cause variability in the Company’s assessment of existence of any impairment.

The Company continues to monitor significant changes in key assumptions that could result in future period impairment charges.

Based on such assessment, the Company concluded that there was no impairment on goodwill as of December 31, 2024 and 2023.

Other Intangible Assets

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

As of December 31, 2023

Carrying Amount Accumulated

Amortization Net Carrying

Finite-lived intangible assets:

Customer relationships $ 99,050 $ ( 51,085 ) $ 47,965

Developed technology 3,552 ( 2,522 ) 1,030

Trade names and trademarks 1,400 ( 1,286 ) 114

Non-compete agreements 336 ( 181 ) 155

104,338 ( 55,074 ) 49,264

Indefinite-lived intangible assets:

Trade names and trademarks 900 — 900

Total intangible assets $ 105,238 $ ( 55,074 ) $ 50,164

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

As of December 31, 2022

Carrying Amount Accumulated

Amortization Net Carrying

As of December 31, 2024 As of December 31, 2023

Amount Accumulated

Amortization Net

Amount Gross Carrying

Amount Accumulated Amortization Net

Finite-lived intangible assets:

11 unchanged sentences

Amortization expense $ 13,630 $ 14,678 $ 17,109

During the years ended December 31, 2024 and 2023, the Company performed an impairment test of its intangible assets for recoverability and determined that the carrying values of certain intangible assets were not fully recoverable.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

recorded impairment charges amounting to $ 429 and $ nil for the years ended December 31, 2024 and 2023, respectively under “ Depreciation and amortization ” expense in the consolidated statements of income.

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

5 unchanged sentences

Advance income tax, net $ 49,377 $ 23,269

Receivables from statutory authorities 18,500 15,724

Contract assets 36,072 2,830

Prepaid expenses 21,061 18,171

Derivative instruments 4,308 1,526

Receivables from statutory authorities 19,407 18,500

Deferred contract fulfillment costs 4,281 3,303

Contract assets 2,830 904

Advances to suppliers 4,009 1,883

Derivative instruments 1,973 4,308

Others 4,137 4,405

Other current assets $ 140,317 $ 76,669

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

Other assets consist of the following:

2 unchanged sentences

Deposits with statutory authorities 7,312 6,960

Contract assets 6,835 1,864

Lease deposits 6,495 5,159

Contract assets 3,628 6,835

Prepaid expenses 2,775 —

Derivative instruments 852 3,299

1 unchanged sentence

Other assets $ 56,085 $ 49,524

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

Accrued Expenses and Other Current Liabilities

3 unchanged sentences

Payable to statutory authorities 22,935 20,591

Contingent consideration 15,000 5,000

Client liabilities 9,711 6,909

Accrued capital expenditures 4,134 4,032

Derivative instruments 7,454 2,009

Accrued capital expenditures 2,059 4,134

Contingent consideration 1,280 15,000

Income taxes payable, net 284 1,213

Others 6,326 5,521

5 unchanged sentences

Deferred transition revenue 18,213 10,195

Derivative instruments 4,363 216

Unrecognized tax benefits 1,966 1,262

Contingent consideration 1,420 589

Derivative instruments 216 6,218

Others 2,816 2,534

Other non-current liabilities $ 53,573 $ 31,462

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

Accumulated Other Comprehensive Income/(Loss)

5 unchanged sentences

The following table sets forth the changes in AOCI during the years ended December 31, 2024, 2023 and 2022:

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

Accumulated Other Comprehensive Income/(Loss)

Foreign currency translation gain/(loss) Unrealized gain/(loss) on cash flow hedges Retirement benefits Total

Currency translation adjustments Unrealized gain/(loss) on cash flow hedges Retirement benefits Total

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

Gains / (losses) recognized during the year ( 47,734 ) ( 27,333 ) 2,574 ( 72,493 )

Losses on net investment hedges ( 1,134 ) — — ( 1,134 )

Reclassification to net income (1)

3 unchanged sentences

Accumulated other comprehensive income/(loss) as of December 31, 2022 $ ( 133,139 ) $ ( 11,303 ) $ 299 $ ( 144,143 )

Gains / (losses) recognized during the year ( 47,734 ) ( 27,333 ) 2,574 ( 72,493 )

Gains recognized during the year 652 14,403 1,337 16,392

Reclassification to net income (1)

3 unchanged sentences

Accumulated other comprehensive income/(loss) as of December 31, 2023 $ ( 132,643 ) $ 4,198 $ 1,405 $ ( 127,040 )

