What changed in this filing

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Item 1. Financial Statements

2026-07-28 compared with 2026-04-28 · 376 added, 238 removed, 760 unchanged (45% of the section changed)

3 unchanged sentences

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

Notes March 31, 2026 December 31, 2025

Notes June 30, 2026 December 31, 2025

Current assets:

33 unchanged sentences

Common stock, $ 0.001 par value;

400,000,000 shares authorized, 209,929,764 shares issued and 152,999,425 shares outstanding as of March 31, 2026 and 208,855,566 shares issued and 156,430,028 shares outstanding as of December 31, 2025

400,000,000 shares authorized, 210,101,885 shares issued and 151,745,072 shares outstanding as of June 30, 2026 and 208,855,566 shares issued and 156,430,028 shares outstanding as of December 31, 2025

Additional paid-in capital 724,432 677,562

2 unchanged sentences

Total including shares held in treasury 2,165,531 2,030,023

56,930,339 shares as of March 31, 2026 and 52,425,538 shares as of December 31, 2025, held in treasury, at cost

58,356,813 shares as of June 30, 2026 and 52,425,538 shares as of December 31, 2025, held in treasury, at cost

19 ( 1,299,289 ) ( 1,117,318 )

5 unchanged sentences

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

Three months ended March 31,

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

Notes 2026 2025 2026 2025

29 unchanged sentences

(In thousands)

Three months ended March 31,

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

Notes 2026 2025 2026 2025

5 unchanged sentences

Reclassification adjustments:

Loss on cash flow hedges (1)

(Gain)/loss on cash flow hedges (1)

17 7,807 ( 554 ) 12,729 1,044

11 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the three months ended March 31, 2026 and 2025

For the three months ended June 30, 2026 and 2025

(In thousands, except share count)

1 unchanged sentence

Notes Shares Amount Shares Amount

Balance as of March 31, 2026 209,929,764 $ 210 $ 674,662 $ 1,600,060 $ ( 237,374 ) ( 56,930,339 ) $ ( 1,258,754 ) $ 778,804

Stock issued against stock-based compensation plans 23 172,121 — 3,412 — — — — 3,412

Stock-based compensation 23 — — 24,631 — — — — 24,631

Acquisition of treasury stock 19 — — — — — ( 626,514 ) ( 18,451 ) ( 18,451 )

Accelerated share repurchases 5, 19 — — 21,727 — — ( 799,960 ) ( 21,727 ) —

Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — ( 357 ) ( 357 )

Other comprehensive income 15 — — — — 13,692 — — 13,692

Net income — — — 64,511 — — — 64,511

Balance as of June 30, 2026 210,101,885 $ 210 $ 724,432 $ 1,664,571 $ ( 223,682 ) ( 58,356,813 ) $ ( 1,299,289 ) $ 866,242

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

Notes Shares Amount Shares Amount

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

Stock issued against stock-based compensation plans 23 52,138 — — — — — — —

Stock-based compensation 23 — — 16,392 — — — — 16,392

Acquisition of treasury stock 19 — — — — — ( 906,150 ) ( 41,752 ) ( 41,752 )

Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — 29 29

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

Net income — — — 66,051 — — — 66,051

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

See accompanying notes to unaudited consolidated financial statements.

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the six months ended June 30, 2026 and 2025

(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, 2025 208,855,566 $ 209 $ 677,562 $ 1,532,979 $ ( 180,727 ) ( 52,425,538 ) $ ( 1,117,318 ) $ 912,705

6 unchanged sentences

Net income — — — 131,592 — — — 131,592

Balance as of March 31, 2026 209,929,764 $ 210 $ 674,662 $ 1,600,060 $ ( 237,374 ) ( 56,930,339 ) $ ( 1,258,754 ) $ 778,804

Balance as of June 30, 2026 210,101,885 $ 210 $ 724,432 $ 1,664,571 $ ( 223,682 ) ( 58,356,813 ) $ ( 1,299,289 ) $ 866,242

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

4 unchanged sentences

Acquisition of treasury stock 19 — — — — — ( 1,271,929 ) ( 59,243 ) ( 59,243 )

Excise tax on repurchase of common stock, net of stock issuances 19 — — — — — — 29 29

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

Net income — — — 132,612 — — — 132,612

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

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

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

(In thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

5 unchanged sentences

Fair value mark-to-market on investments ( 3,054 ) ( 1,304 )

Unrealized foreign currency exchange gain, net ( 11,411 ) ( 1,270 )

Unrealized foreign currency exchange (gain)/loss, net ( 11,412 ) ( 3,314 )

Deferred income tax benefit ( 4,930 ) ( 15,605 )

4 unchanged sentences

Income taxes payable, net 31,392 4,202

Accounts payable, accrued expenses and other liabilities 18,464 22,901

Deferred revenue 7,303 2,426

Accrued employee costs ( 29,637 ) ( 31,278 )

Accounts payable, accrued expenses and other liabilities 7,940 8,539

Operating lease liabilities ( 12,042 ) ( 12,250 )

6 unchanged sentences

Investment in equity affiliate ( 600 ) ( 600 )

Net cash provided by/(used for) investing activities 44,025 ( 22,268 )

Net cash used for investing activities ( 6,186 ) ( 36,287 )

Cash flows from financing activities:

4 unchanged sentences

Proceeds from issuance of common stock 3,620 3,868

Net cash (used for)/provided by financing activities ( 44,604 ) 3,405

Net cash used for financing activities ( 100,762 ) ( 84,552 )

Effect of exchange rate changes ( 1,860 ) 7,346

11 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2026

June 30, 2026

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

24 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

June 30, 2026

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

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

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

29 unchanged sentences

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

Segment Information

6 unchanged sentences

The CODM considers budget-to-actuals variances on a quarterly basis for making decisions about the allocation of operating and capital resources to each segment.

