ExlService Holdings, Inc. - Quarter Report: 2024 June (Form 10-Q)

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		Common Stock (1)		Additional Paid-in Capital (1)	Retained Earnings	Accumulated Other Comprehensive Income/(loss)		Treasury Stock			Total

	Notes	Shares	Amount					Shares (1)	Amount
January 1, 2023			$	$	$	$	()	()	$	()	$
Stock issued against stock-based compensation plans	23				—	—		—	—
Stock-based compensation	23	—	—		—	—		—	—
Acquisition of treasury stock	19	—	—	—	—	—		()	()		()

Revenues, net$ $ $ $ $

Cost of revenues (1)

Gross profit (1)

$ $ $ $ $ Operating expenses Foreign exchange gain, net, interest expense and other income, net()Income tax expense Gain from equity-method investment Net income$

(1) Exclusive of depreciation and amortization expense.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

$ $ $ Analytics services Revenues, net$ $ $ $

(1) Digital operations and solutions include revenues of the Company’s Insurance, Healthcare and Emerging Business reportable segments. Refer to the reportable segment disclosure above.

$ $ $ Non-United StatesThe United Kingdom Rest of World Total Non-United States Revenues, net$ $ $ $

$ The United States The Philippines South Africa Rest of World Long-lived assets$ $

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

$ Contract assets$ $ Contract liabilities:Deferred revenue (consideration received in advance)$ $ Consideration received for process transition activities$ $

Accounts receivable includes $ and $ as of June 30, 2024 and December 31, 2023, 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 significant performance risk associated with its unbilled receivables.

There was no significant impairment of contract assets as of June 30, 2024 and December 31, 2023.

$ $ $ Consideration received for process transition activities$ $ $ $

Contract acquisition and fulfillment costs

$ $ $ $ Additions Amortization()()()()()Closing Balance$ $ $ $ $

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

$ $ $ $ Additions Amortization()()()()()Closing Balance$ $ $ $ $

There was significant impairment for contract acquisition and contract fulfillment costs as of June 30, 2024 and December 31, 2023.

Allowance for expected credit losses

$ Less: Allowance for expected credit losses()()Accounts receivable, net$ $

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

Three months ended

Six months ended

Year ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

December 31, 2023

Opening Balance

Additions/(reductions)

()

Reductions due to write-off of accounts receivable

()

Currency translation adjustments

()

Closing Balance

Customer and credit risk concentration

No single customer accounted for more than 10% of the Company's revenues, net during the three and six months ended June 30, 2024 and 2023. The Company’s management believes that the loss of any of its top ten clients could have a material adverse effect on its financial performance.

To reduce credit risk, the Company conducts ongoing credit evaluations of its customers. No customer accounted for more than 10% of accounts receivable, net, as of June 30, 2024 and December 31, 2023.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

$ $ $

Denominators (1):

Basic weighted average common shares outstanding Dilutive effect of stock-based awards Diluted weighted average common shares outstanding

Earnings per share attributable to ExlService Holdings, Inc. stockholders (1):

Basic$ $ $ $ Diluted$ $ $ $ Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share

(1) Prior period information has been adjusted to reflect the -for-1 forward stock split of the Company’s common stock effected in August 2023. Refer to Note 19 – Capital Structure to the unaudited consolidated financial statements for further details.

On March 15, 2024, the Company entered into a master confirmation (the “Master Accelerated Share Repurchase Confirmation”) and a supplemental confirmation (together with the Master Accelerated Share Repurchase Confirmation, the “2024 ASR Agreement”), with Citibank, N.A. (“Citibank”). Refer to Note 19 - Capital Structure to the unaudited consolidated financial statements for further details. During the three months ended March 31, 2024, 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 $ was initially recorded in additional paid-in capital, which reflects the pending settlement of the 2024 ASR Agreement.

Had the 2024 ASR Agreement been settled as of June 30, 2024, determined based on the volume-weighted average price per share since its effective date, Citibank would have been required to deliver additional estimated shares to the Company. The effect of the potential share settlement under the 2024 ASR Agreement was excluded from the computation of diluted earnings per share as its inclusion would have been anti-dilutive.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

$ $ $ Interest and dividend income

Fair value changes of contingent consideration (1)

Others, net () ()Other income, net$ $ $ $

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

$ $ Restricted cash (current) Cash, cash equivalents and restricted cash$ $ $

Restricted cash (current) primarily represents funds held on behalf of customers in dedicated bank accounts. The corresponding liability against the same is included under “Accrued Expenses and other current liabilities.”

$ Term deposits Total Short-term investments$ $ Long-term investmentsTerm deposits$ $

Restricted term deposits (1)

Investment in equity affiliate Total Long-term investments$ $

(1) Restricted term deposits represent deposit with banks against bank guarantees issued through banks in favor of relevant statutory authorities for equipment imports, deposits for obtaining indirect tax registrations and for demands against pending income tax and Value Added Tax (“VAT”) assessments. These deposits with banks will mature one year after the balance sheet date.

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

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

$ Less: Accumulated depreciation and amortization ()()Property, plant and equipment, net $ $

During the three and six months ended June 30, 2024, there were no changes in estimated useful lives of property and equipment during the ordinary course of operations.

$ $ $

Internally developed software costs was as follows:


	As of
	June 30, 2024	December 31, 2023
Cost	$	$
Less : Accumulated amortization	()	()
Internally developed software, net	$	$

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,
	2024	2023	2024	2023
Amortization expense	$	$	$	$

There were indicators of impairment related to long-lived assets as of June 30, 2024 and December 31, 2023.

10.

$ $ $ $ Others Other non-current liabilities$ $

15.

)$ $ $()Losses recognized during the period()() ()

Reclassification to net income (1)

()()

Income tax effects (2)

()() Accumulated other comprehensive income/(loss) as of June 30, 2024$()$ $ $()Balance as of January 1, 2023$()$()$ $()Gains recognized during the period

Reclassification to net income (1)

()

Income tax effects (2)

()()()()Accumulated other comprehensive income/(loss) as of June 30, 2023$()$ $ $()

(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.