Gains recognized during the year 652 14,403 1,337 16,392

Losses recognized during the year ( 17,484 ) ( 14,513 ) ( 1,414 ) ( 33,411 )

Reclassification to net income (1)

2 unchanged sentences

3,129 2,898 435 6,462

Accumulated other comprehensive income/(loss) as of December 31, 2023 $ ( 132,643 ) $ 4,198 $ 1,405 $ ( 127,040 )

Accumulated other comprehensive loss as of December 31, 2024 $ ( 146,998 ) $ ( 7,548 ) $ ( 176 ) $ ( 154,722 )

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

(2) These are income tax effects recognized on cash flow hedges, retirement benefits and foreign currency translation gain/(loss).

(2) These are income tax effects recognized on cash flow hedges, retirement benefits and currency translation adjustments .

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

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

Fair Value Measurements

13 unchanged sentences

Total $ — $ 11,817 $ 2,700 $ 14,517

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

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

15 unchanged sentences

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

Fair values for derivative financial instruments are based on independent sources including highly rated financial institutions and are

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

classified as Level 2.

Fair values for derivative financial instruments are based on independent sources including highly rated financial institutions and are classified as Level 2.

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

3 unchanged sentences

The measurement is calculated using unobservable inputs based on the Company’s own assessment of achievement of certain performance goals.

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

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

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

6 unchanged sentences

During the years ended December 31, 2024 and 2023, there were no transfers among Level 1, Level 2 and Level 3.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

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.

Nonrecurring Fair Value Measurements of Assets:

Nonrecurring fair value measurements include impairment tests of goodwill conducted by the Company during the years ended December 31, 2023 and 2022, as applicable.

The fair value determination of the Company's reporting units was based on a combination of the income approach, using a DCF model, which are Level 3 inputs, and also the market approach, as applicable, using market multiples for reporting units, which are Level 2 inputs.

During the years ended December 31, 2023 and 2022, the Company did no t recognize any impairment charges on goodwill as the fair values of the reporting units exceeded their carrying value.

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

Derivatives and Hedge Accounting

2 unchanged sentences

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

For derivatives in cash flow hedging relationships as of December 31, 2023 and December 31, 2022, the Company had outstanding foreign currency forward contracts totaling $ 722,800 and $ 841,620 , respectively and interest rate swaps totaling $ 75,000 , each.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

The Company estimates that approximately $ 2,357 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 December 31, 2023, could be reclassified into earnings within the next twelve months.

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

December 31, 2024 December 31, 2023

Foreign currency forward contracts denominated in:

dollar (USD) 984,300 722,800

Interest rate swaps (Floating to fixed) denominated in:

The Company estimates that approximately $ 5,693 of derivative losses, net, excluding tax effects, included in AOCI, representing changes in the value of cash flow hedges based on exchange rates prevailing as of December 31, 2024, could be reclassified into earnings within the next twelve months.

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

4 unchanged sentences

pound sterling (GBP) and South African rand (ZAR).

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

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

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

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

1 unchanged sentence

December 31, 2024 December 31, 2023

dollar (USD) 170,543 163,990

pound sterling (GBP) 14,544 8,351

Euro (EUR) 5,231 1,956

Australian dollar (AUD) 3,452 1,951

South African rand (ZAR) 150,150 —

Sell USD 179,491 170,543

Sell GBP 20,956 14,544

Sell EUR 9,008 5,231

Sell AUD 4,770 3,452

Sell ZAR 10,006 150,150

Buy USD 588 —

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:

20 unchanged sentences

2024 2023 2022

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

on derivative financial instruments

Derivatives in cash flow hedging relationships

11 unchanged sentences

Foreign exchange gain/(loss), net $ 891 $ ( 3,110 ) $ 1,532 $ 296 $ 6,199 $ ( 9,571 )

Effect of net investment hedges on OCI:

Year ended December 31,

Amount of loss recognized in OCI

Net investment hedging relationships

2023 2022 2021

Foreign currency forward contracts $ — $ — $ 1,134

The following tables summarizes the Company’s debt position:

As of December 31,

Revolving credit facility

December 31, 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 — ( 114 ) ( 114 ) — — —

Total current portion of long-term borrowings — 4,886 4,886 65,000 — 65,000

Long-term borrowings 190,000 93,750 283,750 135,000 — 135,000

Unamortized debt issuance costs — ( 152 ) ( 152 ) — — —

Total long-term borrowings 190,000 93,598 283,598 135,000 — 135,000

Total borrowings $ 190,000 $ 98,484 $ 288,484 $ 200,000 $ — $ 200,000

6 unchanged sentences

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

as Administrative Agent.