Revenues, net and cost of revenues for the three months ended March 31, 2026 and 2025, respectively, for each of the reportable segments, are as follows:

Three months ended March 31, 2026

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

Revenues, net and cost of revenues for the three months ended June 30, 2026 and 2025, respectively, for each of the reportable segments, are as follows:

Three months ended June 30, 2026

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

13 unchanged sentences

(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.

Three months ended June 30, 2025

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

Revenues, net $ 172,174 $ 129,489 $ 121,089 $ 91,708 $ 514,460

Cost of revenues (1)

Employee costs 95,370 60,972 66,158 49,637 272,137

Infrastructure and technology costs 13,380 7,067 6,367 8,294 35,108

Other costs (2)

3,558 5,066 2,845 1,558 13,027

Gross profit (1)

$ 59,866 $ 56,384 $ 45,719 $ 32,219 $ 194,188

Operating expenses 113,050

Income from operations 81,138

Foreign exchange gain, net, interest expense and other income, net 3,600

Income before income tax expense and earnings from equity affiliates $ 84,738

(1) Exclusive of depreciation and amortization expense.

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

June 30, 2026

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

Three months ended March 31, 2025

Revenues and cost of revenues for the six months ended June 30, 2026 and 2025, respectively, for each of the reportable segments, are as follows:

Six months ended June 30, 2026

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

13 unchanged sentences

(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.

Six months ended June 30, 2025

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

Revenues, net $ 344,230 $ 255,081 $ 238,791 $ 177,377 $ 1,015,479

Cost of revenues (1)

Employee costs 185,919 119,896 130,452 94,457 530,724

Infrastructure and technology costs 26,626 13,805 12,536 16,455 69,422

Other costs (2)

8,930 9,916 6,131 2,854 27,831

Gross profit (1)

$ 122,755 $ 111,464 $ 89,672 $ 63,611 $ 387,502

Operating expenses 227,949

Income from operations 159,553

Foreign exchange gain, net, interest expense and other income, net 5,351

Income before income tax expense and earnings from equity affiliates $ 164,904

(1) Exclusive of depreciation and amortization expense.

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

Revenues, net by service type, were as follows:

Three months ended March 31,

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

2026 2025 2026 2025

Data and AI-led (1)

9 unchanged sentences

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

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

Three months ended March 31,

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

2026 2025 2026 2025

Revenues, net

4 unchanged sentences

Revenues, net by industry verticals, were as follows:

Three months ended March 31,

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

2026 2025 2026 2025

Insurance $ 233,701 $ 203,222 $ 459,761 $ 403,583

2 unchanged sentences

Revenues, net $ 594,763 $ 514,460 $ 1,165,114 $ 1,015,479

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Long-lived assets

5 unchanged sentences

Long-lived assets $ 212,082 $ 209,232

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

Revenues, net and Accounts Receivable, net

2 unchanged sentences

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Accounts receivable, net $ 434,362 $ 343,105

3 unchanged sentences

Consideration received for process transition activities $ 33,761 $ 32,247

Accounts receivable includes $ 170,511 and $ 141,653 as of March 31, 2026 and December 31, 2025, respectively, representing unbilled receivables.

Accounts receivable includes $ 192,342 and $ 141,653 as of June 30, 2026 and December 31, 2025, respectively, representing unbilled receivables.

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

Contract assets as of March 31, 2026 and December 31, 2025, include receivables of $ 21,783 and $ 24,849 , respectively, from payment integrity services.

Contract assets as of June 30, 2026 and December 31, 2025, include receivables of $ 36,941 and $ 24,849 , 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 March 31, 2026 and December 31, 2025.

Revenue recognized during the three months ended March 31, 2026 and 2025, which was included in the contract liabilities balance at the beginning of the respective periods:

Three months ended March 31,

There were no significant cumulative catch-up impact or impairment related to contract assets as of June 30, 2026 and December 31, 2025.

