ExlService Holdings, Inc. 10-K

ITEM 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), to allow timely decisions regarding required disclosure. In connection with the preparation of this Annual Report on Form 10-K, our management carried out an evaluation, under the supervision and with the participation of the CEO and CFO, of the effectiveness and operation of our 46 Ta ble of Contents disclosure controls and procedures as of December 31, 2025. Based upon that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures, as of December 31, 2025, were effective. Management’s Responsibility for Financial Statements Responsibility for the objectivity, integrity and presentation of the accompanying financial statements and other financial information presented in this report rests with our management. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). The financial statements include amounts that are based on estimates and judgments which management believes are reasonable under the circumstances. Deloitte & Touche LLP, an independent registered public accounting firm, has been retained to audit our consolidated financial statements and the effectiveness of our internal control over financial reporting. Its accompanying reports are based on audits conducted in accordance with the standards of the Public Company Accounting Oversight Board. The Audit Committee of the board of directors is composed solely of independent directors and is responsible for recommending to the board of directors the independent public accounting firm to be retained for the coming year. The Audit Committee meets regularly and privately with the independent public accountants, with our internal auditors and with management to review accounting, auditing, internal control and financial reporting matters. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act. Those rules define internal control over financial reporting as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the U.S. The Company’s internal control over financial reporting includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP; • provide reasonable assurance that receipts and expenditures are being made only in accordance with the authorization of our management and our board of directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management, under the supervision and with the participation of the CEO and CFO, assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria described in “ Internal Control—Integrated Framework ” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of its internal control over financial reporting. Management reviewed the results of its assessment with the Audit Committee of the board of directors. Based on this assessment and those criteria, management concluded that we maintained effective internal control over financial reporting as of December 31, 2025. See Deloitte & Touche LLP’s accompanying attestation report on their audit of our internal controls over financial reporting. Changes in Internal Control over Financial Reporting During the three months ended December 31, 2025, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 47 Ta ble of Contents ITEM 9B. Other Information Rule 10b5-1 Trading Plans During the three months ended December 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. None. 48 Ta ble of Contents PART III. ITEM 10. Directors, Executive Officers and Corporate Governance Code of Ethics. We have adopted a code of conduct and ethics that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. Our code of conduct and ethics can be found posted in the investor relations section on our website at http://ir.exlservice.com/corporate-governance. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of our code of conduct and ethics by posting such information on our website at the address and the location specified above. The additional information required by this Item 10 will be set forth in the definitive proxy statement for our 2025 Annual Meeting of Stockholders (the “Proxy Statement”), including under the headings “Our board of directors,” “Our executive officers” and “Corporate governance — Committees — Audit Committee,” “— Committees — Nominating and Governance Committee” and, to the extent included, “— Delinquent Section 16(a) Reports,” and is incorporated herein by reference. We intend to file the Proxy Statement with the SEC within 120 days after the fiscal year ended December 31, 2025. ITEM 11. Executive Compensation We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, including under the headings “Executive Compensation — Compensation Discussion and Analysis,” “— Compensation and Talent Management Committee Report,” “— Summary Compensation Table for Fiscal Year 2025,” “— Grants of Plan-Based Awards Table for Fiscal Year 2025,” “Outstanding Equity Awards at Fiscal 2025 Year-End,” “Option Exercises and Stock Vested During Fiscal Year 2025,” “— Pension Benefits for Fiscal Year 2025,” “— Potential Payments upon Termination or Change in Control at Fiscal 2025 Year-End,” “— Director Compensation for Fiscal Year 2025,” “— Risk and Compensation Policies” and “Corporate Governance — Compensation and Talent Management Committee Interlocks and Insider Participation.” ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Equity Compensation Plan Information The following table provides information as of December 31, 2025 with respect to the shares of our common stock that may be issued under our existing equity compensation plans. For a description of our equity compensation plans, see Note 23 - Stock-Based Compensation to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data.” Plan Category Number of Securities to be Issued Upon Exercise/Vesting of Outstanding Options, Warrants and Rights (1) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column 1) (2) Equity compensation plans approved by security holders 7,167,716 $ 30.14 9,369,596 Equity compensation plans not approved by security holders — — — Total 7,167,716 $ 30.14 9,369,596 (1) This includes outstanding options and unvested restricted stock units, which include time-based restricted stock units and performance-based restricted stock units. This also includes vested time-based restricted stock units, performance-based restricted stock units and employee stock purchase plan units for which the underlying common stock was not issued as of December 31, 2025. (2) This includes 5,919,466 and 3,450,130 securities, under the 2025 Omnibus Incentive Plan (assuming performance at target for outstanding performance-based restricted stock units) and 2022 Employee Stock Purchase Plan, respectively. We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, including under the heading “Principal Stockholders.” 49 Ta ble of Contents ITEM 13. Certain Relationships and Related Transactions, and Director Independence We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, including under the headings “Certain Relationships and Related Person Transactions” and “Corporate Governance — Director Independence.” ITEM 14. Principal Accountant Fees and Services We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, including under the heading “Ratification of the Appointment of Independent Registered Public Accounting Firm — Audit and Non-Audit Fees.” PART IV. ITEM 15. Exhibits and Financial Statement Schedules (a) 1. Consolidated Financial Statements. The consolidated financial statements required to be filed in the Annual Report on Form 10-K are listed on page F-1 hereof. The required financial statements appear on pages F-5 through F-58 hereof. 2. Financial Statement Schedules. Financial statement schedules have been omitted since they are either not required, not material or the information is otherwise included in our consolidated financial statements or the notes to our consolidated financial statements. 3. Exhibits. The Exhibits filed as part of this Annual Report on Form 10-K are listed on the Exhibit Index immediately preceding such Exhibits, which Exhibit Index is incorporated in this Annual Report on Form 10-K by reference. (b) Exhibits. See Item 15(a)(3) above. (c) Financial Statement Schedules. See Item 15(a)(2) above. ITEM 16. Form 10-K Summary Not applicable. 50 Ta ble of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned hereunto duly authorized. Date: February 24, 2026 EXLSERVICE HOLDINGS, INC. By: /S/ MAURIZIO NICOLELLI MAURIZIO NICOLELLI Chief Financial Officer (Duly Authorized Signatory, Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /S/ ROHIT KAPOOR Chairman and Chief Executive Officer (Principal Executive Officer) February 24, 2026 Rohit Kapoor /S/ MAURIZIO NICOLELLI Chief Financial Officer (Principal Financial and Accounting Officer) February 24, 2026 Maurizio Nicolelli /S/ VIKRAM S. PANDIT Director February 24, 2026 Vikram S. Pandit /S/ THOMAS BARTLETT Director February 24, 2026 Thomas Bartlett /S/ ANDREAS FIBIG Director February 24, 2026 Andreas Fibig /S/ PATRICK GERAGHTY Director February 24, 2026 Patrick Geraghty /S/ KRISTY PIPES Director February 24, 2026 Kristy Pipes /S/ NITIN SAHNEY Director February 24, 2026 Nitin Sahney /S/ SARAH K. WILLIAMSON Director February 24, 2026 Sarah K. Williamson 51 Ta ble of Contents INDEX TO EXHIBITS The following exhibits are being filed as part of this report or incorporated by reference as indicated therein: 3.1 Fourth Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 25, 2024). 3.2 Sixth Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 21, 2023). 4.1 Registration Rights Agreement (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K (File No. 1-33089) filed on October 25, 2006). 4.2 Description of Common Stock (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K (File No. 1-33089) filed on February 25, 2025). 10.1+ Form of ExlService Holdings, Inc. Employment Agreement (applicable to Executive Officers) (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on April 27, 2023). 10.2+ Second Amended and Restated Employment and Non-Competition Agreement, dated August 3, 2020, between the Company and Rohit Kapoor (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on October 29, 2020). 10.3+ Amendment to Second Amended and Restated Employment and Non-Competition Agreement, dated August 12, 2022, between the Company and Rohit Kapoor (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on October 27, 2022). 10.4+ Amendment No. 2 to Second Amended and Restated Employment and Non-Competition Agreement, effective February 16, 2023, between the Company and Rohit Kapoor (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on April 27, 2023). 10.5+ Employment Agreement, effective as of February 3, 2020, between ExlService Holdings, Inc. and Maurizio Nicolelli (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K (File No. 1-33089) filed on February 25, 2021). 10.6+ Employment Agreement, effective as of April 18, 2022, between exl Service (India) Private Limited and Vikas Bhalla (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on April 27, 2023). 10.7+ ExlService Holdings, Inc. 2015 Amendment and Restatement of the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 25, 2015). 10.8+ Form of Restricted Stock Unit Agreement (U.S.) under the ExlService Holdings, Inc. 2015 Amendment and Restatement of the 2006 Omnibus Award Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on October 27, 2016). 10.9+ Form of Restricted Stock Unit Agreement (U.S.) under the ExlService Holdings, Inc. 2015 Amendment and Restatement of the 2006 Omnibus Award Plan “(incorporated by reference to Exhibit 10.40 to the Company’s Annual Report on Form 10-K (File No. 1-33089) filed on March 15, 2017). 10.10+ ExlService Holdings, Inc. 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 20, 2018). 10.11+ Form of Restricted Stock Unit Agreement (applicable to U.S. Executive Officers) under the 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on April 27, 2023). 10.12+ Form of Restricted Stock Unit Agreement (applicable to International Executive Officers) under the 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on April 27, 2023). 10.13+ Form of Restricted Stock Unit Agreement (Directors) under the 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on April 29, 2021). 10.14+ Form of Option Agreement (applicable to U.S. Executive Officers) under the 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on July 27, 2023). 52 Ta ble of Contents 10.15+ Form of Option Agreement (applicable to International Executive Officers) under the 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 1-33089) filed on July 27, 2023). 10.16+ ExlService Holdings, Inc. 2025 Omnibus Incentive Plan, effective June 17, 2025 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 17, 2025). 10.17+ Form of Restricted Stock Unit (applicable to CEO) under the 2025 Omnibus Incentive Plan. 10.18+ Form of Restricted Stock Unit (applicable to U.S. Executive Officers) under the 2025 Omnibus Incentive Plan. 10.19+ Form of Restricted Stock Unit (applicable to International Executive Officers) under the 2025 Omnibus Incentive Plan. 10.20+ Form of Restricted Stock Unit (applicable to Directors) under the 2025 Omnibus Incentive Plan. 10.21+ ExlService Holdings, Inc. 2022 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 22, 2022). 10.22 Amendment and Restatement Agreement, dated April 18, 2022, by and among the Company and the other loan parties thereto, the lenders party thereto, and Citibank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on April 20, 2022). 10.23 First Amendment to Amended and Restated Credit Agreement, dated August 9, 2024, by and among the Company and the other loan parties party thereto, the lenders party thereto, and Citibank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on August 15, 2024) . 10.24 Master Confirmation – Variable Tenor Accelerated Stock Repurchase, dated as of March 15, 2024, between ExlService Holdings, Inc. and Citibank, N.A. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-33089) filed on March 18, 2024). 19.1 ExlService Holdings, Inc. Securities Trading Policy (incorporated by reference to Exhibit 19.1 to the Company’s Annual Report on Form 10-K (File No. 1-33089) filed on February 25, 2025). 21.1 Subsidiaries of the Company . 23.1 Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm. 31.1 Certification of the Chief Executive Officer of ExlService Holdings, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of the Chief Financial Officer of ExlService Holdings, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97 ExlService Holdings, Inc. Clawback Policy (incorporated by reference to Exhibit 97 to the Company’s Annual Report on Form 10-K (File No. 1-33089) filed on February 29, 2024. 101.INS Inline XBRL Instance Document* 101.SCH Inline XBRL Taxonomy Extension Schema* 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase* 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase* 101.LAB Inline XBRL Taxonomy Extension Label Linkbase* 101.PRE Inline XBRL Extension Presentation Linkbase* 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) 53 Ta ble of Contents *This exhibit will not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference. +Indicates management contract or compensatory plan required to be filed as an Exhibit. 54 Ta ble of Contents EXLSERVICE HOLDINGS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) F- 2 Consolidated Balance Sheets as of December 31, 2025 and 2024 F- 5 Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023 F- 6 Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023 F- 7 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2025, 2024 and 2023 F- 8 Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023 F- 9 Notes to Consolidated Financial Statements F- 10 F-1 Ta ble of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of ExlService Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of ExlService Holdings, Inc. (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenues - Refer to Notes 2 and 4 to the financial statements Critical Audit Matter Description Revenues from payment integrity services having contingent fee arrangements are recognized by the Company at the point in time when a performance obligation is satisfied, which is when it identifies an overpayment claim. In such contracts, the Company’s consideration is contingent upon the actual collections made by its customers and net of any subsequent retraction claims. Based on guidance on variable consideration in Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), the Company uses its historical experience and projections to determine the expected amount of revenue to be recognized based on the expected consideration to be received from its customers. Any adjustment required due to change in estimates are recorded in the period in which such change is identified. We identified revenue recognized under contracts for the Company’s payment integrity services as a critical audit matter because of the judgments necessary for management to determine the transaction price, represented by the amount of expected recoveries from its customers. This required extensive audit effort and a high degree of auditor judgment when performing F-2 Ta ble of Contents audit procedures to audit management’s estimates of transaction price used to recognize revenue and evaluating the results of those procedures. ______________________________________________________________________________________________________ How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to testing the transaction price of the Company’s contracts to provide payment integrity services included the following, among others: • We tested the effectiveness of the internal controls related to the assumptions used to determine the transaction price that is probable of recovery, including subsequent changes to amounts earned. • We selected a sample of transactions and performed the following procedures for evaluating management’s estimate and underlying data used for deriving transaction price: • Read the underlying contract with the customer and agreed the commission rate for the selected transaction to the Company’s computation used to determine the amount of revenue recognized. • Tested management’s estimate used to determine the transaction price that is probable of recovery, including subsequent changes to amounts earned. • Tested the accuracy and completeness of the underlying data (i.e. historical experience) used by management to support such estimate. • Tested the mathematical accuracy of the Company’s estimate analysis. • We evaluated management’s ability to estimate the transaction price accurately by comparing actual recoveries to management’s historical estimates. /s/ Deloitte & Touche LLP New York, New York February 24, 