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.

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., as Administrative Agent, and certain lenders (the “2022 Credit Agreement”), pursuant to which the parties thereto amended and restated the Credit Agreement.

Among other things, the 2022 Credit Agreement (a) provides for the issuance of new revolving credit commitments such that the aggregate amount of revolving credit commitments available to the Company is equal to $ 400,000 ;

(b) extends the maturity date of the revolving credit facility from November 21, 2022 to April 18, 2027;

and (c) replaces LIBOR with the Secured Overnight Financing Rate (“SOFR”) as the reference rate for the U.S.

dollar borrowings.

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

as Administrative Agent, which was amended and restated on April 18, 2022 (the “2022 Credit Agreement”), Among other things, the 2022 Credit Agreement (a) provides for the issuance of new revolving credit commitments such that the aggregate amount of revolving credit commitments available as of April 18, 2022 to the Company is equal to $ 400,000 ;

and (b) extends the maturity date of the revolving credit facility from November 21, 2022 to April 18, 2027.

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 as of August 9, 2024 to the Company is 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 prepayment amount of 5 %.

The increased revolving 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.

In addition, the 2022 Credit Agreement contains a covenant to not permit the interest coverage ratio or the total net leverage ratio, both, as defined, for the four consecutive quarter period ending on the last day of each fiscal quarter, to be less than 3.0 to 1.0 or more than 3.5 to 1.0, respectively.

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

Borrowings of $ 100,000 under the term loan facility (which was drawn based on adjusted SOFR) were used to repay the borrowings outstanding under the revolving credit facility on August 9, 2024.

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.

In addition, the 2024 Credit Agreement contains a covenant to not permit the interest coverage ratio or the total net leverage ratio for the four consecutive quarter period ending on the last day of each fiscal quarter, to be less than 3.0 to 1.0 or more than 3.5 to 1.0, respectively.

The 2024 Credit Agreement bears interest at a rate equal to specified prime rate (alternate base rate) or adjusted SOFR, plus, in each case, an applicable margin.

The applicable margin is tied to the Company’s total net leverage ratio and ranges from 0 % to 0.75 % per annum on loans pegged to the specified prime rate, and 0.88 % to 1.75 % per annum on loans pegged to the adjusted SOFR.

The applicable margin on the revolving credit facility is tied to the Company’s total net leverage ratio and ranges from 0 % to 0.75 % per annum on loans pegged to the specified prime rate, and 0.875 % to 1.75 % per annum on loans pegged to the adjusted SOFR.

The applicable margin on the term loan facility is also tied to the Company’s total net leverage ratio and ranges from 0.125 % to 1.00 % per annum on loans pegged to the specified prime rate, and 1.125 % to 2.00 % per annum on loans pegged to the adjusted SOFR.

The revolving credit commitments under the 2024 Credit Agreement are subject to a commitment fee which is also tied to the Company’s total net leverage ratio, and ranges from 0.125 % to 0.275 % per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations.

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

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

Year ended December 31,

2024 2023 2022

Effective Interest Rate 6.3 % 2.9 % 1.7 %

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

Convertible Senior Notes

On October 1, 2018, the Company entered into an investment agreement with Orogen Echo LLC (the “Purchaser”), an affiliate of The Orogen Group LLC, relating to the issuance to the Purchaser of $ 150,000 , in an aggregate principal amount (the “Notes”).

The Notes carried interest at a rate of 3.5 % per annum, payable semi-annually in arrears in cash on April 1 and October 1 of each year.

The Notes were convertible at an initial conversion rate of 13.3333 shares of the common stock per one thousand dollar principal amount of the Notes (which represented an initial conversion price of approximately $ 75 per share).

Revolving credit facility 6.3 % 6.3 % 2.9 %

Term loan facility 6.5 % — % — %

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

EXLSERVICE HOLDINGS, INC.

2 unchanged sentences

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

The Company had the option to redeem the principal amount of the Notes, at its option, if the closing sale price of the common stock exceeded 150 % of the then-current conversion price for 20 or more trading days in the 30 consecutive trading day period preceding the Company’s exercise of this redemption right (including the trading day immediately prior to the date of the notice of redemption).

During the year ended December 31, 2021, the Notes carried an effective interest rate of 3.6 %.