Revenue recognized during the three and six months ended June 30, 2026 and 2025, which was included in the contract liabilities balance at the beginning of the respective periods:

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

2026 2025 2026 2025

Deferred revenue (consideration received in advance) $ 1,883 $ 3,877 $ 6,498 $ 11,306

Consideration received for process transition activities $ 1,932 $ 1,279 $ 3,924 $ 2,656

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

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

Three months ended Three months ended

March 31, 2026 March 31, 2025 March 31, 2026 March 31, 2025

Contract Acquisition Costs

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

2026 2025 2026 2025

Opening balance $ 1,766 $ 2,126 $ 1,947 $ 2,287

2 unchanged sentences

Closing balance $ 1,606 $ 2,192 $ 1,606 $ 2,192

There was no significant impairment for contract acquisition and contract fulfillment costs as of March 31, 2026 and December 31, 2025.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

Contract Fulfillment Costs

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

2026 2025 2026 2025

Opening balance $ 38,387 $ 38,080 $ 39,223 $ 36,022

Additions 2,210 2,156 3,174 5,485

Amortization ( 1,976 ) ( 1,298 ) ( 3,776 ) ( 2,569 )

Closing balance $ 38,621 $ 38,938 $ 38,621 $ 38,938

There was no significant impairment for contract acquisition and contract fulfillment costs as of June 30, 2026 and December 31, 2025.

Allowance for expected credit losses

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Accounts receivable, including unbilled receivables $ 437,643 $ 345,980

2 unchanged sentences

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

Three months ended March 31,

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

2026 2025 2026 2025

Opening balance $ 3,065 $ 4,734 $ 2,875 $ 3,528

3 unchanged sentences

Closing balance $ 3,281 $ 4,727 $ 3,281 $ 4,727

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

Customer and credit risk concentration

No single customer accounted for more than 10% of the Company's revenues, net during the three months ended March 31, 2026 and 2025.

No single customer accounted for more than 10% of the Company's revenues, net during the three and six months ended June 30, 2026 and 2025.

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 March 31, 2026 and December 31, 2025.

No customer accounted for more than 10% of accounts receivable, net, as of June 30, 2026 and December 31, 2025.

Earnings Per Share

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

Three months ended March 31,

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

2026 2025 2026 2025

Net income $ 64,511 $ 66,051 $ 131,592 $ 132,612

8 unchanged sentences

LLC (“Morgan Stanley”).

During the three months ended

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

March 31, 2026, the Company recorded the initial delivery of shares in treasury stock at cost, which resulted in an immediate reduction of its outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share.

The forward contracts indexed to the Company's own common stock met the criteria for equity classification, and prepayment of $ 25,000 was initially recorded in additional paid-in capital, which reflects the pending settlement of the 2026 ASR Agreement.

Had the 2026 ASR Agreement been settled as of March 31, 2026, determined based on the volume-weighted average price per share since its effective date, Morgan Stanley would have been required to deliver additional estimated shares to the Company.

The effect of the potential share settlement under the 2026 ASR Agreement was excluded from the computation of diluted earnings per share as its inclusion would have been anti-dilutive.

During the six months ended June 30, 2026, the Company recorded the initial delivery and final settlement of shares in treasury stock, which resulted in an immediate reduction of its outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share.

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

1 unchanged sentence

Other income, net consists of the following:

Three months ended March 31,

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

2026 2025 2026 2025

Interest and dividend income $ 2,437 $ 2,682 $ 3,990 $ 5,307

Gain on sale and fair value mark-to-market on investments 1,550 2,259 3,040 4,207

Fair value changes of contingent consideration (1)

( 3,000 ) — ( 3,000 ) —

Others, net ( 857 ) 730 ( 1,509 ) 860

1 unchanged sentence

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

Cash, Cash Equivalents and Restricted Cash

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

March 31, 2026 March 31, 2025 December 31, 2025

June 30, 2026 June 30, 2025 December 31, 2025

Cash and cash equivalents $ 126,722 $ 149,134 $ 146,326

8 unchanged sentences

Due to the associated restrictions, these deposits with banks are anticipated to mature one year after the balance sheet date.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

Investments consist of the following:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Short-term investments

Mutual funds (1)

$ 98,499 $ 129,549

Term deposits 58,603 52,492

5 unchanged sentences

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

Property and Equipment, net

Property and equipment consists of the following:

March 31, 2026 December 31, 2025

Property and equipment consist of the following:

June 30, 2026 December 31, 2025

Property and equipment, gross $ 383,761 $ 367,558

1 unchanged sentence

Property and equipment, net $ 114,587 $ 111,821

During the three months ended March 31, 2026, there were no material changes in estimated useful lives of property and equipment during the ordinary course of operations.

During the three and six months ended June 30, 2026, there were no material changes in estimated useful lives of property and equipment during the ordinary course of operations.

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

Three months ended March 31,

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

2026 2025 2026 2025

Depreciation and amortization expense $ 11,346 $ 10,778 $ 22,123 $ 21,089

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Cost $ 66,051 $ 59,391

1 unchanged sentence

Internally developed software, net $ 21,668 $ 20,059

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

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

2026 2025 2026 2025

Amortization expense $ 2,628 $ 2,743 $ 5,051 $ 5,483

During the three and six months ended June 30, 2026 and 2025, there were no indicators of impairment related to capitalized software.

Business Combinations, Goodwill and Other Intangible Assets

On June 22, 2026, the Company, through its wholly owned subsidiary Clairvoyant AI, Inc.

entered into a securities purchase agreement (the “Purchase Agreement”), which is expected to close on July 31, 2026, to acquire 100 % of the equity securities of I Merit Inc., a Delaware Corporation (“iMerit”), in exchange for upfront cash consideration of $ 170,000 , subject to certain post-closing adjustments, and up to an additional $ 140,000 in cash incentives and earnouts over two years contingent on meeting specified milestones, as set forth in the Purchase Agreement.

iMerit is a recognized leader in AI model training, evaluation and reinforcement learning.

