ExlService Holdings, Inc. 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion in connection with our unaudited consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Some of the statements in the following discussion are forward looking statements. Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include but are not limited to: • our ability to maintain and grow client demand for our services and solutions, including anticipating and incorporating the latest technologies, for instance, artificial intelligence (“AI”), including generative AI, agentic AI into our offerings; • use of AI technology presents competitive, operational, reputational and legal risks, and our use of AI technology may not be successful; • impact on client demand by the selling cycle and terms of our client contracts; including for our AI-related offerings; • our ability to attract and retain enough sufficiently trained employees to support our operations or any changes in the senior management team; • our ability to accurately estimate and/or manage costs; • our ability to adjust our pricing terms or effectively manage our asset utilization levels to meet the changing demands of our clients and potential clients; • cyber security incidents, data breaches, additional cybersecurity and privacy risks from growing use of AI, or other unauthorized disclosure of sensitive or confidential client and employee data; • reliance on third parties to deliver services and infrastructure for client critical services, and on third party data use rights for certain of our offerings; • employee wage increases; • failure to protect our intellectual property; • our dependence on a limited number of clients and our ability to withstand the loss of a significant client; • our ability to manage rapid infrastructure and personnel growth across countries, including losing key talent to competitors; • our ability to successfully consummate or integrate strategic acquisitions including the impact from the impairment of goodwill and other intangible assets, if any; • legal liability arising out of customer and third party contracts; • increasing competition in our industry, including from other providers and from internal resources of our clients; • our ability to make accurate estimates and assumptions in connection with the preparation of our consolidated financial statements; • challenges related to upgrading our enterprise resource planning system; 35 Table of Contents • credit risk fluctuations in the market values of our investment and derivatives portfolios; • telecommunications or technology disruptions or breaches, natural or other disasters, medical epidemics or pandemics, or acts of violence or war; • challenges by applicable tax authorities to transfer pricing determinations or the introduction of new or unfavorable tax legislation, tariffs, including legal restrictions on repatriation of funds held abroad; • exposure to currency exchange rate fluctuations in the various currencies in which we do business including rising inflation, high interest rates and economic recessionary trends on currency exchange rates; • restrictions on immigration and work permits; • regulatory, legislative and judicial developments, including our ability to adhere to regulations or accreditation or licensing standards that govern our business; • our ability to service debt or obtain additional financing on competitive terms, or exposure to interest rate fluctuations that are not fully hedged through interest rate swaps; and • negative public reaction in the United States or elsewhere to offshore outsourcing; These and other factors are more fully discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. These and other risks could cause actual results to differ materially from those implied by forward-looking statements in this Quarterly Report on Form 10-Q. The forward-looking statements made by us in this Quarterly Report on Form 10-Q, or elsewhere, speak only as of the date on which they were made. New risks and uncertainties may occur from time to time, and it is impossible for us to predict those events or how they may affect us. We have no obligation to update any forward-looking statements in this Quarterly Report on Form 10-Q after the date of this Quarterly Report on Form 10-Q, except as required by federal securities laws. Executive Overview We are a global data and artificial intelligence (“AI”) company that offers services and solutions to reinvent client business models, drive better outcomes and unlock growth with speed. We harness the power of data, AI, and deep industry knowledge to transform businesses, including the world’s leading corporations in industries including insurance, healthcare and life sciences, banking and capital markets, retail, communications and media, and energy and