(2) These are income tax effects recognized on cash flow hedges, retirement benefits and currency translation adjustments. Refer to Note 22 - Income Taxes to the unaudited consolidated financial statements.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

16.

$ $ $

Mutual funds (2)

Derivative financial instruments Total$ $ $ $ LiabilitiesDerivative financial instruments $ $ $ $ Total$ $ $ $ Quoted Prices in
Active Markets for
Identical AssetsSignificant Other
Observable
InputsSignificant Other
Unobservable
InputsAs of December 31, 2023(Level 1)(Level 2)(Level 3)TotalAssets

Cash equivalents - Money market funds (1)

$ $ $ $

Mutual funds (2)

Derivative financial instruments Total$ $ $ $ LiabilitiesDerivative financial instruments $ $ $ $

Contingent consideration (3)

Total$ $ $ $

(1) Represents money market funds which are carried at the fair value option under ASC Topic 825 “Financial Instruments”.

(2) Represents those short-term investments which are carried at the fair value option under ASC Topic 825 “Financial Instruments”.

(3) Contingent consideration is presented under “Accrued Expenses and Other Current Liabilities” and “Other Non-Current Liabilities,” as applicable, in the consolidated balance sheets.

Fair Value of Derivative Financial Instruments:

The Company’s derivative financial instruments consist of foreign currency forward contracts and interest rate swaps. Fair values for derivative financial instruments are based on independent sources including highly rated financial institutions and are classified as Level 2. Refer to Note 17 - Derivatives and Hedge Accounting to the unaudited consolidated financial statements for further details.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

$ $ $ Fair value changes () Payments ()()()Closing balance$ $ $ $

During the three and six months ended June 30, 2024 and 2023, 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 approximates its fair value because the Company’s interest rate yield is near current market rates for comparable debt instruments.

17.

Sell U.K. pound sterling (GBP) Interest rate swaps (Floating to fixed) denominated in:USD

The Company estimates that approximately $ of derivative gains, net, excluding tax effects, included in AOCI, representing changes in the value of cash flow hedges based on exchange rates prevailing as of June 30, 2024, could be reclassified into earnings within the next twelve months. As of June 30, 2024, the maximum outstanding term of the cash flow hedges was approximately months.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

Sell GBP Sell EUR Sell AUD Buy USD

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

Derivatives in cash flow hedging
relationships

Derivatives not designated as hedging
instruments

As of

June 30, 2024

December 31, 2023

June 30, 2024

December 31, 2023

Assets:

Other current assets

Other assets

Liabilities:

Accrued expenses and other
current liabilities

Other non-current liabilities

)$ $()$ Gain/(loss) recognized in unaudited consolidated statements of incomeDerivatives not designated as hedging instruments$()$()$()$

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

$()$ $()General and administrative expenses$ $ ()Selling and marketing expenses$ $ ()Depreciation and amortization expense$ ()$ ()Interest expense$ $ Total before tax()()Income tax effects on above() Net of tax$()$()Derivatives not designated as hedging instrumentsLocation in unaudited consolidated statements of income where gain/(loss) was recognizedForeign exchange gain/(loss), net$ $()$ $()$ $()$ $()

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

18.

Letters of Credit

In the ordinary course of business, the Company provides standby letters of credit to third parties primarily for facility leases. As of each of June 30, 2024 and December 31, 2023, the Company had outstanding letters of credit of $, that were not recognized in the consolidated balance sheets.

19.

class of common stock outstanding.

Forward Stock Split

On June 20, 2023, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation, which upon filing with the State of Delaware on August 1, 2023, and effectiveness thereof, effected a -for-1 forward stock split of the Company’s common stock (the “2023 Stock Split”) and an increase in the number

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

shares to shares. The par value of each share of common stock, $, remained unchanged.

Pursuant to the 2023 Stock Split, each stockholder of record on July 25, 2023 holding shares of the Company’s common stock received additional shares of the Company’s common stock for every one share held. The additional shares were distributed after the close of business on August 1, 2023. The common shares began trading on the Nasdaq Global Select Market on a post-split basis on August 2, 2023.

All share count and per share amounts in the unaudited consolidated financial statements have been retrospectively adjusted from January 1, 2023 to reflect the 2023 Stock Split as if it occurred at the beginning of the earliest period presented. An amount equal to the par value of the increased shares resulting from the 2023 Stock Split was reclassified from “Additional paid-in capital” to “Common stock.”

Share Repurchases

$ $ Three months ended June 30, 2023$ $ Six months ended June 30, 2024$ $ Six months ended June 30, 2023$ $

(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 shares of restricted stock.

On October 5, 2021, the Company’s board of directors authorized a $ (excluding excise tax) common stock repurchase program beginning January 1, 2022 (the “2022 Repurchase Program”).

On February 26, 2024, the Company’s board of directors authorized a $ (excluding excise tax) common stock repurchase program beginning March 1, 2024 (the “2024 Repurchase Program”), and terminated the 2022 Repurchase Program on February 29, 2024.

On March 15, 2024, the Company entered into a 2024 ASR Agreement with Citibank to repurchase shares of its common stock for an aggregate purchase price of $, as part of the Company’s 2024 Repurchase Program. Upon payment of the aggregate purchase price of $, the Company received an initial delivery of shares of its common stock at an initial price of $ per share, representing % of the aggregate purchase price. The Company funded the repurchase with available cash on hand and borrowing from its revolving credit facility. The 2024 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 2024 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 prices of the Common Stock during the term of the 2024 ASR Agreement, less a discount and subject to adjustments pursuant to the terms and conditions of the 2024 ASR Agreement. At final settlement, Citibank may be required to deliver additional shares of Common Stock to the Company, or, under certain circumstances, the Company may be required to make a cash payment or deliver shares of Common Stock, at its election, to Citibank.