It is focused on helping its clients train large language and multimodal models to improve accuracy, precision, and effectiveness.

The acquisition strengthens

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

June 30, 2026

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

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

Three months ended March 31,

Amortization expense $ 2,423 $ 2,740

During the three months ended March 31, 2026 and 2025, there were no indicators of impairment related to capitalized software.

Goodwill and Other Intangible Assets

Company's ability to help enterprises achieve measurable outcomes from AI, builds partnerships with leading foundation model builders and expands its reach into high-growth AI tech sectors.

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

2 unchanged sentences

Currency translation adjustments ( 42 ) ( 28 ) ( 494 ) ( 397 ) ( 961 )

Balance as of March 31, 2026 $ 77,224 $ 189,565 $ 99,642 $ 52,228 $ 418,659

During the three months ended March 31, 2026 and 2025, the Company performed an assessment to determine whether events or circumstances exist that may lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Based on such assessment, the Company concluded that there was no impairment on goodwill as of March 31, 2026 and 2025.

Balance as of June 30, 2026 $ 77,227 $ 189,566 $ 99,659 $ 52,241 $ 418,693

During the three and six months ended June 30, 2026 and 2025, the Company performed an assessment to determine whether events or circumstances exist that may lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Based on such assessment, the Company concluded that there was no impairment on goodwill as of the three and six months ended June 30, 2026 and 2025.

Other Intangible Assets

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

As of March 31, 2026 As of December 31, 2025

Gross Carrying

Amount Accumulated Amortization Net

Carrying Amount Gross Carrying

As of June 30, 2026 As of December 31, 2025

Amount Accumulated

Amortization Net

Amount Gross Carrying

Amount Accumulated Amortization Net

9 unchanged sentences

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

Three months ended March 31,

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

2026 2025 2026 2025

Amortization expense $ 3,258 $ 3,277 $ 6,484 $ 6,523

During the three and six months ended June 30, 2026 and 2025, there were no indicators of impairment related to intangible assets.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

June 30, 2026

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

During the three months ended March 31, 2026 and 2025, there were no indicators of impairment related to intangible assets.

Estimated future amortization expense related to finite-lived intangible assets as of March 31, 2026 was as follows:

2026 (April 1 - December 31) $ 9,550

Estimated future amortization expense related to finite-lived intangible assets as of June 30, 2026 was as follows:

2026 (July 1 - December 31) $ 6,292

Total $ 28,820

1 unchanged sentence

Other current assets consist of the following:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Contract assets $ 39,458 $ 27,083

Prepaid expenses 38,488 26,465

Advance income tax, net 24,378 51,984

Contract assets 24,243 27,083

Receivables from statutory authorities 22,476 21,374

4 unchanged sentences

Other assets consist of the following:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Deferred contract fulfillment costs $ 30,496 $ 32,146

Deposits with statutory authorities 7,515 7,859

Prepaid expenses 7,809 6,761

Deposits with statutory authorities 7,494 7,859

Lease deposits 7,314 7,087

5 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

June 30, 2026

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

1 unchanged sentence

Accrued expenses and other current liabilities consist of the following:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Accrued expenses $ 70,620 $ 64,220

Payable to statutory authorities 40,492 27,222

Derivative instruments 32,156 15,443

Payable to statutory authorities 24,423 27,222

Client liabilities 13,180 12,601

4 unchanged sentences

Other non-current liabilities consist of the following:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Retirement benefits $ 41,507 $ 41,632

4 unchanged sentences

Other non-current liabilities $ 87,613 $ 81,401

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

Accumulated Other Comprehensive Income/(Loss)

The following table sets forth the changes in Accumulated other comprehensive income/(loss) (“AOCI”) during the three months ended March 31, 2026 and 2025:

The following table sets forth the changes in Accumulated other comprehensive income/(loss) (“AOCI”) during the six months ended June 30, 2026 and 2025:

Accumulated Other Comprehensive Income/(Loss)

6 unchanged sentences

— 4,873 15 4,888

Balance as of March 31, 2026 $ ( 180,352 ) $ ( 47,659 ) $ ( 9,363 ) $ ( 237,374 )

Balance as of June 30, 2026 $ ( 179,639 ) $ ( 34,935 ) $ ( 9,108 ) $ ( 223,682 )

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

4 unchanged sentences

( 1,012 ) ( 2,847 ) ( 26 ) ( 3,885 )

Balance as of March 31, 2025 $ ( 143,744 ) $ 1,257 $ ( 300 ) $ ( 142,787 )

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

Balance as of June 30, 2025 $ ( 140,077 ) $ 6,073 $ ( 430 ) $ ( 134,434 )

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

4 unchanged sentences

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

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

As of March 31, 2026 (Level 1) (Level 2) (Level 3) Total

Quoted Prices in

Active Markets for

Identical Assets Significant Other

Inputs Significant Other

As of June 30, 2026 (Level 1) (Level 2) (Level 3) Total

Cash equivalents - Money market funds (1)