infrastructure, among others. One of our key assets is our global delivery network, which includes highly trained industry and process specialists across the United States, the United Kingdom, Latin America, South Africa, Europe and Asia (primarily India and the Philippines). We have operations centers in India, the United States, the Philippines, South Africa, Colombia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and the Republic of Ireland. We manage and report financial information through four reportable segments, aligned to our Industry Market Units (“IMUs”): Insurance, Healthcare and Life Sciences, Banking, Capital Markets and Diversified Industries, and International Growth Markets, which reflects the manner in which our management reviews financial information and makes operating decisions. Revenues For the three months ended March 31, 2026, we generated revenues of $570.4 million compared to revenues of $501.0 million for the three months ended March 31, 2025, an increase of $69.4 million, or 13.8%. We serve clients mainly in North America, and the United Kingdom & Europe, with these two regions generating 83.0% and 14.5%, respectively, of our total revenues for the three months ended March 31, 2026 and 82.9% and 15.1%, respectively, of our total revenues for the three months ended March 31, 2025. For the three months ended March 31, 2026 and 2025, our total revenues from our top ten clients accounted for 34.6% and 33.7% of our total revenues, respectively. Although we continue to develop relationships with new clients to diversify our client base, we believe that the loss of any of our top ten clients could have a material adverse effect on our financial performance. 36 Table of Contents Our Business We provide data and AI-led solutions and services and digital operations solutions and services to our clients. We market and sell our solutions and services to existing and prospective clients through our sales and client management teams, which are aligned by our IMUs. Our sales and client management teams operate primarily from the United States, India, the United Kingdom, Ireland and Australia. Data and AI-led: Data and AI-led revenue is derived from our Data Management, Analytics, AI services and solutions businesses. It includes revenue from fully integrated business operations like payment integrity services and platform-based solutions and services, which combine operations, technology, data, analytics, and AI. It also includes revenue from operations that embed data and AI within clients’ operational workflows. Digital operations: Digital operations revenue is derived from managed services that blend our deep domain expertise with industry-specific solutions and services to operate clients’ business functions with enhanced productivity, greater speed and improved accuracy. These digital operations deployments form the foundation for future client transformation opportunities to infuse AI into client workflows and unlock even greater value. Our reportable segments, aligned to our IMUs, which provide data and AI-led solutions and services and digital operations solutions and services, are described below: Insurance: We serve insurance brokers, reinsurers, and insurtech companies and provide services to insurers in the areas of property and casualty, life, disability, annuity, and retirement services. Our offerings include claims management, premium and benefit administration, agency management, account reconciliation, actuarial and risk analytics, policy research, digital marketing, new business acquisition, underwriting support, policy servicing, premium audit, surveys, billing and collection, commercial and residential survey, finance and accounting, and customer service using digital technology, AI, including agentic AI, generative AI, machine learning (“ML”) and advanced automation. We also combine our cloud-first digital insurance software solutions and industry expertise with agentic AI, generative AI, machine learning, advanced analytics, and platforms. This includes our Insurance Large Language Model (“LLM”), a specialized generative AI platform for claims, underwriting and subrogation, developed leveraging our deep experience and proprietary data in the insurance industry. Additionally, we provide third-party administration for life and annuity insurance through our LifePRO® and Life Digital Suite SaaS platforms and also offer subrogation services to property and casualty insurers using our Subrosource® BPaaS platform. Healthcare and Life Sciences: We serve U.S.-based healthcare payers, providers, pharmacy benefit managers (“PBMs”), and life sciences organizations by combining deep healthcare and life sciences domain expertise with data, analytics and AI-led insights and technology-enabled services that transform how care is delivered, managed and paid. We provide care management, utilization management, disease management, payment integrity, revenue optimization and customer engagement, commercial analytics and regulatory support services to improve healthcare outcomes, enhanced patient and provider experience, optimized healthcare spending and streamline healthcare administration processes by simplifying complex workflows. For healthcare payers, we offer payment integrity services, pre and post-pay auditing services, payment analytics, subrogation and claims recovery, care management and patient navigation solutions. For healthcare providers, we offer revenue cycle management, digital transformation, data-driven analytics and contact center solutions. For PBMs, we provide digital transformation, data and analytics and call center modernization. Our life sciences offerings combine domain expertise, data engineering, AI-driven insight generation, and digital operations to deliver outcomes across commercial, clinical, regulatory, and patient support functions. We leverage AI, analytics, and cloud-based solutions to enhance value-based care, optimize claims, and ensure regulatory compliance. Banking, Capital Markets, and Diversified Industries: Our Banking and Capital Markets and Diversified Industries group delivers comprehensive solutions across retail and commercial banking, credit card and payment services, fintech, wealth and retirement services, capital markets, utilities, retail and consumer packaged goods, communications, media and entertainment, travel and leisure, transportation and logistics, infrastructure and other business services industries. By integrating deep domain expertise with AI-driven decision-making, we enable financial institutions to innovate, enhance operational agility, and adapt to evolving market demands. We provide risk management solutions, marketing and customer analytics solutions to our clients, along with our integrated operations services that encompass the full range of banking 37 Table of Contents operations, including digital lending solutions that improve underwriting and compliance, omni-channel marketing, digital onboarding, know your customer (“KYC”)/anti-money laundering (“AML”) compliance, collections, fraud prevention, and customer servicing, among others. Our industry-leading AI and automation-driven service offerings drive operational efficiency and foster innovation across the financial services and other industries. Our enterprise services and solutions include domain-specific operations, integrated finance and accounting services, customer experience management, back-office operations, and revenue enhancement, such as pricing and billing, enabling our clients to deliver enhanced operational efficiency, and high-quality customer experiences. For example, in the retail and consumer packaged goods sectors, we enable advanced supply chain performance through AI-driven analytics services supporting smarter merchandising, dynamic pricing, and accurate demand forecasting and for our clients in the utilities sector, we offer AI-enabled operations and solutions related to end-to-end customer life cycle management, including onboarding and terminations, engineering field operations, billing, and debt management. International Growth Markets: Our International Growth Markets (“IGM”) IMU is focused on strengthening our global footprint outside of North America. We ensure customized delivery while leveraging EXL’s global capabilities in data, AI, and digital operations to drive differentiated business outcomes for our clients in growth markets. This provides us with opportunities to leverage our investments, experience, and expertise from the North America market to expand our global client base, drive further growth, and bring us closer to our clients and partners across the world. IGM consists of dedicated teams servicing clients and localizing our global capabilities in insurance, life sciences, banking and capital markets, energy and infrastructure, retail, consumer goods, and travel industries in growth markets. Across all regions in which we operate, we combine deep domain experience with our data and AI expertise to help clients innovate, enhance operational agility, adapt to changing market demands, and drive better business transformation. Pricing: We charge for our services using various pricing models like time-and-material pricing, full-time-equivalent pricing, transaction-based pricing, outcome-based pricing, subscription-based pricing and other alternative or emerging pricing models. Outcome-based pricing arrangements are an example of a non-linear pricing model where our revenues from platforms and solutions and the services we provide are compensated based on our clients’ usage or savings rather than the efforts we deploy to provide these services. We continue to observe a shift in the industry pricing models toward transaction-based pricing, outcome-based pricing and other alternative pricing models. We believe this trend will continue and we use such alternative pricing models with some of our current clients and are seeking to move certain other clients from a full-time-equivalent pricing model to a transaction-based or other alternative pricing model. These alternative pricing models place the focus on operating efficiency in order to maintain or improve our gross margins. Critical Accounting Policies and Estimates There have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, 2026, as compared to the critical accounting policies and estimates referred in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Critical Accounting Estimates” and Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. 38 Table of Contents Results of Operations The following table summarizes our results of operations: (dollars in millions) Three months ended March 31, 2026 Three months ended March 31, 2025 Percentage of Revenues, net Percentage of Revenues, net Dollar change Percentage change (A) (B) (C=A-B) Revenues, net $ 570.4 100.0 % $ 501.0 100.0 % $ 69.4 13.8 % Cost of revenues (1) 348.3 61.1 % 307.7 61.4 % 40.6 13.2 % Gross profit (1) 222.1 38.9 % 193.3 38.6 % 28.8 14.9 % Operating expenses: General and administrative expenses 69.1 12.1 % 59.4 11.9 % 9.7 16.2 % Selling and marketing expenses 47.2 8.3 % 41.9 8.4 % 5.3 12.6 % Depreciation and amortization expense 14.0 2.5 % 13.6 2.7 % 0.4 3.3 % Total operating expenses 130.3 22.8 % 114.9 22.9 % 15.4 13.4 % Income from operations 91.8 16.1 % 78.4 15.6 % 13.4 17.1 % Foreign exchange gain/(loss), net 1.1 0.2 % 1.2 0.2 % (0.1) (4.8) % Interest expense (4.0) (0.7) % (4.1) (0.8) % 0.1 (4.7) % Other income, net 2.5 0.4 % 4.7 0.9 % (2.2) (49.2) % Income before income tax expense and earnings from equity affiliates 91.4 16.0 % 80.2 16.0 % 11.2 14.0 % Income tax expense 24.3 4.3 % 13.5 2.7 % 10.8 80.2 % Income before earnings from equity affiliates 67.1 11.8 % 66.7 13.3 % 0.4 0.6 % Gain/(loss) from equity-method investment — — % (0.1) — % 0.1 (98.2) % Net income $ 67.1 11.8 % $ 66.6 13.3 % $ 0.5 0.8 % (1) Exclusive of depreciation and amortization expense. Due to rounding, the numbers presented in the tables included in this Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may not add up precisely to the totals provided. 39 Table of Contents Three Months Ended March 31, 2026 compared to Three Months Ended March 31, 2025 Revenues, net: The following table summarizes our revenues by reportable segments: Three months ended March 31, Dollar change Percentage change Percentage of Total Revenues for the three months ended 2026 2025 2026 2025 (dollars in millions) Insurance $ 194.0 $ 172.0 $ 22.0 12.7 % 34.0 % 34.3 % Healthcare and Life Sciences 151.9 125.6 26.3 21.0 % 26.7 % 25.1 % Banking, Capital Markets and Diversified Industries 127.4 117.7 9.7 8.2 % 22.3 % 23.5 % International Growth Markets 97.1 85.7 11.4 13.4 % 17.0 % 17.1 % Revenues, net $ 570.4 $ 501.0 $ 69.4 13.8 % 100.0 % 100.0 % Revenues for the three months ended March 31, 2026 were up by $69.4 million, or 13.8%, compared to the three months ended March 31, 2025, driven by the expansion of business from our existing clients across all reportable segments by 11.8% and revenue from new clients wins by 2.0% during the three months ended March 31, 2026. Revenue growth in Insurance by 12.7% was driven by the expansion of business from our existing clients by 11.5% and new clients by 1.2% during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Revenue growth in Healthcare and Life Sciences by 21.0% was driven by the expansion of business from our existing clients by 20.5% and new clients by 0.5% during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Revenue growth in Banking, Capital Markets and Diversified Industries by 8.2% was driven by the expansion of business from our existing clients by 4.1% and new clients by 4.1% during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Revenue growth in International Growth Markets of 13.4% was driven by the expansion of business from our existing clients by 8.0%, new clients by 2.9% and a foreign exchange gain, net of hedging by 2.5% during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Cost of Revenues and Gross Margin: The following table sets forth cost of revenues and gross margin of our reportable segments. Cost of Revenues Gross Margin Three months ended March 31, Dollar change Percentage change Three months ended March 31, Percentage change 2026 2025 2026 2025 (dollars in millions) Insurance $ 120.8 $ 109.2 $ 11.6 10.7 % 37.7 % 36.6 % 1.1 % Healthcare and Life Sciences 83.1 70.5 12.6 17.9 % 45.3 % 43.9 % 1.4 % Banking, Capital Markets and Diversified Industries 80.4 73.7 6.7 9.0 % 36.9 % 37.3 % (0.4) % International Growth Markets 64.0 54.3 9.7 17.9 % 34.1 % 36.6 % (2.5) % Total $ 348.3 $ 307.7 $ 40.6 13.2 % 38.9 % 38.6 % 0.3 % Cost of revenues for the three months ended March 31, 2026 increased by $40.6 million, or 13.2%, compared to the three months ended March 31, 2025. The increase in cost of revenues was due to increases in employee-related costs of $35.5 million on account of higher headcount and wage inflation, and higher technology, facilities and other operating costs of $8.8 million, partially offset by a foreign exchange gain, net of hedging of $3.7 million. Our gross margin for the three months ended March 31, 2026 was 38.9%, compared to 38.6% for the three months ended March 31, 2025, an increase of 30 basis points (“bps”) primarily driven by higher revenues and operational efficiencies, partially offset by lower volumes in certain existing clients during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. 40 Table of Contents The increase in cost of revenues in Insurance by $11.6 million for the three months ended March 31, 2026 was due to increases in employee-related costs of $11.2 million on account of higher headcount and wage inflation, and higher technology costs of $1.8 million, partially offset by a foreign exchange gain, net of hedging of $1.1 million and lower other operating costs of $0.3 million. Gross margin in Insurance increased by 110 bps, primarily due to higher revenues and operational efficiencies during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase in cost of revenues in Healthcare and Life Sciences by $12.6 million for the three months ended March 31, 2026 was due to increases in employee-related costs of $9.3 million on account of higher headcount and wage inflation, higher technology costs of $1.6 million, and higher facilities and other operating costs of $2.7 million, partially offset by foreign exchange gain, net of hedging of $1.0 million. Gross margin in Healthcare and Life Sciences increased by 140 bps, primarily due to higher volumes in certain existing clients during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase in cost of revenues in Banking, Capital Markets and Diversified Industries by $6.7 million for the three months ended March 31, 2026 was due to increases in employee-related costs of $6.9 million on account of higher headcount and wage inflation, and higher technology costs of $1.1 million, partially offset by a foreign exchange gain, net of hedging of $1.0 million and lower other operating costs of $0.3 million. Gross margin in Banking, Capital Markets and Diversified Industries decreased by 40 bps, primarily due to lower volumes in certain existing clients during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase in cost of revenues in International Growth Markets by $9.7 million for the three months ended March 31, 2026 was due to increases in employee-related costs of $8.1 million on account of higher headcount and wage inflation, and higher technology, facilities and other operating costs of $2.2 million, partially offset by a foreign exchange gain, net of hedging of $0.6 million. Gross margin in International Growth Markets decreased by 250 bps, primarily due to lower volumes in certain existing clients during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Selling, General and Administrative (“SG&A”) Expenses. SG&A expenses as a percentage of net revenues increased from 20.2% during the three months ended March 31, 2025 to 20.4% during the three months ended March 31, 2026. The increase in SG&A expenses by $15.0 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025 was primarily due to increases in employee-related costs of $11.8 million on account of higher headcount and wage inflation, increased investments in digital and generative AI capabilities of $1.9 million, and higher sales and marketing and other operating costs of $1.3 million. Depreciation and Amortization. Depreciation and amortization expenses as a percentage of net revenues decreased by 0.2% during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase in depreciation and amortization expense by 3.3% during the three months ended March 31, 2026, compared to the three months ended March 31, 2025 was primarily due to investments in infrastructure, technology assets and digital capabilities. Income from Operations. The increase in income from operations by 17.1% during the three months ended March 31, 2026, compared to the three months ended March 31, 2025 was primarily due to higher revenues and gross margins, partially offset by higher SG&A expenses. Foreign Exchange Gain, net. We recorded a foreign exchange gain, net of $1.1 million for the three months ended March 31, 2026, compared to a foreign exchange gain, net of $1.2 million for the three months ended March 31, 2025. Foreign exchange gains and losses are primarily attributable to the movement of the U.S. dollar against the Indian rupee, the Philippine peso, the U.K. pound sterling and the South African rand during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Interest expense . The decrease in interest expense by $0.1 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025 was primarily due to a lower average effective interest rate. 41 Table of Contents Other Income, net. Three months ended March 31, Dollar change Percentage change 2026 2025 (dollars in millions) Interest and dividend income $ 1.6 $ 2.7 $ (1.1) (40.8) % Gain on sale and fair value mark-to-market on investments 1.5 1.9 (0.4) (23.5) % Others, net (0.6) 0.1 (0.7) NM (1) Other income, net $ 2.5 $ 4.7 $ (2.2) (49.2) % (1) Not Meaningful Other income, net decreased by $2.2 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025 due to lower yield on our investments and higher other expenses. Income Tax Expense . The effective tax rate for the three months ended March 31, 2026 was 26.6%, an increase from 16.9% for the three months ended March 31, 2025. We recorded income tax expense of $24.3 million and $13.5 million for the three months ended March 31, 2026 and 2025, respectively. The increase in income tax expense was primarily as a result of lower excess tax benefits related to stock-based compensation of $13.2 million and higher profit, partially offset by a decrease in non-deductible compensation expenses, as compared to the three months ended March 31, 2025. Net Income . The increase in net income by 0.8% during the three months ended March 31, 2026, compared to the three months ended March 31, 2025 was attributable to the aforementioned factors. 42 Table of Contents Liquidity and Capital Resources Three months ended March 31, Dollar change Percentage change 2026 2025 (dollars in millions) Opening cash, cash equivalents and restricted cash $ 166.0 $ 171.4 $ (5.4) (3.2) % Net cash provided by operating activities 1.7 3.2 (1.5) (47.0) % Net cash provided by/(used for) investing activities 44.0 (22.3) 66.3 (297.7) % Net cash (used for)/provided by financing activities (44.6) 3.4 (48.0) NM (1) Effect of exchange rate changes (2.3) 2.7 (5.0) (186.3) % Closing cash, cash equivalents and restricted cash $ 164.8 $ 158.4 $ 6.4 4.0 % (1) Not Meaningful As of March 31, 2026 and December 31, 2025, we had $253.8 million and $328.4 million, respectively, in cash, cash equivalents and short-term investments, of which $206.9 million and $285.8 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes. We periodically evaluate opportunities to distribute cash among our group entities to fund our operations, expand our business and make strategic acquisitions in the United States and other geographies. As and when we decide to distribute, we may have to accrue additional taxes in accordance with local tax laws, rules and regulations in the relevant foreign jurisdictions. During the three months ended March 31, 2026, some of our foreign subsidiaries repatriated $13.0 million to the United States. Operating Activities: Net cash provided by operating activities was $1.7 million during the three months ended March 31, 2026, compared to $3.2 million during the three months ended March 31, 2025, reflecting lower cash earnings, partially offset by changes in working capital. The major drivers contributing to the decrease of $1.5 million year-over-year included the following: • Decrease in cash earnings, including adjustments for non-cash and other items contributed lower cash flow of $2.5 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. These adjustments include unrealized foreign currency exchange (gain)/loss, net, fair value mark-to-market on investments, stock-based employee compensation, depreciation and amortization of long-lived assets and intangibles acquired in business combinations, among others. • Changes in accounts receivable, including advance billings, contributed lower cash flow of $5.0 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Our days sales outstanding were 63 days as of March 31, 2026, compared to 67 days as of March 31, 2025. • Changes in other assets, accounts payables including other liabilities contributed to a lower cash payout of $6.0 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Investing Activities: Net cash provided by investing activities were $44.0 million for the three months ended March 31, 2026, compared to net cash used of $22.3 million for the three months ended March 31, 2025. The increase of $66.3 million was primarily due to higher proceeds from redemption of investments of $65.7 million during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. Financing Activities: Net cash used for financing activities were $44.6 million during the three months ended March 31, 2026, compared to net cash provided of $3.4 million during the three months ended March 31, 2025. The decrease of $48.0 million was due to higher purchases of treasury stock of $148.0 million under our share repurchase programs, partially offset by higher net proceeds from borrowings of $100.0 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. We expect to use cash from operating activities to maintain and expand our business by making investments, primarily related to building new digital capabilities, including AI, and purchase telecommunications equipment and computer hardware and software in connection with managing client operations. We incurred $12.9 million of capital expenditure during the three months ended March 31, 2026. We expect to incur total capital expenditures of between $50.0 million to $55.0 million in fiscal 2026, primarily to meet our growth requirements, 43 Table of Contents including additions to our facilities and infrastructure, as well as investments in technology applications, product development and other digital technologies. In connection with any tax assessment orders that have been issued, or may be issued against us or our subsidiaries, we may be required to deposit additional amounts with the relevant authorities with respect to such assessment orders. See Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for further information. We believe that our existing cash, cash equivalents and short-term investments and sources of liquidity will be sufficient to satisfy our cash requirements over the next 12 months. Our future cash requirements will depend on many factors, including our rate of revenue growth, our investments in strategic initiatives like acquisition of complementary businesses, capital expenditures and continued stock repurchases, including accelerated stock repurchases, under our board-authorized stock repurchase program, which may require the use of significant cash resources and/or additional financing. We anticipate that we will continue to rely upon cash from operating activities to finance most of our above-mentioned requirements, although if we have significant growth through acquisitions, we may need to obtain additional financing. In the ordinary course of business, we enter into contracts and commitments that obligate us to make payments in the future. These obligations include borrowings, including interest obligations, purchase commitments, operating and finance lease commitments, employee benefit payments under gratuity plans, payments for contingent consideration and uncertain tax positions. See Note 16 - Fair Value Measurements - Fair Value of Contingent Consideration, Note 18 - Borrowings, Note 20 - Employee Benefit Plans, Note 21 - Leases, Note 22 - Income Taxes and Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for further information on material cash requirements from known contractual and other obligations. In the ordinary course of business, we provide standby letters of credit to third parties primarily for facility leases. As of March 31, 2026 and December 31, 2025, we had outstanding letters of credit of $1.1 million and $1.6 million respectively, that were not recognized in our consolidated balance sheets. These are unlikely to have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. We had no other off-balance sheet arrangements or obligations. Financing Arrangements The following table summarizes our debt position: As of March 31, 2026 December 31, 2025 (dollars in millions) Revolving credit facility Term loan facility Total Revolving credit facility Term loan facility Total Current portion of long-term borrowings $ — $ 5.0 $ 5.0 $ — $ 5.0 $ 5.0 Unamortized debt issuance costs — (0.1) (0.1) — (0.1) (0.1) Current portion of long-term borrowings — 4.9 4.9 — 4.9 4.9 Long-term borrowings 325.0 87.5 412.5 205.0 88.8 293.8 Unamortized debt issuance costs — — — — — — Long-term borrowings 325.0 87.5 412.5 205.0 88.8 293.8 Borrowings $ 325.0 $ 92.4 $ 417.4 $ 205.0 $ 93.7 $ 298.7 As of March 31, 2026 and December 31, 2025, we were in compliance with the financial covenants under our credit agreement with certain lenders and Citibank N.A. as administrative agent. See Note 18 – Borrowings to our unaudited consolidated financial statements. Recent Accounting Pronouncements For a description of recent accounting pronouncements, see Note 2 - Summary of Significant Accounting Policies - Recent Accounting Pronouncements to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements.” 44 Table of Contents ITEM 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes in our quantitative and qualitative disclosures about market risk from those disclosed in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.