On July 19, 2024, upon final settlement of the 2024 ASR Agreement, the Company received additional shares of its common stock based on a daily volume-weighted average price of $ per share during the term of the 2024 ASR Agreement. The additional shares received were subsequently recorded as treasury stock.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

repurchase programs, 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.

repurchase programs, as below:

Shares repurchased

Total consideration

Weighted average purchase price per share

Three months ended June 30, 2024

Three months ended June 30, 2023

Six months ended June 30, 2024

Six months ended June 30, 2023

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, effective January 1, 2023, 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 $ and $, respectively, on repurchase of common stock as a part of cost of such repurchases for the three and six months ended June 30, 2024.

20.

% per annum on the India Plan for the year ending on December 31, 2024.

Actual return Employer contribution Benefits paid()Currency translation adjustments()

Plan assets as of June 30, 2024

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

$ $ $ Interest cost Expected return on plan assets()()()()Amortization of actuarial (gain)/loss, gross of tax()()()()Net gratuity cost$ $ $ $ Amortization of actuarial (gain)/loss, gross of tax$()$()$()$()Income tax effects on above()()()()Amortization of actuarial (gain)/loss, net of tax$()$()$()$()

The Company maintains several 401(k) plans (the “401(k) Plans”) under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), covering all eligible employees, as defined in the Code as a defined contribution plan. The Company may make discretionary contributions of up to a maximum of % of employee compensation within certain limits.

$ $ $

Contributions to the defined contribution plans on behalf of employees in foreign subsidiaries of the Company

$ $ $ $

21.

$ $ $ Interest on lease liabilities

Operating lease (1)

Variable lease costs Total lease cost$ $ $ $

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

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

$ Operating cash outflows for finance leases$$ Financing cash outflows for finance leases$$ ROU assets obtained in exchange for new operating lease liabilities$$ ROU assets obtained in exchange for new finance lease liabilities$$ Weighted average remaining lease term (in years)Finance lease years yearsOperating lease years yearsWeighted average discount rateFinance lease % %Operating lease % %

As part of the Company’s efforts to optimize its existing network of operations centers, the Company continued to evaluate its office facilities to determine where it can exit or consolidate its use of office space. The Company modified certain of its operating leases, resulting in an increase of its lease liabilities by $ and a decrease of its lease liabilities by $, during the six months ended June 30, 2024 and 2023, respectively, with a corresponding adjustment to ROU assets.

As of June 30, 2024 and December 31, 2023, the Company did not have any significant leases that have not yet commenced but that create significant rights and obligations for the Company.

$ 2025 2026 2027 2028 2029 and thereafter Total lease payments Less: Imputed interest Present value of lease liabilities$ $

22.

% during the three months ended June 30, 2023 to % during the three months ended June 30, 2024. The Company recorded income tax expense of $ and $ for the three months ended June 30, 2024 and 2023, respectively. The decrease in income tax expense was primarily as a result of lower profit during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, partially offset by higher credits during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

% during the six months ended June 30, 2023 to % during the six months ended June 30, 2024. The Company recorded income tax expense of $ and $ for the six months ended June 30, 2024 and 2023, respectively. The increase in income tax expense was primarily as a result of lower excess tax benefits related to stock-based compensation during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, and an increase in non-deductible expenses, partially offset by lower profit during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

During the six months ended June 30, 2024, the Company’s subsidiaries in India repatriated $ (net of $ withholding taxes) to the United States.

)$()$()$()Reclassification adjustment for cash flow hedges () ()Reclassification adjustment for retirement benefits()()()()Currency translation adjustments ()Total$()$()$ $()

23.

$ $ $ General and administrative expenses Selling and marketing expenses Total$ $ $ $

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

$()$ $()$

(1) Includes $ and $ during the three months ended June 30, 2024 and 2023, respectively, and $ and $ during the six months ended June 30, 2024 and 2023, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No. 2016-09, Compensation - Stock Compensation.

As of June 30, 2024 and December 31, 2023, the Company had and shares, respectively, available for grant under the 2018 Omnibus Incentive Plan.

Stock Options

During the three and six months ended June 30, 2024, there was no stock option activity under the Company’s stock-based compensation plans. The number of stock options that were unvested as of June 30, 2024 and December 31, 2023 were and units, respectively. The number of stock options that were vested and exercisable as of June 30, 2024 and December 31, 2023 were and units, respectively.

As of June 30, 2024, unrecognized compensation cost of $ is expected to be expensed over a weighted average period of years.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

$ Granted Vested() Forfeited Outstanding as of June 30, 2024* $

* As of June 30, 2024 and December 31, 2023 restricted stock units vested for which the underlying common stock is yet to be issued are and , respectively.

As of June 30, 2024, unrecognized compensation cost of $ is expected to be expensed over a weighted average period of years.

Restricted Stock Units

$ Granted Vested() Forfeited() Outstanding as of June 30, 2024* $

* As of June 30, 2024 and December 31, 2023 restricted stock units vested for which the underlying common stock is yet to be issued are and , respectively.

As of June 30, 2024, unrecognized compensation cost of $ is expected to be expensed over a weighted average period of years.

Performance Based Stock Awards

Under the 2018 Plan, the Company grants performance-based restricted stock units (“PRSUs”) to executive officers and other specified employees. During the six months ended June 30, 2024, the Company granted % of each award recipient’s equity grants in the form of PRSUs that cliff vest at the end of a period based on an aggregated revenue target for a period. The remaining % 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 the 2018 Plan, and are measured over a performance period.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

June 30, 2024

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

$ $ Granted Vested Forfeited() () Outstanding as of June 30, 2024 $ $

As of June 30, 2024, unrecognized compensation cost of $ is expected to be expensed over a weighted average period of years.

Employee Stock Purchase Plan

On June 21, 2022, at the annual meeting of stockholders of the Company, the Company’s stockholders approved the ExlService Holdings, Inc. 2022 Employee Stock Purchase Plan (the “2022 ESPP”).

The 2022 ESPP allows eligible employees to purchase the Company’s shares of common stock through payroll deductions at a pre-specified discount to the lower of closing price of the Company’s common shares on the date of offering or the last business day of each purchase interval. The dollar amount of shares of common stock that can be purchased under the 2022 ESPP must not exceed % of the participating employee’s compensation during the offering period, subject to a cap of $ per employee per calendar year. The Company has reserved shares of common stock for issuance under the 2022 ESPP.

The fourth offering period under the 2022 ESPP commenced on January 1, 2024 with a term of .

Issuance of common stock related to the:Third offering period$ Shares available for issuance as of June 30, 2024Issuance of common stock related to the fourth offering
period made subsequent to June 30, 2024$

24.

and $, respectively, related to this service contract. During the six months ended June 30, 2024 and 2023, the Company recognized revenues, net of $ and $, respectively, related to this service contract. The Company had outstanding accounts receivable, net of $ and $, related to this service contract as of June 30, 2024 and December 31, 2023, respectively.

In February 2024, the Company entered into a service contract for providing analytics services to Corridor Platforms, Inc., which is an equity affiliate of the Company. During the three and six months ended June 30, 2024, the Company recognized revenues, net of $ and $, respectively, related to this service contract. The Company had outstanding accounts receivable, net of $ related to this service contract as of June 30, 2024.

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EXLSERVICE HOLDINGS, INC.

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June 30, 2024

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

25.

under agreements to purchase property and equipment. This amount is net of capital advances paid which are recognized in unaudited consolidated balance sheets as “Capital work in progress” under “Property and equipment.”

On June 15, 2023, the Company, along with other limited partners, entered into a limited partnership agreement with the general partner, PNP Financial Services Fund GP I, LLC and initial limited partner and outgoing partner, to form a partnership with the name Plug and Play Financial Services Fund I, L.P. (the “Partnership”) for the primary purpose of making investments in growth-stage technology companies. Subsequent to June 30, 2024, the Company further invested $ in the Partnership and is committed under the Partnership to make further investments up to an amount of $.

Other Commitments

Certain units of the Company’s Indian subsidiaries were established as % Export-Oriented units or under the Software Technology Parks of India or Special Economic Zone scheme promulgated by the Government of India. These units are exempt from customs, central excise duties, and levies on imported and indigenous capital goods, stores, and spares. The Company has undertaken to pay custom duties, service taxes, levies, and liquidated damages payable, if any, in respect of imported and indigenous capital goods, stores and spares consumed duty free, in the event that certain terms and conditions are not fulfilled. The Company believes, however, that these units have in the past satisfied, and will continue to satisfy, the required conditions.

The Company’s operations centers in the Philippines are registered as qualified Philippines Economic Zone Authority units, which provides the Company fiscal incentives on the import of capital goods and local purchase of services and materials. The Company is required to meet certain requirements to retain the incentives. The Company has complied, and intends to continue compliance, with the requirements to avail itself of the incentives.

Contingencies

The transfer pricing regulations in the countries where the Company operates require that controlled intercompany transactions be at arm’s-length. Accordingly, the Company determines and documents pricing for controlled intercompany transactions based on an economic analysis as prescribed in the respective regulations. The tax authorities have jurisdiction to review the Company’s transfer pricing. If the Company’s transfer pricing is challenged by the authorities, they could assess additional tax, interest and penalties, thereby impacting the Company’s profitability and cash flows.

The Company is currently involved in transfer pricing and related income tax disputes with Indian tax authorities. The aggregate amount demanded by Indian tax authorities (net of advance payments) as of June 30, 2024 and December 31, 2023 is $ and $, respectively. The Company has made payments and/or provided bank guarantees against these demands in the amounts of $ and $, as of June 30, 2024 and December 31, 2023, 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.

India’s VAT regime ended in June 2017 and was replaced by the current Goods and Service Tax (“GST”) regime. Pursuant to reviewing the Company’s annual VAT filings, the Indian tax authorities raised aggregate VAT demands for tax years 2015 and 2017, in the amounts of $ and $, as of June 30, 2024 and December 31, 2023, respectively. The Company has provided bank guarantees against these demands in the amounts of $ and $, as of June 30, 2024 and December 31, 2023, respectively. The GST authorities rejected the Company’s refunds claims in the amounts of $ and $ as of June 30, 2024 and December 31, 2023, 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 provision was recognized as of June 30, 2024 and December 31, 2023, 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 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

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EXLSERVICE HOLDINGS, INC.

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June 30, 2024

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

26.

% of the Company’s global workforce.

The restructuring costs include costs in relation to employee severance and other associated costs including legal fees and outplacement support costs. These costs have been recognized under cost of revenues (across all reporting segments), general & administrative and selling & marketing expenses in the unaudited consolidated statements of income.

$ $ Costs incurred during the period Payments made during the period Balance as of June 30, 2024$ $ $

27.

% of the equity securities of Incandescent Technologies, Inc., a Delaware Corporation (“ITI”) for cash consideration of $, subject to certain post-closing adjustments and contingent consideration of $, based on the achievement of certain performance goals by ITI during the ending July 31, 2026. ITI is a data management solutions firm servicing primarily Global 1000 companies in the banking, financial services and healthcare industries.

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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, 2023. Some of the statements in the following discussion are forward looking statements.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include but are not limited to:

•our ability to maintain and grow client demand for our services and solutions, including anticipating and incorporating the latest technologies, for instance, artificial intelligence (“AI”), including generative AI into our offerings;

•impact on client demand by the selling cycle and terms of our client contracts;

•fluctuations in our earnings;

•our ability to hire and retain enough sufficiently trained employees to support our operations or any changes in the senior management team;

•our ability to accurately estimate and/or manage costs;

•our ability to adjust our pricing terms or effectively manage our asset utilization levels to meet the changing demands of our clients and potential clients;

•cyber security incidents, data breaches, or other unauthorized disclosure of sensitive or confidential client and employee data;

•reliance on third parties to deliver services and infrastructure for client critical services;

•employee wage increases;

•failure to protect our intellectual property;

•our dependence on a limited number of clients in a limited number of industries and our ability to withstand the loss of a significant client;

•our ability to grow our business or effectively manage growth and international operations;

•our ability to successfully consummate or integrate strategic acquisitions including the impact from the impairment of goodwill and other intangible assets, if any;

•legal liability arising out of customer and third party contracts;

•increasing competition in our industry;

•telecommunications or technology disruptions or breaches, natural or other disasters, medical epidemics or pandemics, such as COVID-19, or acts of violence or war;

•operational and information security failures arising as a result of remote work solutions adopted due to COVID-19;

•adverse outcome of our disputes with the tax authorities in the geographies where we operate;

•the introduction of new or unfavorable tax legislation, including legal restrictions on repatriation of funds held abroad;

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•exposure to currency exchange rate fluctuations in the various currencies in which we do business including the potential effects of Russian-Ukraine and Israel-Hamas conflicts, rising inflation, high interest rates and economic recessionary trends on currency exchange rates;

•restrictions on immigration;

•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 favorable terms. Inception of interest rate swaps to hedge interest rate risk;

•negative public reaction in the U.S. or elsewhere to offshore outsourcing;

•effects of political and economic conditions globally, particularly in the geographies where we operate;

•our ability to make accurate estimates and assumptions in connection with the preparation of our consolidated financial statements;

•credit risk fluctuations in the market values of our investment and derivatives portfolios; and

•our ability to meet our sustainability-related goals and targets.

These and other factors are more fully discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. 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 leading data analytics and digital operations and solutions company. We partner with clients using a data and AI-led approach to reinvent business models, drive better business outcomes and unlock growth with speed. We harness the power of data, analytics, AI, and deep industry knowledge to transform operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media and retail, among others.

We deliver data analytics and digital operations and solutions to our clients, driving enterprise-scale business transformation initiatives that leverage our deep expertise in advanced analytics, AI, generative AI and cloud technology. We manage and report financial information through our four strategic business units: Insurance, Healthcare, Analytics and Emerging Business, which reflects how management reviews financial information and makes operating decisions.

Our reportable segments are as follows:

•Insurance,

•Healthcare,

•Analytics, and

•Emerging Business

Our global delivery network, which includes highly trained industry and process specialists across the United States, the United Kingdom, Latin America, South Africa, Europe and Asia (primarily India and the Philippines), is a key asset. We have operations centers in India, the United States, the Philippines, South Africa, Colombia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and the Republic of Ireland.

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Revenues

For the three months ended June 30, 2024, we generated revenues of $448.4 million compared to revenues of $405.0 million for the three months ended June 30, 2023, an increase of $43.4 million, or 10.7%. For the six months ended June 30, 2024, we generated revenues of $884.9 million compared to revenues of $805.6 million for the six months ended June 30, 2023, an increase of $79.3 million, or 9.8%.

We serve clients mainly in the United States and the United Kingdom, with these two regions generating 82.7% and 11.8%, respectively, of our total revenues for the three months ended June 30, 2024, and 84.1% and 10.8%, respectively, of our total revenues for the three months ended June 30, 2023. For the six months ended June 30, 2024, these two regions generated 82.8% and 11.7%, respectively, of our total revenues and 84.4% and 10.6%, respectively, of our total revenues for the six months ended June 30, 2023.

For the three months ended June 30, 2024 and 2023, our total revenues from our top ten clients accounted for 33.0% and 33.8% of our total revenues, respectively. For the six months ended June 30, 2024 and 2023, our total revenues from our top ten clients accounted for 32.9% and 34.3% of our total revenues, respectively. Although we continue to develop relationships with new clients to diversify our client base, we believe that the loss of any of our top ten clients could have a material adverse effect on our financial performance.

Our Business

We provide data analytics and digital operations and solutions to our clients. We market our services to our existing and prospective clients through our sales and client management teams, which are aligned by key industry verticals and cross-industry domains such as finance and accounting. Our sales and client management teams operate primarily from the United States, Europe and Australia.

Digital Operations and Solutions: We provide our clients with a range of data and AI-led digital operations and solutions from our Insurance, Healthcare and Emerging Business strategic business units, which are focused on solving complex industry challenges, which include: a) multi-modal data ingestion using AI, and converting unstructured content into curated and usable data, b) real-time and comprehensive data insights including end-to-end data management and building a 360-degree view of our clients’ customers, c) omni-channel and frictionless customer experience including self-service, conversational AI and smart agent assist, d) intelligent and AI-powered redesign and automation of transaction processing and e) automated quality, compliance and audit. Some of our clients’ operations that we have transformed using the above solutions include underwriting operations, claims processing, accounts payables processing, utilization management, member and provider contact center services and collections and accounts receivable. We either manage and digitally transform these operations for our clients by deploying our solutions through a software-as-a-service model via our partners’ cloud network or a client’s on-cloud deployment model, to digitally transform their retained operations. For a portion of our digital operations and solutions, we hire and train employees to work at our operations centers on the relevant business operations, implement a process migration to these operations centers and then provide services either to the client or directly to the client’s customers. Each client contract has different terms based on the scope, deliverables and complexity of the engagement. We also provide consulting services related to digital operations and solutions that include industry-specific digital transformational services as well as cross-industry finance and accounting services as part of the Emerging Business strategic business unit.

We provide our services under contracts with our clients, which typically have terms of three or more years, with some being contracts with no end dates. These contracts provide us with a relatively predictable revenue base for a substantial portion of our digital operations and solutions business. However, our clients can typically terminate these contracts with or without cause and with short notice periods. We have a long selling cycle for our services and the budget and approval processes of prospective clients make it difficult to predict the timing of entering into definitive agreements with new clients. Similarly, new license sales and implementation projects for our technology service platforms and other software-based services have a long selling cycle, however ongoing annual maintenance and support contracts for existing arrangements provide us with a relatively predictable revenue base.

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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 pricing models. Outcome-based pricing arrangements are examples of non-linear pricing models where clients link revenues from platforms and solutions and the services we provide to usage or savings rather than the efforts deployed 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.

We have also observed that prospective larger clients are entering into multi-vendor relationships with regard to their digital operations and solutions needs to seek more favorable contract terms and diversification of the risk of concentration on a few vendors. We believe that the trend toward multi-vendor relationships will continue. A multi-vendor relationship allows a client to seek more favorable pricing and other contract terms from each vendor, which can result in significantly reduced gross margins from the provision of services to such client for each vendor. To the extent our large clients expand their use of multi-vendor relationships and are able to extract more favorable contract terms from other vendors, our gross margins and revenues may be reduced with regard to such clients if we are required to modify the terms of our relationships with such clients to meet competition.

Analytics: Our analytics services aim to drive better business outcomes for our clients by unlocking deep insights from data and creating data and AI-led solutions across all parts of our clients’ business. We provide care optimization and reimbursement optimization services for our clients through our healthcare analytics solutions and services. We also offer integrated solutions to help our clients in cost containment by leveraging technology platforms, customizable and configurable analytics and expertise in healthcare reimbursements to help clients enhance their claim payment accuracy. Our Analytics teams deliver predictive and prescriptive analytics in the areas of customer acquisition and life cycle management, risk underwriting and pricing, operational effectiveness, credit and operational risk monitoring and governance, regulatory reporting and data management. We enhance, modernize and enrich structured and unstructured data and use a spectrum of advanced analytical tools and techniques, including our in-house and third-party AI, generative AI, and ML capabilities and proprietary solutions to create insights, improve decision making for our clients and address a range of complex industry-wide priorities. We actively cross-sell and, where appropriate, integrate our analytics services with other digital operations and solutions as part of a comprehensive offering for our clients. Our project-based analytics services are cyclical and can be significantly affected by variations in business cycles. In addition, our project-based analytics services are documented in contracts with terms generally not exceeding one year and may not produce ongoing or recurring business for us once the project is completed. These contracts also usually contain provisions permitting termination of the contract after a short notice period. The short-term nature and specificity of these projects could lead to fluctuations and uncertainties in the revenues generated from providing analytics services.

We anticipate that revenues from our analytics services will grow as we expand our service offerings and client base, both organically and through acquisitions.

Income Taxes

The Organization for Economic Cooperation and Development, issued a Pillar II model for implementing a 15% global minimum tax effective January 1, 2024. The application of the rules relating to Pillar II continue to evolve, and there are countries that are still in the process of issuing attendant rules and regulations, including available transitional safe harbor rules. The two countries where we operate but do not meet the available safe harbor rules are the Republic of Ireland and the Philippines. The Pillar II impacts for the Republic of Ireland and the Philippines are not significant and have been properly reflected in our financial statements. We will continue to monitor Pillar II developments and assess any future impacts.

Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies and estimates during the three and six months ended June 30, 2024, as compared to the critical accounting policies and estimates referred in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Critical Accounting Policies and Estimates” and Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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Results of Operations

The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023:


									(dollars in millions)
	Three months ended June 30, 2024		Percentage of Revenues, net		Three months ended June 30, 2023		Percentage of Revenues, net		Dollar Change		Percentage Change
	(A)				(B)				(C=A-B)
Revenues, net	$	448.4	100.0	%	$	405.0	100.0	%	$	43.4	10.7	%
Cost of revenues (1)	282.1		62.9	%	253.2		62.5	%	28.9		11.4	%
Gross profit (1)	166.3		37.1	%	151.8		37.5	%	14.5		9.5	%
Operating expenses:
General and administrative expenses	56.5		12.6	%	45.6		11.3	%	10.9		23.8	%
Selling and marketing expenses	35.4		7.9	%	28.2		7.0	%	7.2		25.5	%
Depreciation and amortization expense	12.9		2.9	%	13.1		3.2	%	(0.2)		(1.6)	%

Total operating expenses	104.8		23.4	%	86.9		21.5	%	17.9		20.5	%
Income from operations	61.5		13.7	%	64.9		16.0	%	(3.4)		(5.2)	%
Foreign exchange gain, net	—		—	%	0.3		0.1	%	(0.3)		(88.7)	%
Interest expense	(5.3)		(1.2)	%	(3.2)		(0.8)	%	(2.1)		64.4	%
Other income, net	3.5		0.8	%	2.6		0.7	%	0.9		33.4	%

Income before income tax expense and earnings from equity affiliates	59.7		13.3	%	64.6		15.9	%	(4.9)		(7.5)	%
Income tax expense	13.9		3.1	%	15.5		3.8	%	(1.6)		(10.8)	%
Income before earnings from equity affiliates	45.8		10.2	%	49.1		12.1	%	(3.3)		(6.6)	%
Gain from equity-method investment	—		—	%	—		—	%	—		—	%
Net income attributable to ExlService Holdings, Inc. stockholders	$	45.8	10.2	%	$	49.1	12.1	%	$	(3.3)	(6.6)	%

(1) Exclusive of depreciation and amortization expense.

Due to rounding, the numbers presented in the tables included in this Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may not add up precisely to the totals provided.

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Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Revenues.

The following table summarizes our revenues by reportable segments:


	Three months ended June 30,						Percentage change		Percentage of Total Revenues for the three months ended
	2024		2023		Dollar Change				2024		2023
	(dollars in millions)
Insurance	$	149.3	$	128.5	$	20.8	16.2	%	33.3	%	31.7	%
Healthcare	28.1		27.2		0.9		3.5	%	6.3	%	6.7	%
Emerging Business	77.2		67.1		10.1		14.9	%	17.2	%	16.6	%
Analytics	193.8		182.2		11.6		6.4	%	43.2	%	45.0	%
Total revenues, net	$	448.4	$	405.0	$	43.4	10.7	%	100.0	%	100.0	%

Revenues for the three months ended June 30, 2024 were up by $43.4 million, or 10.7%, compared to the three months ended June 30, 2023, driven primarily by revenue growth from our new and existing clients in the Insurance, Emerging Business and Analytics reportable segments.

Revenue growth in Insurance of $20.8 million was primarily driven by expansion of business from our new and existing clients of $20.8 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Revenue growth in Healthcare of $0.9 million was primarily driven by expansion of business from our existing clients of $1.6 million, partially offset by lower revenues associated with the ramp-down of certain existing clients of $0.7 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Revenue growth in Emerging Business of $10.1 million was primarily driven by expansion of business from our new and existing clients of $10.1 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Revenue growth in Analytics of $11.6 million was primarily driven by higher volumes in our annuity and project-based engagements from our new and existing clients of $11.6 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Cost of Revenues and Gross Margin: The following table sets forth cost of revenues and gross margin of our reportable segments:


	Cost of Revenues								Gross Margin
	Three months ended June 30,				Dollar Change		Percentage change		Three months ended June 30,				Percentage Change
	2024		2023						2024		2023
	(dollars in millions)
Insurance	$	95.5	$	84.3	$	11.2	13.3	%	36.0	%	34.4	%	1.6	%
Healthcare	18.8		17.6		1.2		7.2	%	33.1	%	35.4	%	(2.3)	%
Emerging Business	45.1		37.8		7.3		19.1	%	41.6	%	43.7	%	(2.1)	%
Analytics	122.7		113.5		9.2		8.1	%	36.7	%	37.7	%	(1.0)	%
Total	$	282.1	$	253.2	$	28.9	11.4	%	37.1	%	37.5	%	(0.4)	%

Cost of revenues for the three months ended June 30, 2024 increased by $28.9 million, or 11.4% compared to the three months ended June 30, 2023. The increase in cost of revenues was primarily due to increases in employee-related costs including restructuring costs and technology costs, partially offset by foreign exchange gain, net of hedging. Our gross margin for the three months ended June 30, 2024 was 37.1%, compared to 37.5% for the three months ended June 30, 2023, a decrease

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of 40 basis points (“bps”) primarily driven by the impact of restructuring costs of 70 bps, partially offset by higher revenues during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

The increase in cost of revenues in Insurance of $11.2 million for the three months ended June 30, 2024 was primarily due to increases in employee-related costs of $10.7 million on account of higher headcount, restructuring costs and wage inflation, higher technology costs of $1.2 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model and higher other operating costs of $1.1 million, partially offset by foreign exchange gain, net of hedging of $1.8 million. Gross margin in Insurance increased by 160 bps during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to higher revenues and operational efficiencies during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

The increase in cost of revenues in Healthcare of $1.2 million for the three months ended June 30, 2024 was primarily due to increases in employee-related costs of $1.8 million on account of higher headcount and wage inflation, partially offset by foreign exchange gain, net of hedging of $0.6 million. Gross margin in Healthcare decreased by 230 bps during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to lower revenues associated with the ramp-down of certain existing clients and higher operating expenses during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

The increase in cost of revenues in Emerging Business of $7.3 million for the three months ended June 30, 2024 was primarily due to increases in employee-related costs of $7.6 million on account of higher headcount, restructuring costs and wage inflation and higher technology costs of $0.8 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model, partially offset by foreign exchange gain, net of hedging of $1.1 million. Gross margin in Emerging Business decreased by 210 bps during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to investment in ramp-ups in certain new and existing clients during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

The increase in cost of revenues in Analytics of $9.2 million for the three months ended June 30, 2024 was primarily due to increases in employee-related costs of $7.6 million on account of higher headcount, restructuring costs and wage inflation and higher technology costs of $2.0 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model, partially offset by lower other operating costs of $0.4 million. Gross margin in Analytics decreased by 100 bps during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to the impact of restructuring costs of 120 bps, partially offset by higher revenues during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Selling, General and Administrative (“SG&A”) Expenses.


	Three months ended June 30,				Dollar Change		Percentage change
	2024		2023
	(dollars in millions)
General and administrative expenses	$	56.5	$	45.6	$	10.9	23.8	%
Selling and marketing expenses	35.4		28.2		7.2		25.5	%
Selling, general and administrative expenses	$	91.9	$	73.8	$	18.1	24.5	%

The increase in SG&A expenses of $18.1 million was primarily due to increases in employee-related costs of $8.5 million on account of higher headcount and wage inflation, higher investments in digital and generative AI capabilities of $4.4 million, higher sales and marketing spend of $1.4 million, restructuring costs, litigation settlement costs and associated legal fees of $3.1 million and higher other operating costs of $1.2 million. This was partially offset by foreign exchange gain, net of hedging of $0.5 million, during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

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Depreciation and Amortization.


	Three months ended June 30,				Dollar Change		Percentage change
	2024		2023
	(dollars in millions)
Depreciation expense	$	9.8	$	8.9	$	0.9	10.3	%
Intangible amortization expense	3.1		4.2		(1.1)		(26.8)	%
Depreciation and amortization expense	$	12.9	$	13.1	$	(0.2)	(1.6)	%

The increase in depreciation expense of $0.9 million was primarily due to investments in digital capabilities, computers and networking equipment during the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease in intangibles amortization expense of $1.1 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023 was primarily due to end of useful lives for certain intangible assets.

Income from Operations. Income from operations decreased by $3.4 million, or 5.2%, from $64.9 million for the three months ended June 30, 2023 to $61.5 million for the three months ended June 30, 2024, primarily due to higher SG&A expenses, partially offset by higher revenues during the three months ended June 30, 2024.

Foreign Exchange Gain, net. Foreign exchange gains and losses are primarily attributable to the movement of the U.S. dollar against the Indian rupee, the Philippine peso, the U.K. pound sterling and the South African rand during the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The average exchange rate of the U.S. dollar against the Indian rupee increased from 82.20 during the three months ended June 30, 2023 to 83.42 during the three months ended June 30, 2024. The average exchange rate of the U.S. dollar against the Philippine peso increased from 55.58 during the three months ended June 30, 2023 to 58.29 during the three months ended June 30, 2024. The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.25 during the three months ended June 30, 2023 to 1.26 during the three months ended June 30, 2024. The average exchange rate of the U.S. dollar against the South African rand decreased from 19.02 during the three months ended June 30, 2023 to 18.53 during the three months ended June 30, 2024.

We recorded a foreign exchange gain, net of $0.3 million for the three months ended June 30, 2023 compared to a foreign exchange gain, net of $nil for the three months ended June 30, 2024.