On August 27, 2021, the Company entered into a Payoff and Termination Agreement with the Purchaser, pursuant to which the Company prepaid and settled its outstanding obligations under the Notes, by electing a combination of cash and shares of the Company’s common stock.

During the year ended December 31, 2021, the Company recognized a loss on settlement of the Notes of $ 12,845 , representing the difference between the fair value of the consideration allocated to the debt component and the carrying value of the debt component immediately before settlement, and is presented as “Loss on settlement of convertible notes,” in the Company’s consolidated statements of income.

During the year ended December 31, 2021, the Company recognized interest expense and amortization of debt discount of $ 5,237 on the Notes.

Expected payments for all of the Company’s borrowings as of December 31, 2023 were as follows:

Revolving credit facility

Principal Payments Interest Payments (1)

The maturity profile of the Company’s long-term borrowings, excluding debt issuance costs, outstanding as of December 31, 2024 was as follows:

Revolving credit facility Term loan facility

2025 $ — $ 5,000

1 unchanged sentence

Total $ 190,000 $ 98,750

(1) Interest payments are based on interest rate prevailing as of December 31, 2023.

Letters of Credit

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

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

As of December 31, 2024 and 2023, the Company had outstanding letters of credit of $ 761 and $ 461 , respectively, that were not recognized in the consolidated balance sheets.

Capital Structure

3 unchanged sentences

The Company's shares of common stock have no preemptive, subscription, redemption or conversion rights.

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 Secretary of State of the State of Delaware on August 1, 2023, and effectiveness thereof, effected a 5 -for-1 forward stock split of the Company’s common stock (the “2023 Stock Split”) and an increase in the number of authorized shares of the Company’s common stock from 100,000,000 shares to 400,000,000 shares.

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

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

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

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

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

All share count and per share amounts in the consolidated financial statements have been retrospectively adjusted from January 1, 2021 to reflect the 2023 Stock Split as if it occurred at the beginning of the earliest period presented.

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

Share Repurchases

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

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

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

3 unchanged sentences

(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 restricted stock units.

On December 16, 2019, the Company’s board of directors authorized a $ 200,000 common stock repurchase program beginning January 1, 2020 through December 31, 2022 (the “2019 Repurchase Program”).

On October 5, 2021, the Company’s board of directors authorized a $ 300,000 (excluding excise tax) common stock repurchase program beginning January 1, 2022 (the “2022 Repurchase Program”), and terminated the 2019 Repurchase Program on December 31, 2021.

Under the 2022 Repurchase Program and 2019 Repurchase Program, 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.

On February 26, 2024, the Company’s board of directors authorized a $ 500,000 (excluding excise tax) common stock repurchase program beginning March 1, 2024 (the “2024 Repurchase Program”), and terminated the 2022 Repurchase Program on February 29, 2024.

On March 15, 2024, the Company entered into a 2024 ASR Agreement with Citibank to repurchase shares of its common stock for an aggregate purchase price of $ 125,000 , as part of the Company’s 2024 Repurchase Program.

Upon payment of the aggregate purchase price of $ 125,000 , the Company received an initial delivery of 3,350,084 shares of its common stock at an initial price of $ 29.85 per share, representing 80 % of the aggregate purchase price.

The Company funded the repurchase with available cash on hand and borrowing from its revolving credit facility.

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

The forward stock purchase agreement was classified as an equity instrument under ASC Topic 815-40, Contracts in Entity's Own Equity, and

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

deemed to have a fair value of zero at the effective date.

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

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 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.

Repurchases may be discontinued at any time by the management.

The Company purchased shares of its common stock, for a total consideration including commission and excluding excise tax, under repurchase programs, as below:

The Company purchased shares of its common stock, for a total consideration including commissions but excluding excise tax, under its two repurchase programs, as below:

Shares repurchased Total consideration Weighted average purchase price per share

4 unchanged sentences

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 $ 217 on repurchase of common stock as a part of cost of such repurchases for the year ended December 31, 2023.

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

The Company recognized excise tax of $ 1,096 and $ 218 on repurchase of common stock as a part of cost of such repurchases for the years ended December 31, 2024 and 2023, respectively.

The Company has not paid or declared any cash dividends on its common stock during the years ended December 31, 2024, 2023 and 2022.

16 unchanged sentences

The benefit obligation has been measured as of December 31, 2024 and 2023.