8 unchanged sentences

Total $ — $ 48,500 $ 8,000 $ 56,500

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

Quoted Prices in

Active Markets for

Identical Assets Significant Other

Inputs Significant Other

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

11 unchanged sentences

(2) Contingent consideration is presented under “Accrued expenses and other current liabilities” in the consolidated balance sheets.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

Fair Value of Derivative Financial Instruments:

7 unchanged sentences

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

Three months ended March 31,

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

2026 2025 2026 2025

Opening balance $ 5,000 $ 2,700 $ 5,000 $ 2,700

Fair value changes 3,000 — 3,000 —

Payments — — — —

Closing balance $ 8,000 $ 2,700 $ 8,000 $ 2,700

During the three months ended March 31, 2026 and 2025, there were no transfers among Level 1, Level 2 and Level 3.

During the three and six months ended June 30, 2026 and 2025, 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.

The carrying value

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

June 30, 2026

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

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.

Derivatives and Hedge Accounting

3 unchanged sentences

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Foreign currency forward contracts denominated in:

1 unchanged sentence

dollar (USD) 5,159 12,075

The Company estimates that approximately $ 35,560 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 March 31, 2026, could be reclassified into earnings within the next twelve months.

As of March 31, 2026, the maximum outstanding term of the cash flow hedges was approximately 39 months.

The Company estimates that approximately $ 28,304 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 June 30, 2026, could be reclassified into earnings within the next twelve months.

As of June 30, 2026, the maximum outstanding term of the cash flow hedges was approximately 36 months.

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

3 unchanged sentences

Foreign currency forward contracts denominated in:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Sell USD 244,088 217,040

5 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

June 30, 2026

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

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

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

March 31, 2026 December 31, 2025 March 31, 2026 December 31, 2025

Derivatives in cash flow hedging

relationships Derivatives not designated as hedging

June 30, 2026 December 31, 2025 June 30, 2026 December 31, 2025

Other current assets $ 3,419 $ 4,444 $ 14 $ 196

Other assets $ 1,050 $ 1,424 $ — $ —

Accrued expenses and other current liabilities $ 38,708 $ 15,383 $ 304 $ 60

Accrued expenses and other

current liabilities $ 31,723 $ 15,383 $ 433 $ 60

Other non-current liabilities $ 16,344 $ 9,765 $ — $ —

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

Three months ended March 31,

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

Derivative financial instruments:

2026 2025 2026 2025

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

4 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

June 30, 2026

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

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

Three months ended March 31,

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

Three months ended June 30,

As per unaudited consolidated

statements of

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

statements of

income Gain/(loss) on derivative financial instruments

Derivatives in cash flow hedging relationships

11 unchanged sentences

Foreign exchange gain, net $ 1,609 $ 1,747 $ 2,211 $ ( 1,766 )

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

Six months ended June 30,

As per unaudited consolidated

statements of

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

statements of

income Gain/(loss) on derivative financial instruments

Derivatives in cash flow hedging relationships

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

Revenues, net $ 1,165,114 139 $ 1,015,479 $ ( 1,028 )

Cost of revenues $ 717,070 ( 11,178 ) $ 627,977 ( 53 )

General and administrative expenses $ 143,487 ( 1,368 ) $ 118,966 ( 28 )

Selling and marketing expenses $ 96,829 ( 187 ) $ 81,371 ( 9 )

Depreciation and amortization expense $ 28,607 ( 135 ) $ 27,612 74

Total before tax ( 12,729 ) ( 1,044 )

Income tax effects on above 2,667 217

Net of tax $ ( 10,062 ) $ ( 827 )

Derivatives not designated as hedging instruments

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

Foreign exchange gain, net $ 2,744 $ ( 8,714 ) $ 3,403 $ ( 1,286 )

The following table summarizes the Company’s debt position:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

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

6 unchanged sentences

Borrowings $ 290,000 $ 91,155 $ 381,155 $ 205,000 $ 93,598 $ 298,598

Unamortized debt issuance costs for the Company’s revolving credit facility of $ 410 and $ 507 as of March 31, 2026 and December 31, 2025, respectively, are presented under “Other current assets” and “Other assets,” as applicable, in the consolidated balance sheets.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

June 30, 2026

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

Unamortized debt issuance costs for the Company’s revolving credit facility of $ 313 and $ 507 as of June 30, 2026 and December 31, 2025, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.

Credit Agreement

4 unchanged sentences

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

The Company is in the process of refinancing its 2024 Credit Agreement, which is expected to be completed in the third quarter of 2026.

The Company believes that it has access to adequate resources, which include cash and cash equivalents, short-term investments, cash provided by operating activities and unused amounts in its revolving credit facility to meet its needs for at least the next twelve months.

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

3 unchanged sentences

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

Three months ended March 31,

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

2026 2025 2026 2025

Revolving credit facility 5.0 % 5.8 % 5.0 % 5.8 %

Term loan facility 5.1 % 5.7 % 5.1 % 5.7 %

As of March 31, 2026 and December 31, 2025, the Company was in compliance with the financial covenants under the 2024 Credit Agreement.

