Item 2. Management’s Discussion and Analysis
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion in connection with our unaudited consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Some of the statements in the following discussion are forward looking statements.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include but are not limited to:
• our ability to maintain and grow client demand for our services and solutions, including anticipating and incorporating the latest technologies, for instance, artificial intelligence (“AI”), including generative AI into our offerings;
• use of AI technology presents competitive, operational, reputational and legal risks, and our use of AI technology may not be successful;
• impact on client demand by the selling cycle and terms of our client contracts;
• our ability to successfully transition to and implement new organization structure;
• fluctuations in our earnings;
• our ability to hire and retain enough sufficiently trained employees to support our operations or any changes in the senior management team;
• our ability to accurately estimate and/or manage costs;
• our ability to adjust our pricing terms or effectively manage our asset utilization levels to meet the changing demands of our clients and potential clients;
• cyber security incidents, data breaches, or other unauthorized disclosure of sensitive or confidential client and employee data;
• reliance on third parties to deliver services and infrastructure for client critical services, and on third party data use rights for certain of our offerings;
• employee wage increases;
• failure to protect our intellectual property;
• our dependence on a limited number of clients and our ability to withstand the loss of a significant client;
• our ability to manage rapid infrastructure and personnel growth across countries;
• our ability to successfully consummate or integrate strategic acquisitions including the impact from the impairment of goodwill and other intangible assets, if any;
• legal liability arising out of customer and third party contracts;
• increasing competition in our industry;
• telecommunications or technology disruptions or breaches, natural or other disasters, medical epidemics or pandemics, or acts of violence or war;
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• challenges by applicable tax authorities to transfer pricing determinations or the introduction of new or unfavorable tax legislation, tariffs, including legal restrictions on repatriation of funds held abroad;
• exposure to currency exchange rate fluctuations in the various currencies in which we do business including rising inflation, high interest rates and economic recessionary trends on currency exchange rates;
• restrictions on immigration and work permits;
• regulatory, legislative and judicial developments, including our ability to adhere to regulations or accreditation or licensing standards that govern our business;
• our ability to service debt or obtain additional financing on competitive terms, or exposure to interest rate fluctuations that are not fully hedged through interest rate swaps;
• negative public reaction in the United States or elsewhere to offshore outsourcing;
• effects of political and economic conditions globally including newly imposed U.S tariffs and any additional responsive non-U.S tariffs, particularly in the geographies where we operate;
• our ability to make accurate estimates and assumptions in connection with the preparation of our consolidated financial statements;
• credit risk fluctuations in the market values of our investment and derivatives portfolios; and
• our ability to execute our sustainability-related initiatives.
These and other factors are more fully discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. These and other risks could cause actual results to differ materially from those implied by forward-looking statements in this Quarterly Report on Form 10-Q.
The forward-looking statements made by us in this Quarterly Report on Form 10-Q, or elsewhere, speak only as of the date on which they were made. New risks and uncertainties may occur from time to time, and it is impossible for us to predict those events or how they may affect us. We have no obligation to update any forward-looking statements in this Quarterly Report on Form 10-Q after the date of this Quarterly Report on Form 10-Q, except as required by federal securities laws.
Executive Overview
We are 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. We harness the power of data, AI, and deep industry knowledge to transform businesses, including the world’s leading corporations in industries including insurance, healthcare, life sciences, banking and financial services, media and retail, communications and media, and energy and infrastructure, among others.
Our global delivery network, which includes highly trained industry and process specialists across the United States, the United Kingdom, Latin America, South Africa, Europe and Asia (primarily India and the Philippines), is a key asset. We have operations centers in India, the United States, the Philippines, South Africa, Colombia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and the Republic of Ireland.
In the first quarter of 2025, we implemented operational and structural changes to align with how our management reviews financial information and makes operating decisions. The new operating model is comprised of Industry Market Units (“IMUs”) to focus on delivering higher value to clients leveraging our full suite of capabilities; and Strategic Growth Units to focus on rapidly advancing our operational, analytics, data engineering, and AI capabilities specific to our chosen industries. Our IMUs will focus on managing customer relationships and delivering the “One EXL” value proposition to clients, maintain a unified go-to-market approach and be integrally responsible for growth, profitability and client satisfaction.
Accordingly, our new reportable segments, aligned to our IMUs, are as follows:
• Insurance,
• Healthcare and Life Sciences,
• Banking, Capital Markets and Diversified Industries,
• International Growth Markets
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The primary changes in our new reportable segments reflect 1) the integration of our former Analytics reportable segment as a core capability within each of our IMUs, ensuring alignment with the specialized needs of our clients across IMUs, 2) the reorganization of our 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 our 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 strategically expand our footprint in markets outside of North America and drive focus on offerings and expansion in those markets in new and existing clients.
In addition, our 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), the United Kingdom and Europe, and Rest of World.
We have recast our segment disclosures for all prior periods presented to conform to the way we internally manage and monitor segment level performance of our business.
Revenues
For the three months ended June 30, 2025, we generated revenues of $514.5 million compared to revenues of $448.4 million for the three months ended June 30, 2024, an increase of $66.1 million, or 14.7%. For the six months ended June 30, 2025, we generated revenues of $1,015.5 million compared to revenues of $884.9 million for the six months ended June 30, 2024, an increase of $130.6 million, or 14.8%.
We serve cli ents mainly in North America, and the United Kingdom and Europe , with these two regions generating 82.2% and 15.1%, respectively, of our total revenues for the three months ended June 30, 2025, and 82.3% and 14.8%, respectively, of our total revenues for the three months ended June 30, 2024. For the six months ended June 30, 2025, these two regions generated 82.5% and 14.8%, respectively, of our total revenues and 82.6% and 14.7%, respectively, of our total revenues for the six months ended June 30, 2024.
For the three months ended June 30, 2025 and 2024, our total revenues from our top ten clients accounted for 33.5% and 33.0% of our total revenues, respectively. For the six months ended June 30, 2025 and 2024, our total revenues from our top ten clients accounted for 33.6% and 32.9% of our total revenues, respectively. Although we continue to develop relationships with new clients to diversify our client base, we believe that the loss of any of our top ten clients could have a material adverse effect on our financial performance.
Our Business
We provide data and AI-led and digital operations services to our clients. We market and sell our solutions and services to existing and prospective clients through our sales and client management teams, which are aligned by our IMUs. Our sales and client management teams operate primarily from the United States, India, the United Kingdom, Ireland and Australia.
Data and AI-led: Our data and AI-led revenue comes from AI-powered solutions and services in which we embed data and AI into client workflows. Leveraging our depth of domain knowledge, analytics, data management and digital engineering expertise, our 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.
Digital operations: Our digital operations revenue comes from our industry-specific solutions and services that help clients run essential business functions with greater speed, accuracy, and efficiency. We apply deep industry expertise and tailored technology—whether our 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.
Our industry market units, which provide data and AI-led and digital operations services, are described below:
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Insurance: We combine our cloud-first digital insurance software solutions and industry expertise with generative AI, machine learning, advanced analytics, and platforms, to enable insurance businesses to transform operations and embed artificial intelligence into workflows. Our data and AI-powered operations and services span across the insurance value chain. We provide services to insurers in the areas of property and casualty, life, disability, annuity, and retirement services. Additionally, we serve insurance brokers, reinsurers, and insurtech companies.
Our offerings include digital marketing, new business acquisition, actuarial, underwriting support, claims processing, premium and benefit administration, policy servicing, premium audit, surveys, billing and collection, commercial and residential surveys, finance and accounting and customer service. This includes our Insurance Large Language Model (“LLM”), a specialized generative AI platform for claims, underwriting and subrogation, developed leveraging our deep experience and proprietary data in the insurance space.
Healthcare and Life Sciences: We work with clients across the healthcare ecosystem to meet their current and dynamic business challenges. We deliver integrated solutions and services at the intersection of domain, data, and AI to enable AI transformation for healthcare payers and providers, pharmacy benefit managers (“PBMs”), and life sciences organizations. Through the provision of a range of data and AI-powered operations and solutions, we focus on streamlining healthcare administration processes to enhance operational efficiency, aimed at reducing costs for both providers and consumers and improving consumer experience. We leverage innovative technologies to provide offerings intended to simplify complex workflows, minimize bureaucratic hurdles, and improve overall effectiveness.
For healthcare payers, we offer pre and post-pay auditing services, payment analytics, payment integrity, a care management platform and services and patient navigation. For healthcare providers, we offer revenue cycle management, digital transformation, data and analytics and call center modernization. For PBMs, we provide digital transformation, data and analytics and call center modernization. Within the life sciences space, we provide finance and accounting operations and data analytics. Across our segments, we leverage AI, analytics, and cloud-based solutions to enhance value-based care, optimize claims, and ensure regulatory compliance.
Banking, Capital Markets, and Diversified Industries: Our Banking and Capital Markets and Diversified Industries group delivers comprehensive solutions across retail and commercial banking, credit card services, payment services, fintech, banking infrastructure services, capital markets, mortgage services, utilities, retail and consumer packaged goods, media, communications and entertainment, travel and leisure, transportation and logistics, and other business services industries.
By integrating domain expertise with AI-driven data management, we empower financial institutions to innovate, enhance operational agility, and navigate evolving market demands. Our tailored services span retail banking operations such as digital lending solutions that enhance underwriting and compliance, sales and demand generation, omni-channel marketing, digital onboarding, know your customer (“KYC”)/anti-money laundering (“AML”) compliance, and collections; credit card services including customer acquisition, fraud management, and payment processing; and payment services structured for secure, multi-currency transaction processing. Additionally, we support fintechs with AI-driven hyper-personalization and analytics, while our capital markets solutions cover investment banking, asset management, custodian banking, and fund administration. Mortgage services include loan origination, account servicing, default management, and title settlement services. Our industry-leading AI and automation-driven service offerings drive efficiency and innovation across financial services.
Our enterprise services and solutions include domain-specific operations, finance and accounting, customer experience management, back-office operations, and revenue enhancement, such as pricing and billing, enabling our clients to deliver superior economic performance. For example, in the retail and consumer packaged goods sectors, we provide supply chain management services and AI-led advanced analytical services including merchandising, pricing, and demand forecasting and for our clients in the utilities sector, we offer AI-enabled operations and solutions related to end-to-end customer life cycle management, including onboarding and terminations, engineering field services, customer service, billing, and debt management and collections.