The following table sets forth the activity and the funded status of the gratuity plans and the amounts recognized in the Company’s consolidated financial statements at the end of the relevant periods:

The following table sets forth the activity and the funded status of the gratuity plans and the amounts recognized in the Company’s consolidated financial statements:

Change in projected benefit obligation

3 unchanged sentences

Benefits paid ( 1,465 ) ( 1,382 )

Actuarial gain (1)

Prior service cost 2 —

Acquisition adjustments 398 —

Actuarial loss/(gain) (1)

1,546 ( 1,166 )

15 unchanged sentences

Accumulated benefit obligation as of December 31 $ 20,181 $ 16,655

Plan assets in excess of accumulated benefit obligation as of December 31 $ 479 $ 2

Plan assets in excess/(shortfall) of accumulated benefit obligation as of December 31 $ ( 218 ) $ 479

(1) During the years ended December 31, 2024 and 2023, actuarial gain was driven by changes in actuarial assumptions, offset by experience adjustments on present value of benefit obligations.

35 unchanged sentences

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

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 contribution to the 401(k) Plans was as follows:

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

Year ended December 31,

1 unchanged sentence

Contribution to the 401(k) Plans $ 6,325 $ 5,967 $ 5,205

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

Year ended December 31,

2023 2022 2021

Contributions to the defined social security contribution plans $ 23,045 $ 18,215 $ 16,340

Contributions to the defined contribution plans in foreign subsidiaries of the Company $ 28,070 $ 23,045 $ 18,215

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

24 unchanged sentences

Year ended December 31,

Lease cost 2023 2022

2024 2023 2022

Finance lease:

1 unchanged sentence

Interest on lease liabilities 196 90 59

Operating lease (a)

Operating lease (1)

21,764 20,188 21,783

Variable lease costs 4,490 4,374 5,033

Sublease income ( 122 ) — —

Total lease cost $ 26,710 $ 24,833 $ 27,026

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

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

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

Year ended December 31,

2024 2023 2022

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

5 unchanged sentences

Weighted average remaining lease term (in years)

Finance lease 3.1 years 2.8 years

Operating lease 5.5 years 5.9 years

Finance lease 3.3 years 3.1 years 2.8 years

Operating lease 4.9 years 5.5 years 5.9 years

Weighted average discount rate

2 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 a net increase of its lease liabilities by $ 8,805 during the year ended December 31, 2023 and a decrease of its lease liabilities by $ 2,723 during the year ended December 31, 2022, with a corresponding adjustment to ROU assets.

The Company modified certain of its operating leases, resulting in an increase of its lease liabilities by $ 3,372 and $ 8,805 , during the year ended December 31, 2024 and 2023, respectively, with a corresponding adjustment to ROU assets.

As of December 31, 2024 and 2023, the Company did not have any significant leases that have not yet commenced but that create significant rights and obligations for the Company.

54 unchanged sentences

Reclassification adjustment for cash flow hedges 339 ( 797 ) 455

Retirement benefits (incl.

effects of tax rate changes) ( 63 ) ( 231 ) 194

Retirement benefits 402 ( 63 ) ( 231 )

Reclassification adjustment for retirement benefits 33 ( 74 ) ( 179 )

Foreign currency translation adjustments ( 156 ) 10,032 3,016

Currency translation adjustments 3,129 ( 156 ) 10,032

Total $ 6,462 $ ( 4,403 ) $ 15,937

5 unchanged sentences

Foreign tax rate differential 1,164 5,333 ( 1,136 )

Deferred tax provision 2,509 3,801 350

Unrecognized tax benefits 704 ( 187 ) 273

3 unchanged sentences

Research and development credits ( 5,257 ) ( 5,350 ) ( 2,733 )

Prior period items ( 1,415 ) ( 688 ) ( 931 )

Benefit on settlement of convertible notes — — ( 2,411 )

Others 102 ( 1,468 ) ( 696 )

Tax expense $ 62,936 $ 53,536 $ 47,565

The effective tax rate increased from 22.5 % during the year ended December 31, 2023 to 24.1 % during the year ended December 31, 2024.

The Company recorded income tax expense of $ 62,936 and $ 53,536 for the years ended December 31, 2024 and 2023, respectively.

The increase in income tax expense was primarily as a result of higher profit, increase in non-deductible expenses and lower excess tax benefits related to stock-based compensation, partially offset by decrease in foreign tax rate differential during the year ended December 31, 2024 compared to the year ended December 31, 2023.

EXLSERVICE HOLDINGS, INC.

2 unchanged sentences

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

The effective tax rate decreased from 25.0 % during the year ended December 31, 2022 to 22.5 % during the year ended December 31, 2023.

The Company recorded income tax expense of $ 53,536 and $ 47,565 for the years ended December 31, 2023 and 2022, respectively.