The maturity profile of the Company’s long-term borrowings, excluding debt issuance costs, outstanding as of March 31, 2026 was as follows:

As of June 30, 2026 and December 31, 2025, the Company was in compliance with the financial covenants under the 2024 Credit Agreement.

The maturity profile of the Company’s long-term borrowings, excluding debt issuance costs, outstanding as of June 30, 2026 was as follows:

Revolving credit facility Term loan facility

2026 (April 1 - December 31) $ — $ 3,750

2026 (July 1 - December 31) $ — $ 2,500

2027 290,000 88,750

2 unchanged sentences

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

As of March 31, 2026 and December 31, 2025, the Company had outstanding letters of credit of $ 1,137 and $ 1,598 , respectively, that were not recognized in the consolidated balance sheets.

As of June 30, 2026 and December 31, 2025, the Company had outstanding letters of credit of $ 1,137 and $ 1,598 , respectively, that were not recognized in the consolidated balance sheets.

Capital Structure

2 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

June 30, 2026

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

2 unchanged sentences

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

Three months ended March 31, 2026 129,695 $ 4,847 $ 37.37

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

Three months ended June 30, 2026 — $ — $ —

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

Six months ended June 30, 2026 129,695 $ 4,847 $ 37.37

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

(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.

4 unchanged sentences

The Company funded the repurchase with available cash on hand and borrowing from its revolving credit facility.

The 2026 ASR Agreement is accounted for as a treasury stock transaction and forward stock purchase agreement indexed to the Company’s common stock.

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

Under the terms of the 2026 ASR Agreement, the ultimate number of shares of common stock that the Company will repurchase will be based on the average of the daily volume-weighted average price of the common stock during the term of the 2026 ASR Agreement, less a discount and subject to adjustments pursuant to the terms and conditions of the 2026 ASR Agreement.

At final settlement, Morgan Stanley may be required to deliver additional shares of common stock to the Company, or, under certain circumstances, the Company may be required to make a cash payment or deliver shares of common stock at its election to Morgan Stanley.

The final settlement of the 2026 ASR Agreement is expected to be completed on June 16, 2026, subject to acceleration at Morgan Stanley’s discretion, which may occur on or after the lock-out date of April 10, 2026.

The 2026 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 2026 ASR Agreement.

Under the terms of the 2026 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 2026 ASR Agreement, less a discount and subject to adjustments pursuant to the terms and conditions of the 2026 ASR Agreement.

On May 13, 2026, upon final settlement of the 2026 ASR Agreement, the Company received 799,960 additional shares of its common stock based on a daily volume-weighted average price of $ 30.14 per share during the term of the 2026 ASR Agreement.

The additional shares received were recorded as treasury stock at a fair market value of $ 27.16 per share.

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

Repurchases may be discontinued at any time by the management.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

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

Shares repurchased Total consideration Weighted average purchase price per share

Three months ended March 31, 2026 4,375,106 $ 135,803 $ 31.04

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

Three months ended June 30, 2026 1,426,474 $ 43,451 $ 30.46

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

Six months ended June 30, 2026 5,801,580 $ 179,254 $ 30.90

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

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 $ 786 and $ nil during the three months ended March 31, 2026 and 2025, respectively.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

The Company recognized excise tax of $ 357 and $( 29 ), during the three months ended June 30, 2026 and 2025, respectively, and $ 1,143 and $( 29 ), during the six months ended June 30, 2026 and 2025, respectively.

Employee Benefit Plans

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

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 expects to earn a return of approximately 7.5 % per annum on the India Plan for the year ending on December 31, 2026.

5 unchanged sentences

Currency translation adjustments ( 1,230 )

Plan assets as of March 31, 2026 $ 22,973

Plan assets as of June 30, 2026

During the year ended December 31, 2025, the implementation of the new Labor Codes in India resulted in the recognition of prior service cost in OCI.

1 unchanged sentence

The prior service cost recognized is being amortized over the estimated remaining service period of the defined benefit obligation.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

Components of net periodic benefit costs recognized in unaudited consolidated statements of income and retirement benefits reclassified from AOCI, were as follows:

Three months ended March 31,

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

2026 2025 2026 2025

Service cost $ 1,987 $ 1,406 $ 4,010 $ 2,789

8 unchanged sentences

Reclassification of retirement benefits from AOCI, net of tax $ 255 $ ( 130 ) $ 462 $ ( 254 )

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

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.

1 unchanged sentence

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

Three months ended March 31,

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

2026 2025 2026 2025

Contribution to the 401(k) Plans $ 1,504 $ 1,376 $ 4,522 $ 4,171

Contributions to the defined contribution plans in foreign subsidiaries of the Company

$ 9,153 $ 8,692 $ 18,060 $ 16,477

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.

2 unchanged sentences

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

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

Three months ended March 31,

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

2026 2025 2026 2025

Finance lease:

1 unchanged sentence

Interest on lease liabilities 54 77 134 146

228 224 471 425

Operating lease (1)

7,225 6,528 14,265 12,707

Variable lease costs 1,274 1,214 2,359 2,287

2 unchanged sentences

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

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

Three months ended March 31,

Six months ended June 30,

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

11 unchanged sentences

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

The Company modified certain of its operating leases, resulting in an increase in lease liabilities by $ 1,336 during the three months ended March 31, 2026 and a decrease by $ 234 during the three months ended March 31, 2025, respectively, with a corresponding adjustment to ROU assets.