2026 We have served as the Company's auditor since 2018. F-3 Ta ble of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of ExlService Holdings, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of ExlService Holdings, Inc. (the “Company”) as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated February 24, 2026, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP New York, New York February 24, 2026 F-4 Ta ble of Contents EXLSERVICE HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share amount and share count) As of Notes December 31, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents 7 $ 146,326 $ 153,355 Short-term investments 8 182,041 187,223 Restricted cash 7 12,392 9,972 Accounts receivable, net 4 343,105 304,322 Other current assets 11 146,093 140,317 Total current assets 829,957 795,189 Property and equipment, net 9 111,821 101,837 Operating lease right-of-use assets 21 97,411 68,784 Restricted cash 7 7,251 8,071 Deferred tax assets, net 22 129,968 104,747 Goodwill 10 419,654 420,387 Other intangible assets, net 10 36,204 49,331 Long-term investments 8 8,198 13,972 Other assets 12 61,771 56,085 Total assets $ 1,702,235 $ 1,618,403 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 4,753 $ 5,884 Current portion of long-term borrowings 18 4,886 4,886 Deferred revenue 15,356 19,264 Accrued employee costs 146,775 129,994 Accrued expenses and other current liabilities 13 135,498 113,597 Current portion of operating lease liabilities 21 16,857 16,491 Total current liabilities 324,125 290,116 Long-term borrowings, less current portion 18 293,712 283,598 Operating lease liabilities, less current portion 21 88,167 59,851 Deferred tax liabilities, net 22 2,125 1,403 Other non-current liabilities 14 81,401 53,573 Total liabilities 789,530 688,541 Commitments and contingencies 25 Stockholders’ equity: Preferred stock, $ 0.001 par value; 15,000,000 shares authorized, none issued — — Common stock, $ 0.001 par value; 400,000,000 shares authorized, 208,855,566 shares issued and 156,430,028 shares outstanding as of December 31, 2025 and 206,510,587 shares issued and 161,801,212 shares outstanding as of December 31, 2024 19 209 206 Additional paid-in capital 677,562 588,583 Retained earnings 1,532,979 1,281,960 Accumulated other comprehensive loss 15 ( 180,727 ) ( 154,722 ) Total including shares held in treasury 2,030,023 1,716,027 Less: 52,425,538 shares as of December 31, 2025 and 44,709,375 shares as of December 31, 2024, held in treasury, at cost 19 ( 1,117,318 ) ( 786,165 ) Total stockholders’ equity 912,705 929,862 Total liabilities and stockholders’ equity $ 1,702,235 $ 1,618,403 See accompanying notes to consolidated financial statements. F-5 Ta ble of Contents EXLSERVICE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amount and share count) Year ended December 31, Notes 2025 2024 2023 Revenues, net 3, 4 $ 2,087,679 $ 1,838,372 $ 1,630,668 Cost of revenues (1) 1,286,603 1,147,359 1,022,902 Gross profit (1) 801,076 691,013 607,766 Operating expenses: General and administrative expenses 255,308 225,672 198,294 Selling and marketing expenses 172,934 146,502 120,227 Depreciation and amortization expense 9, 10 59,084 55,219 50,490 Total operating expenses 487,326 427,393 369,011 Income from operations 313,750 263,620 238,755 Foreign exchange gain, net 2,859 891 1,532 Interest expense 18 ( 17,611 ) ( 19,256 ) ( 13,180 ) Other income, net 6 16,054 16,092 10,834 Income before income tax expense and earnings from equity affiliates 315,052 261,347 237,941 Income tax expense 22 63,728 62,936 53,536 Income before earnings from equity affiliates 251,324 198,411 184,405 Gain/(loss) from equity-method investment ( 305 ) ( 114 ) 153 Net income $ 251,019 $ 198,297 $ 184,558 Earnings per share: 5 Basic $ 1.56 $ 1.22 $ 1.11 Diluted $ 1.54 $ 1.21 $ 1.10 Weighted average number of shares used in computing earnings per share: 5 Basic 161,028,312 162,718,840 166,341,213 Diluted 162,481,586 164,321,656 168,161,371 (1) Exclusive of depreciation and amortization expense. See accompanying notes to consolidated financial statements. F-6 Ta ble of Contents EXLSERVICE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Year ended December 31, Notes 2025 2024 2023 Net income $ 251,019 $ 198,297 $ 184,558 Other comprehensive income/(loss): Unrealized gain/(loss) on cash flow hedges 17 ( 15,062 ) ( 14,513 ) 14,403 Currency translation adjustments ( 13,819 ) ( 17,484 ) 652 Retirement benefits 20 ( 11,196 ) ( 1,414 ) 1,337 Reclassification adjustments: (Gain)/loss on cash flow hedges (1) 17 4,986 ( 131 ) 5,208 Retirement benefits (2) 20 ( 135 ) ( 602 ) ( 94 ) Income tax effects relating to above (3) 22 9,221 6,462 ( 4,403 ) Total other comprehensive income/(loss) ( 26,005 ) ( 27,682 ) 17,103 Total comprehensive income $ 225,014 $ 170,615 $ 201,661 (1) These are reclassified to net income and are included in revenues, net, cost of revenues, operating expenses and interest expense, as applicable in the consolidated statements of income. (2) These are reclassified to net income and are included in other income, net in the consolidated statements of income. (3) These are income tax effects recognized on cash flow hedges, retirement benefits and currency translation adjustments. See accompanying notes to consolidated financial statements. F-7 Ta ble of Contents EXLSERVICE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, except share count) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income/(Loss) Treasury Stock Total Notes Shares Amount Shares Amount Balance as of December 31, 2022 199,939,880 $ 200 $ 444,948 $ 899,105 $ ( 144,143 ) ( 33,767,660 ) $ ( 441,931 ) $ 758,179 Stock issued against stock-based compensation plans 23 3,470,158 3 4,643 — — — — 4,646 Stock-based compensation 23 — — 58,437 — — — — 58,437 Acquisition of treasury stock 19 — — — — — ( 4,364,498 ) ( 133,268 ) ( 133,268 ) Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — ( 218 ) ( 218 ) Other comprehensive income 15 — — — — 17,103 — — 17,103 Net income — — — 184,558 — — — 184,558 Balance as of December 31, 2023 203,410,038 $ 203 $ 508,028 $ 1,083,663 $ ( 127,040 ) ( 38,132,158 ) $ ( 575,417 ) $ 889,437 Stock issued against stock-based compensation plans 23 3,100,549 3 5,035 — — — — 5,038 Stock-based compensation 23 — — 72,658 — — — — 72,658 Acquisition of treasury stock 19 — — — — — ( 2,406,700 ) ( 81,790 ) ( 81,790 ) Accelerated share repurchase 5, 19 — — 2,862 — — ( 4,170,517 ) ( 127,862 ) ( 125,000 ) Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — ( 1,096 ) ( 1,096 ) Other comprehensive loss 15 — — — — ( 27,682 ) — — ( 27,682 ) Net income — — — 198,297 — — — 198,297 Balance as of December 31, 2024 206,510,587 $ 206 $ 588,583 $ 1,281,960 $ ( 154,722 ) ( 44,709,375 ) $ ( 786,165 ) $ 929,862 Stock issued against stock-based compensation plans 23 2,344,979 3 7,962 — — — — 7,965 Stock-based compensation 23 — — 79,469 — — — — 79,469 Acquisition of treasury stock 19 — — — — — ( 4,734,627 ) ( 202,671 ) ( 202,671 ) Accelerated share repurchase 5, 19 — — 1,548 — — ( 2,981,536 ) ( 126,548 ) ( 125,000 ) Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — ( 1,934 ) ( 1,934 ) Other comprehensive loss 15 — — — — ( 26,005 ) — — ( 26,005 ) Net income — — — 251,019 — — — 251,019 Balance as of December 31, 2025 208,855,566 $ 209 $ 677,562 $ 1,532,979 $ ( 180,727 ) ( 52,425,538 ) $ ( 1,117,318 ) $ 912,705 See accompanying notes to consolidated financial statements. F-8 Ta ble of Contents EXLSERVICE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income $ 251,019 $ 198,297 $ 184,558 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 59,248 55,221 50,280 Stock-based compensation expense 79,469 72,658 58,437 Reduction in the carrying amount of operating lease right-of-use assets 24,639 21,764 20,188 Fair value mark-to-market on investments ( 1,766 ) ( 1,514 ) 17,044 Unrealized foreign currency exchange gain, net ( 13,948 ) ( 5,136 ) ( 1,363 ) Deferred income tax benefit ( 15,063 ) ( 19,885 ) ( 31,742 ) Others, net 3,882 ( 680 ) 5,301 Change in operating assets and liabilities: Accounts receivable ( 35,990 ) 4,647 ( 49,242 ) Other current and non-current assets ( 5,872 ) ( 48,373 ) ( 24,339 ) Income taxes payable, net ( 1,611 ) ( 26,204 ) ( 18,282 ) Accounts payable, accrued expenses and other liabilities 11,229 20,509 7,326 Deferred revenue ( 4,127 ) 7,002 ( 877 ) Accrued employee costs 24,531 21,708 14,090 Payment of contingent consideration — ( 11,000 ) — Operating lease liabilities ( 24,923 ) ( 20,489 ) ( 20,181 ) Net cash provided by operating activities 350,717 268,525 211,198 Cash flows from investing activities: Purchases of property and equipment ( 52,598 ) ( 46,262 ) ( 52,803 ) Proceeds from sale of property and equipment 351 215 739 Business acquisition (net of cash acquired) — ( 24,299 ) — Purchases of investments ( 313,511 ) ( 289,012 ) ( 235,369 ) Proceeds from redemption of investments 317,672 240,859 276,036 Investment in equity affiliate ( 1,174 ) ( 600 ) ( 600 ) Net cash used for investing activities ( 49,260 ) ( 119,099 ) ( 11,997 ) Cash flows from financing activities: Principal payments of finance lease liabilities ( 511 ) ( 326 ) ( 169 ) Proceeds from borrowings 235,000 290,000 80,000 Repayments of borrowings ( 225,000 ) ( 201,250 ) ( 130,000 ) Payment of contingent consideration — ( 4,000 ) ( 5,000 ) Acquisition of treasury stock ( 328,490 ) ( 207,926 ) ( 131,847 ) Proceeds from issuance of common stock 6,237 5,023 5,566 Payment of debt issuance costs — ( 622 ) — Net cash used for financing activities ( 312,764 ) ( 119,101 ) ( 181,450 ) Effect of exchange rate changes 5,878 ( 4,328 ) 2,029 Net increase/(decrease) in cash, cash equivalents and restricted cash ( 5,429 ) 25,997 19,780 Cash, cash equivalents and restricted cash at the beginning of the period 171,398 145,401 125,621 Cash, cash equivalents and restricted cash at the end of the period $ 165,969 $ 171,398 $ 145,401 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 16,958 $ 19,604 $ 13,895 Supplemental disclosure of non-cash investing and financing activities: Additions to property and equipment not yet paid $ 4,265 $ 2,062 $ 4,137 Assets acquired under finance lease $ 985 $ 1,325 $ 461 See accompanying notes to consolidated financial statements. F-9 Ta ble of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2025 (In thousands, except per share amount and share count) 1. Organization ExlService Holdings, Inc. (“ExlService Holdings”) is organized as a corporation under the laws of the State of Delaware. ExlService Holdings, together with its subsidiaries and affiliates (collectively, the “Company”), is a global data and artificial intelligence (“AI”) company that offers services and solutions to reinvent client business models, drive better outcomes and unlock growth with speed. The Company harnesses the power of data, AI, and deep industry knowledge to transform businesses, including the world’s leading corporations in industries including insurance, healthcare and life sciences, banking and capital markets, retail, communications and media, and energy and infrastructure, among others. The Company’s clients are located principally in the United States of America and the United Kingdom. 2. Summary of Significant Accounting Policies (a) Basis of Preparation and Principles of Consolidation The consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”). The accompanying financial statements have been prepared on a consolidated basis and reflect the financial statements of ExlService Holdings, Inc. and all of its subsidiaries and includes the Company's share in the results of its associates. The standalone financial statements of subsidiaries are fully consolidated on a line-by-line basis. Intra-group balances and transactions, and gains and losses arising from intra-group transactions, are eliminated while preparing consolidated financial statements. The Company’s investments in equity affiliates are initially recorded at cost and any excess purchase consideration paid over proportionate share of the fair value of the net assets of the investee at the acquisition date is recognized as goodwill. The proportionate share of net income or loss of the investee after its acquisition is recognized in the consolidated statements of income. Accounting policies of the respective individual subsidiaries and equity affiliates are aligned wherever necessary, so as to ensure consistency with the accounting policies that are adopted by the Company under U.S. GAAP. (b) Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities included in the consolidated financial statements. Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from those estimates. The significant estimates that affect the consolidated financial statements include, but are not limited to, estimates of the contingent consideration, credit risk of customers, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, variable consideration in a customer contract, expected recoverability from customers with contingent fee arrangements, estimated costs to complete fixed price contracts, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments and stock-based awards, and useful life of long-lived assets and other intangible assets. The significant assumptions underneath these estimates include, but are not limited to assumptions to calculate stock-based compensation expense, determine 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. F-10 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) (c) Foreign Currency Translation The functional currency of each entity in the Company is the currency of the primary economic environment in which it operates. Transactions in foreign currencies are initially recorded into functional currency at the rates of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are remeasured into functional currency at the rates of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities are remeasured to the functional currency at exchange rates that prevailed on the date of inception of the transaction. All foreign exchange gains and losses arising on re-measurement are recorded in the Company's consolidated statements of income. The assets and liabilities of the subsidiaries for which the functional currency is other than the U.S. dollar are translated into U.S. dollars, the reporting currency, at the rate of exchange prevailing on the balance sheet date and equity items are translated at exchange rates that prevailed on the date of inception of the transaction. Revenues and expenses are translated into U.S. dollars at the exchange rates prevailing on the last business day of each month, which approximates the average monthly exchange rate. Resulting translation adjustments are included in “Accumulated other comprehensive income/(loss)” in the consolidated balance sheets. (d) Revenue Recognition Revenue is recognized when services are provided to the Company's customers, in an amount that reflects the consideration which the Company expects to be entitled to in exchange for the services provided. The Company recognizes revenue when it satisfies a performance obligation by providing services to a customer. Revenue is measured based on consideration specified in a contract with a customer and excludes value added tax, business tax, any applicable discounts and amounts collected on behalf of third parties. Reimbursements of out-of-pocket expenses are included as a part of revenue. Nature of Services The Company earns its revenues by providing data and AI-led solutions and services and digital operations solutions and services to clients. The Company’s services help businesses achieve higher productivity, cost efficiency and business growth. Identification of Performance Obligations The Company identifies performance obligations by evaluating the distinct goods and services promised in a contract with customers. Type of Contracts and Basis of Recognition i. Revenues under time-and-material and transaction based contracts are recognized over time as the services are performed. When the terms of the client contract specify service level parameters that must be met (such as turnaround time or accuracy), the Company monitors such service level parameters to determine if any service credits or penalties have been incurred. Revenues are recognized net of any penalties or service credits that are due to a client. ii. Revenues for the Company’s fixed-price contracts, which include business support services provided on a fixed price basis or implementation of applications or solutions, are recognized considering costs incurred to date relative to total estimated costs at completion to measure progress towards satisfying the Company’s performance obligations. Incurred cost represents work performed, and thereby reasonably reflects transfer of control to the client. The use of this method requires significant judgment to estimate the stage of completion and/or cost required to complete the contracted scope of work, including assumptions and estimates relative to the length of time to complete the project and the nature and complexity of the work to be performed and resources engaged. The Company regularly monitors these estimates throughout the execution of the project and records changes in the period in which a change in an estimate is determined. If a change in an estimate results in a projected loss on a project, such loss is recognized in the period in which it is first identified. F-11 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) iii. Revenue from the Company’s software and platform-enabled solutions and related services contracts, are primarily software license fees, annual maintenance renewals, software subscription or software as a services fees, software implementation and/or customization fees. Perpetual/distinct licenses with significant standalone functionality are recognized at a point in time when control transfers. Maintenance/support services revenues are recognized ratably over the contract term. Subscription or software as a service revenues are recognized over time. Software implementation and customization revenues are recognized over time as services are performed. Revenues from software license bundled with services are recognized over time when services are performed. . iv. Revenues from payment integrity services having contingent fee arrangements are recognized by the Company at the point in time when a performance obligation is satisfied, which is when it identifies an overpayment claim. In such contracts, the Company’s consideration is contingent upon the actual collections made by its customers and net of any subsequent retraction claims. Based on guidance on “variable consideration” in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), the Company uses its historical