What changed in this filing

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Item 1. Financial Statements

2025-10-28 compared with 2025-07-29 · 256 added, 232 removed, 931 unchanged (34% of the section changed)

3 unchanged sentences

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

Notes June 30, 2025 December 31, 2024

Notes September 30, 2025 December 31, 2024

Current assets:

33 unchanged sentences

Common stock, $ 0.001 par value;

400,000,000 shares authorized, 207,810,635 shares issued and 161,829,331 shares outstanding as of June 30, 2025 and 206,510,587 shares issued and 161,801,212 shares outstanding as of December 31, 2024

400,000,000 shares authorized, 207,938,011 shares issued and 158,882,631 shares outstanding as of September 30, 2025 and 206,510,587 shares issued and 161,801,212 shares outstanding as of December 31, 2024

Additional paid-in capital 627,966 588,583

2 unchanged sentences

Total including shares held in treasury 1,931,929 1,716,027

45,981,304 shares as of June 30, 2025 and 44,709,375 shares as of December 31, 2024, held in treasury, at cost

49,055,380 shares as of September 30, 2025 and 44,709,375 shares as of December 31, 2024, held in treasury, at cost

19 ( 979,540 ) ( 786,165 )

5 unchanged sentences

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

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

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

Notes 2025 2024 2025 2024

10 unchanged sentences

Income from operations 76,174 69,405 235,727 192,378

Foreign exchange gain, net 2,211 36 3,403 395

Foreign exchange gain/(loss), net ( 1,013 ) 278 2,390 673

Interest expense 18 ( 4,923 ) ( 5,526 ) ( 13,349 ) ( 14,145 )

16 unchanged sentences

(In thousands)

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

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

Notes 2025 2024 2025 2024

18 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the three months ended June 30, 2025 and 2024

For the three months ended September 30, 2025 and 2024

(In thousands, except share count)

1 unchanged sentence

Notes Shares Amount Shares Amount

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

Balance as of June 30, 2025 207,810,635 $ 207 $ 625,984 $ 1,414,572 $ ( 134,434 ) ( 45,981,304 ) $ ( 845,379 ) $ 1,060,950

Stock issued against stock-based compensation plans 23 127,376 — 3,843 — — — — 3,843

2 unchanged sentences

Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — ( 694 ) ( 694 )

Other comprehensive income 15 — — — — 8,353 — — 8,353

Accelerated share repurchase 5, 19 — — ( 25,000 ) — — ( 2,302,556 ) ( 100,000 ) ( 125,000 )

Other comprehensive loss 15 — — — — ( 34,543 ) — — ( 34,543 )

Net income — — — 58,161 — — — 58,161

Balance as of June 30, 2025 207,810,635 $ 207 $ 625,984 $ 1,414,572 $ ( 134,434 ) ( 45,981,304 ) $ ( 845,379 ) $ 1,060,950

Balance as of September 30, 2025 207,938,011 $ 207 $ 627,966 $ 1,472,733 $ ( 168,977 ) ( 49,055,380 ) $ ( 979,540 ) $ 952,389

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

Notes Shares Amount Shares Amount

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

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

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

2 unchanged sentences

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

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

Accelerated share repurchase 5, 19 — — 27,862 — — ( 820,433 ) ( 27,862 ) —

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

Net income — — — 53,037 — — — 53,037

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

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the six months ended June 30, 2025 and 2024

For the nine months ended September 30, 2025 and 2024

(In thousands, except share count)

6 unchanged sentences

Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — ( 665 ) ( 665 )

Other comprehensive income 15 — — — — 20,288 — — 20,288

Accelerated share repurchase 5, 19 — — ( 25,000 ) — — ( 2,302,556 ) ( 100,000 ) ( 125,000 )

Other comprehensive loss 15 — — — — ( 14,255 ) — — ( 14,255 )

Net income — — — 190,773 — — — 190,773

Balance as of June 30, 2025 207,810,635 $ 207 $ 625,984 $ 1,414,572 $ ( 134,434 ) ( 45,981,304 ) $ ( 845,379 ) $ 1,060,950

Balance as of September 30, 2025 207,938,011 $ 207 $ 627,966 $ 1,472,733 $ ( 168,977 ) ( 49,055,380 ) $ ( 979,540 ) $ 952,389

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

6 unchanged sentences

Accelerated share repurchase 5, 19 — — 2,862 — — ( 4,170,517 ) ( 127,862 ) ( 125,000 )

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

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

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

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

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

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

(In thousands)

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities:

22 unchanged sentences

Investment in equity affiliate ( 1,174 ) ( 600 )

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

Purchases of investments ( 247,289 ) ( 225,555 )

8 unchanged sentences

Proceeds from issuance of common stock 5,094 3,524

Payment of debt issuance costs — ( 593 )

Net cash used for financing activities ( 147,929 ) ( 52,171 )

Effect of exchange rate changes 5,637 1,330

Net decrease in cash, cash equivalents and restricted cash ( 873 ) ( 19,361 )

Net increase in cash, cash equivalents and restricted cash 8,435 17,863

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

June 30, 2025

September 30, 2025

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

28 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

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.