As of March 31, 2026 and December 31, 2025, the Company did not have any significant leases that have not yet commenced but that create significant rights and obligations for the Company.

Maturities of lease liabilities as of March 31, 2026 were as follows:

The Company modified certain of its operating leases, resulting in an increase in lease liabilities by $ 2,623 and $ 3,107 , during the six months ended June 30, 2026 and 2025, respectively, with a corresponding adjustment to ROU assets.

As of June 30, 2026 and December 31, 2025, the Company did not have any significant leases that have not yet commenced but that create significant rights and obligations for the Company.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

Maturities of lease liabilities as of June 30, 2026 were as follows:

Operating Leases Finance Leases

2026 (April 1 - December 31) $ 18,027 $ 891

2026 (July 1 - December 31) $ 13,112 $ 946

2027 26,421 812

6 unchanged sentences

Present value of lease liabilities $ 106,864 $ 2,147

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

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

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

The effective tax rate for the three months ended March 31, 2026 was 26.6 %, an increase from 16.9 % for the three months ended March 31, 2025.

The Company recorded income tax expense of $ 24,318 and $ 13,496 for the three months ended March 31, 2026 and 2025, respectively.

The increase in income tax expense for the three months ended March 31, 2026 was primarily a result of lower excess tax benefits related to stock-based compensation and higher profit, partially offset by a decrease in non-deductible compensation expenses, as compared to the three months ended March 31, 2025.

The effective tax rate for the three months ended June 30, 2026 was 23.1 %, an increase from 21.9 % for the three months ended June 30, 2025.

The Company recorded income tax expense of $ 19,426 and $ 18,546 for the three months ended June 30, 2026 and 2025, respectively.

The increase in income tax expense for the three months ended June 30, 2026 was primarily a result of an increase in non-deductible expenses and lower excess tax benefits related to stock-based compensation, as compared to the three months ended June 30, 2025.

The effective tax rate for the six months ended June 30, 2026 was 24.9 %, an increase from 19.5 % for the six months ended June 30, 2025.

The Company recorded income tax expense of $ 43,744 and $ 32,042 for the six months ended June 30, 2026 and 2025, respectively.

The increase in income tax expense for the six months ended June 30, 2026 was primarily a result of higher profit and lower excess tax benefits related to stock-based compensation, partially offset by a decrease in non-deductible compensation expenses, as compared to the six months ended June 30, 2025.

Deferred income taxes recognized in OCI were as follows:

Three months ended March 31,

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

2026 2025 2026 2025

Deferred taxes benefit / (expense) recognized on:

5 unchanged sentences

Total $ ( 4,121 ) $ ( 937 ) $ 4,888 $ ( 3,885 )

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

Stock-Based Compensation

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

Three months ended March 31,

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

2026 2025 2026 2025

Cost of revenues $ 3,577 $ 3,421 $ 6,593 $ 6,908

2 unchanged sentences

Total $ 24,631 $ 16,392 $ 46,732 $ 35,579

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

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

$ 6,097 $ 4,211 $ 7,413 $ 13,316

(1) Includes $ 1,280 and $ 14,526 during the three months ended March 31, 2026 and 2025, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No.

(1) Includes $( 17 ) and $ 203 during the three months ended June 30, 2026 and 2025, respectively, and $ 1,263 and $ 14,728 during the six months ended June 30, 2026 and 2025, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No.

2016-09, Compensation - Stock Compensation.

As of March 31, 2026 and December 31, 2025, the Company had 3,395,894 and 5,919,466 shares, respectively, available for future grants under the 2025 Omnibus Incentive Plan (the “2025 Plan”).

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

As of June 30, 2026 and December 31, 2025, the Company had 3,301,245 and 5,919,466 shares, respectively, available for future grants under the 2025 Omnibus Incentive Plan (the “2025 Plan”).

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)

Number of Options

Weighted Average Exercise Price

Aggregate Intrinsic Value

Weighted Average Remaining Contractual Life (Years)

Outstanding as of December 31, 2025 1,734,720 $ 30.14 $ 21,344 7.5

2 unchanged sentences

Forfeited — — — —

Outstanding as of March 31, 2026 1,734,720 $ 30.14 $ 545 7.2

Vested and exercisable as of March 31, 2026

861,740 $ 30.14 $ 271 7.2

Outstanding as of June 30, 2026 1,734,720 $ 30.14 $ — 7.0

Vested and exercisable as of June 30, 2026 1,264,700 $ 30.14 $ — 7.0

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

As of March 31, 2026, unrecognized compensation cost of $ 6,450 is expected to be expensed over a weighted average period of 1.3 years.

As of June 30, 2026, unrecognized compensation cost of $ 5,141 is expected to be expensed over a weighted average period of 1.0 years.

Share Matching Program

1 unchanged sentence

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.

As of March 31, 2026 and December 31, 2025 restricted stock units vested for which the underlying common stock is yet to be issued are nil and 31,662 , respectively.