While the effective tax rate decreased during the year ended December 31, 2023, the amount of income tax expense increased primarily as a result of higher profit during the year ended December 31, 2023, compared to the year ended December 31, 2022, and an increase in non-deductible expenses, partially offset by higher excess tax benefits related to stock-based compensation during the year ended December 31, 2023, compared to the year ended December 31, 2022.

During the year ended December 31, 2023, the Company’s foreign subsidiaries in India, the United Kingdom, Australia, Bulgaria and the Czech Republic repatriated an aggregate amount of $ 136,405 (net of $ 5,852 withholding taxes) to the United States.

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

Effective for taxable years beginning after December 31, 2021, Internal Revenue Code Section 174, Amortization of Research and Experimental Expenditures , provides that research and experimentation expenses can no longer be currently deducted, instead such expenses are required to be capitalized.

Such capitalized expenses are to be amortized over a period of five and fifteen years for the U.S.

and foreign research, respectively.

However, this change has no net impact on the consolidated statements of income for the years ended December 31, 2023 and 2022, due to an offset between current and deferred taxes.

During the year ended December 31, 2024, some of the Company’s foreign subsidiaries repatriated $ 38,161 (net of $ 2,649 withholding taxes) to the United States.

As of December 31, 2024, and December 31, 2023, accumulated net earnings generated by our foreign operations were approximately $ 658,454 and $ 546,828 respectively, of which $ 635,396 and $ 546,828 respectively, are indefinitely reinvested.

Because most of the accumulated net earnings generated by our foreign operations has already been taxed for U.S.

federal and state income tax purposes, any additional taxes due with respect to the repatriation of such earnings would generally be limited to the tax effect of currency gains or losses recognized on repatriation and foreign withholding taxes.

The components of the deferred tax balances were as follows:

8 unchanged sentences

Net unrealized foreign exchange loss 20,242 15,447

Deferred rent 2,853 3,120

Right-of-use assets 20,125 19,042

Others 339 414

6 unchanged sentences

Capitalized costs 7,665 5,999

Foreign branch accounting 8,810 7,618

Lease liability 16,586 16,188

Others 2,198 2,190

2 unchanged sentences

Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying values of assets and liabilities and their respective tax bases and operating loss carry forwards.

The Company performed an analysis of the realizability deferred tax assets as of December 31, 2023 and 2022, and recorded a valuation allowance of $ 482 and $ 309 , respectively.

The Company performed an analysis of the realizability of deferred tax assets as of December 31, 2024, and 2023, and recorded a valuation allowance of $ 3,172 and $ 482 , respectively.

The Company has state research and development tax credit carryforwards as of December 31, 2024 of $ 4,083 (tax effected $ 3,226 , net of federal benefit) that will expire by 2034, if not utilized.

The Company has state net operating loss carryforwards as of December 31, 2024 of $ 5,515 (tax effected $ 281 , net of federal benefit) of which $ 4,992 (tax effected $ 174 , net of federal benefit) is allowed to be carried forward indefinitely and the balance will expire by 2039, if not utilized.

The Company’s income tax expense also includes provisions established for uncertain income tax positions determined in accordance with ASC Topic 740, Income Taxes .

The Company monitors and adjusts these reserves in light of changing facts and circumstances.

To the extent that the final tax outcome of these matters differs from the amounts recorded, such differences will impact the income tax expense in the period in which such determination is made.

EXLSERVICE HOLDINGS, INC.

2 unchanged sentences

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

The Company’s income tax expense also includes provisions established for uncertain income tax positions determined in accordance with Financial Accounting Standards Board Interpretation No.

48, Accounting for Uncertainty in Income Taxes .

The Company monitors and adjusts these reserves in light of changing facts and circumstances.

To the extent that the final tax outcome of these matters differs from the amounts recorded, such differences will impact the income tax expense in the period in which such determination is made.

The following table summarizes the activity related to the unrecognized tax benefits:

2 unchanged sentences

Balance as of January 1 $ 1,262 $ 1,449 $ 1,068

Increases/(decreases) related to prior year tax positions ( 610 ) 158 ( 12 )

Increases related to current year tax positions 423 223 173

Additions based on tax positions related to the current year 561 423 223

Additions based on tax positions of prior years 316 112 158

Reductions for tax positions due to lapse of statutes of limitations ( 173 ) ( 722 ) —

Balance as of December 31 $ 1,966 $ 1,262 $ 1,449

The unrecognized tax benefits as of December 31, 2024 of $ 1,966 , if recognized, would impact the effective tax rate.