The significant assumptions underneath these estimates include, but are not limited to assumptions to calculate stock-based compensation expense, 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.

5 unchanged sentences

This ASU will affect the Company’s annual income tax disclosures but is not expected to impact its consolidated balance sheets or statements of income for the year ending December 31, 2025.

In November 2024, FASB issued ASU No.

In November 2024, the FASB issued ASU No.

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

2 unchanged sentences

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.

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

In July 2025, the FASB issued ASU No.

2025-05, Financial Instruments—Credit Losses (“ASC Topic 326”):

Measurement of Credit Losses for Accounts Receivable and Contract Assets .

This ASU provides a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC Topic 606.

The ASU will be effective for annual reporting periods beginning after December 15, 2025, including interim periods within those years, with early adoption permitted.

The Company is currently evaluating the impact of this ASU and does not expect it to have a material effect on the consolidated financial statements.

In September 2025, the FASB issued ASU No.

2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) .

This ASU enhances the guidance for internal-use software development costs by removing references to project stages and simplifying the criteria for when capitalization of software development costs shall begin.

The ASU will be effective for annual reporting periods beginning after December 15, 2027, including interim periods within those years, with early adoption permitted.

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

(d) Recently Adopted and Applicable Accounting Pronouncements

In March 2024, FASB issued ASU No.

In March 2024, the FASB issued ASU No.

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

6 unchanged sentences

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;

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

leveraging full suite of capabilities;

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

3 unchanged sentences

• International Growth Markets

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

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

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 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.

5 unchanged sentences

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 June 30, 2025 and 2024, respectively, for each of the reportable segments, are as follows:

Three months ended June 30, 2025

Revenues and cost of revenues for the three months ended September 30, 2025 and 2024, respectively, for each of the reportable segments, are as follows:

Three months ended September 30, 2025

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

8 unchanged sentences

Operating expenses 127,762

Income from operations 76,174

Foreign exchange gain, net, interest expense and other income, net ( 1,477 )

Income tax expense 18,546

Loss from equity-method investment ( 141 )

Net income $ 66,051

Income before income tax expense and earnings from equity affiliates $ 74,697

(1) Exclusive of depreciation and amortization expense.

2 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

Three months ended June 30, 2024

Three months ended September 30, 2024

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

8 unchanged sentences

Operating expenses 108,862

Income from operations 69,405

Foreign exchange gain, net, interest expense and other income, net ( 874 )

Income tax expense 13,873

Loss from equity-method investment ( 9 )

Net income $ 45,825

Income before income tax expense and earnings from equity affiliates $ 68,531

(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.

Revenues and cost of revenues for the six months ended June 30, 2025 and 2024, respectively, for each of the reportable segments, are as follows:

Six months ended June 30, 2025

Revenues and cost of revenues for the nine months ended September 30, 2025 and 2024, respectively, for each of the reportable segments, are as follows:

Nine months ended September 30, 2025

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

8 unchanged sentences

Operating expenses 355,711

Income from operations 235,727

Foreign exchange gain, net, interest expense and other income, net 3,874

Income tax expense 32,042

Loss from equity-method investment ( 250 )

Net income $ 132,612

Income before income tax expense and earnings from equity affiliates $ 239,601

(1) Exclusive of depreciation and amortization expense.

2 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

Six months ended June 30, 2024

Nine months ended September 30, 2024

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

8 unchanged sentences

Operating expenses 315,232

Income from operations 192,378

Foreign exchange gain, net, interest expense and other income, net ( 1,596 )

Income tax expense 27,626

Loss from equity-method investment ( 37 )

Net income $ 94,588

Income before income tax expense and earnings from equity affiliates $ 190,782

(1) Exclusive of depreciation and amortization expense.

1 unchanged sentence

Revenues, net by service type, were as follows:

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

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

2025 2024 2025 2024

13 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

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

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

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

2025 2024 2025 2024

5 unchanged sentences

Revenues, net by industry verticals, were as follows:

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

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

2025 2024 2025 2024

4 unchanged sentences

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Long-lived assets

9 unchanged sentences

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Accounts receivable, net $ 351,426 $ 304,322

5 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

Accounts receivable includes $ 145,546 and $ 121,817 as of June 30, 2025 and December 31, 2024, respectively, representing unbilled receivables.

Accounts receivable includes $ 147,896 and $ 121,817 as of September 30, 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 June 30, 2025 and December 31, 2024, includes receivables of $ 28,576 and $ 33,472 , respectively, from our payment integrity services.

Contract assets as of September 30, 2025 and December 31, 2024, includes receivables of $ 25,863 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 June 30, 2025 and December 31, 2024.

Revenue recognized during the three and six months ended June 30, 2025 and 2024, which was included in the contract liabilities balance at the beginning of the respective periods:

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

There were no significant cumulative catch-up impact or impairment related to contract assets as of September 30, 2025 and December 31, 2024.

Revenue recognized during the three and nine months ended September 30, 2025 and 2024, 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,

2025 2024 2025 2024

4 unchanged sentences

Contract Acquisition Costs

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

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

2025 2024 2025 2024

4 unchanged sentences

Contract Fulfillment Costs

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

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

2025 2024 2025 2024

3 unchanged sentences

Closing balance $ 39,233 $ 33,221 $ 39,233 $ 33,221

There was no significant impairment for contract acquisition and contract fulfillment costs as of June 30, 2025 and December 31, 2024.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

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

There was no significant impairment for contract acquisition and contract fulfillment costs as of September 30, 2025 and December 31, 2024.

Allowance for expected credit losses

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Accounts receivable, including unbilled receivables $ 356,153 $ 307,850

1 unchanged sentence

Accounts receivable, net $ 351,426 $ 304,322

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

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

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

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

2025 2024 2025 2024

5 unchanged sentences

Customer and credit risk concentration

No single customer accounted for more than 10% of the Company's revenues, net during the three and six months ended June 30, 2025 and 2024.

No single customer accounted for more than 10% of the Company's revenues, net during the three and nine months ended September 30, 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 June 30, 2025 and December 31, 2024.

No customer accounted for more than 10% of accounts receivable, net, as of September 30, 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 June 30, Six months ended June 30,

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

2025 2024 2025 2024

7 unchanged sentences

Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share 1,448,090 1,790,695 831,678 2,762,178

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

(“Citibank”).

On July 29, 2025, the Company entered into a new supplemental confirmation to the prior Master Accelerated Share Repurchase Confirmation (together, the “2025 ASR Agreement”).

During the three months ended September 30, 2025, the Company recorded the initial delivery of shares in treasury stock at cost, which resulted in an immediate reduction of its outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share.

The forward contracts indexed to the Company's own common stock met the criteria for equity classification, and prepayment of $ 25,000 was initially recorded in additional paid-in capital, which reflects the pending settlement of the 2025 ASR Agreement.

Had the 2025 ASR Agreement been settled as of September 30, 2025, determined based on the volume-weighted average price per share since its effective date, Citibank would have been required to deliver additional estimated shares to the Company.

The effect of the potential share settlement under the 2025 ASR Agreement was excluded from the computation of diluted earnings per share as its inclusion would have been anti-dilutive.

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

1 unchanged sentence

Other income, net consists of the following:

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

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

2025 2024 2025 2024

7 unchanged sentences

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

June 30, 2025 June 30, 2024 December 31, 2024

September 30, 2025 September 30, 2024 December 31, 2024

Cash and cash equivalents $ 160,309 $ 150,102 $ 153,355

10 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

Investments consist of the following:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Short-term investments

9 unchanged sentences

Property and equipment consists of the following:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Property and equipment, gross $ 392,338 $ 356,060

1 unchanged sentence

Property and equipment, net $ 112,677 $ 101,837

During the three and six months ended June 30, 2025, there were no material changes in estimated useful lives of property and equipment during the ordinary course of operations.

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

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

2025 2024 2025 2024

1 unchanged sentence

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Cost $ 66,005 $ 60,447

2 unchanged sentences

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

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

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

2025 2024 2025 2024

2 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

During the three and six months ended June 30, 2025 and 2024, there were no indicators of impairment related to capitalized software.

During the three and nine months ended September 30, 2025 and 2024, there were no indicators of impairment related to capitalized software.

Goodwill and Other Intangible Assets

9 unchanged sentences

Currency translation adjustments 165 ( 21 ) ( 366 ) ( 294 ) ( 516 )

Balance as of June 30, 2025 $ 77,316 $ 189,620 $ 100,622 $ 53,015 $ 420,573

During the three and six months ended June 30, 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 during the three and six months ended June 30, 2025 and 2024.

Balance as of September 30, 2025 $ 77,264 $ 189,600 $ 100,273 $ 52,734 $ 419,871

During the three and nine months ended September 30, 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 during the three and nine months ended September 30, 2025 and 2024.

Other Intangible Assets

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

As of June 30, 2025 As of December 31, 2024

As of September 30, 2025 As of December 31, 2024

Amount Accumulated

13 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

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

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

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

2025 2024 2025 2024

Amortization expense $ 3,310 $ 3,449 $ 9,833 $ 9,606

During the three and six months ended June 30, 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 June 30, 2025 was as follows:

2025 (July 1 - December 31) $ 6,613

During the three and nine months ended September 30, 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 September 30, 2025 was as follows:

2025 (October 1 - December 31) $ 3,302

Total $ 38,611

1 unchanged sentence

Other current assets consist of the following:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Advance income tax, net $ 49,862 $ 49,377

2 unchanged sentences

Receivables from statutory authorities 19,506 19,407

Derivative instruments 8,195 1,973

Deferred contract fulfillment costs 5,327 4,281

Derivative instruments 3,915 1,973

Others 6,613 8,146

1 unchanged sentence

Other assets consist of the following:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Deferred contract fulfillment costs $ 33,906 $ 31,741

2 unchanged sentences

Prepaid expenses 5,444 2,775

Derivative instruments 3,615 852

Contract assets 3,488 3,628

Derivative instruments 780 852

Others 6,718 3,282

2 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

1 unchanged sentence

Accrued expenses and other current liabilities consist of the following:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Accrued expenses $ 63,803 $ 63,548

1 unchanged sentence

Client liabilities 16,753 9,711

Accrued capital expenditures 6,186 2,059

Derivative instruments 12,877 7,454

Income taxes payable 232 284

Accrued capital expenditures 3,379 2,059

Contingent consideration 2,700 1,280

Income taxes payable 237 284

Others 6,047 6,326

2 unchanged sentences

Other non-current liabilities consist of the following:

June 30, 2025 December 31, 2024

Retirement benefits $ 25,034 $ 24,795

September 30, 2025 December 31, 2024

Deferred transition revenue $ 25,364 $ 18,213

Contingent consideration 2,700 1,420

Unrecognized tax benefits 2,215 1,966

Retirement benefits 22,862 24,795

Derivative instruments 9,036 4,363

Unrecognized tax benefits 2,373 1,966

Contingent consideration — 1,420

Others 1,744 2,816

5 unchanged sentences

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.

The following table sets forth the changes in AOCI during the six months ended June 30, 2025 and 2024:

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

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

The following table sets forth the changes in AOCI during the nine months ended September 30, 2025 and 2024:

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

2 unchanged sentences

Balance as of December 31, 2024 $ ( 146,998 ) $ ( 7,548 ) $ ( 176 ) $ ( 154,722 )

Gain recognized during the period 7,933 15,424 — 23,357

Loss recognized during the period ( 10,053 ) ( 10,392 ) — ( 20,445 )

Reclassification to net income (1)

2 unchanged sentences

2,146 1,744 ( 39 ) 3,851

Accumulated other comprehensive income/(loss) as of June 30, 2025 $ ( 140,077 ) $ 6,073 $ ( 430 ) $ ( 134,434 )

Accumulated other comprehensive loss as of September 30, 2025 $ ( 154,905 ) $ ( 13,516 ) $ ( 556 ) $ ( 168,977 )

Balance as of December 31, 2023 $ ( 132,643 ) $ 4,198 $ 1,405 $ ( 127,040 )

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

Gain/(Loss) recognized during the period ( 483 ) 7,257 — 6,774

Reclassification to net income (1)

2 unchanged sentences

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

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

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

(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.

8 unchanged sentences

Inputs Significant Other

As of June 30, 2025 (Level 1) (Level 2) (Level 3) Total

As of September 30, 2025 (Level 1) (Level 2) (Level 3) Total

Cash equivalents - Money market funds (1)

10 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

27 unchanged sentences

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

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

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

2025 2024 2025 2024

Opening balance $ 2,700 $ — $ 2,700 $ 15,589

Acquisitions — 7,700 — 7,700

Fair value changes — — — ( 589 )

1 unchanged sentence

Closing balance $ 2,700 $ 7,700 $ 2,700 $ 7,700

During the three and six months ended June 30, 2025 and 2024, there were no transfers among Level 1, Level 2 and Level 3.

During the three and nine months ended September 30, 2025 and 2024, there were no transfers among Level 1, Level 2 and Level 3.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

7 unchanged sentences

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Foreign currency forward contracts denominated in:

1 unchanged sentence

dollar (USD) 31,609 —

The Company estimates that approximately $ 4,421 of derivative gains, net, excluding tax effects, included in AOCI, representing changes in the value of cash flow hedges based on exchange rates prevailing as of June 30, 2025, could be reclassified into earnings within the next twelve months.

As of June 30, 2025, the maximum outstanding term of the cash flow hedges was approximately 45 months.

The Company estimates that approximately $ 8,660 of derivative loss, 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, 2025, could be reclassified into earnings within the next twelve months.

As of September 30, 2025, the maximum outstanding term of the cash flow hedges was approximately 45 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.

3 unchanged sentences

Foreign currency forward contracts denominated in:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Sell USD 226,932 179,491

2 unchanged sentences

Sell AUD 4,889 4,770

11,435 10,594

(1) This includes $ 10,147 and $ 10,006 related to USD purchases against sale of ZAR 181,501 and ZAR 188,373 as of June 30, 2025 and December 31, 2024, respectively.

(1) This includes $ 5,455 and $ 10,006 related to USD purchases against sale of ZAR 94,303 and ZAR 188,373 as of September 30, 2025 and December 31, 2024, respectively.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

2 unchanged sentences

relationships Derivatives not designated as hedging

June 30, 2025 December 31, 2024 June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024 September 30, 2025 December 31, 2024

Other current assets $ 3,900 $ 1,711 $ 15 $ 262

4 unchanged sentences

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

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

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

Derivative financial instruments:

2 unchanged sentences

Derivatives in cash flow hedging relationships $ ( 25,816 ) $ 10,097 $ ( 10,392 ) $ 7,257

Gain/(loss) recognized in unaudited consolidated statements of income

Loss recognized in unaudited consolidated statements of income

Derivatives not designated as hedging instruments $ ( 7,273 ) $ ( 259 ) $ ( 8,559 ) $ ( 2,332 )

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

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

Three months ended June 30,

Three months ended September 30,

As per unaudited consolidated

19 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

Six months ended June 30,

Nine months ended September 30,

As per unaudited consolidated

18 unchanged sentences

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

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

1 unchanged sentence

Unamortized debt issuance costs — ( 114 ) ( 114 ) — ( 114 ) ( 114 )

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

Current portion of long-term borrowings — 4,886 4,886 — 4,886 4,886

Long-term borrowings 260,000 90,000 350,000 190,000 93,750 283,750

Unamortized debt issuance costs — ( 66 ) ( 66 ) — ( 152 ) ( 152 )

Total long-term borrowings 164,000 91,155 255,155 190,000 93,598 283,598

Total borrowings $ 164,000 $ 96,041 $ 260,041 $ 190,000 $ 98,484 $ 288,484

Long-term borrowings 260,000 89,934 349,934 190,000 93,598 283,598

Borrowings $ 260,000 $ 94,820 $ 354,820 $ 190,000 $ 98,484 $ 288,484

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

Unamortized debt issuance costs for the Company’s revolving credit facility of $ 701 and $ 895 as of June 30, 2025 and December 31, 2024, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.

Unamortized debt issuance costs for the Company’s revolving credit facility of $ 604 and $ 895 as of September 30, 2025 and December 31, 2024, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.

Credit Agreement

9 unchanged sentences

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

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

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

2025 2024 2025 2024

1 unchanged sentence

Term loan facility 5.7 % 6.8 % 5.7 % 6.8 %

As of June 30, 2025 and December 31, 2024, the Company was in compliance with the financial covenants under the 2024 Credit Agreement.

The maturity profile of the Company’s long-term borrowings, excluding debt issuance costs, outstanding as of June 30, 2025 was as follows:

As of September 30, 2025 and December 31, 2024, the Company was in compliance with the financial covenants under the 2024 Credit Agreement.

The maturity profile of the Company’s long-term borrowings, excluding debt issuance costs, outstanding as of September 30, 2025 was as follows:

Revolving credit facility Term loan facility

2025 (July 1 - December 31) $ — $ 2,500

2025 (October 1 - December 31) $ — $ 1,250

2027 260,000 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 June 30, 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.

As of September 30, 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

2 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

2 unchanged sentences

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

Three months ended June 30, 2025 — $ — $ —

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

Six months ended June 30, 2025 190,716 $ 9,432 $ 49.46

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

Three months ended September 30, 2025 — $ — $ —

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

Nine months ended September 30, 2025 190,716 $ 9,432 $ 49.46

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

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

On 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, on February 29, 2024, terminated the previous repurchase program, which had been effective since the beginning of 2022.

In March 2024, the Company entered into the 2024 Accelerated Share Repurchase (ASR) Agreement with Citibank to repurchase shares of its common stock for an aggregate purchase price of $ 125,000 under the 2024 Repurchase Program.

In March 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 under the 2024 Repurchase Program.

The Company received an initial delivery of 3,350,084 shares in March 2024, representing 80 % of the aggregate purchase price, which was recorded in treasury stock, while a prepayment of $ 25,000 was recorded in additional paid-in capital to reflect the pending settlement.

The Company received an additional 820,433 shares upon final settlement in July 2024.

On July 29, 2025, the Company entered into the 2025 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 2,302,556 shares of its common stock at an initial price of $ 43.43 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 2025 ASR Agreement is accounted for as a treasury stock transaction and forward stock purchase agreement indexed to the Company’s common stock.

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

Under the terms of the 2025 ASR Agreement, the ultimate number of shares of Common Stock that the Company will repurchase will be based on the average of the daily volume-weighted average price of the Common Stock during the term of the 2025 ASR Agreement, less a discount and subject to adjustments pursuant to the terms and conditions of the 2025 ASR Agreement.

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

The final settlement of the 2025 ASR Agreement is expected to be completed on December 1, 2025, subject to acceleration at Citibank’s discretion, which could be completed as early as October 30, 2025.

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

Repurchases may be discontinued at any time by the management.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

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

Shares repurchased Total consideration Weighted average purchase price per share

Three months ended June 30, 2025 906,150 $ 41,752 $ 46.08

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

Six months ended June 30, 2025 1,081,213 $ 49,811 $ 46.07

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

Three months ended September 30, 2025 3,074,076 $ 133,467 $ 43.42

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

Nine months ended September 30, 2025 4,155,289 $ 183,278 $ 44.11

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

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, 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 ($ 29 ) and $ 74 , during the three months ended June 30, 2025 and 2024, respectively, and ( $ 29 ) and $ 618 , during the six months ended June 30, 2025 and 2024, respectively, on repurchase of common stock as a part of the cost of such repurchases.

The Company recognized excise tax of $ 694 and $ 412 , during the three months ended September 30, 2025 and 2024, respectively, and $ 665 and $ 1,030 , during the nine months ended September 30, 2025 and 2024, respectively.

Employee Benefit Plans

The Company’s Gratuity Plan in India (the “India Plan”) provides for a lump sum payment to vested employees on retirement or upon termination of employment in an amount based on the respective employee’s salary and years of

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

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

employment with the Company.

In addition, the Company’s subsidiary operating in the Philippines conforms to the minimum regulatory benefit, which provide for lump sum payment to vested employees on retirement from employment in an amount based on the respective employee’s salary and years of employment with the Company (the “Philippines Plan”).

13 unchanged sentences

Currency translation adjustments ( 849 )

Plan assets as of June 30, 2025

Plan assets as of September 30, 2025

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

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

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

2025 2024 2025 2024

10 unchanged sentences

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

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

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

2025 2024 2025 2024

2 unchanged sentences

$ 8,291 $ 7,112 $ 24,768 $ 20,752

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

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

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, 2025

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

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

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

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

2025 2024 2025 2024

10 unchanged sentences

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

Six months ended June 30,

Nine months ended September 30,

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

11 unchanged sentences

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

The Company modified certain of its operating leases, resulting in an increase of its lease liabilities by $ 3,107 and $ 3,377 , during the six months ended June 30, 2025 and 2024, respectively, with a corresponding adjustment to ROU assets.

As of June 30, 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.

The Company modified certain of its operating leases, resulting in an increase of its lease liabilities by $ 5,766 and $ 3,383 , during the nine months ended September 30, 2025 and 2024, respectively, with a corresponding adjustment to ROU assets.

As of September 30, 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.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

Maturities of lease liabilities as of June 30, 2025 were as follows:

Maturities of lease liabilities as of September 30, 2025 were as follows:

Operating Leases Finance Leases

2025 (July 1 - December 31) $ 12,060 $ 845

2025 (October 1 - December 31) $ 6,149 $ 840

2026 24,463 776

8 unchanged sentences

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

The effective tax rate decreased from 23.2 % to 21.9 %, during the three months ended June 30, 2024 and 2025, respectively.

The Company recorded income tax expense of $ 18,546 and $ 13,873 during the three months ended June 30, 2025 and 2024, respectively.

The increase in income tax expense was primarily driven by 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.

The effective tax rate decreased from 22.6 % to 19.5 %, during the six months ended June 30, 2024 and 2025, respectively.

The Company recorded income tax expense of $ 32,042 and $ 27,626 during 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.

The effective tax rate decreased from 22.6 % to 22.1 %, during the three months ended September 30, 2024 and 2025, respectively.

The Company recorded income tax expense of $ 16,456 and $ 15,460 during the three months ended September 30, 2025 and 2024, respectively.

The increase in income tax expense was primarily driven by higher profit, and lower excess tax benefits, partially offset by lower state taxes and a decrease in non-deductible expenses during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The effective tax rate decreased from 22.6 % to 20.3 %, during the nine months ended September 30, 2024 and 2025, respectively.

The Company recorded income tax expense of $ 48,498 and $ 43,086 during the nine months ended September 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 nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

On July 4, 2025, President Trump signed new tax legislation known as the One Big Beautiful Bill Act (“OBBBA”), which effectively extends certain provisions of the 2017 Tax Cuts and Jobs Act, including adjustments to several provisions that were scheduled to sunset, phase out, or phase in.

As a result of the Company’s election to expense research or experimental expenditures incurred in the United States and the related transition provisions, the Company’s U.S.

cash taxes for 2025 will decrease, while there will be no significant impact on its effective tax rate.

Deferred income taxes recognized in OCI were as follows:

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

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

2025 2024 2025 2024

7 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

1 unchanged sentence

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

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

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

2025 2024 2025 2024

5 unchanged sentences

$ 5,788 $ 5,830 $ 19,104 $ 15,807

(1) Includes $ 203 and $ 18 during the three months ended June 30, 2025 and 2024, respectively, and $ 14,728 and $ 7,541 during the six months ended June 30, 2025 and 2024, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No.

(1) Includes $ 64 and $ 1,673 during the three months ended September 30, 2025 and 2024, respectively, and $ 14,792 and $ 9,214 during the nine months ended September 30, 2025 and 2024, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No.

2016-09, Compensation - Stock Compensation.

On June 17, 2025, the Company’s stockholders approved 2025 Omnibus Incentive Plan (the "2025 Plan"), which among other things, reserves 6,800,000 shares (as adjusted under the terms thereof) of the Company’s common stock for grant of awards under the 2025 Plan, at which time new awards under the 2018 Omnibus Incentive Plan (the "2018 Plan") were not permitted to be made, but outstanding awards under the 2018 Plan will continued to be governed by the terms thereof.

As of June 30, 2025, the Company had 5,755,688 shares available for future grants under the 2025 Plan.

As of September 30, 2025, the Company had 5,702,547 shares available for future grants under the 2025 Plan.

Stock Options

8 unchanged sentences

Forfeited ( 33,585 ) 30.15 — —

Outstanding at June 30, 2025 1,734,720 $ 30.14 $ 23,686 8.0

Vested and exercisable at June 30, 2025 828,235 $ 30.14 $ 11,303 8.0

Outstanding at September 30, 2025 1,734,720 $ 30.14 $ 24,102 7.7

Vested and exercisable at September 30, 2025 861,740 $ 30.14 $ 11,973 7.7

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

As of June 30, 2025, unrecognized compensation cost of $ 10,390 is expected to be expensed over a weighted average period of 2.0 years.

As of September 30, 2025, unrecognized compensation cost of $ 9,067 is expected to be expensed over a weighted average period of 1.8 years.

Share Matching Program

3 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

5 unchanged sentences

Forfeited — —

Outstanding as of June 30, 2025* — $ —

* As of June 30, 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.

Outstanding as of September 30, 2025* — $ —

* As of September 30, 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 ( 125,336 ) 36.27

Outstanding as of June 30, 2025* 2,872,199 $ 37.47

* As of June 30, 2025 and December 31, 2024 restricted stock units vested for which the underlying common stock is yet to be issued are 346,431 and 289,547 , respectively.

As of June 30, 2025, unrecognized compensation cost of $ 91,077 is expected to be expensed over a weighted average period of 2.8 years.

Outstanding as of September 30, 2025* 2,843,050 $ 37.60

* As of September 30, 2025 and December 31, 2024 restricted stock units vested for which the underlying common stock is yet to be issued are 346,431 and 289,547 , respectively.

As of September 30, 2025, unrecognized compensation cost of $ 80,207 is expected to be expensed over a weighted average period of 2.7 years.

Performance Based Stock Awards

Under the Company’s equity incentive plans, the Company grants performance-based restricted stock units (“PRSUs”) to executive officers and other specified employees.

During the six months ended June 30, 2025, under the 2025 Plan and the 2018 Plan, 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”).

During the nine months ended September 30, 2025, under the 2025 Plan and the 2018 Plan, 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 PRSU agreements, and are measured over a three-year performance period (“MU”).

7 unchanged sentences

Forfeited ( 15,561 ) 38.03 ( 23,321 ) 56.12

Outstanding as of June 30, 2025 771,643 $ 36.74 1,156,970 $ 53.40

Outstanding as of September 30, 2025 767,068 $ 36.70 1,150,113 $ 53.33

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

As of June 30, 2025, unrecognized compensation cost of $ 55,968 is expected to be expensed over a weighted average period of 2.0 years.

As of September 30, 2025, unrecognized compensation cost of $ 45,697 is expected to be expensed over a weighted average period of 1.8 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 sixth offering period under the 2022 ESPP commenced on January 1, 2025 with a term of six months .

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

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

Number Total Proceeds Received

Total Proceeds Received

Shares available for issuance as of December 31, 2024

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

Shares available for issuance as of June 30, 2025 3,607,805

Issuance of common stock related to the sixth offering period made subsequent to June 30, 2025 97,536 $ 3,844

Issuance of common stock related to the:

Fifth offering period

64,939 $ 1,823

Sixth offering period

97,536 $ 3,844

Shares available for issuance as of September 30, 2025

Contributions received for the seventh offering period up to September 30, 2025

Related Party Disclosures

The Company provides data and AI-led services to Corridor Platforms, Inc., which is an equity affiliate of the Company.

The Company recognized revenues, net of $ 42 and $ 151 , during the three months ended June 30, 2025 and 2024 respectively, and $ 84 and $ 302 , during the six months ended June 30, 2025 and 2024 respectively.

The Company had outstanding accounts receivable, net of $ 56 each, related to this service contract as of June 30, 2025 and December 31, 2024.

The Company provides data and AI-led services to PharmaCord LLC., where one of the Company’s directors is the member-manager as of June 30, 2025.

The Company recognized revenues of $ 105 and $ nil during the three months ended June 30, 2025 and 2024, respectively, and $ 224 and nil during the six months ended June 30, 2025 and 2024, respectively.

The Company had outstanding accounts receivable, net of $ 70 and $ nil , related to this service contract as of June 30, 2025 and December 31, 2024, respectively.

The Company recognized revenues, net of $ 42 and $ 80 during the three months ended September 30, 2025 and 2024, respectively, and $ 126 and $ 382 during the nine months ended September 30, 2025 and 2024, respectively.

The Company had outstanding accounts receivable, net of $ 14 and $ 56 , related to this service contract as of September 30, 2025 and December 31, 2024, respectively.

Commitments and Contingencies

Capital Commitments

As of June 30, 2025, the Company had committed to spend approximately $ 5,000 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, net.”

As of September 30, 2025 and December 31, 2024, the Company had committed to spend approximately $ 6,000 and $ 6,500 , respectively, net of capital advances, under agreements to purchase 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.

1 unchanged sentence

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

As of June 30, 2025, the Company has invested $ 1,800 in the Partnership and is committed to make further investments up to an amount of $ 2,200 .

As of September 30, 2025, the Company has invested $ 2,400 in the Partnership and is committed to make further investments up to an amount of $ 1,600 .

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

13 unchanged sentences

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

The aggregate amount demanded by Indian tax authorities (net of advance payments) as of June 30, 2025 and December 31, 2024 is $ 50,191 and $ 49,588 , respectively.

The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 8,031 and $ 7,506 , as of June 30, 2025 and December 31, 2024, respectively.

The aggregate amount demanded by Indian tax authorities (net of advance payments) as of September 30, 2025 and December 31, 2024 is $ 46,645 and $ 49,588 , respectively.

The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 7,757 and $ 7,506 , as of September 30, 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.

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 $ 5,330 and $ 5,339 , as of June 30, 2025 and December 31, 2024, respectively.

The Company has provided bank guarantees against these demands in the amounts of $ 5,330 and 5,339 , as of June 30, 2025 and December 31, 2024, respectively.

Pursuant to reviewing the Company’s annual VAT and service tax filings, the Indian tax authorities raised aggregate demands for tax years 2015 and 2017, in the amounts of $ 5,249 and $ 5,339 , as of September 30, 2025 and December 31, 2024, respectively.

The Company has provided bank guarantees against these demands in the amounts of $ 5,148 and $ 5,339 , as of September 30, 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 technical merits.

The Indian GST authorities rejected the Company’s refund claims in the amounts of $ 5,732 and $ 5,885 as of June 30, 2025 and December 31, 2024, respectively.

The Indian GST authorities rejected the Company’s refund claims in the amounts of $ 5,537 and $ 5,885 as of September 30, 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 allowance was recorded against these GST receivables as of June 30, 2025 and December 31, 2024, respectively.

Accordingly, no allowance was recorded against these GST receivables as of September 30, 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.

8 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2025

September 30, 2025

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

4 unchanged sentences

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

Subsequent Events

On July 4, 2025, President Trump signed a new tax legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), effectively extending certain provisions of the 2017 Tax Cuts and Jobs Act, including adjusting a number of provisions that were subject to sunsets, phase-outs, or phase-ins.

While most of the changes made by OBBBA are effective in future tax years, some of its provisions are effective in the current tax year.

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

On July 29, 2025, the Company entered into an Accelerated Share Repurchase (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 previously announced 2024 Repurchase Program of $ 500,000 .

The Company plans to fund the repurchase with available cash on hand and/or borrowings from its credit facility.

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