International Growth Markets: Our International Growth Markets (“IGM”) unit is focused on extending our global reach in growth markets outside North America. This provides us with opportunities to leverage our investments, experience, and expertise from the North America market to expand our global client base, drive further growth, and bring us closer to our
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customers across the world. IGM consists of dedicated teams servicing clients in the banking and capital markets, insurance, life sciences, energy and infrastructure, retail, consumer goods, and travel industries in growth markets. This unit is instrumental in localizing our global capabilities in these industry segments to align with the local regulatory, cultural, linguistic and economic needs. Across all regions in which we operate, we combine deep domain experience with our data and AI expertise to help clients innovate, enhance operational agility, adapt to changing market demands, and drive better business outcomes.
Pricing: We charge for our services using various pricing models like time-and-material pricing, full-time-equivalent pricing, transaction-based pricing, outcome-based pricing, subscription-based pricing and other alternative or emerging pricing models. Outcome-based pricing arrangements is an example of a non-linear pricing model where our revenues from platforms and solutions and the services we provide are compensated based on our clients’ usage or savings rather than the efforts we deploy to provide these services. We continue to observe a shift in the industry pricing models toward transaction-based pricing, outcome-based pricing and other alternative pricing models. We believe this trend will continue and we use such alternative pricing models with some of our current clients and are seeking to move certain other clients from a full-time-equivalent pricing model to a transaction-based or other alternative pricing model. These alternative pricing models place the focus on operating efficiency in order to maintain or improve our gross margins.
Income Taxes
The Organization for Economic Cooperation and Development, issued a Pillar II model for implementing a 15% global minimum tax effective January 1, 2024. The application of the rules relating to Pillar II continue to evolve, and there are countries that are still in the process of issuing attendant rules and regulations, including available transitional safe harbor rules. The two countries where we operate but do not meet the available safe harbor rules are the Republic of Ireland and the Philippines. The Pillar II impacts for the Republic of Ireland and the Philippines are not significant and have been properly reflected in our financial statements. We will continue to monitor Pillar II developments and assess any future impacts.
Critical Accounting Policies and Estimates
In the first quarter of 2025, we implemented operational and structural changes which resulted in the realignment of our reporting segments. Refer to Note 3- Segment Information and Note 10- Goodwill and Other Intangible Assets to our unaudited consolidated financial statements for further details.
Goodwill has been re-allocated to reporting units based on the relative fair value approach. We 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 our reporting units was calculated using a discounted cash flow model using estimated future cash flows. The results of our evaluation demonstrated that the fair value of each reporting unit exceeded its book value as of the date of the segment realignment.
There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2025, as compared to the critical accounting policies and estimates referred in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Critical Accounting Policies and Estimates” and Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
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Results of Operations
The following table summarizes our results of operations for the three months ended June 30, 2025 and 2024:
(dollars in millions)
Three months ended June 30, 2025 Percentage of Revenues, net Three months ended June 30, 2024 Percentage of Revenues, net Dollar Change Percentage Change
(A) (B) (C=A-B)
Revenues, net $ 514.5 100.0 % $ 448.4 100.0 % $ 66.1 14.7 %
Cost of revenues (1)
320.3 62.3 % 282.1 62.9 % 38.2 13.5 %
Gross profit (1)
194.2 37.7 % 166.3 37.1 % 27.9 16.8 %
Operating expenses:
General and administrative expenses 59.5 11.6 % 56.5 12.6 % 3.0 5.5 %
Selling and marketing expenses 39.4 7.7 % 35.4 7.9 % 4.0 11.3 %
Depreciation and amortization expense 14.1 2.7 % 12.9 2.9 % 1.2 8.9 %
Total operating expenses 113.0 22.0 % 104.8 23.4 % 8.2 7.9 %
Income from operations 81.2 15.8 % 61.5 13.7 % 19.7 32.0 %
Foreign exchange gain, net 2.2 0.4 % — — % 2.2 6041.7 %
Interest expense (4.3) (0.8) % (5.3) (1.2) % 1.0 (19.6) %
Other income, net 5.7 1.1 % 3.5 0.8 % 2.2 59.7 %
Income before income tax expense and earnings from equity affiliates 84.8 16.5 % 59.7 13.3 % 25.1 41.9 %
Income tax expense 18.6 3.6 % 13.9 3.1 % 4.7 33.7 %
Income before earnings from equity affiliates 66.2 12.9 % 45.8 10.2 % 20.4 44.4 %
Loss from equity-method investment (0.1) — % — — % (0.1) — %
Net income $ 66.1 12.8 % $ 45.8 10.2 % $ 20.3 44.1 %
(1) Exclusive of depreciation and amortization expense.
Due to rounding, the numbers presented in the tables included in this Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may not add up precisely to the totals provided.
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Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024
Revenues
The following table summarizes our revenues by reportable segments:
Three months ended June 30, Percentage
change Percentage of Total Revenues for the three months ended June 30,
2025 2024 Dollar change 2025 2024
(dollars in millions)
Insurance $ 172.2 $ 158.5 $ 13.7 8.7 % 33.5 % 35.3 %
Healthcare and Life Sciences 129.5 106.1 23.4 22.0 % 25.2 % 23.7 %
Banking, Capital Markets and Diversified Industries 121.1 104.6 16.5 15.8 % 23.5 % 23.3 %
International Growth Markets 91.7 79.2 12.5 15.8 % 17.8 % 17.7 %
Total revenues, net $ 514.5 $ 448.4 $ 66.1 14.7 % 100.0 % 100.0 %
Revenues for the three months ended June 30, 2025 were up by $66.1 million, or 14.7%, compared to the three months ended June 30, 2024, driven primarily by revenue growth from our new and existing clients in all of our reportable segments.
Revenue growth in Insurance of $13.7 million was primarily driven by expansion of business from our new and existing clients during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Revenue growth in Healthcare and Life Sciences of $23.4 million was primarily driven by the expansion of business from our new and existing clients, including incremental revenue from our August 2024 acquisition of Incandescent Technologies, Inc. (“ITI Data”) during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Revenue growth in Banking, Capital Markets and Diversified Industries of $16.5 million was primarily driven by expansion of business from our new and existing clients of $16.6 million, including incremental revenue from our August 2024 acquisition of ITI Data, partially offset by a foreign exchange loss of $0.1 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Revenue growth in International Growth Markets of $12.5 million was primarily driven by expansion of business from our new and existing clients of $11.9 million, including incremental revenue from our August 2024 acquisition of ITI Data and a foreign exchange gain, net of hedging of $0.6 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Cost of Revenues and Gross Margin : The following table sets forth cost of revenues and gross margin of our reportable segments:
Cost of Revenues Gross Margin
Three months ended June 30, Dollar change Percentage
change Three months ended June 30, Percentage
change
2025 2024 2025 2024
(dollars in millions)
Insurance $ 112.3 $ 104.5 $ 7.8 7.5 % 34.8 % 34.0 % 0.8 %
Healthcare and Life Sciences 73.1 60.1 13.0 21.6 % 43.5 % 43.4 % 0.1 %
Banking, Capital Markets and Diversified Industries 75.4 65.3 10.1 15.5 % 37.8 % 37.6 % 0.2 %
International Growth Markets 59.5 52.2 7.3 13.9 % 35.1 % 34.1 % 1.0 %
Total $ 320.3 $ 282.1 $ 38.2 13.5 % 37.7 % 37.1 % 0.6 %
Cost of revenues for the three months ended June 30, 2025 increased by $38.2 million, or 13.5% compared to the three months ended June 30, 2024. The increase in cost of revenues was primarily due to increases in employee-related costs and
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technology costs, partially offset by foreign exchange gain, net of hedging. Our gross margin for the three months ended June 30, 2025 was 37.7%, compared to 37.1% for the three months ended June 30, 2024, an increase of 60 basis points (“bps”) primarily driven by higher revenues and operational efficiencies, partially offset by increases in employee-related costs during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
The increase in cost of revenues in Insurance of $7.8 million for the three months ended June 30, 2025 was primarily due to increases in employee-related costs of $12.1 million on account of higher headcount and wage inflation, higher technology costs of $0.9 million and higher other operating costs of $0.4 million, partially offset by lower mail and data expenses in our direct marketing business of $4.6 million, and foreign exchange gain, net of hedging of $1.0 million. Gross margin in Insurance increased by 80 bps, primarily due to higher revenues and operational efficiencies during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
The increase in cost of revenues in Healthcare and Life Sciences of $13.0 million for the three months ended June 30, 2025 was primarily due to increases in employee-related costs of $11.9 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher facilities costs of $1.0 million and higher other operating costs of $0.7 million, partially offset by foreign exchange gain, net of hedging of $0.6 million. Gross margin in Healthcare and Life Sciences increased by 10 bps primarily due to higher volumes in certain existing clients during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
The increase in cost of revenues in Banking, Capital Markets and Diversified Industries of $10.1 million for the three months ended June 30, 2025 was primarily due to increases in employee-related costs of $9.0 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher technology costs of $0.6 million and higher other operating costs $1.1 million, partially offset by foreign exchange gain, net of hedging of $0.6 million. Gross margin in Banking, Capital Markets and Diversified Industries increased by 20 bps, primarily due to higher revenues and operational efficiencies during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
The increase in cost of revenues in International Growth Markets of $7.3 million for the three months ended June 30, 2025 was primarily due to increases in employee-related costs of $6.2 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher technology costs of $0.6 million and higher other operating costs $0.5 million. Gross margin in International Growth Markets increased by 100 bps, primarily due to higher revenues and operational efficiencies during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Selling, General and Administrative (“SG&A”) Expenses.
Three months ended June 30, Dollar change Percentage
change
2025 2024
(dollars in millions)
General and administrative expenses $ 59.5 $ 56.5 $ 3.0 5.5 %
Selling and marketing expenses 39.4 35.4 4.0 11.3 %
Selling, general and administrative expenses $ 98.9 $ 91.9 $ 7.0 7.7 %
The increase in SG&A expenses of $7.0 million was primarily due to increases in employee-related costs of $8.2 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher investments in digital and generative AI capabilities of $1.0 million, higher sales and marketing costs of $0.5 million and foreign exchange loss, net of hedging of $0.4 million. This increase in SG&A was partially offset by one-time restructuring and litigation settlement costs of $3.1 million incurred during the three months ended June 30, 2024, compared to the three months ended June 30, 2025.
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Depreciation and Amortization.
Three months ended June 30, Dollar change Percentage
change
2025 2024
(dollars in millions)
Depreciation expense $ 10.8 $ 9.8 $ 1.0 9.6 %
Intangible amortization expense 3.3 3.1 0.2 6.5 %
Depreciation and amortization expense $ 14.1 $ 12.9 $ 1.2 8.9 %
The increase in depreciation expense was $1.0 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to investments in infrastructure, technology assets and digital capabilities.
Income from Operations. Income from operations increased by $19.7 million, or 32.0%, from $61.5 million for the three months ended June 30, 2024 to $81.2 million for the three months ended June 30, 2025, primarily due to higher revenues and higher gross margins, partially offset by higher SG&A expenses during the three months ended June 30, 2025.
Foreign Exchange Gain, net. Foreign exchange gains and losses are primarily attributable to the movement of the U.S. dollar against the Indian rupee, the Philippine peso, the U.K. pound sterling and the South African rand during the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The average exchange rate of the U.S. dollar against the Indian rupee increased from 83.42 during the three months ended June 30, 2024 to 85.27 during the three months ended June 30, 2025. The average exchange rate of the U.S. dollar against the Philippine peso decreased from 58.29 during the three months ended June 30, 2024 to 55.97 during the three months ended June 30, 2025. The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.26 during the three months ended June 30, 2024 to 1.35 during the three months ended June 30, 2025. The average exchange rate of the U.S. dollar against the South African rand decreased from 18.53 during the three months ended June 30, 2024 to 18.12 during the three months ended June 30, 2025.
We recorded a foreign exchange gain, net of $2.2 million for the three months ended June 30, 2025 compared to a foreign exchange gain, net of $nil for the three months ended June 30, 2024.
Interest expens e. Interest expense decreased from $5.3 million for the three months ended June 30, 2024 to $4.3 million for the three months ended June 30, 2025, primarily due to lower average borrowings and a lower effective interest rate of 5.8% during the three months ended June 30, 2025, compared to 6.5% to the three months ended June 30, 2024.
Other Income, net.
Three months ended June 30, Change Percentage
change
2025 2024
(dollars in millions)
Gain on sale and fair value mark-to-market on investments $ 2.3 $ 1.2 $ 1.1 94.4 %
Interest and dividend income 2.7 2.4 0.3 12.9 %
Others, net 0.7 (0.1) 0.8 — %
Other income, net $ 5.7 $ 3.5 $ 2.2 59.7 %
Other income, net increased from $3.5 million for the three months ended June 30, 2024 to $5.7 million for the three months ended June 30, 2025. The increase is primarily due to higher yield on our investments and reversal of certain contingent liabilities of $0.9 million that were no longer required during the three months ended June 30, 2025.
Income Tax Expense. The effective tax rate decreased from 23.2% during the three months ended June 30, 2024 to 21.9% during the three months ended June 30, 2025. We recorded income tax expense of $18.6 million and $13.9 million for the three months ended June 30, 2025 and 2024, respectively. The increase in income tax expense was primarily as a result of higher profit, partially offset by lower state taxes and higher excess tax benefits during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
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Net Income. Net income increased from $45.8 million for the three months ended June 30, 2024 to $66.1 million for the three months ended June 30, 2025, primarily due to higher in income from operations of $19.7 million, higher foreign exchange and other income, net of $2.2 million each and lower interest expense by $1.0 million. This was partially offset by higher income tax expense of $4.7 million.
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Results of Operations
The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024:
(dollars in millions)
Six months ended June 30, 2025 Percentage of Revenues, net Six months ended June 30, 2024 Percentage of Revenues, net Dollar Change Percentage Change
(A) (B) (C=A-B)
Revenues, net $ 1,015.5 100.0 % $ 884.9 100.0 % $ 130.6 14.8 %
Cost of revenues (1)
628.0 61.8 % 555.5 62.8 % 72.5 13.0 %
Gross profit (1)
387.5 38.2 % 329.4 37.2 % 58.1 17.7 %
Operating expenses:
General and administrative expenses 119.0 11.7 % 109.7 12.4 % 9.3 8.4 %
Selling and marketing expenses 81.4 8.0 % 71.4 8.1 % 10.0 13.9 %
Depreciation and amortization expense 27.6 2.7 % 25.3 2.9 % 2.3 9.3 %
Total operating expenses 228.0 22.4 % 206.4 23.3 % 21.6 10.5 %
Income from operations 159.5 15.7 % 123.0 13.9 % 36.5 29.7 %
Foreign exchange gain, net 3.4 0.3 % 0.4 — % 3.0 761.5 %
Interest expense (8.4) (0.8) % (8.6) (1.0) % 0.2 (2.2) %
Other income, net 10.4 1.0 % 7.4 0.8 % 3.0 38.3 %
Income before income tax expense and earnings from equity affiliates 164.9 16.2 % 122.2 13.8 % 42.7 34.9 %
Income tax expense 32.0 3.2 % 27.6 3.1 % 4.4 16.0 %
Income before earnings from equity affiliates 132.9 13.1 % 94.6 10.7 % 38.3 40.4 %
Loss from equity-method investment (0.3) — % — — % (0.3) 575.7 %
Net income $ 132.6 13.1 % $ 94.6 10.7 % $ 38.0 40.2 %
(1) Exclusive of depreciation and amortization expense.
Due to rounding, the numbers presented in the tables included in this Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may not add up precisely to the totals provided.
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Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Revenues
The following table summarizes our revenues by reportable segments:
Six months ended June 30, Percentage
change Percentage of Total Revenues for the six months ended June 30,
2025 2024 Dollar change 2025 2024
(dollars in millions)
Insurance $ 344.2 $ 316.7 $ 27.5 8.7 % 33.9 % 35.8 %
Healthcare and Life Sciences 255.1 206.8 48.3 23.4 % 25.1 % 23.4 %
Banking, Capital Markets and Diversified Industries 238.8 207.9 30.9 14.9 % 23.5 % 23.5 %
International Growth Markets 177.4 153.5 23.9 15.5 % 17.5 % 17.3 %
Total revenues, net $ 1,015.5 $ 884.9 $ 130.6 14.8 % 100.0 % 100.0 %
Revenues for the six months ended June 30, 2025 were up by $130.6 million, or 14.8%, compared to the six months ended June 30, 2024, driven primarily by revenue growth from our new and existing clients in all of our reportable segments.
Revenue growth in Insurance of $27.5 million was primarily driven by expansion of business from our new and existing clients during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Revenue growth in Healthcare and Life Sciences of $48.3 million was primarily driven by the expansion of business from our new and existing clients, including incremental revenue from our August 2024 acquisition of ITI Data during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Revenue growth in Banking, Capital Markets and Diversified Industries of $30.9 million was primarily driven by expansion of business from our new and existing clients of $31.2 million, including incremental revenue from our August 2024 acquisition of ITI Data, partially offset by a foreign exchange loss of $0.3 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Revenue growth in International Growth Markets of $23.9 million was primarily driven by expansion of business from our new and existing clients of $24.5 million, including incremental revenue from our August 2024 acquisition of ITI Data, partially offset by a foreign exchange loss, net of hedging of $0.6 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Cost of Revenues and Gross Margin : The following table sets forth cost of revenues and gross margin of our reportable segments:
Cost of Revenues Gross Margin
Six months ended June 30, Dollar change Percentage change Six months ended June 30, Percentage change
2025 2024 2025 2024
(dollars in millions)
Insurance $ 221.5 $ 209.2 $ 12.3 5.8 % 35.7 % 33.9 % 1.8 %
Healthcare and Life Sciences 143.6 115.2 28.4 24.7 % 43.7 % 44.3 % (0.6) %
Banking, Capital Markets and Diversified Industries 149.1 131.2 17.9 13.6 % 37.6 % 36.9 % 0.7 %
International Growth Markets 113.8 99.9 13.9 13.9 % 35.9 % 34.9 % 1.0 %
Total $ 628.0 $ 555.5 $ 72.5 13.0 % 38.2 % 37.2 % 1.0 %
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Cost of revenues for the six months ended June 30, 2025 increased by $72.5 million, or 13.0%, compared to the six months ended June 30, 2024. The increase in cost of revenues was primarily due to increases in employee-related costs and technology costs, partially offset by foreign exchange gain, net of hedging. Our gross margin for the six months ended June 30, 2025 was 38.2% compared to 37.2% for the six months ended June 30, 2024, an increase of 100 bps primarily driven by higher revenues and operational efficiencies, partially offset by increases in employee-related costs during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
The increase in cost of revenues in Insurance of $12.3 million for the six months ended June 30, 2025 was primarily due to increases in employee-related costs of $22.8 million on account of higher headcount and wage inflation, higher technology costs of $1.8 million, partially offset by lower mail and data expenses in our direct marketing business of $9.0 million, other operating costs of $0.9 million and foreign exchange gain, net of hedging of $2.4 million. Gross margin in Insurance increased by 180 bps, primarily due to higher revenues and operational efficiencies during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
The increase in cost of revenues in Healthcare and Life Sciences of $28.4 million for the six months ended June 30, 2025 was primarily due to increases in employee-related costs of $26.2 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher facilities costs of $1.2 million, higher technology costs of $1.3 million, and higher other operating costs of $1.3 million, partially offset by foreign exchange gain, net of hedging of $1.6 million. Gross margin in Healthcare and Life Sciences decreased by 60 bps, primarily due to lower volumes in certain existing clients during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
The increase in cost of revenues in Banking, Capital Markets and Diversified Industries of $17.9 million for the six months ended June 30, 2025 was primarily due to increases in employee-related costs of $16.3 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher facilities costs of $1.1 million, higher technology costs of $1.1 million, and higher other operating costs of $1.1 million, partially offset by foreign exchange gain, net of hedging of $1.7 million. Gross margin in Banking, Capital Markets and Diversified Industries increased by 70 bps, primarily due to higher revenues and operational efficiencies during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
The increase in cost of revenues in International Growth Markets of $13.9 million for the six months ended June 30, 2025 was primarily due to increases in employee-related costs of $12.5 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher technology costs of $1.7 million, and higher other operating costs of $0.7 million, partially offset by foreign exchange gain, net of hedging of $1.0 million. Gross margin in International Growth Markets increased by 100 bps during the six months ended June 30, 2025, primarily due to higher revenues and operational efficiencies during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Selling, General and Administrative (“SG&A”) Expenses.
Six months ended June 30, Percentage change
2025 2024 Dollar change
(dollars in millions)
General and administrative expenses $ 119.0 $ 109.7 $ 9.3 8.4 %
Selling and marketing expenses 81.4 71.4 10.0 13.9 %
Selling, general and administrative expenses $ 200.4 $ 181.1 $ 19.3 10.6 %
The increase in SG&A expenses of $19.3 million was primarily due to increases in employee-related costs of $18.0 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher investments in digital and generative AI capabilities of $1.6 million, higher sales and marketing costs of $0.9 million and higher other operating costs of $1.9 million. This increase in SG&A was partially offset by one-time restructuring and litigation settlement costs of $3.1 million incurred during the six months ended June 30, 2024, compared to the six months ended June 30, 2025.
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Depreciation and Amortization.
Six months ended June 30, Percentage change
2025 2024 Dollar change
(dollars in millions)
Depreciation expense $ 21.1 $ 19.1 $ 2.0 10.4 %
Intangible amortization expense 6.5 6.2 0.3 5.9 %
Depreciation and amortization expense $ 27.6 $ 25.3 $ 2.3 9.3 %
The increase in depreciation expense was $2.0 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to investments in infrastructure, technology assets and digital capabilities.
Income from Operations. Income from operations increased by $36.5 million, or 29.7%, from $123.0 million for the six months ended June 30, 2024 to $159.5 million for the six months ended June 30, 2025, primarily due to higher revenues and higher gross margins, partially offset by higher SG&A expenses during the six months ended June 30, 2025.
Foreign Exchange Gain, net. Foreign exchange gains and losses are primarily attributable to the movement of the U.S. dollar against the Indian rupee, the Philippine peso, the U.K. pound sterling and the South African rand during the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The average exchange rate of the U.S. dollar against the Indian rupee increased from 83.27 during the six months ended June 30, 2024 to 85.90 during the six months ended June 30, 2025. The average exchange rate of the U.S. dollar against the Philippine peso decreased from 57.27 during the six months ended June 30, 2024 to 56.91 during the six months ended June 30, 2025. The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.26 during the six months ended June 30, 2024 to 1.31 during the six months ended June 30, 2025. The average exchange rate of the U.S. dollar against the South African rand decreased from 18.74 during the six months ended June 30, 2024 to 18.30 during the six months ended June 30, 2025.
We recorded a foreign exchange gain, net of $3.4 million for the six months ended June 30, 2025 compared to a foreign exchange gain, net of $0.4 million for the six months ended June 30, 2024.
Interest expense. Interest expense decreased from $8.6 million for the six months ended June 30, 2024 to $8.4 million for the six months ended June 30, 2025, primarily due to a lower effective interest rate of 5.8% during the six months ended June 30, 2025, compared to 6.6% to the six months ended June 30, 2024.
Other Income, net.
Six months ended June 30, Percentage change
2025 2024 Change
Gain on sale and fair value mark-to-market on investments $ 4.2 $ 2.2 $ 2.0 93.2 %
Interest and dividend income 5.3 4.7 0.6 13.9 %
Fair value changes of contingent consideration — 0.6 (0.6) (100.0) %
Others, net 0.9 (0.1) 1.0 – %
Other income, net $ 10.4 $ 7.4 $ 3.0 38.3 %
Other income, net increased from $7.4 million for the six months ended June 30, 2024 to $10.4 million for the six months ended June 30, 2025. The increase is primarily due to higher yield on our investments and reversal of certain contingent liabilities of $0.9 million that were no longer required during the six months ended June 30, 2025, partially offset by reversal of contingent consideration liability of $0.6 million related to our June 2022 acquisition of Inbound Media Group, LLC during the six months ended June 30, 2024.
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Income Tax Expense. The effective tax rate decreased from 22.6% during the six months ended June 30, 2024 to 19.5% during the six months ended June 30, 2025. We recorded income tax expense of $32.0 million and $27.6 million for the six months ended June 30, 2025 and 2024, respectively. The increase in income tax expense was primarily driven by higher profit and an increase in non-deductible expenses, partially offset by lower state taxes and higher excess tax benefits during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Net Income. Net income increased from $94.6 million for the six months ended June 30, 2024 to $132.6 million for the six months ended June 30, 2025, primarily due to increases in income from operations of $36.5 million, higher foreign exchange and other income, net of $3.0 million each and lower interest expense by $0.2 million, partially offset by lower income tax expense of $4.4 million and loss from equity-method investment of $0.3 million.
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Liquidity and Capital Resources
Six months ended June 30, Dollar Change Percentage Change
2025 2024
(dollars in millions)
Opening cash, cash equivalents and restricted cash $ 171.4 $ 141.0 $ 30.4 21.5 %
Net cash provided by operating activities 112.6 53.0 59.6 112.3 %
Net cash used for investing activities (36.3) (43.2) 6.9 (16.1) %
Net cash used for financing activities (84.6) (27.3) (57.3) 209.7 %
Effect of exchange rate changes 7.4 (1.8) 9.2 (498.4) %
Closing cash, cash equivalents and restricted cash $ 170.5 $ 121.7 $ 48.8 40.2 %
As of June 30, 2025 and December 31, 2024, we had $353.3 million and $340.6 million, respectively, in cash, cash equivalents and short-term investments, of which $315.7 million and $296.0 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes. We periodically evaluate opportunities to distribute cash among our group entities to fund our operations, expand our business and make strategic acquisitions in the United States and other geographies, and as and when we decide to distribute, we may have to accrue additional taxes in accordance with local tax laws, rules and regulations in the relevant foreign jurisdictions.
Operating Activities: Net cash provided by operating activities was $112.6 million during the six months ended June 30, 2025, compared to $53.0 million during six months ended June 30, 2024, reflecting higher cash earnings and lower working capital needs. The major drivers contributing to the increase of $59.6 million year-over-year included the following:
• An increase in cash earnings including adjustments for non-cash and other items contributed higher cash flow of $44.0 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024. These adjustments include fair value changes in investments, unrealized foreign currency exchange (gain)/loss, net, stock-based employee compensation, depreciation and amortization of long-lived assets and intangibles acquired in business combinations, among others.
• Changes in accounts receivable, including advance billings, contributed lower cash flow of $19.0 million in the six months ended June 30, 2025, compared to the six months ended June 30, 2024. Collections in accounts receivable, including advance billings, was driven by revenue growth during the six months ended June 30, 2025. Our days sales outstanding were 64 days as of June 30, 2025, compared to 63 days as of June 30, 2024.
• Payment of contingent consideration related to our December 2021 acquisition of Clairvoyant AI, Inc. (“Clairvoyant”) during the six months ended June 30, 2024 contributed to a higher cash payout of $11.0 million, whereas no such payment occurred during the six months ended June 30, 2025.
• Changes in other assets, accounts payables including other liabilities contributed to a lower cash payouts of $23.6 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Investing Activities: Net cash used for investing activities was $36.3 million for the six months ended June 30, 2025, compared to $43.2 million for the six months ended June 30, 2024. The decrease of $6.9 million was primarily due to lower net purchase of investments of $11.5 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024. This was partially offset by higher cash paid for capital expenditures, including investments in infrastructure, technology assets and digital capabilities of $4.0 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Financing Activities: Net cash used for financing activities was $84.6 million during the six months ended June 30, 2025, compared to $27.3 million during the six months ended June 30, 2024. The increase of $57.3 million was primarily due to net repayments of borrowings of $28.5 million during the six months ended June 30, 2025, compared to net proceeds from borrowings of $135.0 million during the six months ended June 30, 2024. This was partially offset by lower purchases of treasury stock of $101.0 million under our share repurchase programs during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
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We expect to use cash from operating activities to maintain and expand our business by making investments, primarily related to building new digital capabilities, including AI and purchase telecommunications equipment and computer hardware and software in connection with managing client operations.
We incurred $27.4 million of capital expenditures during the six months ended June 30, 2025. We expect to incur total capital expenditures of between $50.0 million to $55.0 million in fiscal 2025, primarily to meet our growth requirements, including additions to our facilities and infrastructure, as well as investments in technology applications, product development, and other digital technologies.
In connection with any tax assessment orders that have been issued, or may be issued against us or our subsidiaries, we may be required to deposit additional amounts with the relevant authorities with respect to such assessment orders. See Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for further details.
We believe that our existing cash, cash equivalents and short-term investments and sources of liquidity will be sufficient to satisfy our cash requirements over the next 12 months. Our future cash requirements will depend on many factors, including our rate of revenue growth, our investments in strategic initiatives like acquisition of complementary businesses, capital expenditures and continued stock repurchases, including accelerated stock repurchase under our board-authorized stock repurchase program, which may require the use of significant cash resources and/or additional financing. We anticipate that we will continue to rely upon cash from operating activities to finance most of our above-mentioned requirements, although if we have significant growth through acquisitions, we may need to obtain additional financing.
Subsequent to the end of the second quarter of 2025, on July 29, 2025, we entered into an Accelerated Share Repurchase Agreement with Citibank to repurchase shares of our common stock for an aggregate purchase price of $125 million, as part of our previously announced 2024 Repurchase Program of $500 million. We plan to fund the repurchase with available cash on hand and/or borrowings from our credit facility.
In the ordinary course of business, we enter into contracts and commitments that obligate us to make payments in the future. These obligations include borrowings, including interest obligations, purchase commitments, operating and finance lease commitments, employee benefit payments under gratuity plans, payments for contingent consideration and uncertain tax positions. See Note 16 - Fair Value Measurements - Fair Value of Contingent Consideration, Note 18 - Borrowings, Note 20 - Employee Benefit Plans, Note 21 - Leases, Note 22 - Income Taxes and Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for further information on material cash requirements from known contractual and other obligations.
In the ordinary course of business, we provide standby letters of credit to third parties primarily for facility leases. As of June 30, 2025 and December 31, 2024, we had outstanding letters of credit of $0.7 million and $0.8 million respectively, that were not recognized in our consolidated balance sheets. These are unlikely to have, a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. We had no other off-balance sheet arrangements or obligations.
Financing Arrangements
The following table summarizes our debt position:
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As of
June 30, 2025 December 31, 2024
Revolving credit facility Term loan facility Total Revolving credit facility Term loan facility Total
Current portion of long-term borrowings $ — $ 5.0 $ 5.0 $ — $ 5.0 $ 5.0
Unamortized debt issuance costs — (0.1) (0.1) — (0.1) (0.1)
Total current portion of long-term borrowings — 4.9 4.9 — 4.9 4.9
Long-term borrowings 164.0 91.3 255.3 190.0 93.8 283.8
Unamortized debt issuance costs — (0.1) (0.1) — (0.2) (0.2)
Total long-term borrowings 164.0 91.2 255.2 190.0 93.6 283.6
Total borrowings $ 164.0 $ 96.1 $ 260.1 $ 190.0 $ 98.5 $ 288.5
As of June 30, 2025 and December 31, 2024, we were in compliance with the financial covenants under our credit agreement with certain lenders and Citibank N.A. as administrative agent. See Note 18 – Borrowings to our unaudited consolidated financial statements.
Recent Accounting Pronouncements
For a description of recent accounting pronouncements, see Note 2 - Summary of Significant Accounting Policies - Recent Accounting Pronouncements to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements.”
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.