As of December 31, 2023 and 2022, the Company has no t accrued interest and penalties relating to unrecognized tax benefits.

For the years ended December 31, 2024 and 2023, the Company has no t accrued interest and penalties relating to unrecognized tax benefits.

Stock-Based Compensation

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

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

On June 15, 2018, at the Company’s 2018 Annual Meeting of Stockholders, the Company's stockholders approved the 2018 Omnibus Incentive Plan, which among other things, reserves 15,875,000 shares of the Company’s common stock for grants of awards under the 2018 Omnibus Incentive Plan.

As of December 31, 2023, the Company had 3,249,875 shares available for grant under the 2018 Omnibus Incentive Plan.

As of December 31, 2024 and 2023, the Company had 1,813,592 and 4,096,102 shares, respectively, available for grant under the 2018 Omnibus Incentive Plan.

Under the 2018 Omnibus Incentive Plan, the Compensation and Talent Management Committee (the “Committee”) may grant awards of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, performance-based compensation awards (including cash bonus awards and market condition based awards) or any combination of the foregoing.

12 unchanged sentences

$ 17,576 $ 17,333 $ 9,785

(1) Includes $ 9,714 , $ 15,055 and $ 5,881 during the years ended December 31, 2024, 2023 and 2022, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No.

2016-09, Compensation - Stock Compensation.

EXLSERVICE HOLDINGS, INC.

2 unchanged sentences

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

(1) Includes $ 15,055 , $ 5,881 and $ 3,651 during the years ended December 31, 2023, 2022 and 2021, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No.

2016-09, Compensation - Stock Compensation.

Stock Options

8 unchanged sentences

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

Stock options granted under the 2018 Omnibus Incentive Plan during the year ended December 31, 2023, have a contractual period of ten years and vest ratably over four years .

Stock options were granted under the 2018 Omnibus Incentive Plan during the year ended December 31, 2023 which have a contractual period of ten years and vest ratably over four years .

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

29 unchanged sentences

Outstanding as of December 31, 2023 *

217,230 $ 24.95

Vested* ( 72,385 ) 24.95

Forfeited — —

Outstanding as of December 31, 2024 *

144,845 $ 24.95

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

As of December 31, 2024, unrecognized compensation cost of $ 445 is expected to be expensed over a weighted average period of 0.3 years.

16 unchanged sentences

3,240,200 $ 28.82

* As of December 31, 2023 and 2022, restricted stock units vested for which the underlying common stock is yet to be issued are 324,125 and 872,450 , respectively.

EXLSERVICE HOLDINGS, INC.

2 unchanged sentences

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

* As of December 31, 2024 and 2023, restricted stock units vested for which the underlying common stock is yet to be issued are 289,547 and 324,125 , respectively.

The fair value of restricted stock units is generally the market price of the Company’s shares on the date of grant.

As of December 31, 2024, unrecognized compensation cost of $ 63,066 is expected to be expensed over a weighted average period of 2.6 years.

The weighted average fair value of restricted stock units granted and the grant date fair value of restricted stock units vested was as follows:

The weighted average fair value of restricted stock units granted and the grant date fair value of restricted stock units vested (including SMP) was as follows:

Year ended December 31,

2024 2023 2022

Weighted average fair value $ 33.99 $ 24.28 $ 18.25

Grant date fair value $ 33,058 $ 24,002 $ 23,845

Weighted average fair value of restricted stock units granted $ 30.23 $ 33.99 $ 24.28

Grant date fair value of restricted stock units vested $ 42,279 $ 33,058 $ 24,002

Performance-Based Stock Awards

36 unchanged sentences

Outstanding as of December 31, 2024 537,944 $ 31.02 806,519 $ 43.06

* Represents adjustment of shares vested in respect of MUs granted in February 2021 upon achievement of the performance targets for such awards for which the underlying common stock was issued subsequent to December 31, 2023.

* Represents adjustment of shares vested in respect of PUs and MUs granted in 2022 upon achievement of the performance targets for such awards.

** Represents PUs and MUs vested for which the underlying common stock was issued subsequent to December 31, 2024.

As of December 31, 2024, unrecognized compensation cost of $ 33,943 is expected to be expensed over a weighted average period of 1.8 years.

5 unchanged sentences

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

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

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

EXLSERVICE HOLDINGS, INC.

3 unchanged sentences

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

Employee Stock Purchase Plan Unit’s

Number Total Proceeds Received

1 unchanged sentence

Issuance of common stock related to the:

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

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

Third offering period 71,645 $ 1,948

Fourth offering period 86,936 $ 2,414

Shares available for issuance as of December 31, 2024 3,672,744

Issuance of common stock related to the third offering

Issuance of common stock related to the fifth offering

period made subsequent to December 31, 2024 64,939 $ 1,823

1 unchanged sentence

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

Third offering period of

July 1, 2023 to December 31, 2023 Second offering period of

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

October 1, 2022 to December 31, 2022

Fifth offering period of

July 1, 2024 to December 31, 2024 Fourth offering period of

January 1, 2024 to June 30, 2024 Third offering period of

July 1, 2023 to December 31, 2023

Dividend yield — — —

4 unchanged sentences

Related Party Disclosures

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

During the year ended December 31, 2023 and 2022, the Company recognized revenues, net of $ 1,975 and $ 2,258 , respectively, related to this service contract.

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, 2024.

During the years ended December 31, 2024 and 2023, the Company recognized revenues, net of $ 638 and $ 1,975 , respectively, related to this service contract.

The Company had outstanding accounts receivable, net of $ 124 and $ 209 related to this service contract as of December 31, 2024 and 2023, respectively.

On October 1, 2018, the Company entered into the Investment Agreement with the Purchaser relating to the issuance to the Purchaser of $ 150,000 aggregate principal amount of the Notes.

In connection with the investment, Vikram S.

Pandit, Chairman and CEO of The Orogen Group LLC (an affiliate of the Purchaser), was appointed to Company’s board of directors.

The Company settled the Notes on August 27, 2021.

Refer to Note 18 - Borrowings to the consolidated financial statements for further details.

The following transactions with the Purchaser were recognized by the Company in connection with the Notes during the year ended December 31, 2021:

Repayment of the Notes in cash $ 200,000

Repayment of the Notes in shares $ 36,742

Interest expense on the Notes $ 3,442

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

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 year ended December 31, 2024, the Company recognized revenues, net of $ 424 related to this service contract.

The Company had outstanding accounts receivable, net of $ 56 related to this service contract as of December 31, 2024.

Commitments and Contingencies

3 unchanged sentences

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.

During the year ended December 31, 2023, the Company invested $ 600 in the Partnership and is committed under the Partnership to make further investments up to an amount of $ 3,400 .

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

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

in growth-stage technology companies.

During the year ended December 31, 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

15 unchanged sentences

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.

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 $ 5,339 and $ 5,493 , as of December 31, 2024 and 2023, respectively.

The Company has provided bank guarantees against these demands in the amounts of $ 4,570 and $ nil , as of December 31, 2023 and 2022, respectively.

The GST authorities rejected the Company’s refund claims in the amounts of $ 4,748 and $ 3,866 as of December 31, 2023 and 2022, respectively.

The Company has provided bank guarantees against these demands in the amounts of $ 5,339 and $ 4,570 , as of December 31, 2024 and 2023, respectively.

The GST authorities rejected the Company’s refunds claims in the amounts of $ 5,885 and $ 4,748 as of December 31, 2024 and 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 December 31, 2024 and 2023, respectively.

One of the Company’s subsidiary 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

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2023

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

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.

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 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.

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

EXLSERVICE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

December 31, 2024

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

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.

Subsequent Events

On February 26, 2024, the Company’s board of directors authorized a $ 500,000 common stock repurchase program (the “2024 Repurchase Program”), effective March 1, 2024, for a two-year period, in line with its capital allocation strategy.

Under the 2024 Repurchase Program, 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.

Repurchases may be discontinued at any time by the management.

The 2024 Repurchase Program replaces the 2022 Repurchase Program, which was terminated effective February 29, 2024.

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.

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 consolidated statements of income.

The following table summarizes the activity related to the restructuring costs incurred and paid during the year ended December 31, 2024:

Year ended December 31, 2024

Employee-Related Costs Other Associated Costs Total

Opening balance $ — $ — $ —

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

Payments during the period 4,397 365 4,762

Closing balance $ — $ — $ —

Subsequent Event

In the first quarter of 2025, the Company began to implement operational and structural changes, resulting in the realignment of its reporting segments.

The new reportable segments will be Insurance, Healthcare and Life Sciences, Banking, Capital Markets and Diversified Industries, and International Growth Markets.

Beginning in the first quarter of 2025, the Company will reflect this change in segment presentation in its periodic and annual reports.

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-K

Item 9A. Controls and Procedures