experience and projections to determine the expected amount of revenue to be recognized based on the expected consideration to be received from its customers. Any adjustment required due to a change in estimates is recorded in the period in which such change is identified. The estimated amount of revenue to be collected from the Company’s customers is presented as contract assets within “Other Current Assets”. Modification to Contracts The Company’s contracts may be modified to add, remove or change existing performance obligations. The accounting for modifications to contracts involves assessing whether the services added to an existing contract are distinct and whether the pricing is at a standalone selling price. Services added that are distinct and at standalone selling price are accounted on a prospective basis either as a separate contract, or as a termination of existing contract and creation of a new contract. Arrangements with Multiple Performance Obligations The Company’s contracts with customers do not generally bundle different services together except for software and related services contracts, involving implementation services and post contract maintenance services. As such in multiple performance obligations arrangements, performance obligations are determined and revenue is recognized based on the transaction price allocated to each performance obligation determined using its relative standalone selling price. Allocation of Transaction Price to Performance Obligations The transaction price is allocated to performance obligations on a relative standalone selling price basis. Standalone selling prices are estimated by reference to the total transaction price less the sum of the observable standalone selling prices of other goods or services promised in the contract. In assessing whether to allocate variable consideration to a specific part of the contract, the Company considers the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract. Variable Consideration Variability in the transaction price arises primarily due to service level agreements, volume discounts entailing variability in revenue earned, and contracts under the Company’s payment integrity services whereby the transaction price is based on the estimated amount the Company enables its customers to recover. The Company considers its historical experience, including trends with similar transactions and expectations regarding the contract in estimating the amount of variable consideration that should be recognized during a period. The Company believes that the expected value method is most appropriate for determining the variable consideration since the Company has a large number of contracts with a similar nature of transactions/services. F-12 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) Unbilled Receivables Unbilled receivables represents revenues recognized for services rendered between the last billing date and the balance sheet date. Deferred Revenue and Contract Fulfillment Costs Contract liabilities (deferred revenue) consist of advance billings and billing in excess of revenues recognized. Deferred revenue also includes the amount for which services have been rendered but other conditions of revenue recognition are not met, for example, where the Company does not have an enforceable contract. Further, the Company also defers any upfront payments collected from its customers attributable to certain process transition activities, with respect to its customers where such activities do not represent separate performance obligations. Revenues related to such transition activities are classified under “Deferred revenue” and “Other non-current liabilities” in the Company’s consolidated balance sheets and are recognized as (or when) the performance obligation is fulfilled under the contract with customer. Costs related to such transition activities are contract fulfillment costs, and thereby classified under “Other current assets” and “Other assets” in the consolidated balance sheets, and are recognized over the expected duration of the relationship with customers, under “Cost of revenues” in the consolidated statements of income. Contract Acquisition Costs Incremental costs incurred for acquiring contracts, such as sales commissions are contract acquisition costs and thereby classified under “Other current assets” and “Other assets” in the consolidated balance sheets. Such costs are amortized over the expected duration of the relationship with customers and recorded under Selling and marketing expenses in the consolidated statements of income. Upfront Payments Made to Customers Upfront payments, in nature of deal signing discount or deal signing bonuses made to customers are contract assets and classified under “Other current assets and Other assets” in the consolidated balance sheets. Such costs are amortized over the expected period of benefit and are recorded as an adjustment to transaction price and reduced from revenues. Out-of-Pocket Expenses Reimbursements of out-of-pocket expenses received from customers are included as part of revenues. Payment terms All contracts entered into by the Company specify the payment terms and are defined for each contract separately. Usual payment terms range between 30 - 60 days. The Company does not have any extended payment terms clauses in existing contracts. Remaining Performance Obligations The Company does not disclose the value of remaining performance obligations as a result of applying the practical expedient provided in ASC Topic 606, for contracts that meet any of the following criteria: i. Contracts with an original expected length of one year or less as determined under ASC Topic 606, ii. Contracts for which Company recognize revenue based on the right to invoice for service performed. (e) Cash and Cash Equivalents and Restricted Cash The Company considers all highly liquid investments purchased with an original maturity of ninety days or less to be cash equivalents. Pursuant to the Company’s investment policy, surplus funds are invested in highly-rated debt mutual funds, money market funds and time deposits to reduce its exposure to market risk with regard to these funds. F-13 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) The Company’s investment in money market funds is considered as cash equivalents. These investments are accounted for in accordance with the fair value option under ASC Topic 825, Financial Instruments . The fair value is represented by original cost on the acquisition date and the net asset value (“NAV”) as quoted, at each reporting period and any changes in fair value are included in other income/(expense), net. Gain or loss on the disposal of these investments is calculated using the first in, first out (“FIFO”) method and is included in other income/(expense), net. Restricted cash includes any cash and cash equivalents that are legally restricted as to withdrawal or usage for the Company’s operations. For purposes of the statements of cash flows, the Company includes in its cash and cash-equivalent balances those amounts that have been classified as restricted cash and restricted cash equivalents. (f) Short-Term and Long-Term Investments The Company’s short-term investments consist of investments in mutual funds and those term deposits with more than three months of original maturity and less than twelve months of remaining maturity as of the reporting date, while long-term investments consist of term deposits with more than twelve months of remaining maturity as of the reporting date and investments in equity affiliates. The Company’s investments in term deposits with financial institutions are measured and recognized at amortized cost. Interest earned on such investments is included in other income/(expense), net. The Company’s mutual fund investments are in debt funds invested in India. These investments are accounted for in accordance with the fair value option under ASC Topic 825, Financial Instruments . The fair value is represented by original cost on the acquisition date and the net asset value (“NAV”) as quoted, at each reporting period and any changes in fair value are included in other income/(expense), net. Gain or loss on the disposal of these investments is calculated using the FIFO method and is included in other income/(expense), net. Investments in equity affiliates are initially recorded at cost and any excess purchase consideration paid over proportionate share of the fair value of the net assets of the investee at the acquisition date is recognized as goodwill. The proportionate share of net income or loss of the investee after its acquisition is recognized in the consolidated statements of income. The Company periodically reviews the carrying value of its investment to determine if there has been any other than temporary decline in carrying value. The investment balance for an investee is increased or decreased for cash contribution and distributions to or from, respectively . (g) Accounts Receivable and Allowance for Expected Credit Losses Accounts receivable are recorded net of allowances for expected credit losses. The Company evaluates the credit risk of its customers based on a combination of various financial and qualitative factors that may affect the ability of each customer to pay. The Company considered current and anticipated future economic conditions relating to the industries of the Company’s customers and the countries where it operates. In calculating expected credit loss, the Company also considered past payment trends, credit rating and other related credit information for its significant customers to estimate the probability of default in the future. Accounts receivable balances are written-off against the allowance for expected credit losses after all means of collection have been exhausted and the potential for recovery is considered remote. Accounts receivable include unbilled accounts receivable which represent revenues on contracts to be billed, in subsequent periods, as per the terms of the related contracts. (h) Property and Equipment Property and equipment are stated at cost, which is generally comprised of the purchase price for such property or equipment, non-refundable duties and taxes, but excludes any discounts and/or rebates, less accumulated depreciation and impairment. Equipment held under finance leases are capitalized at the commencement of the lease at an amount equal to the lease liability, adjusted for any lease prepayments, initial direct costs and lease incentives, which usually approximate the fair value of the underlying asset. Expenditures for replacements and improvements are capitalized, if they enhance the production F-14 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) capacity and future benefits whereas the costs of maintenance and repairs are charged to earnings as incurred. Advances paid towards acquisition of property and equipment and the cost of property and equipment not yet placed in service before the end of the reporting period, net of impairment, if any, are classified as capital work in progress. Depreciation is computed using the straight-line method over the estimated useful lives of the assets and is presented under “Depreciation and amortization expense” in the consolidated statements of income. The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The estimated useful life have been disclosed in Note 9 - Property and Equipment, net to the consolidated financial statements. (i) Software Development Costs The Company capitalizes certain costs related to the development of or enhancements to existing internal-use software. The Company begins to capitalize such costs when planning stage efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed as incurred and recorded within “General and administrative expenses” in the Company’s consolidated statements of income. The Company also capitalizes certain costs incurred in connection with developing or obtaining software or technology for sale to customers when the initial design phase is completed and commercial and technological feasibility has been established. The Company capitalizes costs incurred after technological feasibility is reached but before software is available for general release to customers, which primarily includes coding and testing activities. Any development cost incurred before technological feasibility is established is expensed as incurred as research and development costs. Costs incurred on internally developed software not yet ready for its intended use before the end of the reporting period, net of impairment, if any, are classified as capital work in progress. The Company exercises judgment in determining the point at which various projects may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized. Annual amortization of internally developed software products meant for sale, lease or otherwise marketable is the greater of the amount computed using the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or the straight-line method over the remaining estimated economic life of the software product, generally estimated to be up to 3 to 5 years from the date the product became available for use. Annual amortization of internally developed software products meant for internal-use is based on the straight-line method over the estimated useful lives of the internally developed software products. Amortization of such internally developed software is presented under “Depreciation and amortization expense” in the consolidated statements of income. The Company also capitalizes certain implementation costs that are incurred when implementing cloud computing services or software-as-a-service arrangements, which primarily include efforts associated with configuration and development activities. These capitalized costs are reported in "Other current assets" and "Other non-current assets" in the consolidated balance sheets. Once the service is ready for use, the capitalized costs are expensed over the term of the hosting arrangement and recognized in consolidated statements of income. (j) Business Combinations, Goodwill and Other Intangible Assets ASC Topic 805, Business Combinations, requires that the acquisition method of accounting be used for all business combinations. The guidance specifies criteria as to intangible assets acquired in a business combination that must be recognized and reported separately from goodwill. Contingent consideration is recognized at its fair value on the acquisition date. A liability resulting from contingent consideration is re-measured to fair value as of each reporting date until the contingency is resolved, whereby such changes in fair value are recognized in earnings. Under ASC Topic 350, Intangibles - Goodwill and Other , all assets and liabilities of the acquired businesses, including goodwill, are assigned to reporting units. Acquisition related costs are expensed as incurred under general and administrative expenses. F-15 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) In addition, assets acquired and liabilities assumed, including uncertain tax positions and tax-related valuation allowances, are initially estimated as of the acquisition date and subsequently re-evaluated, with any measurement-period adjustments (up to one year) recorded to goodwill. Goodwill represents the cost of the acquired businesses in excess of the fair value of identifiable tangible and intangible net assets purchased in a business combination. The Company undertakes studies to determine the fair values of assets and liabilities acquired and allocates purchase consideration to assets and liabilities, including property and equipment, goodwill and other identifiable intangibles. Goodwill is not amortized but is tested for impairment at least on an annual basis, relying on a number of factors including operating results, business plans and estimated future cash flows of the reporting units to which it is assigned. The Company examines the carrying value and fair value of the reporting unit that includes goodwill as and when the circumstances warrant, to determine whether there are any impairment losses. The Company performs an assessment of qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Based on the assessment of events or circumstances, the Company performs a quantitative assessment of goodwill impairment if it determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, based on the quantitative impairment analysis, the carrying value of the goodwill of a reporting unit exceeds the fair value of such goodwill, an impairment loss is recognized in an amount equal to the excess, limited to the total amount of goodwill allocated to that reporting unit. In addition, the Company performs a qualitative assessment of goodwill impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Intangible assets acquired in a business combination are initially valued and recognized at fair market value using generally accepted valuation methods appropriate for the type of intangible asset. Intangible assets with definite lives are amortized over the estimated useful lives and are reviewed for impairment, if indicators of impairment arise. Amortization of intangible assets with definite lives is presented under “Depreciation and amortization expense” in the consolidated statements of income. The evaluation of impairment is based upon a comparison of the carrying amount of the intangible asset to its fair value, which is calculated using the estimated future undiscounted net cash flows expected to be generated by the asset. If the fair value of the intangible assets is less than the carrying amount of the asset, the asset is considered impaired and an impairment expense is recognized equal to any shortfall in the current period. The Company’s definite lived intangible assets are amortized over their estimated useful lives as listed below using a straight-line method: Useful Lives (in years) Customer relationships 5 - 15 Developed technology 3 - 10 Non-compete agreements 3 - 5 Trade names and trademarks 2 - 10 (k) Impairment of Long-lived Asset s Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Such assets are required to be tested for impairment if the carrying amount of the assets is higher than the future undiscounted net cash flows expected to be generated from the assets. To determine fair value, the Company follows the discounted cash flow approach. The impairment amount to be recognized is measured as the amount by which the carrying value of the assets exceeds their fair value. (l) Derivative Financial Instruments In the normal course of business, the Company uses derivative instruments to mitigate the exposure from risk of foreign currency and interest rate fluctuations. The Company enters into foreign currency forward contracts to hedge cash flow risks from forecasted transactions denominated in certain foreign currencies, and interest rate swaps to hedge cash flow risks from F-16 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) fluctuations in interest rates on its indebtedness. These contracts adhere to the Company’s treasury operations’ objectives and policies to qualify as cash flow hedges, and are with counterparties that are highly rated financial institutions. The Company recognizes derivative instruments and hedging activities as either assets or liabilities in its consolidated balance sheets and measures them at fair value. Changes in the fair value of these cash flow hedges are recorded as a component of accumulated other comprehensive income/(loss) (“AOCI”), net of tax. The resultant foreign exchange gain/(loss) upon settlement of cash flow hedges of forecasted transactions are reclassified from AOCI to the consolidated statements of income along with the underlying hedged item in the same line as part of “Revenues, net,” “Cost of revenues,” “General and administrative expenses,” “Selling and marketing expenses,” and “Depreciation and amortization expense,” as applicable. The accumulated changes in the fair value of interest rate swaps recognized in AOCI are reclassified to the consolidated statements of income and are presented as a part of “Interest expense” over the term of the contract. The Company evaluates hedge effectiveness of cash flow hedges at the time a contract is entered into as well as on an ongoing basis. For hedge relationships that are discontinued because the forecasted transaction is not expected to occur by the end of the originally specified period, any related derivative amounts recorded in AOCI are reclassified to earnings. The Company also uses derivatives instruments consisting of foreign currency forward contracts to hedge intercompany balances and other monetary assets or liabilities denominated in currencies other than the functional currency, against the risk of foreign currency fluctuations associated with remeasurement of such assets and liabilities to functional currency. These derivatives do not qualify as fair value hedges under ASC Topic 815. Changes in the fair value of these derivatives are recognized in the consolidated statements of income and are included in foreign exchange gain/(loss), net. All of the assets and liabilities related to the Company’s forward contracts are subject to master netting arrangements with each individual counterparty. The Company has presented all of the assets and liabilities related to these contracts on a gross basis, with no offsets, in its consolidated balance sheets. There is no financial collateral (including cash collateral) provided or received by the Company related to these contracts. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. (m) Employee Benefits Contributions to defined contribution plans are charged to the consolidated statements of income in the period in which services are rendered by the covered employees. Current service costs for defined benefit plans are recognized in the period to which they relate. The liability in respect of defined benefit plans is calculated annually by the Company using the projected unit credit method. The Company records annual amounts relating to its defined benefit plans using actuarial assumptions such as discount rates, mortality, assumed rates of return on plan assets, future compensation increases and attrition rates. The Company reviews its assumptions on an annual basis and makes modifications to the assumptions as needed. The Company includes the service cost component of the net periodic benefit cost in the same line item or items as other compensation costs arising from services rendered by the respective employees during the period. The interest cost, expected return on plan assets and amortization of actuarial gains/(loss) and prior period service costs, are included in “ Other income/(expense), net. ” Refer to Note 20 - Employee Benefit Plans to the consolidated financial statements. The Company recognizes its liabilities for compensated absences depending on whether the obligation is attributable to employee services already rendered, rights to compensated absences vest or accumulate and payment is probable and estimable. (n) Stock-Based Compensation The Company recognizes stock-based compensation expense in the consolidated statements of income for awards of equity instruments to employees and non-employee directors based on the grant-date fair value of those awards. The Company recognizes these compensation costs on straight-line basis over the requisite service period of the award, or to the date on which retirement eligibility is achieved, if shorter. Forfeitures are accounted when the actual forfeitures occur. On June 17, 2025, the Company’s stockholders approved the 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 F-17 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) 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. Under the Company’s Plans (the “2025 Plan and the 2018 Plan”), the Company grants performance-based restricted stock units (“PRSUs”) to executive officers and other specified employees. Generally, the Company grants PRSUs that cliff vest based on an aggregated revenue target (“PU”) for a three-year period, and PRSUs that are based on market conditions (“MU”) and cliff vest upon meeting or exceeding the Company's total shareholder return relative to a group of peer companies specified under the Plans, and are measured over a three-year performance period. The award recipient may earn up to 200 % of the PRSUs granted based on the actual achievement of the respective targets. However, the features of the equity incentive compensation program are subject to change by the Compensation and Talent Management Committee of the Company’s board of directors. The fair value of each PU is determined based on the market price of one common share of the Company on the day prior to the date of grant, and the associated compensation expense is calculated on the basis that performance targets at 100 % are probable of being achieved. The compensation expense for the PU is recognized on a straight-line basis over the service period, which is through the end of the third year. Over this period, the number of shares that will be issued is adjusted upward or downward based upon the probability of achievement of the performance targets. The final number of shares issued and the related compensation cost recognized as an expense will be based on a comparison of the final performance metrics to the specified targets. The expense related to the unvested PU as of December 31, 2025 was based on the Company's assessment of performance criteria for these grants that would most likely be met during the respective years of vesting against the targeted performance level. The grant date fair value for the MUs is determined using a Monte Carlo simulation model and the related compensation expense is expensed on a straight-line basis over the vesting period. All compensation expense related to the MU will be recognized if the requisite performance period is fulfilled, regardless of the extent of the market condition achieved. Stock-based compensation expense associated with the Company's 2022 Employee Stock Purchase Plan (“ESPP”) is measured at fair-value using a Black-Scholes option-pricing model at the commencement of each offering period and recognized over that offering period. (o) Income Taxes The Company accounts for income taxes using the asset and liability method of accounting for income taxes. The Company calculates and provides for income taxes in each of the tax jurisdictions in which it operates. The deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying values of existing assets and liabilities and their respective tax bases and all operating losses carried forward, if any. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which the applicable temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or tax status is recognized in the consolidated statements of income in the period in which the change is identified. The Company releases (reclassifies) the tax effects from AOCI to the consolidated statements of income at the time of settlement of cash flows hedges and amortization of deferred actuarial gain/(loss) on retirement benefits. Deferred tax assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company establishes provisions for uncertain tax provisions and related interest and penalties when the Company believes those tax positions are not more likely than not of being sustained, if challenged. The Company has indefinitely reinvested earnings from its foreign subsidiaries through December 31, 2023, and has not recorded deferred tax liabilities for such earnings. Beginning 2024, the Company is not indefinitely investing current year earnings of the Company’s foreign disregarded subsidiaries and is not recording any deferred tax liabilities. However, the Company continues to indefinitely reinvest earnings from its controlled foreign corporation subsidiaries and has not recorded deferred tax liabilities for such earnings. The Company recognizes the tax effects of Global Intangible Low-Taxed Income of certain foreign subsidiaries as a period cost. F-18 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) (p) Concentration of Credit Risk in Financial Instruments Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, time deposits, mutual fund investments, accounts receivable and derivative financial instruments. Pursuant to the Company’s investment policy, surplus funds are maintained as cash equivalents and short-term investments, and are invested in highly-rated mutual funds, money market funds and time deposits, placed with highly rated financial institutions to reduce its exposure to market risk with regard to these funds. The Company’s exposure to credit risk on account receivable is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers . To mitigate this risk, the Company conducts ongoing credit evaluations of its customers. (q) Fair value measurements In accordance with ASC Topic 820, Fair Value Measurements , the Company calculates fair value based on assumptions that market participants would use in pricing the asset or liability, rather than entity specific assumptions. The fair value hierarchy consists of the following three levels: • Level I — Quoted prices for identical instruments in active markets. • Level II — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. • Level III — Instruments whose significant value drivers are unobservable. (r) Leases The Company determines if an arrangement contains a lease at the inception of the contract by assessing whether there is an identified asset and whether the Company has the right to control its use. At the lease commencement date, the Company classifies the lease as either an operating lease or a finance lease, based on the terms of the arrangement. Operating leases are presented within “Operating lease right-of-use assets,” “Current portion of operating lease liabilities” and “Operating lease liabilities, less current portion” in the Company's consolidated balance sheets. Long-lived assets underlying finance leases are presented within “Property and equipment, net” and the current and non-current portion of finance lease liabilities are presented within “Accrued expenses and other current liabilities - others” and “other non-current liabilities - others,” respectively, in the Company's consolidated balance sheets. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease arrangement. Lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease ROU assets are recognized at commencement date in an amount equal to lease liability, adjusted for any lease prepayments, initial direct costs, and lease incentives. For leases in which the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate based on the information available at commencement date. The Company determines the incremental borrowing rate by adjusting the benchmark reference rates with appropriate financing spreads applicable to the respective geographies where the leases are entered and lease specific adjustments for the effects of collateral, if applicable. Lease terms includes the effects of options to extend or terminate the lease when it is reasonably certain at commencement of the lease that the Company will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term reflecting single operating lease cost. The Company evaluates lease agreements to determine lease and non-lease components, which are accounted for separately. Lease payments that depend on factors other than an index or rate are considered variable lease payments and are excluded from the operating lease assets and liabilities and are recognized as expense in the period in which the obligation is incurred. Lease payments include payments for common area maintenance, utilities such as electricity, heating and water, among others, and property taxes, and other similar payments paid to the landlord, which are treated as non-lease component. The Company reviews ROU assets for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. F-19 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) (s) Earnings per share Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding, adjusted for outstanding shares that are subject to repurchase during the period. Diluted earnings per share is computed using the weighted average number of common shares issued and outstanding during the period plus the potentially dilutive effect of common stock equivalents, including outstanding stock options, restricted stock, restricted stock units and employee stock purchase plans. For the purposes of calculating diluted earnings per share, the treasury stock method is used for stock-based awards. The Company includes performance stock unit awards in dilutive potential common shares when they become contingently issuable and have a dilutive impact per authoritative guidance and excludes such awards when they are not contingently issuable. (t) Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recognized when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Legal costs incurred in connection with such liabilities are expensed as incurred. Capital commitments are disclosed in the financial statements. (u) Recent Accounting Pronouncements In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income (“ASC Topic 220”): Expense Disaggregation Disclosures. This ASU improves disclosures relating to the disaggregation of income statement expenses, requires additional disclosures about the nature of expenses in commonly presented financial statement captions on an annual and interim basis for all public business entities. The ASU will be effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its 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. In December 2025, the FASB issued ASU No. 2025-10, Government Grants (“ASC Topic 832”): Accounting for Government Grants Received by Business Entities. This ASU provides authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants for business entities, creating a framework that previously did not exist under U.S. GAAP. The ASU will be effective for annual reporting periods beginning after December 15, 2028, 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. In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (“ASC Topic 270”): Narrow-Scope Improvements. This ASU provides a comprehensive list of interim disclosures that are required by U.S. GAAP and incorporates disclosure principle of material events or changes occurred since the prior year-end. The ASU will be effective for interim reporting 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 consolidated financial statements. F-20 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) (v) Recently Adopted and Applicable Accounting Pronouncements In March 2024, FASB issued ASU No. 2024-01, Compensation-Stock Compensation (“ASC Topic 718”) . This ASU clarifies how to evaluate whether profits interest and similar awards given to employees and non-employees are within the scope of share-based payment arrangement under ASC Topic 718. The ASU will be effective for annual periods beginning after December 15, 2024, including interim periods within those years, with early adoption permitted. The Company has early adopted this ASU beginning January 1, 2024. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (“Accounting Standards Codification (“ASC”) Topic 740”), Improvements to Income Tax Disclosures. This ASU expands disclosures relating to the entity’s income tax rate reconciliation, income taxes paid and certain other disclosures related to income taxes. The ASU is effective for annual periods beginning after December 15, 2024. The Company has adopted the disclosure requirements on a prospective basis, effective for the year ended December 31, 2025. Refer to Note 22 - Income Taxes to the consolidated financial statements for further details. F-21 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) 3. Segment Information The Company is a provider of data and AI-led solutions and services and digital operations solutions and services in an integrated manner for clients across industry verticals. In the first quarter of 2025, the Company implemented operational and structural changes to accelerate the execution of Company’s data and AI strategy and 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”) to focus on delivering higher value to clients leveraging full suite of capabilities; and Strategic Growth Units to focus on rapidly advancing the capabilities specific to various industries and client needs. Consequently, the Company realigned its reportable segments to the IMUs as follows: • Insurance • Healthcare and Life Sciences, • Banking, Capital Markets and Diversified Industries, • International Growth Markets 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 IMU to represent all services 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 IMU is helping the Company strategically expand its footprint in markets outside of North America and drive focus on offerings and expansion in those markets in new and existing clients In addition, revenues by service type are now presented as data and AI-led solutions and services and digital operations solutions and services. Revenues attributable to geographical regions are now presented as North America (including the United States, Canada and Mexico), the United Kingdom & Europe, and the Rest of World. The Company has recast segment disclosures for the prior periods presented herein to conform to the new segment structure. This change in segment presentation does not affect the Company’s consolidated statements of income, balance sheets or statements of cash flows. The Company’s Chief Executive Officer has been identified as the CODM. The CODM generally reviews financial information such as revenues, cost of revenues and gross profit to allocate an overall budget and measure segment performance. F-22 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) Revenues, net and cost of revenues for the years ended December 31, 2025, 2024 and 2023, respectively, for each of the reportable segments, are as follows: Year ended December 31, 2025 Insurance Healthcare and Life Sciences Banking, Capital Markets and Diversified Industries International Growth Markets Total Revenues, net $ 710,575 $ 532,584 $ 482,356 $ 362,164 $ 2,087,679 Cost of revenues (1) Employee costs 380,703 249,119 260,234 193,270 1,083,326 Infrastructure and technology costs 54,310 28,943 25,952 34,002 143,207 Other costs (2) 18,803 22,193 12,578 6,496 60,070 Gross profit (1) $ 256,759 $ 232,329 $ 183,592 $ 128,396 $ 801,076 Operating expenses 487,326 Income from operations 313,750 Foreign exchange gain, net, interest expense and other income, net 1,302 Income before income tax expense and earnings from equity affiliates $ 315,052 (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. Year ended December 31, 2024 Insurance Healthcare and Life Sciences Banking, Capital Markets and Diversified Industries International Growth Markets Total Revenues, net $ 656,419 $ 430,679 $ 426,716 $ 324,558 $ 1,838,372 Cost of revenues (1) Employee costs (2) 337,483 198,957 236,361 174,740 947,541 Infrastructure and technology costs 49,349 25,230 21,809 30,471 126,859 Other costs (3) 38,100 18,919 10,445 5,495 72,959 Gross profit (1) $ 231,487 $ 187,573 $ 158,101 $ 113,852 $ 691,013 Operating expenses 427,393 Income from operations 263,620 Foreign exchange gain, net, interest expense and other income, net ( 2,273 ) Income before income tax expense and earnings from equity affiliates $ 261,347 (1) Exclusive of depreciation and amortization expense. (2) Employee costs include restructuring costs of $ 782 , $ 267 , $ 1,050 and $ 979 for Insurance, Healthcare and Life Sciences, Banking, Capital Markets and Diversified Industries and International Growth Markets, respectively. Refer to Note 26 – Restructuring Costs to the consolidated financial statements for further details. F-23 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) (3) 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. Year ended December 31, 2023 Insurance Healthcare and Life Sciences Banking, Capital Markets and Diversified Industries International Growth Markets Total Revenues, net $ 586,403 $ 366,392 $ 411,828 $ 266,045 $ 1,630,668 Cost of revenues (1) Employee costs 300,249 170,675 226,576 143,462 840,962 Infrastructure and technology costs 43,289 18,924 18,860 24,400 105,473 Other costs (2) 41,776 19,503 10,408 4,780 76,467 Gross profit (1) $ 201,089 $ 157,290 $ 155,984 $ 93,403 $ 607,766 Operating expenses 369,011 Income from operations 238,755 Foreign exchange gain, net, interest expense and other income, net ( 814 ) Income before income tax expense and earnings from equity affiliates $ 237,941 (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, net by service type, were as follows: Year ended December 31, 2025 2024 2023 Data and AI-led (1) $ 1,155,342 $ 979,731 $ 834,737 Digital operations (2) 932,337 858,641 795,931 Revenues, net $ 2,087,679 $ 1,838,372 $ 1,630,668 (1) Data and AI-led revenue comes from AI-powered solutions and services in which the Company embeds data and AI into client workflows, leveraging the Company’s depth of domain knowledge, analytics, data management and digital engineering expertise. Company’s digital and AI capabilities that drive data and technology-led transformation for the clients include generative AI, reinforcement learning, hyper automation, cloud data management, conversational AI, robotics, enterprise architecture development, integration platform as a service and AI for operations. (2) Digital operations revenue comes from the technology-enabled managed services that blend Company’s deep domain expertise with industry-specific solutions and services that help clients run business functions with enhanced productivity, greater speed and improved accuracy. The Company applies deep industry expertise and tailored technology—whether its proprietary technology or client technology—to solve complex challenges and drive measurable outcomes. These digital operations deployments form the foundation for future client transformation opportunities to infuse AI into client workflows and unlock even greater value. All four reportable segments of the Company include revenues from both data and AI-led solutions and services and digital operations solutions and services. F-24 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 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. Year ended December 31, 2025 2024 2023 Revenues, net North America $ 1,725,612 $ 1,513,812 $ 1,364,449 United Kingdom & Europe 307,305 272,530 226,757 Rest of World 54,762 52,030 39,462 Revenues, net $ 2,087,679 $ 1,838,372 $ 1,630,668 Revenues, net by industry verticals, were as follows: Year ended December 31, 2025 2024 2023 Insurance $ 829,899 $ 767,311 $ 672,869 Healthcare and Life Sciences 533,542 431,790 367,340 Banking, Capital Markets and Diversified Industries 724,238 639,271 590,459 Revenues, net $ 2,087,679 $ 1,838,372 $ 1,630,668 Long-lived assets by geographic area, which consist of property and equipment, net and operating lease ROU assets were as follows: As of December 31, 2025 December 31, 2024 Long-lived assets India $ 63,999 $ 63,040 North America 60,575 52,510 The Philippines 36,480 25,881 South Africa 19,635 23,828 Rest of World 28,543 5,362 Long-lived assets $ 209,232 $ 170,621 F-25 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) 4. Revenues, net and Accounts Receivable, net Refer to Note 3 - Segment Information to the consolidated financial statements for revenues disaggregated by reportable segments, service type, geography and industry verticals. Contract balances The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers: As of December 31, 2025 December 31, 2024 Accounts receivable, net $ 343,105 $ 304,322 Contract assets $ 31,901 $ 39,700 Contract liabilities: Deferred revenue (consideration received in advance) $ 9,216 $ 15,484 Consideration received for process transition activities $ 32,247 $ 21,993 Accounts receivable includes $ 141,653 and $ 121,817 as of December 31, 2025 and 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 December 31, 2025 and 2024, includes receivables of $ 24,849 and $ 33,472 , respectively, from 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 December 31, 2025 and 2024. Revenue recognized during the years ended December 31, 2025 and 2024, which was included in the contract liabilities balance at the beginning of the respective periods: Year ended December 31, 2025 2024 Deferred revenue (consideration received in advance) $ 14,378 $ 9,321 Consideration received for process transition activities $ 5,428 $ 2,657 Contract acquisition and fulfillment costs The following table provides details of the Company’s contract acquisition and fulfillment costs: Contract Acquisition Costs Contract Fulfillment Costs Year ended December 31, Year ended December 31, 2025 2024 2025 2024 Opening balance $ 2,287 $ 2,122 $ 36,022 $ 24,673 Additions 564 1,240 8,853 15,118 Amortization ( 904 ) ( 1,075 ) ( 5,652 ) ( 3,769 ) Closing balance $ 1,947 $ 2,287 $ 39,223 $ 36,022 There was no significant impairment for contract acquisition and contract fulfillment costs as of December 31, 2025 and 2024. F-26 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) Allowance for expected credit losses The following table provides information about accounts receivable, net of allowance for expected credit losses: As of December 31, 2025 December 31, 2024 Accounts receivable, including unbilled receivables $ 345,980 $ 307,850 Less: Allowance for expected credit losses ( 2,875 ) ( 3,528 ) Accounts receivable, net $ 343,105 $ 304,322 The movement in “Allowance for expected credit losses” was as follows: Year ended December 31, 2025 2024 Opening balance $ 3,528 $ 3,703 Additions/(reductions) 556 ( 39 ) Reductions due to write-off of accounts receivable ( 1,207 ) ( 135 ) Currency translation adjustments ( 2 ) ( 1 ) Closing balance $ 2,875 $ 3,528 Customer and credit risk concentration No single customer accounted for more than 10% of the Company's revenues, net during the years ended December 31, 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 December 31, 2025 and 2024. 5. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share: Year ended December 31, 2025 2024 2023 Numerator: Net income $ 251,019 $ 198,297 $ 184,558 Denominator: Basic weighted average common shares outstanding 161,028,312 162,718,840 166,341,213 Dilutive effect of stock-based awards 1,453,274 1,602,816 1,820,158 Diluted weighted average common shares outstanding 162,481,586 164,321,656 168,161,371 Earnings per share: Basic $ 1.56 $ 1.22 $ 1.11 Diluted $ 1.54 $ 1.21 $ 1.10 Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share 786,093 2,073,990 1,628,932 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 F-27 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) 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 year ended December 31, 2025, the Company recorded the initial delivery and final settlement of shares in treasury stock, which resulted in an immediate reduction of its outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share. The Company privately repurchased shares from Orogen Echo LLC (an affiliate of The Orogen Group LLC, hereafter referred to as “Orogen”) under a Stock Purchase Agreement dated December 15, 2025, which also resulted in an immediate reduction of its outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share. Refer to Note 19 - Capital Structure to the consolidated financial statements for further details. 6. Other Income, Net Other income, net consists of the following: Year ended December 31, 2025 2024 2023 Gain on sale and fair value mark-to-market on investments $ 8,339 $ 5,662 $ 5,013 Interest and dividend income 9,644 9,921 8,027 Fair value changes of contingent consideration (1) ( 2,300 ) 589 ( 1,900 ) Others, net 371 ( 80 ) ( 306 ) Other income, net $ 16,054 $ 16,092 $ 10,834 (1) Refer to Note 16 - Fair Value Measurements to the consolidated financial statements for further details. 7. Cash, Cash Equivalents and Restricted Cash For the purposes of consolidated statements of cash flows, cash, cash equivalents and restricted cash consist of the following: As of December 31, 2025 December 31, 2024 December 31, 2023 Cash and cash equivalents $ 146,326 $ 153,355 $ 136,953 Restricted cash (current) (1) 12,392 9,972 4,062 Restricted cash (non-current) (2) 7,251 8,071 4,386 Cash, cash equivalents and restricted cash $ 165,969 $ 171,398 $ 145,401 (1) Restricted cash (current) primarily represents funds held on behalf of customers in dedicated bank accounts. The corresponding liability against the same is included under “Accrued expenses and other current liabilities.” Restricted cash also includes funds held as collateral in a dedicated bank account for irrevocable letters of credit issued in favor of third parties for facility leases. (2) Restricted cash (non-current) represents deposits with banks against bank guarantees issued through banks in favor of relevant statutory authorities for equipment imports, deposits for obtaining indirect tax registrations and for demands against pending income tax and value added tax (“VAT”) assessments. Due to the associated restrictions, these deposits with banks are anticipated to mature one year after the balance sheet date. 8. Investments F-28 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) Investments consist of the following: As of December 31, 2025 December 31, 2024 Short-term investments Mutual funds $ 129,549 $ 108,251 Term deposits 52,492 78,972 Short-term investments $ 182,041 $ 187,223 Long-term investments Term deposits $ 2,626 $ 9,295 Investment in equity affiliate 5,572 4,677 Long-term investments $ 8,198 $ 13,972 Refer to Note 16 - Fair Value Measurements to the consolidated financial statements for further details. F-29 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) 9. Property and Equipment, net Property and equipment consists of the following: As of Estimated useful lives (Years) December 31, 2025 December 31, 2024 Owned Assets: Network equipment and computers 3 - 5 $ 189,459 $ 167,525 Software 2 - 5 81,340 105,874 Leasehold improvements 3 - 8 53,299 45,819 Office furniture and equipment 3 - 8 27,139 23,898 Motor vehicles 2 - 5 650 635 Buildings 30 885 929 Land — 579 608 Capital work in progress — 10,680 7,504 364,031 352,792 Less: Accumulated depreciation and amortization ( 254,243 ) ( 252,667 ) $ 109,788 $ 100,125 ROU assets under finance leases: Network equipment and computers 49 56 Leasehold improvements 410 587 Office furniture and equipment 124 417 Motor vehicles 2,944 2,208 3,527 3,268 Less: Accumulated amortization ( 1,494 ) ( 1,556 ) $ 2,033 $ 1,712 Property and equipment, net $ 111,821 $ 101,837 During the years ended December 31, 2025 and 2024, 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 consolidated statements of income was as follows: Year ended December 31, 2025 2024 2023 Depreciation and amortization expense $ 45,944 $ 41,589 $ 35,812 Internally developed software costs included in property and equipment were as follows: As of December 31, 2025 December 31, 2024 Cost $ 59,391 $ 60,447 Less : Accumulated amortization ( 39,332 ) ( 38,243 ) Internally developed software, net $ 20,059 $ 22,204 F-30 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) The amortization expense on internally developed software recognized in the consolidated statements of income was as follows: Year ended December 31, 2025 2024 2023 Amortization expense $ 13,403 $ 12,849 $ 9,282 During the years ended December 31, 2025 and 2024, the Company performed an impairment test of its capitalized software for recoverability to determine whether the carrying values of certain software are fully recoverable or not. The Company recorded impairment charges amounting to $ nil and $ 1,187 for the years ended December 31, 2025 and 2024, respectively under “ Depreciation and amortization ” expense in the consolidated statements of income. 10. Goodwill and Other Intangible Assets Goodwill In the first quarter of 2025, the Company implemented operational and structural changes, which resulted in the realignment of its reporting segments. Refer to Note 3- Segment Information for further details. Goodwill has been re-allocated to reporting units based on the relative fair value approach. The Company tested goodwill for impairment prior to the segment realignment and immediately thereafter, for events and conditions identified in accordance with the guidance in ASC Topic 350, Intangibles- Goodwill and Other . The fair value of the reporting units was calculated using a discounted cash flow model using estimated future cash flows. The results of the evaluation demonstrated that the fair value of each reporting unit exceeded its book value as of the date of the segment realignment . The following table sets forth details of changes in goodwill by reportable segment of the Company: Insurance Healthcare and Life Sciences Banking, Capital Markets and Diversified Industries International Growth Markets Total Balance as of December 31, 2023 $ 73,371 $ 189,352 $ 92,545 $ 50,371 $ 405,639 Acquisition 5,409 411 12,056 4,159 22,035 Measurement period adjustments ( 1,645 ) ( 125 ) ( 3,666 ) ( 1,264 ) ( 6,700 ) Currency translation adjustments ( 36 ) ( 17 ) ( 296 ) ( 238 ) ( 587 ) Balance as of December 31, 2024 77,099 189,621 100,639 53,028 420,387 Currency translation adjustments 170 ( 27 ) ( 486 ) ( 390 ) ( 733 ) Balance as of December 31, 2025 $ 77,269 $ 189,594 $ 100,153 $ 52,638 $ 419,654 The Company performs its annual goodwill impairment assessment during the fourth quarter, to determine whether events or circumstances exist that may lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Based on such assessment, the Company concluded that there was no impairment on goodwill as of December 31, 2025 and 2024. F-31 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) Other Intangible Assets Information regarding the Company’s intangible assets is set forth below: As of December 31, 2025 As of December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Finite-lived intangible assets: Customer relationships $ 108,550 $ ( 73,482 ) $ 35,068 $ 108,550 $ ( 60,667 ) $ 47,883 Developed technology 3,636 ( 3,558 ) 78 3,529 ( 3,311 ) 218 Trade names and trademarks 1,700 ( 1,542 ) 158 1,700 ( 1,442 ) 258 Non-compete agreements 300 ( 300 ) — 300 ( 228 ) 72 114,186 ( 78,882 ) 35,304 114,079 ( 65,648 ) 48,431 Indefinite-lived intangible assets: Trade names and trademarks 900 — 900 900 — 900 Other intangible assets $ 115,086 $ ( 78,882 ) $ 36,204 $ 114,979 $ ( 65,648 ) $ 49,331 The amortization expense recognized in the consolidated statements of income was as follows: Year ended December 31, 2025 2024 2023 Amortization expense $ 13,140 $ 13,630 $ 14,678 During the years ended December 31, 2025 and 2024, the Company performed an impairment test of its intangible assets for recoverability to determine whether the carrying values of certain software are fully recoverable or not. The Company recorded impairment charges amounting to $ nil and $ 429 for the years ended December 31, 2025 and 2024, respectively under “ Depreciation and amortization ” expense in the consolidated statements of income. Estimated future amortization expense related to finite-lived intangible assets as of December 31, 2025 was as follows: 2026 $ 12,776 2027 11,844 2028 9,228 2029 1,456 Total $ 35,304 F-32 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) 11. Other Current Assets Other current assets consist of the following: As of December 31, 2025 December 31, 2024 Advance income tax, net $ 51,984 $ 49,377 Contract assets 27,083 36,072 Prepaid expenses 26,465 21,061 Receivables from statutory authorities 21,374 19,407 Deferred contract fulfillment costs 7,077 4,281 Derivative instruments 4,640 1,973 Others 7,470 8,146 Other current assets $ 146,093 $ 140,317 12. Other Assets Other assets consist of the following: As of December 31, 2025 December 31, 2024 Deferred contract fulfillment costs $ 32,146 $ 31,741 Deposits with statutory authorities 7,859 7,312 Lease deposits 7,087 6,495 Prepaid expenses 6,761 2,775 Contract assets 4,818 3,628 Derivative instruments 1,424 852 Others 1,676 3,282 Other assets $ 61,771 $ 56,085 13. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following: As of December 31, 2025 December 31, 2024 Accrued expenses $ 64,220 $ 63,548 Payable to statutory authorities 27,222 22,935 Derivative instruments 15,443 7,454 Client liabilities 12,601 9,711 Contingent consideration 5,000 1,280 Others 11,012 8,669 Accrued expenses and other current liabilities $ 135,498 $ 113,597 F-33 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) 14. Other Non-Current Liabilities Other non-current liabilities consist of the following: As of December 31, 2025 December 31, 2024 Retirement benefits $ 41,632 $ 24,795 Deferred transition revenue 26,139 18,213 Derivative instruments 9,765 4,363 Unrecognized tax benefits 2,176 1,966 Contingent consideration — 1,420 Others 1,689 2,816 Other non-current liabilities $ 81,401 $ 53,573 15. Accumulated Other Comprehensive Income/(Loss) The following table sets forth the changes in AOCI during the years ended December 31, 2025, 2024 and 2023: Accumulated Other Comprehensive Income/(Loss) Currency translation adjustments Unrealized gain/(loss) on cash flow hedges Retirement benefits Total Balance as of December 31, 2022 $ ( 133,139 ) $ ( 11,303 ) $ 299 $ ( 144,143 ) Gain recognized during the year 652 14,403 1,337 16,392 Reclassification to net income (1) — 5,208 ( 94 ) 5,114 Income tax effects (2) ( 156 ) ( 4,110 ) ( 137 ) ( 4,403 ) Accumulated other comprehensive income/(loss) as of December 31, 2023 $ ( 132,643 ) $ 4,198 $ 1,405 $ ( 127,040 ) Loss recognized during the year ( 17,484 ) ( 14,513 ) ( 1,414 ) ( 33,411 ) Reclassification to net income (1) — ( 131 ) ( 602 ) ( 733 ) Income tax effects (2) 3,129 2,898 435 6,462 Accumulated other comprehensive loss as of December 31, 2024 $ ( 146,998 ) $ ( 7,548 ) $ ( 176 ) $ ( 154,722 ) Loss recognized during the year ( 13,819 ) ( 15,062 ) ( 11,196 ) ( 40,077 ) Reclassification to net income (1) — 4,986 ( 135 ) 4,851 Income tax effects (2) 4,269 2,134 2,818 9,221 Accumulated other comprehensive loss as of December 31, 2025 $ ( 156,548 ) $ ( 15,490 ) $ ( 8,689 ) $ ( 180,727 ) (1) Refer to Note 17 - Derivatives and Hedge Accounting and Note 20 - Employee Benefit Plans to the consolidated financial statements for reclassification to net income. (2) These are income tax effects recognized on currency translation adjustments, cash flow hedges and retirement benefits. Refer to Note 22 - Income Taxes to the consolidated financial statements. F-34 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) 16. Fair Value Measurements Assets and Liabilities Measured at Fair Value The following table sets forth the Company’s assets and liabilities that were recognized at fair value: Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Other Unobservable Inputs As of December 31, 2025 (Level 1) (Level 2) (Level 3) Total Assets Cash equivalents - Money market funds (1) $ 50,971 $ — $ — $ 50,971 Mutual funds (1) 129,549 — — 129,549 Derivative financial instruments — 6,064 — 6,064 Total $ 180,520 $ 6,064 $ — $ 186,584 Liabilities Derivative financial instruments $ — $ 25,208 $ — $ 25,208 Contingent consideration (2) — — 5,000 5,000 Total $ — $ 25,208 $ 5,000 $ 30,208 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Other Unobservable Inputs As of December 31, 2024 (Level 1) (Level 2) (Level 3) Total Assets Cash equivalents - Money market funds (1) $ 54,925 $ — $ — $ 54,925 Mutual funds (1) 108,251 — — 108,251 Derivative financial instruments — 2,825 — 2,825 Total $ 163,176 $ 2,825 $ — $ 166,001 Liabilities Derivative financial instruments $ — $ 11,817 $ — $ 11,817 Contingent consideration (2) — — 2,700 2,700 Total $ — $ 11,817 $ 2,700 $ 14,517 (1) Represents money market funds and short-term investments which are carried at the fair value option under ASC Topic 825 “Financial Instruments” . (2) Contingent consideration is presented under “Accrued expenses and Other current liabilities” and “Other non-current liabilities”, as applicable in the consolidated balance sheets. Fair Value of Derivative Financial Instruments : Fair values for derivative financial instruments are based on independent sources including highly rated financial institutions and are classified as Level 2. Refer to Note 17 - Derivatives and Hedge Accounting to the consolidated financial statements for further details. Fair Value of Contingent Consideration : The fair value measurement of contingent consideration is determined using Level 3 inputs. The Company’s contingent consideration represents a component of the total purchase consideration for business acquisitions. The measurement is F-35 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) calculated using unobservable inputs based on the Company’s own assessment of achievement of certain performance goals. The Company estimated the fair value of the contingent consideration based on the Monte Carlo simulation model. The following table summarizes the changes in the fair value of contingent consideration: Year ended December 31, 2025 2024 Opening balance $ 2,700 $ 15,589 Acquisitions — 2,700 Fair value changes 2,300 ( 589 ) Payments — ( 15,000 ) Closing balance $ 5,000 $ 2,700 During the years ended December 31, 2025 and 2024, there were no transfers among Level 1, Level 2 and Level 3. Financial Instruments Not Carried at Fair Value : The Company’s other financial instruments not carried at fair value consist primarily of cash and cash equivalents (except investments in money market funds, as disclosed above), short-term investments (except investments in mutual funds, as disclosed above), restricted cash, accounts receivable, net, long-term investments, accrued capital expenditures, accrued expenses, client liabilities and interest payable on borrowings for which fair values approximate their carrying amounts. The carrying value of the Company’s outstanding revolving credit facility and term loan facility approximates its fair value because the Company’s interest rate yield is near current market rates for comparable debt instruments. 17. Derivatives and Hedge Accounting The Company uses derivative instruments to mitigate cash flow volatility from risk of fluctuations in foreign currency exchange rates and interest rates. The Company enters into foreign currency forward contracts to hedge cash flow risks from forecasted revenues and other transactions denominated in certain foreign currencies. These contracts qualify as cash flow hedges under ASC Topic 815, Derivatives and Hedging , and are with counterparties that are highly rated financial institutions. The following table sets forth the aggregate notional amount of derivatives in cash flow hedging relationship: As of December 31, 2025 December 31, 2024 Foreign currency forward contracts denominated in: Sell U.S. dollar (USD) 1,134,800 984,300 Buy U.S. dollar (USD) 12,075 — The Company estimates that approximately $ 10,939 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 December 31, 2025, could be reclassified into earnings within the next twelve months. As of December 31, 2025, the maximum outstanding term of the cash flow hedges was approximately 42 months. The Company also enters into foreign currency forward contracts to hedge its intercompany balances and other monetary assets and liabilities denominated in currencies other than functional currencies, against the risk of fluctuations in foreign currency exchange rates associated with remeasurement of such assets and liabilities to functional currency. These foreign currency forward contracts do not qualify as fair value hedges under ASC Topic 815, Derivatives and Hedging . Changes in the fair value of these financial instruments are recognized in the consolidated statements of income and are included in the foreign exchange gain/(loss), net line item. F-36 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) The following table sets forth the aggregate notional principal amounts of outstanding foreign currency forward contracts for derivatives not designated as hedging instruments: As of Foreign currency forward contracts denominated in: December 31, 2025 December 31, 2024 Sell USD 217,040 179,491 Sell GBP 35,962 20,956 Sell EUR 7,722 9,008 Sell AUD 4,917 4,770 Buy USD (1) 1,837 10,594 1) This includes $ 1,130 related to USD purchases against sale of CAD 1,545 as of December 31, 2025 and $ 10,006 related to USD purchases against sale of ZAR 188,373 as of December 31, 2024. The following table sets forth the fair value of the foreign currency forward contracts and their location on the consolidated balance sheets: Derivatives in cash flow hedging relationships Derivatives not designated as hedging instruments As of As of December 31, 2025 December 31, 2024 December 31, 2025 December 31, 2024 Assets: Other current assets $ 4,444 $ 1,711 $ 196 $ 262 Other assets $ 1,424 $ 852 $ — $ — Liabilities: Accrued expenses and other current liabilities $ 15,383 $ 7,404 $ 60 $ 50 Other non-current liabilities $ 9,765 $ 4,363 $ — $ — The following table sets forth the effect of foreign currency forward contracts and interest rate swaps on AOCI and the consolidated statements of income: Year ended December 31, Derivative financial instruments: 2025 2024 2023 Unrealized gain/(loss) recognized in other comprehensive income (“OCI”) Derivatives in cash flow hedging relationships $ ( 15,062 ) $ ( 14,513 ) $ 14,403 Gain/(loss) recognized in consolidated statements of income Derivatives not designated as hedging instruments $ ( 10,715 ) $ ( 3,110 ) $ 296 F-37 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) The following table sets forth the location and amount of gain/(loss) recognized in consolidated statements of income for derivatives in cash flow hedging relationships and derivatives not designated as hedging instruments: Year ended December 31, 2025 2024 2023 As per consolidated statements of income Gain/(loss) on derivative financial instruments As per consolidated statements of income Gain/(loss) on derivative financial instruments As per consolidated statements of income Gain/(loss) on derivative financial instruments Derivatives in cash flow hedging relationships Location in consolidated statements of income where gain/(loss) was reclassified from AOCI Revenues, net $ 2,087,679 $ ( 2,157 ) $ 1,838,372 $ — $ 1,630,668 $ — Cost of revenues $ 1,286,603 ( 2,517 ) $ 1,147,359 ( 722 ) $ 1,022,902 ( 5,180 ) General and administrative expenses $ 255,308 ( 415 ) $ 225,672 110 $ 198,294 ( 454 ) Selling and marketing expenses $ 172,934 ( 61 ) $ 146,502 18 $ 120,227 ( 40 ) Depreciation and amortization expense $ 59,084 164 $ 55,219 2 $ 50,490 ( 236 ) Interest expense $ 17,611 — $ 19,256 723 $ 13,180 702 Total before tax ( 4,986 ) 131 ( 5,208 ) Income tax effects on above 957 ( 339 ) 797 Net of tax $ ( 4,029 ) $ ( 208 ) $ ( 4,411 ) Derivatives not designated as hedging instruments Location in consolidated statements of income where gain/(loss) was recognized Foreign exchange gain/(loss), net $ 2,859 $ ( 10,715 ) $ 891 $ ( 3,110 ) $ 1,532 $ 296 F-38 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) 18. Borrowings The following tables summarizes the Company’s debt position: As of December 31, 2025 December 31, 2024 Revolving credit facility Term loan facility Total Revolving credit facility Term loan facility Total Current portion of long-term borrowings $ — $ 5,000 $ 5,000 $ — $ 5,000 $ 5,000 Unamortized debt issuance costs — ( 114 ) ( 114 ) — ( 114 ) ( 114 ) Current portion of long-term borrowings — 4,886 4,886 — 4,886 4,886 Long-term borrowings 205,000 88,750 293,750 190,000 93,750 283,750 Unamortized debt issuance costs — ( 38 ) ( 38 ) — ( 152 ) ( 152 ) Long-term borrowings 205,000 88,712 293,712 190,000 93,598 283,598 Borrowings $ 205,000 $ 93,598 $ 298,598 $ 190,000 $ 98,484 $ 288,484 Unamortized debt issuance costs for the Company’s revolving credit facility of $ 507 and $ 895 as of December 31, 2025 and 2024, respectively, are presented under “Other current assets” and “Other assets,” as applicable, in the consolidated balance sheets. Credit Agreement The Company held a $ 300,000 revolving credit facility pursuant to its credit agreement (the “Credit Agreement”), dated as of November 21, 2017 with certain lenders and Citibank N.A. as Administrative Agent. This agreement was amended and restated in April 2022, followed by the First Amendment to Amended and Restated Credit Agreement in August 2024 (the “2024 Credit Agreement”). Among other things, the 2024 Credit Agreement increased revolving credit commitments to $ 500,000 and provided a new term loan facility of $ 100,000 with an annual repayment amount of 5 %. The increased revolving credit facility and the new term loan facility both mature on April 18, 2027. Under the 2024 Credit Agreement, obligations are guaranteed by the Company’s wholly-owned material domestic subsidiaries and secured by substantially all of the assets of the Company and its material domestic subsidiaries. The agreement includes a letter of credit sub-facility, permits voluntary prepayments without premium or penalty, and allows borrowings to be used for working capital, general corporate purposes, and permitted acquisitions. The 2024 Credit Agreement contains customary affirmative and negative covenants, including, but not limited to, restrictions on the ability to incur indebtedness, create liens, make certain investments, make certain dividends and distributions, enter into, or undertake, certain liquidations, mergers, consolidations or acquisitions and dispose of certain assets or subsidiaries. In addition, the 2024 Credit Agreement contains a covenant to not permit the interest coverage ratio or the total net leverage ratio for the four consecutive quarter period ending on the last day of each fiscal quarter, to be less than 3.0 to 1.0 or more than 3.5 to 1.0, respectively. As of December 31, 2025 and 2024, the Company was in compliance with the financial covenants under the 2024 Credit Agreement. Under the 2024 Credit Agreement, obligations bear interest at a rate equal to either the specified prime rate (alternate base rate) or the adjusted secured overnight financing rate (SOFR), in each case plus an applicable margin tied to the Company’s total net leverage ratio. The applicable margin on the revolving credit facility ranges from 0 % to 0.75 % per annum on loans pegged to the specified prime rate and 0.88 % to 1.75 % per annum on loans pegged to the adjusted SOFR, while the margin on the term loan facility ranges from 0.13 % to 1.00 % per annum on loans pegged to the specified prime rate, and 1.13 % to 2.00 % per annum on loans pegged to the adjusted SOFR. The revolving credit commitments under the 2024 Credit Agreement are subject to a commitment fee which is also tied to the Company’s total net leverage ratio, and ranges from 0.13 % to 0.28 % per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations. F-39 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) The effective interest rates of the revolving credit facility and the term loan facility are as follows: Year ended December 31, 2025 2024 2023 Revolving credit facility 5.7 % 6.3 % 6.3 % Term loan facility 5.7 % 6.5 % — % The maturity profile of the Company’s long-term borrowings, excluding debt issuance costs, outstanding as of December 31, 2025 was as follows: Revolving credit facility Term loan facility 2026 $ — $ 5,000 2027 205,000 88,750 Total $ 205,000 $ 93,750 Letters of Credit In the ordinary course of business, the Company provides standby letters of credit to third parties primarily for facility leases. As of December 31, 2025 and 2024, the Company had outstanding letters of credit of $ 1,598 and $ 761 , respectively, that were not recognized in the consolidated balance sheets. 19. Capital Structure Common Stock The Company has one class of common stock outstanding. Holders of the Company's common stock are entitled to one vote per share. Upon the liquidation or dissolution of the Company, its common stockholders are entitled to receive a ratable share of the available net assets of the Company after payment of all debts and other liabilities. The Company's shares of common stock have no preemptive, subscription, redemption or conversion rights. Share Repurchases The Company purchased shares of its common stock from certain employees in connection with withholding tax payments related to the vesting of restricted stock units and performance-based restricted stock units, as below: Shares repurchased Total consideration Weighted average purchase price per share (1) Year ended December 31, 2025 229,483 $ 11,089 $ 48.32 Year ended December 31, 2024 303,836 $ 10,266 $ 33.79 Year ended December 31, 2023 237,047 $ 7,853 $ 33.13 (1) The weighted average purchase price per share is based on the closing price of the Company’s common stock on the Nasdaq Global Select Market on the trading day prior to the applicable vesting date of the 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 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 F-40 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) 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 was accounted for as a treasury stock transaction and forward stock purchase agreement indexed to the Company’s common stock. The forward stock purchase agreement was classified as an equity instrument under ASC Topic 815-40, Contracts in Entity's Own Equity , and deemed to have a fair value of zero at the effective date. The prepayment of $ 25,000 was initially recorded in additional paid-in capital, which reflected the pending settlement of the 2025 ASR Agreement. Under the terms of the 2025 ASR Agreement, the ultimate number of shares of Common Stock that the Company repurchased was based on the average of the daily volume-weighted average prices of the Common Stock during the term of the 2025 ASR Agreement, less a discount and subject to adjustments pursuant to the terms and conditions of the 2025 ASR Agreement. On October 31, 2025, upon final settlement of the 2025 ASR Agreement, the Company received 678,980 additional shares of its common stock based on a daily volume-weighted average price of $ 41.92 per share during the term of the 2025 ASR Agreement. The additional shares received were recorded as treasury stock at a fair market value of $ 39.10 per share, and $ 1,548 was recorded in additional paid-in capital. 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. 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 Year ended December 31, 2025 5,934,710 $ 253,208 $ 42.67 Year ended December 31, 2024 6,273,381 $ 196,524 $ 31.33 Year ended December 31, 2023 4,127,451 $ 125,416 $ 30.39 On December 15, 2025, the Company repurchased 1,551,970 shares of the Company’s common stock from Orogen for an aggregate purchase price of $ 63,374 , based on a purchase price per share of $ 40.83 , which is the volume weighted average price over the 5 days prior to settlement. The shares were privately repurchased from Orogen under a Stock Purchase Agreement dated December 15, 2025, which is separate from the Company’s 2024 Repurchase Program. 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 $ 1,934 and $ 1,096 during the years ended December 31, 2025 and 2024, respectively. Dividends The Company has not paid or declared any cash dividends on its common stock during the years ended December 31, 2025, 2024 and 2023. The Company’s borrowings under its 2024 Credit Agreement could restrict its ability to declare or make any dividends or similar distributions. F-41 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) 20. 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 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”). Liabilities with regard to the India Plan and the Philippines Plan are determined by actuarial valuation using the projected unit credit method. Current service costs for these plans are accrued in the year to which they relate. Actuarial gains or losses or prior service costs, if any, resulting from amendments to the plans are recognized and amortized over the remaining period of service of the employees. The India Plan is partially funded whereas the Philippines Plan is unfunded. The Company makes annual contributions to the India Plan established with insurance companies. Fund managers manage these funds and calculate the annual contribution required to be made by the Company and manage the India Plan, including any required payouts. These funds are managed on a cash accumulation basis, inclusive of interest which is declared periodically. The Company earned a return of approximately 7.0 % per annum on the India Plan for the year ended December 31, 2025. The benefit obligation has been measured as of December 31, 2025 and 2024. The following table sets forth the activity and the funded status of the gratuity plans and the amounts recognized in the Company’s consolidated financial statements: Change in projected benefit obligation 2025 2024 Projected benefit obligation as of January 1 $ 29,854 $ 24,237 Service cost 5,757 4,429 Interest cost 2,116 1,552 Benefits paid ( 1,929 ) ( 1,465 ) Prior service cost (1) 10,263 2 Acquisition adjustments — 398 Actuarial loss (2) 1,037 1,546 Currency translation adjustments ( 1,530 ) ( 845 ) Projected benefit obligation as of December 31 $ 45,568 $ 29,854 Change in plan assets Plan assets as of January 1 $ 19,963 $ 17,134 Actual return 1,481 1,369 Employer contribution 5,761 3,353 Benefits paid ( 1,747 ) ( 1,338 ) Currency translation adjustments ( 1,100 ) ( 555 ) Plan assets as of December 31 $ 24,358 $ 19,963 Unfunded status as of December 31 $ 21,210 $ 9,891 Amounts recognized in the consolidated balance sheets Non-current liabilities (included under other non-current liabilities) $ 20,780 $ 9,555 Current liabilities (included under accrued employee costs) 430 336 Total accrued liabilities $ 21,210 $ 9,891 Accumulated benefit obligation as of December 31 $ 29,774 $ 20,181 Plan assets in shortfall of accumulated benefit obligation as of December 31 $ 5,416 $ 218 F-42 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) (1) Effective November 21, 2025, the Government of India has consolidated multiple existing labor legislations into a unified framework comprising four labor codes collectively referred to as the new “Labor Codes”. The Labor Codes, amongst other things introduces changes, including a uniform definition of wages. These legislative changes have resulted in an increase in the projected benefit obligation and the same has been recognized as prior service cost in OCI. (2) During the years ended December 31, 2025 and 2024, actuarial loss was driven by changes in actuarial assumptions, offset by experience adjustments on present value of benefit obligations. Components of net periodic benefit costs recognized in consolidated statements of income and retirement benefits reclassified from AOCI, were as follows: Year ended December 31, 2025 2024 2023 Service cost $ 5,757 $ 4,429 $ 3,799 Interest cost 2,116 1,552 1,569 Expected return on plan assets ( 1,410 ) ( 1,237 ) ( 1,048 ) Reclassification of retirement benefits from AOCI: Amortization of actuarial gain ( 441 ) ( 602 ) ( 94 ) Amortization of prior service cost 306 — — Net periodic benefit cost $ 6,328 $ 4,142 $ 4,226 Reclassification of retirement benefits from AOCI, gross of tax $ ( 135 ) $ ( 602 ) $ ( 94 ) Income tax effects ( 267 ) 33 ( 74 ) Reclassification of retirement benefits from AOCI, net of tax $ ( 402 ) $ ( 569 ) $ ( 168 ) The components of retirement benefits included in AOCI, excluding tax effects, were as follows: As of December 31, 2025 2024 2023 Net actuarial gain/(loss) $ ( 2,617 ) $ ( 1,239 ) $ 777 Net prior service cost ( 9,957 ) ( 4 ) ( 5 ) Amount recognized in AOCI, excluding tax effects $ ( 12,574 ) $ ( 1,243 ) $ 772 The Company estimates that it will make contributions of $ 10,000 during the year ending on December 31, 2026 for the defined benefit plans. The weighted average actuarial assumptions used to determine benefit obligations and net periodic benefit cost were: Year ended December 31, 2025 2024 2023 Discount rate 6.6 % 6.9 % 7.1 % Rate of increase in compensation levels 7.4 % 7.3 % 7.0 % Expected long-term rate of return on plan assets per annum 7.0 % 7.3 % 7.3 % F-43 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) The Company evaluates these assumptions annually based on its long-term plans of growth and industry standards. The discount rates are either based on current market yields on government securities or yields on government securities adjusted for a suitable risk premium, if available. Expected benefit payments during the year ending December 31, 2026 $ 5,440 2027 $ 5,915 2028 $ 5,405 2029 $ 5,299 2030 $ 4,869 2031 to 2035 $ 20,119 The Company maintains several 401(k) plans (the “401(k) Plans”) under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), covering all eligible employees, as defined in the Code as a defined contribution plan. The Company may make discretionary contributions of up to a maximum of 3.0 % of employee compensation within certain limits. The Company’s contributions to various defined contribution plans were as follows: Year ended December 31, 2025 2024 2023 Contribution to the 401(k) Plans $ 6,995 $ 6,325 $ 5,967 Contributions to the defined contribution plans in foreign subsidiaries of the Company $ 33,544 $ 28,070 $ 23,045 21. Leases The Company conducts its operations using facilities leased under operating lease agreements that expire at various dates, with options to extend or terminate before expiration date. The Company finances its use of certain motor vehicles, leasehold improvements and other equipment under various lease arrangements provided by financial institutions. The lease agreements do not contain any covenants to impose any restrictions except for market-standard practice for similar lease arrangements. 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. F-44 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) Supplemental balance sheet information As of December 31, 2025 December 31, 2024 Operating Lease Operating lease ROU assets $ 97,411 $ 68,784 Operating lease liabilities - Current $ 16,857 $ 16,491 Operating lease liabilities - Non-current 88,167 59,851 Total operating lease liabilities $ 105,024 $ 76,342 Finance Lease Property and equipment, gross $ 3,527 $ 3,268 Accumulated amortization ( 1,494 ) ( 1,556 ) Property and equipment, net $ 2,033 $ 1,712 Finance lease liabilities - Current $ 616 $ 435 Finance lease liabilities - Non-current 1,544 1,349 Total finance lease liabilities $ 2,160 $ 1,784 The components of lease cost, which are included in the Company’s consolidated statements of income, are as follows: Year ended December 31, 2025 2024 2023 Finance lease: Depreciation on underlying ROU assets $ 601 $ 382 $ 181 Interest on lease liabilities 305 196 90 906 578 271 Operating lease (1) 25,484 21,764 20,188 Variable lease costs 4,641 4,490 4,374 Sublease income ( 334 ) ( 122 ) — Total lease cost $ 30,697 $ 26,710 $ 24,833 (1) Includes short-term leases, which are immaterial. F-45 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) Supplemental cash flow and other information related to leases are as follows: Year ended December 31, 2025 2024 2023 Cash payments for amounts included in the measurement of lease liabilities : Operating cash outflows for operating leases $ 24,923 $ 20,489 $ 20,181 Operating cash outflows for finance leases $ 305 $ 196 $ 90 Financing cash outflows for finance leases $ 511 $ 326 $ 169 ROU assets obtained in exchange for new operating lease liabilities $ 44,764 $ 20,518 $ 24,880 ROU assets obtained in exchange for new finance lease liabilities $ 985 $ 1,325 $ 461 Weighted average remaining lease term (in years) Finance lease 2.6 years 3.3 years 3.1 years Operating lease 6.7 years 4.9 years 5.5 years Weighted average discount rate Finance lease 15.0 % 15.1 % 14.6 % Operating lease 7.6 % 8.0 % 7.7 % 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 $ 16,299 and $ 3,372 , during the year ended December 31, 2025 and 2024, respectively, with a corresponding adjustment to ROU assets. As of December 31, 2025 and 2024, the Company did not have any significant leases that have not yet commenced but that create significant rights and obligations for the Company. There was no impairment of ROU assets as of December 31, 2025 and 2024. Maturities of lease liabilities as of December 31, 2025 were as follows: Operating Leases Finance Leases 2026 $ 24,083 $ 886 2027 24,123 816 2028 21,615 595 2029 13,475 362 2030 8,992 110 2031 and thereafter 42,334 — Total lease payments 134,622 2,769 Less: Imputed interest 29,598 609 Present value of lease liabilities $ 105,024 $ 2,160 F-46 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) 22. Income Taxes The components of income before income tax expense consist of the following: Year ended December 31, 2025 2024 2023 Domestic $ 71,027 $ 72,286 $ 100,905 Foreign 244,025 189,061 137,036 Total $ 315,052 $ 261,347 $ 237,941 Income tax expense/(benefit) consists of the following: Year ended December 31, 2025 2024 2023 Current provision: Federal $ 2,047 $ 31,323 $ 32,796 State and local 20,613 9,907 18,654 Foreign 56,131 41,591 33,828 $ 78,791 $ 82,821 $ 85,278 Deferred provision/(benefit): Federal $ ( 8,309 ) $ ( 20,812 ) $ ( 26,079 ) State and local ( 4,462 ) 1,640 ( 5,945 ) Foreign ( 2,292 ) ( 713 ) 282 ( 15,063 ) ( 19,885 ) ( 31,742 ) Income tax expense $ 63,728 $ 62,936 $ 53,536 Deferred income taxes recognized in OCI were as follows: Year ended December 31, 2025 2024 2023 Deferred taxes benefit/(expense) recognized on: Unrealized gain/(loss) on cash flow hedges $ 3,091 $ 2,559 $ ( 3,313 ) Reclassification adjustment for cash flow hedges ( 957 ) 339 ( 797 ) Retirement benefits 3,085 402 ( 63 ) Reclassification adjustment for retirement benefits ( 267 ) 33 ( 74 ) Currency translation adjustments 4,269 3,129 ( 156 ) Total $ 9,221 $ 6,462 $ ( 4,403 ) F-47 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) In accordance with the requirements of ASU 2023-09 for the year ended December 31, 2025, the reconciliation of taxes at the federal statutory rate to the income tax expense was as follows: Amount Percentage U.S. federal statutory tax rate $ 66,097 21.0 % State and local income taxes, net of federal income tax effect (1) 12,341 3.9 % Foreign tax effects India Statutory tax rate differential 4,422 1.4 % Others (2) 809 0.3 % Ireland Statutory tax rate differential ( 5,519 ) ( 1.8 ) % Others (2) 1,440 0.5 % Philippines Statutory tax rate differential 918 0.3 % Tax incentives ( 4,068 ) ( 1.3 ) % Others (2) 3,055 1.0 % Other foreign jurisdictions 1,537 0.5 % Effect of cross-border tax laws Foreign-derived intangible income ( 7,429 ) ( 2.4 ) % Others 312 0.1 % Tax credits Research and development tax credits ( 4,404 ) ( 1.4 ) % U.S. foreign tax credit ( 4,237 ) ( 1.3 ) % Non-taxable or non-deductible items Officers compensation 9,278 2.9 % Excess tax benefit ( 13,113 ) ( 4.2 ) % Others 2,072 0.7 % Changes in unrecognized tax benefits 217 0.1 % Income tax expense $ 63,728 20.3 % (1) State and local taxes in New York state and city, Kentucky, Rhode Island, California, and Pennsylvania made up the majority of the tax effect in this category. (2) Others include tax withholdings related to cross-border payments. F-48 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) The reconciliation of taxes at the federal statutory rate to income tax expense for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows: Year ended December 31, 2024 2023 Expected tax expense $ 54,883 $ 49,968 Foreign tax rate differential 1,164 5,333 Unrecognized tax benefits 704 ( 187 ) State taxes, net of federal taxes 10,724 11,640 Non-deductible expenses 10,330 8,655 Excess tax benefit on stock-based compensation ( 9,714 ) ( 15,055 ) Research and development credits ( 5,257 ) ( 5,350 ) Others 102 ( 1,468 ) Income tax expense $ 62,936 $ 53,536 As of December 31, 2025, the Company has accumulated net earnings of $ 75,081 from its foreign operations that are not indefinitely reinvested. Most of the accumulated net earnings generated by the foreign operations has already been taxed for U.S. federal and state income tax purposes, and any additional taxes due with respect to the repatriation of such earnings would generally be limited to the tax effect of currency gains or losses recognized on repatriation and foreign withholding taxes. Income taxes paid, net of refunds, during the year ended December 31, 2025 were as follows: Amount Federal $ 18,906 State and local 11,588 Foreign India 27,213 United Kingdom 7,044 Ireland 4,361 Others 8,119 Total $ 77,231 Income taxes paid, net of refunds, during the years ended December 31, 2024, and 2023 were $ 108,549 and $ 106,549 , respectively. F-49 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) The components of the deferred tax balances were as follows: As of December 31, 2025 December 31, 2024 Deferred tax assets: Tax credit carry forwards $ 9,730 $ 8,058 Depreciation and amortization expense 21,295 18,178 Capitalized research and development expenses 55,693 54,844 Stock-based compensation 16,711 10,902 Accrued employee costs and other expenses 41,440 33,897 Net unrealized foreign exchange loss 20,541 20,242 Right-of-use assets 24,854 20,125 Others 791 620 Total deferred tax assets 191,055 166,866 Valuation allowance ( 2,640 ) ( 3,172 ) Deferred tax assets, net of valuation allowance $ 188,415 $ 163,694 Deferred tax liabilities: Intangible assets $ 29,710 $ 29,883 Net unrealized gain on investments 1,006 4,018 Capitalized costs 8,012 7,665 Lease liabilities 21,436 16,586 Others 408 2,198 Total deferred tax liabilities $ 60,572 $ 60,350 Net deferred tax assets $ 127,843 $ 103,344 Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying values of assets and liabilities and their respective tax bases. The Company performed an analysis of the realizability of deferred tax assets as of December 31, 2025, and 2024, and recorded a valuation allowance of $ 2,640 and $ 3,172 , respectively. The Company has state research and development tax credit carryforwards as of December 31, 2025 of $ 3,371 ($ 2,663 , net of federal tax impact) that will expire by 2035, if not utilized. The Company’s income tax expense also includes provisions established for uncertain income tax positions determined in accordance with ASC Topic 740, Income Taxes . The Company monitors and adjusts these reserves in light of changing facts and circumstances. To the extent that the final tax outcome of these matters differs from the amounts recorded, such differences will impact the income tax expense in the period in which such determination is made. F-50 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) The following table summarizes the activity related to the unrecognized tax benefits: Year ended December 31, 2025 2024 2023 Balance as of December 31 $ 1,966 $ 1,262 $ 1,449 Additions based on tax positions related to the current year 524 561 423 Additions based on tax positions of prior years 54 316 112 Reductions for tax positions due to lapse of statutes of limitations ( 368 ) ( 173 ) ( 722 ) Balance as of December 31 $ 2,176 $ 1,966 $ 1,262 The unrecognized tax benefits as of December 31, 2025 of $ 2,176 , if recognized, would impact the effective tax rate. For the years ended December 31, 2025 and 2024, the Company has no t accrued interest and penalties relating to unrecognized tax benefits. 23. Stock-Based 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 grants 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 December 31, 2025, the Company had 5,919,466 shares available for future grants under the 2025 Plan. Under the 2025 Plan, the Compensation and Talent Management Committee (the “Committee”) may grant awards of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based compensation awards (including revenue target based and market condition based awards), stock bonuses and cash bonus awards, or any combination or variation of the foregoing. The Committee determines which employees are eligible to receive the equity awards, the number of equity awards to be granted, the exercise price, the vesting period and the exercise period. The vesting period for the equity award issued is determined on the date of the grant and is non-transferable during the life of the equity award. Stock options have a contractual period of ten years from the date of grant and vest ratably over four years . Restricted stock units generally vest proportionally over a period of four years from the date of grant, unless specified otherwise. Stock-based compensation expense by function, as below, are included in the consolidated statements of income: Year ended December 31, 2025 2024 2023 Cost of revenues $ 13,189 $ 15,762 $ 14,686 General and administrative expenses 31,980 28,612 21,574 Selling and marketing expenses 34,300 28,284 22,177 Total $ 79,469 $ 72,658 $ 58,437 Income tax benefit related to stock-based compensation (1) $ 24,997 $ 17,576 $ 17,333 (1) Includes $ 15,930 , $ 9,714 and $ 15,055 during the years ended December 31, 2025, 2024 and 2023, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No. 2016-09, Compensation - Stock Compensation. F-51 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) Stock Options Stock option activity under the Company’s stock-based compensation plans is shown below: Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (Years) Outstanding as of December 31, 2024 1,768,305 $ 30.14 $ 25,187 8.5 Granted — — — — Exercised — — — — Forfeited ( 33,585 ) 30.15 — — Outstanding as of December 31, 2025 1,734,720 $ 30.14 $ 21,344 7.5 Vested and exercisable at December 31, 2025 861,740 $ 30.14 $ 10,603 7.5 Weighted average grant date fair value of per unit of stock option granted during the period $ — Stock options were granted under the 2018 Omnibus Incentive Plan during the year ended December 31, 2023 which have a contractual period of ten years and vest ratably over four years . The fair value of each stock option granted to employees is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: Year ended December 31, 2023 Dividend yield — Expected life (years) 6.25 Risk free interest rate for expected life 3.8 % Volatility for expected life 32.4 % The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model. As of December 31, 2025, unrecognized compensation cost of $ 7,744 is expected to be expensed over a weighted average period of 1.5 years. The grant date fair value of stock options exercised and cash received from stock options exercised was as follows: Year ended December 31, 2025 2024 2023 Grant date fair value $ — $ 269 $ 30 Cash received $ — $ 675 $ 85 Share Matching Program Under the Company’s 2018 Plan, the Company established a share matching program (“SMP”) for executive officers and other specified employees. Under the SMP, the Company agreed to issue a number of restricted stock units equal to the number of newly acquired shares of the Company's common stock. For purposes of the match, “newly acquired shares” includes the employee’s first quarter 2022 open market purchase of the common stock, and crediting of equity awards vesting under any existing stock award plan of the Company as having been purchased by such employees, in an amount between $ 100 to $ 500 per such employee. F-52 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) The matching restricted stock units granted under the SMP will vest in two installments, with one-third to vest on the second anniversary of the grant date and the remaining two-thirds to vest on the third anniversary of the grant date; the newly acquired shares for which the matching restricted stock units were granted must also be held by the employee until such vesting dates. The Company’s underlying common stock issued pursuant to the vesting of the matching restricted stock units will not be marketable or transferable for a period of two years following the vesting date. Certain forfeiture and other conditions apply. Restricted stock unit activity under the SMP is shown below: Restricted Stock Units (SMP) Number Weighted Average Fair Value Outstanding as of December 31, 2024 (1) 144,845 $ 24.95 Granted — — Vested ( 144,845 ) 24.95 Forfeited — — Outstanding as of December 31, 2025 — $ — (1) As of December 31, 2025 and 2024 restricted stock units vested for which the underlying common stock is yet to be issued are 31,662 and 72,385 , respectively. Due to administrative processes, the restricted stock units issued during the year ended December 31, 2025, were reduced based on applicable U.S. tax rules and regulations. Restricted Stock Units The Committee is authorized to award restricted stock units to participants. The Committee establishes the terms, conditions and restrictions applicable to each award of restricted stock units, including the time or times at which restricted stock units will be granted or vested and the number of units to be covered by each award. The terms and conditions of each restricted stock award will be reflected in a restricted stock unit agreement. Any cash or in-kind dividends paid with respect to unvested shares of restricted stock units are withheld by the Company and paid to the holder of such shares of restricted stock, without interest, only if and when such shares of restricted stock units vest. Any unvested shares of restricted stock units are immediately forfeited without consideration upon the termination of holder’s employment with the Company or its affiliates. Accordingly, the Company’s unvested restricted stock units do not include non-forfeitable rights to dividends or dividend equivalents and are therefore not considered as participating securities for purposes of earnings per share calculations pursuant to the two-class method. Restricted stock unit activity under the Company’s stock-based compensation plans is shown below: Restricted Stock Units Number Weighted Average Fair Value Outstanding as of December 31, 2024 (1) 3,240,200 $ 28.82 Granted 1,072,380 50.43 Vested (1) ( 1,347,614 ) 26.69 Forfeited ( 175,365 ) 36.92 Outstanding as of December 31, 2025 (1) 2,789,601 $ 37.65 (1) As of December 31, 2025 and 2024, restricted stock units vested for which the underlying common stock is yet to be issued are 348,636 and 289,547 , respectively. The fair value of restricted stock units is generally the market price of the Company’s shares on the date of grant. As of December 31, 2025, unrecognized compensation cost of $ 69,303 is expected to be expensed over a weighted average period of 2.5 years. F-53 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) The weighted average fair value of restricted stock units granted and the grant date fair value of restricted stock units vested was as follows: Year ended December 31, 2025 2024 2023 Weighted average fair value of restricted stock units granted $ 50.43 $ 30.23 $ 33.99 Grant date fair value of restricted stock units vested $ 39,582 $ 42,279 $ 33,058 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. The Company generally grants 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”). The fair value of each PU is determined based on the market price of one common share on a day prior to the date of grant, and the associated stock compensation expense is calculated on the basis that performance targets at 100 % are probable of being achieved. The stock compensation expense for the PUs is recognized on a straight-line basis over the service period, which is through the end of the third year. Over this period, the number of shares that will be issued are adjusted upward or downward based upon the probability of achievement of the performance targets. The final number of shares issued and the related compensation cost recognized as an expense is based on a comparison of the final performance metrics to the specified targets. The grant date fair value for each MU is determined using a Monte Carlo simulation model and the related stock compensation expense is expensed on a straight-line basis over the vesting period. The stock compensation expense related to the MUs is recognized once the requisite performance period is fulfilled regardless of the extent of the market condition achieved. The Monte Carlo simulation model simulates a range of possible future stock prices and estimates the probabilities of the potential payouts. This model also incorporates the following ranges of assumptions: • The historical volatilities are used over the most recent three-year period for the components of the peer group. • The risk-free interest rate is based on the U.S. Treasury rate assumption commensurate with the three-year performance period. • Since the plan stipulates that the awards are based upon the TSR of the Company and the components of the peer group, it is assumed that the dividends get reinvested in the issuing entity on a continuous basis. • The correlation coefficients are used to model the way in which each entity tends to move in relation to each other are based upon the price data used to calculate the historical volatilities. The fair value of each MU granted to employees is estimated on the date of grant using the following weighted average assumptions: Year ended December 31, 2025 2024 2023 Dividend yield — — — Expected life (years) 2.54 - 2.86 2.87 2.87 Risk free interest rate for expected life 3.9 % - 4.3 % 4.5 % 4.3 % Volatility for expected life 27.3 % - 29.8 % 29.9 % 32.9 % F-54 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) PRSU activity under the Company’s stock plans is shown below: Revenue-Based PRSUs Market Condition-Based PRSUs Number Weighted Average Fair Value Number Weighted Average Fair Value Outstanding as of December 31, 2024 537,944 $ 31.02 806,519 $ 43.06 Granted 379,685 48.31 366,915 76.08 Adjustment upon final determination of level of performance goal achievement (1) 31,877 34.56 139,523 44.72 Vested (2) ( 229,250 ) 34.56 ( 435,303 ) 44.72 Forfeited ( 23,817 ) 38.06 ( 35,688 ) 56.11 Outstanding as of December 31, 2025 696,439 $ 39.20 841,966 $ 56.31 (1) Represents adjustment of shares vested in respect of PUs and MUs granted in 2023 upon achievement of the performance targets for such awards. (2) Represents PUs and MUs vested for which the underlying common stock was issued subsequent to December 31, 2025. As of December 31, 2025, unrecognized compensation cost of $ 41,939 is expected to be expensed over a weighted average period of 1.8 years. Employee Stock Purchase Plan On June 21, 2022, at the annual meeting of stockholders of the Company, the Company’s stockholders approved the ExlService Holdings, Inc. 2022 Employee Stock Purchase Plan (the “2022 ESPP”). The 2022 ESPP allows eligible employees to purchase the Company’s shares of common stock through payroll deductions at a pre-specified discount to the lower of closing price of the Company’s common shares on the date of offering or the last business day of each purchase interval. The dollar amount of shares of common stock that can be purchased under the 2022 ESPP must not exceed 15 % of the participating employee’s compensation during the offering period, subject to a cap of $ 25 per employee per calendar year. The Company has reserved 4,000,000 shares of common stock for issuance under the 2022 ESPP. 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: Employee Stock Purchase Plan Unit’s Number Total Proceeds Received Shares available for issuance as of December 31, 2024 3,672,744 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 December 31, 2025 3,510,269 Issuance of common stock related to the seventh offering period made subsequent to December 31, 2025 60,139 $ 2,297 F-55 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) The ESPP is compensatory and results in compensation expense. The fair value of common stock to be issued under the ESPP was determined using the Black-Scholes option pricing model with the following assumptions: Seventh offering period of July 1, 2025 to December 31, 2025 Sixth offering period of January 1, 2025 to June 30, 2025 Fifth offering period of July 1, 2024 to December 31, 2024 Dividend yield — — — Expected life (years) 0.5 0.5 0.5 Risk free interest rate for expected life 4.2 % 4.2 % 5.3 % Volatility for expected life 31.8 % 24.6 % 25.5 % Discount for illiquidity 7.8 % 6.8 % 7.4 % 24. Related Party Disclosures The Company provides data and AI-led solutions and services to Corridor Platforms, Inc., which is an equity affiliate of the Company. The Company recognized revenues, net of $ 203 and $ 424 during the year ended December 31, 2025 and 2024, respectively. The Company had outstanding accounts receivable, net of $ 28 and $ 56 related to this service contract as of December 31, 2025 and 2024, respectively. In December 2025, the Company entered into a transaction to privately repurchase 1,551,970 shares for $ 63,373 from Orogen Echo LLC, an affiliate of The Orogen Group LLC where one of the Company’s directors is the CEO and Chairman. 25. Commitments and Contingencies Capital Commitments As of December 31, 2025 and 2024, the Company had committed to spend approximately $ 8,700 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. (the “Partnership”) for the primary purpose of making investments in growth-stage technology companies. The Company committed to make an aggregate investment of $ 4,000 in the Partnership. As of December 31, 2025, the Company has invested $ 2,400 in the Partnership and is committed to make further investments up to an amount of $ 1,600 . Other Commitments Certain units of the Company’s Indian subsidiaries were established as 100 % Export-Oriented units or under the Software Technology Parks of India or Special Economic Zone scheme promulgated by the Government of India. These units are exempt from customs, central excise duties, and levies on imported and indigenous capital goods, stores, and spares. The Company has undertaken to pay custom duties, service taxes, levies, and liquidated damages payable, if any, in respect of imported and indigenous capital goods, stores and spares consumed duty free, in the event that certain terms and conditions are not fulfilled. The Company believes, however, that these units have in the past satisfied, and will continue to satisfy, the required conditions. The Company’s operations centers in the Philippines are registered as qualified Philippines Economic Zone Authority units, which provides the Company fiscal incentives on the import of capital goods and local purchase of services and materials. The Company is required to meet certain requirements to retain the incentives. The Company has complied and intends to continue compliance with the requirements to avail itself of the incentives. Contingencies The transfer pricing regulations in the countries where the Company operates require that controlled intercompany transactions be at arm’s-length. Accordingly, the Company determines and documents pricing for controlled intercompany transactions based on an economic analysis as prescribed in the respective regulations. The tax authorities have jurisdiction to F-56 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) review the Company’s transfer pricing. If the Company’s transfer pricing is challenged by the authorities, they could assess additional tax, interest and penalties, thereby impacting the Company’s profitability and cash flows. 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 December 31, 2025 and 2024 is $ 42,205 and $ 49,588 , respectively. The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 7,684 and $ 7,506 , as of December 31, 2025 and 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 and service tax filings, the Indian tax authorities raised aggregate demands for tax years 2015 and 2017, in the amounts of $ 5,186 and $ 5,339 , as of December 31, 2025 and 2024, respectively. The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 5,090 and $ 5,339 , as of December 31, 2025 and 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 $ 5,494 and $ 5,885 as of December 31, 2025 and 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 allowances was recorded against these GST receivables as of December 31, 2025 and 2024, respectively. Some of the Company’s subsidiaries in India have undergone assessments with the statutory authority with respect to defined contribution plan. Except for some components of the assessments for which the Company has recognized a provision in the consolidated financial statements, the Company believes that the amount demanded by such authority is not a meaningful indicator of the potential liabilities of the Company, and that these matters are without merit. The Company is defending against the assessment orders and in one case, has instituted an appeal against the order before the relevant tribunal while also making a payment under protest of the amount demanded. As of the reporting date, the Company’s management does not believe that the ultimate assessments in any of these matters will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. The Company will continue to monitor and evaluate its position based on future events and developments on these matters. From time to time, the Company, its subsidiaries, and/or their present officers or directors, may be or have been, named as a defendant in litigation matters, including employment-related claims. The plaintiffs in those cases seek damages, including, where applicable, compensatory damages, punitive damages and attorney’s fees. With respect to pending litigation matters as of the reporting date, the Company believes that the damages claimed are without merit, and the Company intends to vigorously defend them. The Company will continuously monitor developments on these matters to assess potential impacts to the financial statements. The outcomes of legal actions are unpredictable and subject to significant uncertainties, and thus it is inherently difficult to determine the likelihood of the Company incurring a material loss or quantification of any such loss. With respect to certain pending litigation matters as of the reporting date, the Company has made provisions based on information currently available, including its evaluation of the facts underlying each matter and legal counsel’s advice on the estimated losses or range of reasonably possible losses. Based on the Company’s assessment, including the availability of insurance recoveries, the Company’s management does not believe that currently pending litigation, individually or in aggregate, will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. The Company will continuously monitor these matters to assess potential impacts to the financial statements. 26. Restructuring Costs In second quarter of 2024, the Company initiated a strategic restructuring plan to align its workforce with market opportunities, business strategies and evolving customer needs. This plan was executed in the second quarter of 2024, which affected less than 1 % of the Company’s global workforce, and was completed as of December 31, 2024. The restructuring costs of $ 4,762 included costs in relation to employee severance and other associated costs including legal fees and outplacement support costs. These costs were recognized under cost of revenues (across all reporting segments), general & administrative and selling & marketing expenses in the consolidated statements of income during the year ended December 31, 2024. F-57 Table of Contents EXLSERVICE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued) December 31, 2025 (In thousands, except per share amount and share count) 27. Subsequent Event On February 19, 2026, the Company’s board of directors authorized a $ 500,000 common stock repurchase program (the “2026 Repurchase Program”), effective February 28, 2026, for a two-year period, unless earlier terminated, suspended or modified by the board. Under the 2026 Repurchase Program, shares may be purchased by the Company from time to time on the open market or otherwise, in such quantities, at such prices, in such manner and on such terms and conditions as determined by the Company’s management to be in the best interests of the Company. The 2026 Repurchase Program replaces the 2024 Repurchase Program, which was terminated effective February 28, 2026. F-58