As of June 30, 2026 and December 31, 2025, restricted stock units vested for which the underlying common stock is yet to be issued are nil and 31,662 , respectively.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

Restricted Stock Units

7 unchanged sentences

Forfeited ( 116,947 ) 36.36

Outstanding as of March 31, 2026 (1)

Outstanding as of June 30, 2026 (1)

3,279,033 $ 35.22

(1) As of March 31, 2026 and December 31, 2025 restricted stock units vested for which the underlying common stock is yet to be issued are 294,376 and 348,636 , respectively.

As of March 31, 2026, unrecognized compensation cost of $ 104,444 is expected to be expensed over a weighted average period of 3.0 years.

(1) As of June 30, 2026 and December 31, 2025 restricted stock units vested for which the underlying common stock is yet to be issued are 328,139 and 348,636 , respectively.

As of June 30, 2026, unrecognized compensation cost of $ 94,835 is expected to be expensed over a weighted average period of 2.8 years.

Performance-Based Stock Awards

1 unchanged sentence

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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

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 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”).

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

6 unchanged sentences

Forfeited ( 15,147 ) 37.03 ( 22,710 ) 53.63

Outstanding as of March 31, 2026 1,099,777 $ 36.11 1,446,871 $ 47.85

As of March 31, 2026, unrecognized compensation cost of $ 74,470 is expected to be expensed over a weighted average period of 2.1 years.

Outstanding as of June 30, 2026 1,090,548 $ 36.12 1,433,034 $ 47.83

As of June 30, 2026, unrecognized compensation cost of $ 64,944 is expected to be expensed over a weighted average period of 1.9 years.

Employee Stock Purchase Plan

1 unchanged sentence

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.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

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 the 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.

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Issuance of common stock made during the seventh offering period 60,139 $ 2,297

Shares available for issuance as of March 31, 2026 3,450,130

Contributions received for the eighth offering period up to March 31, 2026

Shares available for issuance as of June 30, 2026 3,450,130

Issuance of common stock related to the eighth offering period made subsequent to June 30, 2026 146,650 $ 3,413

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 $ 84 and $ 42 during the three months ended March 31, 2026 and 2025, respectively.

The Company had outstanding accounts receivable, net of $ 28 related to this service contract as of March 31, 2026 and December 31, 2025.

The Company recognized revenues, net of $ 97 and $ 42 , during the three months ended June 30, 2026 and 2025 respectively, and $ 181 and $ 84 , during the six months ended June 30, 2026 and 2025 respectively.

The Company had outstanding accounts receivable, net of $ 41 and $ 28 , related to this service contract as of June 30, 2026 and December 31, 2025, respectively.

Commitments and Contingencies

Capital Commitments

As of March 31, 2026 and December 31, 2025, the Company had committed to spend approximately $ 10,000 and $ 8,700 , 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

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

with the name Plug and Play Financial Services Fund I, L.P.

As of June 30, 2026 and December 31, 2025, the Company had committed to spend approximately $ 11,900 and $ 8,700 , respectively, net of capital advances, under agreements to purchase property and equipment.

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

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

As of March 31, 2026, the Company has invested $ 2,400 in the Partnership and is committed to make further investments up to an amount of $ 1,600 .

As of June 30, 2026, the Company has invested $ 3,000 in the Partnership and is committed to make further investments up to an amount of $ 1,000 .

Other Commitments

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Contingencies

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2026

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

The transfer pricing regulations in the countries where the Company operates require that controlled intercompany transactions be at arm’s-length.

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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 March 31, 2026 and December 31, 2025 is $ 44,429 and $ 42,205 , respectively.

The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 7,282 and $ 7,684 , as of March 31, 2026 and December 31, 2025, respectively.

The aggregate amount demanded by Indian tax authorities (net of advance payments) as of June 30, 2026 and December 31, 2025 is $ 44,376 and $ 42,205 , respectively.

The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 7,436 and $ 7,684 , as of June 30, 2026 and December 31, 2025, 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 $ 4,915 and $ 5,186 , as of March 31, 2026 and December 31, 2025, respectively.

The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 4,823 and $ 5,090 , as of March 31, 2026 and December 31, 2025, respectively.

Pursuant to reviewing the Company’s annual VAT and service tax filings, the Indian tax authorities raised aggregate demands for tax years 2015 and 2017, in the amounts of $ 4,923 and $ 5,186 , as of June 30, 2026 and December 31, 2025, respectively.

The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ 4,832 and $ 5,090 , as of June 30, 2026 and December 31, 2025, 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 Goods and Services Tax (“GST”) authorities rejected the Company’s refund claims in the amounts of $ 5,207 and $ 5,494 as of March 31, 2026 and December 31, 2025, respectively.

The Indian Goods and Services Tax (“GST”) authorities rejected the Company’s refund claims in the amounts of $ 5,216 and $ 5,494 as of June 30, 2026 and December 31, 2025, 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 were recorded against these GST receivables as of March 31, 2026 and December 31, 2025, respectively.

Accordingly, no allowances were recorded against these GST receivables as of June 30, 2026 and December 31, 2025, 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 unaudited 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.

The Company is defending against the assessment orders and in two cases, 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.

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

March 31, 2026

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

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.

7 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements