What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-04-29 compared with 2024-10-30 · 348 added, 536 removed, 678 unchanged (57% of the section changed)

3 unchanged sentences

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

Notes September 30, 2024 December 31, 2023

Notes March 31, 2025 December 31, 2024

Current assets:

33 unchanged sentences

Common stock, $ 0.001 par value;

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

400,000,000 shares authorized, 207,758,497 shares issued and 162,683,343 shares outstanding as of March 31, 2025 and 206,510,587 shares issued and 161,801,212 shares outstanding as of December 31, 2024

Additional paid-in capital 609,592 588,583

2 unchanged sentences

Total including shares held in treasury 1,815,533 1,716,027

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

45,075,154 shares as of March 31, 2025 and 44,709,375 shares as of December 31, 2024, held in treasury, at cost

19 ( 803,656 ) ( 786,165 )

5 unchanged sentences

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

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

Three months ended March 31,

Notes 2025 2024

16 unchanged sentences

Income before earnings from equity affiliates 66,670 48,791

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

Loss from equity-method investment ( 109 ) ( 28 )

Net income $ 66,561 $ 48,763

10 unchanged sentences

(In thousands)

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

Three months ended March 31,

Notes 2025 2024

18 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the three months ended September 30, 2024 and 2023

For the three months ended March 31, 2025 and 2024

(In thousands, except share count)

1 unchanged sentence

Notes Shares Amount Shares Amount

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

Balance as of January 1, 2025 206,510,587 $ 206 $ 588,583 $ 1,281,960 $ ( 154,722 ) ( 44,709,375 ) $ ( 786,165 ) $ 929,862

Stock issued against stock-based compensation plans 23 1,247,910 1 1,822 — — — — 1,823

1 unchanged sentence

Acquisition of treasury stock 19 — — — — — ( 365,779 ) ( 17,491 ) ( 17,491 )

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

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

Other comprehensive income 15 — — — — 11,935 — — 11,935

Net income — — — 66,561 — — — 66,561

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

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

Notes Shares Amount Shares Amount

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

Stock issued against stock-based compensation plans 23 375,550 — 3,548 — — — — 3,548

Stock-based compensation 23 — — 17,067 — — — — 17,067

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

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

Net income — — — 43,876 — — — 43,876

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

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the nine months ended September 30, 2024 and 2023

(In thousands, except share count)

Balance as of March 31, 2025 207,758,497 $ 207 $ 609,592 $ 1,348,521 $ ( 142,787 ) ( 45,075,154 ) $ ( 803,656 ) $ 1,011,877

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

Notes Shares Amount Shares Amount

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

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

Stock issued against stock-based compensation plans 23 1,324,950 1 1,947 — — — — 1,948

1 unchanged sentence

Acquisition of treasury stock 19 — — — — — ( 4,177,220 ) ( 125,805 ) ( 125,805 )

Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — ( 1,030 ) ( 1,030 )

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

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

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

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

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

Notes Shares Amount Shares Amount

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

Stock issued against stock-based compensation plans 23 2,184,305 2 4,644 — — — — 4,646

Stock-based compensation 23 — — 42,985 — — — — 42,985

Acquisition of treasury stock 19 — — — — — ( 3,238,666 ) ( 101,336 ) ( 101,336 )

Other comprehensive income 15 — — — — 7,338 — — 7,338

Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — ( 544 ) ( 544 )

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

Net income — — — 48,763 — — — 48,763

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

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

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine months ended September 30,

Three months ended March 31,

Cash flows from operating activities:

Net income $ 66,561 $ 48,763

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

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

Depreciation and amortization expense 13,542 12,337

7 unchanged sentences

Accounts receivable ( 35,231 ) ( 27,578 )

Other current and non-current assets ( 6,961 ) ( 19,204 )

Other current and non-current asset ( 22,945 ) ( 14,969 )

Income taxes payable, net 11,664 11,443

Accounts payable, accrued expenses and other liabilities 22,901 8,371

Deferred revenue 753 5,829

Accrued employee costs ( 65,566 ) ( 64,246 )

Accounts payable, accrued expenses and other liabilities 10,177 ( 325 )

Operating lease liabilities ( 5,840 ) ( 4,616 )

Payment of contingent consideration — ( 11,000 )

Net cash provided by operating activities 163,179 132,160

Net cash (used for)/provided by operating activities 3,243 ( 21,873 )

Cash flows from investing activities:

1 unchanged sentence

Proceeds from sale of property and equipment 95 62

Investment in equity affiliate ( 600 ) ( 600 )

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

Purchases of investments ( 90,185 ) ( 64,932 )

Proceeds from redemption of investments 81,362 80,825

Investment in equity affiliate ( 600 ) —

Net cash (used for)/provided by investing activities ( 22,268 ) 4,689

3 unchanged sentences

Repayments of borrowings ( 31,250 ) ( 35,000 )

Acquisition of treasury stock ( 195,880 ) ( 100,542 )

Payment of contingent consideration — ( 4,000 )

Acquisition of treasury stock ( 17,994 ) ( 152,227 )

Proceeds from issuance of common stock 2,765 1,514

Payment of debt issuance costs ( 593 ) —

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

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

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

Net cash (used for)/provided by financing activities 3,405 ( 9,773 )

Effect of exchange rate changes 2,700 ( 1,212 )

Net decrease in cash, cash equivalents and restricted cash ( 12,920 ) ( 28,169 )

Cash, cash equivalents and restricted cash at the beginning of the period 171,398 145,401

10 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

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

1 unchanged sentence

(“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 and life sciences, 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.”).

10 unchanged sentences

Intra-group balances and transactions, and gains and losses arising from intra-group transactions, are eliminated while preparing consolidated financial statements.

The Company’s 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.

The proportionate share of net income or loss of the investee after its acquisition is recognized in the unaudited consolidated statements of income.

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

The Company’s investments in equity affiliates are recorded using equity method of accounting.

In the first quarter of 2025, the Company implemented operational and structural changes to accelerate the execution of its data and AI strategy.

Under the new structure, the Company reports its financial performance based on new segments described in Note 3 - Segment Information to the unaudited consolidated financial statements.

In conjunction with the new reporting structure, the Company has recast prior period amounts, wherever applicable, to conform to the way the Company internally manages and monitors segment performance.

This change primarily impacted Note 3 - Segment Information and Note 10 - Goodwill and Other Intangible Assets to the unaudited consolidated financial statements.

This change in segment presentation does not affect the Company’s unaudited consolidated statements of income, balance sheets or statements of cash flows.

(b) Use of Estimates

2 unchanged sentences

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

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

the identifiable intangible assets and contingent consideration, purchase price allocation, including revenue projections and the discount rate applied within the discounted cash flow model for business acquisitions, credit risk of customers, the nature and 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

The significant estimates that affect the unaudited consolidated financial statements include, but are not limited to, estimates of the fair value of the identifiable intangible assets and contingent consideration, purchase price allocation, including revenue projections and the

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

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.

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 generation of economic benefits to calculate depreciation and amortization for long-lived assets and other intangible assets, and recoverability of long-lived assets, goodwill and other intangible assets.

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 .

This ASU modifies the disclosure or presentation requirements of a variety of Topics in the Codification.

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.

The adoption of this ASU will not have a material impact on the Company’s unaudited 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 (“Accounting Standards Codification (“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 unaudited consolidated financial statements.

In December 2023, FASB issued ASU No.

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

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

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.

The ASU will be effective for annual periods beginning after December 15, 2024.

The ASU is effective for annual periods beginning after December 15, 2024.

The Company is currently evaluating the impact of this ASU on its annual consolidated financial statements for the year ending on December 31, 2025.

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 reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

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

(d) Recently adopted Accounting Pronouncements

In March 2023, FASB issued ASU No.

2023-01, Leases (“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 did not have a material impact on its unaudited consolidated financial statements.

(d) Recently Adopted and Applicable Accounting Pronouncements

In March 2024, FASB issued ASU No.

2 unchanged sentences

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

The Company has early

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

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

Segment Information

The Company is a provider of data and AI-led and digital operations services in an integrated manner for clients across industry verticals.

In the first quarter of 2025, the Company implemented operational and structural changes to align with how the Company’s Chief Operating Decision Maker (“CODM”) reviews financial information and makes operating decisions.

This new operating model comprises of Industry Market Units (“IMUs”) which focus on delivering higher value to clients by leveraging full suite of capabilities;

and Strategic Growth Units which rapidly advance the capabilities specific to various industries and client needs.

Consequently, the Company realigned its reportable segments to the IMUs as follows:

• Healthcare and Life Sciences,

• Banking, Capital Markets and Diversified Industries,

• International Growth Markets

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

adopted this ASU beginning January 1, 2024.

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

In March 2024, FASB issued ASU No.

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

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

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

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

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

Segment and Geographical Information

The Company is a provider of data analytics and digital operations and solutions.

The Company manages and reports financial information through its four reportable segments:

Insurance, Healthcare, Analytics and Emerging Business, which reflects how management reviews financial information and makes operating decisions.

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 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 unaudited consolidated financial statements for further details.

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

Three months ended September 30, 2024

Insurance Healthcare Emerging Business Analytics Total

The primary changes in the new reportable segments reflect 1) the integration of the former Analytics reportable segment as a core capability within each of the IMUs, ensuring alignment with the specialized needs of clients across IMUs, 2) the reorganization of the former Emerging Business reportable segment into a Banking, Capital Markets and Diversified Industries reportable segment, excluding Life Sciences, which is now a part of the new Healthcare and Life Sciences reportable segment, and 3) the formation of International Growth Markets as a separate business unit to represent all service and solutions offerings to clients in the United Kingdom, Europe, Middle East, Asia-Pacific and South Africa geographies across all industry verticals.

The International Growth Markets business unit will help the Company to strategically expand its footprint in markets outside of North America and drive focus on offerings and expansion in those markets in new and existing clients.

In addition, revenues by service type are now presented as data and AI-led and digital operations services.

Revenues attributable to geographical regions are now presented as North America (including the United States, Canada and Mexico), U.K.

& Europe, and the Rest of World.

The Company has recast segment disclosures for the prior periods presented herein to conform to the new segment structure.

This change in segment presentation does not affect the Company’s unaudited consolidated statements of income, balance sheet or statements of cash flows.

The Company’s Chief Executive Officer has been identified as the 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.

Revenues and cost of revenues for the three months ended March 31, 2025 and 2024, respectively, for each of the reportable segments, are as follows:

Three months ended March 31, 2025

Insurance Healthcare and Life Sciences Banking, Capital Markets and Diversified Industries International Growth Markets Total

Revenues, net $ 172,056 $ 125,592 $ 117,702 $ 85,669 $ 501,019

Cost of revenues (1)

Employee costs 90,549 58,924 64,294 44,820 258,587

Infrastructure and technology costs 13,246 6,738 6,169 8,161 34,314

Other costs (2)

5,372 4,850 3,286 1,296 14,804

7 unchanged sentences

(1) Exclusive of depreciation and amortization expense.

(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

Three months ended September 30, 2023

Insurance Healthcare Emerging Business Analytics Total

Revenues, net $ 136,369 $ 26,177 $ 65,316 $ 183,109 $ 410,971

Cost of revenues (1)

86,435 16,533 37,599 115,435 256,002

Gross profit (1)

$ 49,934 $ 9,644 $ 27,717 $ 67,674 $ 154,969

Operating expenses 94,739

Foreign exchange gain, net, interest expense and other income, net ( 2,218 )

Income tax expense 14,161

Gain from equity-method investment 25

Net income $ 43,876

(1) Exclusive of depreciation and amortization expense.

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

Nine months ended September 30, 2024

Insurance Healthcare Emerging Business Analytics Total

Three months ended March 31, 2024

Insurance Healthcare and Life Sciences Banking, Capital Markets and Diversified Industries International Growth Markets Total

Revenues, net $ 158,267 $ 100,656 $ 103,253 $ 74,331 $ 436,507

Cost of revenues (1)

Employee costs 81,404 45,761 58,695 39,723 225,583

Infrastructure and technology costs 11,921 5,442 4,953 6,841 29,157

Other costs (2)

11,396 3,832 2,343 1,113 18,684

7 unchanged sentences

(1) Exclusive of depreciation and amortization expense.

Nine months ended September 30, 2023

Insurance Healthcare Emerging Business Analytics Total

Revenues, net $ 390,762 $ 80,036 $ 198,677 $ 547,135 $ 1,216,610

Cost of revenues (1)

(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.

Revenues, net by service type, were as follows:

Three months ended March 31,

Data and AI-led (1)

$ 267,929 $ 231,724

Gross profit (1)

Digital operations (2)

233,090 204,783

Operating expenses 271,430

Foreign exchange gain, net, interest expense and other income, net ( 2,598 )

Income tax expense 37,773

Gain from equity-method investment 157

Net income $ 144,275

(1) Exclusive of depreciation and amortization expense.

Revenues, net $ 501,019 $ 436,507

(1) Data and AI-led revenue comes from AI-powered solutions and services in which the Company embeds data and AI into client workflows.

Leveraging the Company’s depth of domain knowledge, analytics, data management and digital engineering expertise, the Company’s industry-specific offerings are designed to help clients accelerate growth, improve customer experience, enhance efficiency, and deliver lasting competitive advantages.

As clients evolve from digital operations to data and AI-powered operations and outcomes, these capabilities represent the next stage of enterprise transformation.

(2) Digital operations revenue comes from the Company’s industry-specific solutions and services that help clients run essential business functions with greater speed, accuracy, and efficiency.

The Company applies deep industry expertise and tailored technology—whether its proprietary technology or client technology—to solve complex challenges and drive measurable outcomes.

These digital operations deployments form the foundation for future client transformation opportunities to infuse AI into client workflows and unlock even greater value.

All four reportable segments of the Company include revenues from both data and AI-led and digital operations services.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

Revenues, net by service type, were as follows:

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

2024 2023 2024 2023

Digital operations and solutions (1)

$ 268,071 $ 227,862 $ 768,432 $ 669,475

Analytics services 204,002 183,109 588,514 547,135

Revenues, net $ 472,073 $ 410,971 $ 1,356,946 $ 1,216,610

(1) Digital operations and solutions include revenues of the Company’s Insurance, Healthcare and Emerging Business reportable segments.

Refer to the reportable segment disclosure above.

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

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

2024 2023 2024 2023

The Company attributes revenues based on geographical markets where the customer operations being served by it are located.

Three months ended March 31,

Revenues, net

The United States $ 388,067 $ 343,135 $ 1,121,122 $ 1,022,883

Non-United States

The United Kingdom 56,650 46,327 160,019 131,549

North America $ 415,350 $ 362,176

& Europe 75,693 65,610

Rest of World 9,976 8,721

Total Non-United States 84,006 67,836 235,824 193,727

Revenues, net $ 501,019 $ 436,507

Revenues, net by industry verticals, were as follows:

Three months ended March 31,

Insurance $ 200,361 $ 183,059

Healthcare and Life Sciences 125,826 100,900

Banking, Capital Markets and Diversified Industries 174,832 152,548

Revenues, net $ 501,019 $ 436,507

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Long-lived assets

India $ 66,263 $ 63,040

The United States 57,307 61,592

South Africa 27,783 20,890

North America 52,981 52,510

The Philippines 30,023 25,881

South Africa 22,785 23,828

Rest of World 6,246 5,362

Long-lived assets $ 178,298 $ 170,621

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2025

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

Revenues, net and Accounts Receivable, net

Refer to Note 3 - Segment and Geographical Information to the unaudited consolidated financial statements for revenues disaggregated by reportable segments and geography.

Refer to Note 3 - Segment Information to the unaudited consolidated financial statements for revenues disaggregated by reportable segments, service type, geography and industry verticals.

Contract balances

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Accounts receivable, net $ 339,856 $ 304,322

3 unchanged sentences

Consideration received for process transition activities $ 26,570 $ 21,993

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

Accounts receivable includes $ 168,420 and $ 148,735 as of September 30, 2024 and December 31, 2023, respectively, representing unbilled receivables.

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

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

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

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

2024 2023 2024 2023

Accounts receivable includes $ 144,747 and $ 121,817 as of March 31, 2025 and December 31, 2024, 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 performance risk associated with its unbilled receivables.

Contract assets as of March 31, 2025 and December 31, 2024, includes receivables of $ 38,130 and $ 33,472 , respectively, from our payment integrity services.

There are no performance risks associated with these contract assets.

There were no significant cumulative catch-up impact or impairment related to contract assets as of March 31, 2025 and December 31, 2024.

Revenue recognized during the three months ended March 31, 2025 and 2024, which was included in the contract liabilities balance at the beginning of the respective periods is as follows:

Three months ended March 31,

Deferred revenue (consideration received in advance)

$ 7,429 $ 7,061

Consideration received for process transition activities

$ 1,377 $ 632

Contract acquisition and fulfillment costs

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

Contract Acquisition Costs

Three months ended Nine months ended Year ended

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

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

Additions 6 115 377 1,591 1,841

Amortization ( 218 ) ( 233 ) ( 721 ) ( 621 ) ( 814 )

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

Contract Fulfillment Costs

Three months ended Nine months ended Year ended

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

Contract Acquisition Costs Contract Fulfillment Costs

Three months ended Year ended Three months ended Year ended

March 31, 2025 March 31, 2024 December 31, 2024 March 31, 2025 March 31, 2024 December 31, 2024

Opening balance $ 2,287 $ 2,122 $ 2,122 $ 36,022 $ 24,673 $ 24,673

2 unchanged sentences

Closing balance $ 2,126 $ 1,901 $ 2,287 $ 38,080 $ 27,287 $ 36,022

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

There was no significant impairment for contract acquisition and contract fulfillment costs as of March 31, 2025 and December 31, 2024.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2025

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

Allowance for expected credit losses

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Accounts receivable, including unbilled receivables $ 344,590 $ 307,850

1 unchanged sentence

Accounts receivable, net $ 339,856 $ 304,322

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

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

Three months ended Nine months ended Year ended

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

Three months ended March 31, Year ended

2025 2024 December 31, 2024

Opening balance $ 3,528 $ 3,703 $ 3,703

4 unchanged sentences

Customer and credit risk concentration

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

No single customer accounted for more than 10% of the Company's revenues, net during the three months ended March 31, 2025 and 2024.

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 September 30, 2024 and December 31, 2023.

No customer accounted for more than 10% of accounts receivable, net, as of March 31, 2025 and December 31, 2024.

Earnings Per Share

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

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

2024 2023 2024 2023

Three months ended March 31,

Net income $ 66,561 $ 48,763

9 unchanged sentences

(“Citibank”).

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

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

Refer to Note 19 - Capital Structure to the unaudited consolidated

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

financial statements for further details.

During the three months ended March 31, 2024, the Company recorded the initial delivery 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, net

Other income, net consists of the following:

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

2024 2023 2024 2023

Three months ended March 31,

Gain on sale and fair value mark-to-market on investments $ 1,948 $ 1,016

1 unchanged sentence

Fair value changes of contingent consideration (1)

— ( 2,500 ) 589 ( 2,500 )

Others, net 130 63

3 unchanged sentences

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

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

March 31, 2025 March 31, 2024 December 31, 2024

Cash and cash equivalents $ 140,442 $ 108,565 $ 153,355

8 unchanged sentences

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2025

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

Investments consist of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Short-term investments

7 unchanged sentences

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

Property and Equipment, net

Property and equipment consists of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Property, plant and equipment, gross $ 372,237 $ 356,060

1 unchanged sentence

Property, plant and equipment, net $ 107,148 $ 101,837

During the three and nine months ended September 30, 2024, there were no changes in estimated useful lives of property and equipment during the ordinary course of operations.

During the three months ended March 31, 2025, there were no material changes in estimated useful lives of property and equipment during the ordinary course of operations.

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

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

2024 2023 2024 2023

Three months ended March 31,

Depreciation and amortization expense $ 10,311 $ 9,266

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Cost $ 60,648 $ 60,447

1 unchanged sentence

Internally developed software, net $ 19,665 $ 22,204

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

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

2024 2023 2024 2023

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

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

Business Combinations, Goodwill and Other Intangible Assets

Incandescent Technologies, Inc.

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

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

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

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

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

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

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

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

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

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

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

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

Intangible assets $ 10,720

Other assets, net 581

Goodwill 22,035

Total purchase consideration* $ 33,336

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

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

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

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

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

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

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

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

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

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

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

Three months ended March 31,

Amortization expense $ 2,740 $ 2,520

During the three months ended March 31, 2025 and 2024, there were no indicators of impairment related to capitalized software.

Goodwill and Other Intangible Assets

In the first quarter of 2025, the Company implemented operational and structural changes which resulted in the realignment of its reporting segments.

Refer to Note 3- Segment Information for further details.

Goodwill has been re-allocated to reporting units based on the relative fair value approach.

The Company tested goodwill for impairment prior to the segment realignment and immediately thereafter, for events and conditions identified in accordance with the guidance in ASC Topic 350, Intangibles- Goodwill and Other .

The fair value of the reporting units was calculated using a discounted cash flow model using estimated future cash flows.

The results of the evaluation demonstrated that the fair value of each reporting unit exceeded its book value as of the date of the segment realignment.

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

Insurance Healthcare Emerging Business Analytics Total

Insurance Healthcare and Life Sciences Banking, Capital Markets and Diversified Industries International Growth Markets Total

Balance as of January 1, 2025 $ 77,099 $ 189,621 $ 100,639 $ 53,028 $ 420,387

Acquisition — — — 22,035 22,035

Currency translation adjustments 75 1 17 14 107

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

As of September 30, 2024, the Company performed an assessment to determine whether events or circumstances exist that may lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The Company considered current and forecasted economic and market conditions and qualitative factors, such as the Company’s performance during the nine months ended September 30, 2024, business forecasts for the remainder of the year,

Balance as of March 31, 2025 $ 77,174 $ 189,622 $ 100,656 $ 53,042 $ 420,494

During the three months ended March 31, 2025 and 2024, the Company performed an assessment to determine whether events or circumstances exist that may lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Based on such assessment, the Company concluded that there was no impairment on goodwill as of March 31, 2025 and 2024.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

stock price movements, generation and availability of cash and expansion plans.

The Company reviewed key assumptions, including revisions of projected future revenues for reporting units against the results of the annual impairment test performed during the fourth quarter of 2023.

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

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 clients.

Other Intangible Assets

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

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

Amount Accumulated

Amortization Net

Amount Gross Carrying

As of March 31, 2025 As of December 31, 2024

Gross Carrying

Amount Accumulated Amortization Net

Carrying Amount Gross Carrying

Amount Accumulated Amortization Net

Finite-lived intangible assets:

8 unchanged sentences

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

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

2024 2023 2024 2023

Three months ended March 31,

Amortization expense $ 3,246 $ 3,080

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

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

2028 and thereafter 10,017

During the three months ended March 31, 2025 and 2024, there were no indicators of impairment related to intangible assets.

Estimated future amortization expense related to finite-lived intangible assets as of March 31, 2025 was as follows:

2025 (April 1 - December 31) $ 9,884

Total $ 45,192

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

1 unchanged sentence

Other current assets consist of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Contract assets $ 40,840 $ 36,072

Advance income tax, net 37,659 49,377

Receivables from statutory authorities 21,854 18,500

Prepaid expenses 32,472 21,061

Derivative instruments 8,492 4,308

Receivables from statutory authorities 20,611 19,407

Deferred contract fulfillment costs 4,923 4,281

Advances to suppliers 3,149 1,883

Contract assets 2,465 2,830

Derivative instruments 4,746 1,973

Others 8,952 8,146

1 unchanged sentence

Other assets consist of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Deferred contract fulfillment costs $ 33,157 $ 31,741

1 unchanged sentence

Lease deposits 6,945 6,495

Derivative instruments 4,720 3,299

Contract assets 3,669 3,628

Prepaid expenses 3,327 2,775

Derivative instruments 1,603 852

Others 5,343 3,282

2 unchanged sentences

Accrued expenses and other current liabilities consist of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Accrued expenses $ 65,232 $ 63,548

1 unchanged sentence

Client liabilities 11,867 9,711

Contingent consideration 2,800 15,000

Accrued capital expenditures 3,764 2,059

Income taxes payable, net 1,249 1,213

Derivative instruments 3,385 7,454

Contingent consideration 1,280 1,280

Income taxes payable 271 284

Others 5,253 6,326

2 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

1 unchanged sentence

Other non-current liabilities consist of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Retirement benefits $ 26,431 $ 24,795

Deferred transition revenue 21,827 18,213

Contingent consideration 4,900 589

Unrecognized tax benefits 2,123 1,966

Contingent consideration 1,420 1,420

Derivative instruments 723 4,363

3 unchanged sentences

Accumulated other comprehensive income/(loss) (“AOCI”) consists of actuarial gain/(loss) on retirement benefits and foreign currency translation adjustments.

In addition, the Company enters into foreign currency forward contracts and interest rate swaps, which are designated as cash flow hedges and net investment hedges, as applicable, in accordance with ASC Topic 815, Derivatives and Hedging .

In addition, the Company enters into foreign currency forward contracts and interest rate swaps, which are designated as cash flow hedges, as applicable, in accordance with ASC Topic 815, Derivatives and Hedging .

Cumulative changes in the fair values of cash flow hedges are recognized in AOCI on the Company’s consolidated balance sheets.

The fair value changes are reclassified from AOCI to unaudited consolidated statements of income upon settlement of foreign currency forward contracts designated as cash flow hedges of a forecast transaction, whereas such changes for interest rate swaps are reclassified over the term of the contract.

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

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

The following table sets forth the changes in AOCI during the three months ended March 31, 2025 and 2024:

Accumulated Other Comprehensive Income/(Loss)

1 unchanged sentence

Balance as of January 1, 2025 $ ( 146,998 ) $ ( 7,548 ) $ ( 176 ) $ ( 154,722 )

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

Gain recognized during the period 3,927 9,469 — 13,396

Reclassification to net income (1)

2 unchanged sentences

( 673 ) ( 2,262 ) ( 13 ) ( 2,948 )

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

Accumulated other comprehensive income/(loss) as of March 31, 2025 $ ( 143,744 ) $ 1,257 $ ( 300 ) $ ( 142,787 )

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

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

Losses recognized during the period ( 3,064 ) ( 62 ) — ( 3,126 )

Reclassification to net income (1)

2 unchanged sentences

519 ( 190 ) ( 1 ) 328

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

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

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

3 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

2 unchanged sentences

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

Quoted Prices in

Active Markets for

Identical Assets Significant Other

Inputs Significant Other

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

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

As of March 31, 2025 (Level 1) (Level 2) (Level 3) Total

Cash equivalents - Money market funds (1)

8 unchanged sentences

Total $ — $ 4,108 $ 2,700 $ 6,808

Quoted Prices in

Active Markets for

Identical Assets Significant Other

Inputs Significant Other

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

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

14 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 classified as Level 2.

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

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

classified as Level 2.

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

Fair Value of Contingent Consideration :

2 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.

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

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:

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

2024 2023 2024 2023

Three months ended March 31,

Opening balance $ 2,700 $ 15,589

Acquisitions 7,700 — 7,700 —

Fair value changes — ( 589 )

1 unchanged sentence

Closing balance $ 2,700 $ —

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

During the three months ended March 31, 2025 and 2024, there were no transfers among Level 1, Level 2 and Level 3.

Financial Instruments Not Carried at Fair Value :

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

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

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2025

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

Derivatives and Hedge Accounting

The Company uses derivative instruments to mitigate cash flow volatility from risk of fluctuations in foreign currency exchange rates and interest rates.

The Company enters into foreign currency forward contracts to hedge cash flow risks from forecasted transactions denominated in certain foreign currencies, and interest rate swaps to hedge cash flow risks from its revolving credit facility having variable interest rate obligations.

The Company enters into foreign currency forward contracts to hedge cash flow risks from forecasted revenues and other transactions denominated in certain foreign currencies.

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

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Foreign currency forward contracts denominated in:

dollar (USD) 903,000 984,300

Interest rate swaps (Floating to fixed) denominated in:

The Company estimates that approximately $ 7,631 of derivative gains, net, excluding tax effects, included in AOCI, representing changes in the value of cash flow hedges based on exchange rates prevailing as of September 30, 2024, could be reclassified into earnings within the next twelve months.

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

dollar (USD) 31,500 —

The Company estimates that approximately $ 983 of derivative gains, net, excluding tax effects, included in AOCI, representing changes in the value of cash flow hedges based on exchange rates prevailing as of March 31, 2025, could be reclassified into earnings within the next twelve months.

As of March 31, 2025, the maximum outstanding term of the cash flow hedges was approximately 42 months.

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

1 unchanged sentence

Changes in the fair value of these financial instruments are recognized in the unaudited consolidated statements of income and are included in the foreign exchange gain/(loss) line item.

The Company’s primary exchange rate exposure is with the Indian rupee (INR), the Philippine peso (PHP), the U.K.

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

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.

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

Foreign currency forward contracts denominated in:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Sell USD 215,904 179,491

4 unchanged sentences

Buy USD 953 588

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:

Derivatives in cash flow hedging

relationships Derivatives not designated as hedging

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

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

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

March 31, 2025 December 31, 2024 March 31, 2025 December 31, 2024

Other current assets $ 4,316 $ 1,711 $ 430 $ 262

Other assets $ 1,603 $ 852 $ — $ —

Accrued expenses and other

current liabilities $ 843 $ 1,859 $ 148 $ 150

Accrued expenses and other current liabilities $ 3,333 $ 7,404 $ 52 $ 50

Other non-current liabilities $ 723 $ 4,363 $ — $ —

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2025

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

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

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

Three months ended March 31,

Derivative financial instruments:

2024 2023 2024 2023

Unrealized gain/(loss) recognized in OCI

Unrealized gain/(loss) recognized in other comprehensive income (“OCI”)

Derivatives in cash flow hedging relationships $ 9,469 $ ( 62 )

1 unchanged sentence

Derivatives not designated as hedging instruments $ 480 $ 40

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

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

Three months ended September 30,

As per unaudited consolidated

statements of

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

statements of

income Gain/(loss) on derivative financial instruments

Three months ended March 31,

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

Derivatives in cash flow hedging relationships

11 unchanged sentences

Foreign exchange gain/(loss), net $ 1,192 $ 480 $ 359 $ 40

$ 278 $ ( 259 ) $ 409 $ ( 1,584 )

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

Nine months ended September 30,

As per unaudited consolidated

statements of

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

statements of

income Gain/(loss) on derivative financial instruments

Derivatives in cash flow hedging relationships

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

Cost of revenues $ 849,336 $ ( 64 ) $ 760,691 $ ( 4,148 )

General and administrative expenses $ 167,195 156 $ 144,564 ( 357 )

Selling and marketing expenses $ 108,982 23 $ 88,674 ( 32 )

Depreciation and amortization expense $ 39,055 12 $ 38,192 ( 185 )

Interest expense $ 14,145 723 $ 10,030 461

Total before tax 850 ( 4,261 )

Income tax effects on above ( 416 ) 701

Net of tax $ 434 $ ( 3,560 )

Derivatives not designated as hedging instruments

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

Foreign exchange gain/(loss), net $ 673 $ ( 2,332 ) $ 838 $ 574

$ 673 $ ( 2,332 ) $ 838 $ 574

The following tables summarizes the Company’s debt position:

September 30, 2024 December 31, 2023

The following tables summarizes the Company’s debt position under its credit agreement with Citibank, N.A.:

March 31, 2025 December 31, 2024

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

2 unchanged sentences

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

— 4,891 4,891 65,000 — 65,000

Long-term borrowings 210,000 92,500 302,500 190,000 93,750 283,750

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

Unamortized debt issuance costs — ( 123 ) ( 123 ) — ( 152 ) ( 152 )

Total long-term borrowings 210,000 92,377 302,377 190,000 93,598 283,598

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

Total borrowings $ 210,000 $ 97,263 $ 307,263 $ 190,000 $ 98,484 $ 288,484

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

Unamortized debt issuance costs for the Company’s revolving credit facility of $ 798 and $ 895 as of March 31, 2025 and December 31, 2024, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.

Credit Agreement

1 unchanged sentence

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 Secured Overnight Financing Rate (“SOFR”) as the reference rate for the U.S.

dollar borrowings.

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

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

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

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

This agreement was amended and restated in April 2022, followed by the First Amendment to Amended and Restated Credit Agreement in August 2024 (the “2024 Credit Agreement”).

Among other things, the 2024 Credit Agreement increases revolving credit commitments to $ 500,000 and provides a new term loan facility of $ 100,000 with an annual repayment amount of 5 %.

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

Under the 2024 Credit Agreement, obligations bear interest at a rate equal to specified prime rate (alternate base rate) or the adjusted secured overnight financing rate (SOFR) specified therein, plus, in each case, an applicable margin, and are guaranteed by the Company’s wholly-owned material domestic subsidiaries and secured by all or substantially all of the Company’s and its material domestic subsidiaries’ assets.

The revolving credit commitments are subject to a commitment fee.

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

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

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

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

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

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

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

2024 2023 2024 2023

Three months ended March 31,

Revolving credit facility 5.8 % 6.7 %

Term loan facility 5.7 % — %

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

As of March 31, 2025 and December 31, 2024, the Company was in compliance with the financial covenants under the 2024 Credit Agreement.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

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

The maturity profile of the Company’s long-term borrowings, excluding debt issuance costs, outstanding as of March 31, 2025 was as follows:

Revolving credit facility Term loan facility

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

2025 (April 1 - December 31) $ — $ 3,750

2027 210,000 88,750

2 unchanged sentences

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

As of September 30, 2024 and December 31, 2023, the Company had outstanding letters of credit of $ 741 and $ 461 , respectively, that were not recognized in the consolidated balance sheets.

As of March 31, 2025 and December 31, 2024, the Company had outstanding letters of credit of $ 741 and $ 761 , respectively, that were not recognized in the consolidated balance sheets.

Capital Structure

3 unchanged sentences

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

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

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

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

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

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

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”).

Three months ended March 31, 2025 190,716 $ 9,432 $ 49.46

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

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.

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.

On March 15, 2024, the Company entered into the 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 is accounted for as a treasury stock transaction and forward stock purchase agreement indexed to the Company’s common stock.

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

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

The prepayment of $ 25,000 was initially recorded in additional paid-in capital, which reflected the pending settlement of the 2024 ASR Agreement.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

March 31, 2025

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

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

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

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 commissions and excluding excise tax, under its two 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

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

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

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

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

Three months ended March 31, 2025 175,063 $ 8,058 $ 46.03

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

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

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

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

Pursuant to the Inflation Reduction Act, 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 $ nil and $ 544 on repurchase of common stock as a part of cost of such repurchases for the three months ended March 31, 2025 and 2024, respectively.

Employee Benefit Plans

9 unchanged sentences

The Company expects to earn a return of approximately 7.0 % per annum on the India Plan for the year ending on December 31, 2025.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

Change in Plan Assets

4 unchanged sentences

Currency translation adjustments 34

Plan assets as of September 30, 2024

Plan assets as of March 31, 2025 $ 20,045

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2025

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

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

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

2024 2023 2024 2023

Three months ended March 31,

Service cost $ 1,383 $ 1,108

8 unchanged sentences

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

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

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

2024 2023 2024 2023

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

Three months ended March 31,

Contribution to the 401(k) Plans $ 2,795 $ 2,443

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

$ 7,112 $ 5,841 $ 20,752 $ 16,837

Contributions to the defined contribution plans in foreign subsidiaries of the Company $ 7,785 $ 6,749

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

2 unchanged sentences

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

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

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

2024 2023 2024 2023

Three months ended March 31,

Finance lease:

1 unchanged sentence

Interest on lease liabilities 69 36

164 75 395 190

Operating lease (1)

5,995 4,839 17,088 15,171

Variable lease costs 1,073 984

Sub lease income ( 49 ) — ( 49 ) —

Sublease income ( 110 ) —

Total lease cost $ 7,343 $ 6,437

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2025

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

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

Nine months ended September 30,

Three months ended March 31,

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

11 unchanged sentences

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

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

As of September 30, 2024 and December 31, 2023, the Company did not have any significant leases that have not yet commenced but that create significant rights and obligations for the Company.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

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

The Company modified certain of its operating leases, resulting in a decrease in lease liabilities by $ 234 during the three months ended March 31, 2025 and an increase in lease liabilities by $ 3,228 during the three months ended March 31, 2024, with a corresponding adjustment to ROU assets.

As of March 31, 2025 and December 31, 2024, the Company did not have any significant leases that have not yet commenced but that create significant rights and obligations for the Company.

Maturities of lease liabilities as of March 31, 2025 were as follows:

Operating Leases Finance Leases

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

2025 (April 1 - December 31) $ 17,304 $ 763

2026 21,993 721

6 unchanged sentences

Present value of lease liabilities $ 78,834 $ 1,963

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2025

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

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

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

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

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

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

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

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

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

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

The effective tax rate decreased from 22.0 % during the three months ended March 31, 2024 to 16.9 % during the three months ended March 31, 2025.

The Company recorded income tax expense of $ 13,496 and $ 13,753 for the three months ended March 31, 2025 and 2024, respectively.

The decrease in income tax expense for the three months ended March 31, 2025 was primarily a result of higher excess tax benefits related to stock-based compensation, partially offset by higher profit and increase in non-deductible compensation expenses, compared to the three months ended March 31, 2024.

Deferred income taxes recognized in OCI were as follows:

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

2024 2023 2024 2023

Three months ended March 31,

Deferred taxes benefit / (expense) recognized on:

4 unchanged sentences

Total $ ( 2,948 ) $ 328

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

Stock-Based Compensation

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

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

2024 2023 2024 2023

Three months ended March 31,

Cost of revenues $ 3,487 $ 3,949

2 unchanged sentences

Total $ 19,187 $ 17,852

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

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

$ 9,105 $ 5,358

(1) Includes $ 1,673 and $ 462 during the three months ended September 30, 2024 and 2023, respectively, and $ 9,214 and $ 13,172 during the nine months ended September 30, 2024 and 2023, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No.

(1) Includes $ 14,526 and $ 7,523 during the three months ended March 31, 2025 and 2024, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No.

2016-09, Compensation - Stock Compensation .

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

As of March 31, 2025 and December 31, 2024, the Company had 549,764 and 1,813,592 shares, respectively, available for grant under the 2018 Omnibus Incentive Plan.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2025

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

Stock Options

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

Stock Options

Number Weighted Average

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

Vested 447,655 30.14

Number of Options

Weighted Average Exercise Price

Aggregate Intrinsic Value

Weighted Average Remaining Contractual Life (Years)

Outstanding at December 31, 2024 1,768,305 $ 30.14 $ 25,187 8.5

Granted — — — —

Exercised — — — —

Forfeited — — — —

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

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

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

Outstanding at March 31, 2025 1,768,305 $ 30.14 $ 30,191 8.2

Vested and exercisable at March 31, 2025 425,265 $ 30.14 $ 7,261 8.2

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

As of March 31, 2025, unrecognized compensation cost of $ 11,998 is expected to be expensed over a weighted average period of 2.3 years.

Share Matching Program

2 unchanged sentences

Restricted stock unit activity under the SMP is shown below:

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

Restricted Stock Units (SMP)

Number Weighted Average

Outstanding as of December 31, 2023 217,230 $ 24.95

Outstanding at December 31, 2024* 144,845 $ 24.95

Vested* ( 144,845 ) 24.95

Forfeited — —

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

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

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

Outstanding as of March 31, 2025* — $ —

* As of March 31, 2025 and December 31, 2024 restricted stock units vested for which the underlying common stock is yet to be issued are 217,230 and 72,385 , respectively.

Restricted Stock Units

6 unchanged sentences

Forfeited ( 12,559 ) 30.56

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

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

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

Outstanding as of March 31, 2025* 2,743,823 $ 35.74

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2025

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

* As of March 31, 2025 and December 31, 2024 restricted stock units vested for which the underlying common stock is yet to be issued are 291,520 and 289,547 , respectively.

As of March 31, 2025, unrecognized compensation cost of $ 89,438 is expected to be expensed over a weighted average period of 3.0 years.

Performance-Based Stock Awards

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

During the nine months ended September 30, 2024, the Company granted 40 % of each award recipient’s equity grants in the form of PRSUs that cliff vest at the end of a three-year period based on an aggregated revenue target for a three-year period.

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

During the three months ended March 31, 2025, the Company granted 40 % of each award recipient’s equity grants in the form of PRSUs that cliff vest at the end of a three-year period based on an aggregated revenue target for a three-year period (“PU”).

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

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

6 unchanged sentences

Forfeited ( 1,904 ) 29.73 ( 2,849 ) 40.10

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

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

Outstanding as of March 31, 2025 631,010 $ 34.03 946,020 $ 48.85

As of March 31, 2025, unrecognized compensation cost of $ 41,380 is expected to be expensed over a weighted average period of 2.1 years.

Employee Stock Purchase Plan

4 unchanged sentences

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

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

The sixth offering period under the 2022 ESPP commenced on January 1, 2025 with a term of six months .

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

1 unchanged sentence

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

Issuance of common stock related to the:

Third offering period 71,645 $ 1,948

Fourth offering period 86,936 $ 2,414

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

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

Issuance of common stock made during the fifth offering period 64,939 $ 1,823

Shares available for issuance as of March 31, 2025 3,607,805

Contributions received for the sixth offering period up to March 31, 2025 $ 2,935

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2025

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

Related Party Disclosures

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

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

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

The Company had outstanding accounts receivable, net of $ 84 and $ 209 , related to this service contract as of September 30, 2024 and December 31, 2023, respectively.

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

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

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

In April 2022, the Company entered into a service contract for providing data and AI-led 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 three months ended March 31, 2025 and 2024, the Company recognized revenues, net of $ nil and $ 166 , respectively, related to this service contract.

The Company had outstanding accounts receivable, net of $ nil and $ 124 , related to this service contract as of March 31, 2025 and December 31, 2024, respectively.

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

During the three months ended March 31, 2025 and 2024, the Company recognized revenues, net of $ 42 and $ 151 , respectively, related to this service contract.

The Company had outstanding accounts receivable, net of $ 14 and $ 56 , related to this service contract as of March 31, 2025 and December 31, 2024, respectively.

Commitments and Contingencies

Capital Commitments

As of September 30, 2024, the Company had committed to spend approximately $ 6,300 under agreements to purchase property and equipment.

As of March 31, 2025, the Company had committed to spend approximately $ 10,300 under agreements to purchase property and equipment.

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

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

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

in growth-stage technology companies.

During the nine months ended September 30, 2024, the Company further invested $ 600 in the Partnership and is committed under the Partnership to make further investments up to an amount of $ 2,800 .

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

The Company committed to make an aggregate investment of $ 4,000 in the Partnership.

As of March 31, 2025, the Company has invested $ 1,800 in the Partnership and is committed to make further investments up to an amount of $ 2,200 .

Other Commitments

12 unchanged sentences

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

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

The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 7,669 and $ 7,227 , as of September 30, 2024 and December 31, 2023, respectively.

The aggregate amount demanded by Indian tax authorities (net of advance payments) as of March 31, 2025 and December 31, 2024 is $ 50,535 and $ 49,588 , respectively.

The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 8,045 and $ 7,506 , as of March 31, 2025 and December 31, 2024, respectively.

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

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

Pursuant to reviewing the Company’s annual VAT filings, the Indian tax authorities raised aggregate VAT demands for tax years 2015 and 2017, in the amounts of $ 5,455 and $ 5,493 , as of September 30, 2024 and December 31, 2023, respectively.

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

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2025

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

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 $ 5,348 and $ 5,339 , as of March 31, 2025 and December 31, 2024, respectively.

The Company has provided bank guarantees against these demands in the amounts of $ 5,348 and $ 5,339 , as of March 31, 2025 and December 31, 2024, respectively.

The Indian GST authorities rejected the Company’s refund claims in the amounts of $ 5,746 and $ 5,885 as of March 31, 2025 and December 31, 2024, 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 September 30, 2024 and December 31, 2023, respectively.

Accordingly, no provision was recognized as of March 31, 2025 and December 31, 2024, respectively.

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

5 unchanged sentences

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

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2024

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

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

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

3 unchanged sentences

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

Restructuring Costs

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

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

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

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

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

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

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

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

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

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

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

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

What changed 10-Q

Item 1. Financial Statements