Interest expense. Interest expense increased from $3.2 million for the three months ended June 30, 2023 to $5.3 million for the three months ended June 30, 2024, primarily due to a higher average outstanding balance under our revolving credit facility and a higher effective interest rate of 6.5% during the three months ended June 30, 2024, compared to 6.2% during the three months ended June 30, 2023.

Other Income, net.


	Three months ended June 30,				Change		Percentage change
	2024		2023
	(dollars in millions)
Gain on sale and mark-to-market on investments	$	1.2	$	1.1	$	0.1	6.1	%
Interest and dividend income	2.4		1.7		0.7		43.7	%
Other, net	(0.1)		(0.2)		0.1		(114.9)	%
Other income, net	$	3.5	$	2.6	$	0.9	33.4	%

Other income, net increased by $0.9 million, from $2.6 million for the three months ended June 30, 2023 to $3.5 million for the three months ended June 30, 2024. The increase is primarily due to higher yield on our investments of $0.8 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

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Income Tax Expense. The effective tax rate decreased from 24.1% during the three months ended June 30, 2023 to 23.2% during the three months ended June 30, 2024. We recorded income tax expense of $13.9 million and $15.6 million for the three months ended June 30, 2024 and 2023, respectively. The decrease in income tax expense was primarily as a result of lower profit during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, partially offset by higher credits during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Net Income. Net income decreased from $49.1 million for the three months ended June 30, 2023 to $45.8 million for the three months ended June 30, 2024, primarily due to a decrease in income from operations of $3.4 million, higher interest expense of $2.1 million and lower foreign exchange gain, net of $0.3 million, partially offset by a lower income tax expense of $1.6 million and higher other income, net of $0.9 million.

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Results of Operations

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:


									(dollars in millions)
	Six months ended June 30, 2024		Percentage of Revenues, net		Six months ended June 30, 2023		Percentage of Revenues, net		Dollar Change		Percentage Change
	(A)				(B)				(C=A-B)
Revenues, net	$	884.9	100.0	%	$	805.6	100.0	%	$	79.3	9.8	%
Cost of revenues (1)	555.5		62.8	%	504.7		62.6	%	50.8		10.1	%
Gross profit (1)	329.4		37.2	%	300.9		37.4	%	28.5		9.4	%
Operating expenses:
General and administrative expenses	109.7		12.4	%	92.3		11.5	%	17.4		18.8	%
Selling and marketing expenses	71.4		8.1	%	57.7		7.2	%	13.7		23.7	%
Depreciation and amortization expense	25.3		2.9	%	26.6		3.3	%	(1.3)		(5.1)	%

Total operating expenses	206.4		23.3	%	176.6		21.9	%	29.8		16.8	%
Income from operations	123.0		13.9	%	124.3		15.4	%	(1.3)		(1.0)	%
Foreign exchange gain, net	0.4		—	%	0.4		0.1	%	—		(7.8)	%
Interest expense	(8.6)		(1.0)	%	(6.6)		(0.8)	%	(2.0)		30.1	%
Other income, net	7.4		0.8	%	5.8		0.7	%	1.6		29.0	%

Cost of revenues for the six months ended June 30, 2024 increased by $50.8 million, or 10.1%, compared to the six months ended June 30, 2023. The increase in cost of revenues was primarily due to increases in employee-related costs including restructuring costs and technology costs, partially offset by foreign exchange gain, net of hedging. Our gross margin for the six months ended June 30, 2024 was 37.2% compared to 37.4% for the six months ended June 30, 2023, a decrease of 20 bps primarily driven by the impact of restructuring costs of 30 bps, partially offset by higher revenues and operational efficiencies during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

The increase in cost of revenues in Insurance of $21.2 million for the six months ended June 30, 2024 was primarily due to increases in employee-related costs of $19.5 million on account of higher headcount, restructuring costs and wage inflation, higher technology costs of $2.5 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model and higher other operating costs of $2.6 million, partially offset by foreign exchange gain, net of hedging of $3.4 million. Gross margin in Insurance increased by 170 bps during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to higher revenues and operational efficiencies during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

The decrease in cost of revenues in Healthcare of $0.3 million for the six months ended June 30, 2024 was primarily due to foreign exchange gain, net of hedging of $0.8 million, lower facilities costs of $0.6 million resulting from optimization of office space and lower other operating costs of $0.3 million, partially offset by increases in employee-related costs of $1.4 million on account of higher headcount and wage inflation. Gross margin in Healthcare increased by 100 bps during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to higher revenues and operational efficiencies during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

The increase in cost of revenues in Emerging Business of $12.3 million for the six months ended June 30, 2024 was primarily due to increases in employee-related costs of $12.7 million on account of higher headcount, restructuring costs and wage inflation, higher technology costs of $1.1 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model and higher other operating costs of $0.5 million, partially offset by foreign exchange gain, net of hedging of $2.0 million. Gross margin in Emerging Business decreased by 140 bps during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to investment in ramp-ups in certain new and existing clients during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

The increase in cost of revenues in Analytics of $17.6 million for the six months ended June 30, 2024 was primarily due to increases in employee-related costs of $16.2 million on account of higher headcount, restructuring costs and wage inflation and higher technology costs of $3.7 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model, partially offset by lower other operating costs of $1.6 million and foreign exchange gain, net of hedging of $0.7 million. Gross margin in Analytics decreased by 130 bps during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to the impact of restructuring costs of 60 bps and increases in employee-related costs, partially offset by higher revenues and operational efficiencies during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

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Selling, General and Administrative (“SG&A”) Expenses.


	Six months ended June 30,						Percentage change
	2024		2023		Dollar Change
	(dollars in millions)
General and administrative expenses	$	109.7	$	92.3	$	17.4	18.8	%
Selling and marketing expenses	71.4		57.7		13.7		23.7	%
Selling, general and administrative expenses	$	181.1	$	150.0	$	31.1	20.7	%

The increase in SG&A expenses of $31.1 million was primarily due to higher employee-related costs of $16.6 million on account of higher headcount and wage inflation, higher investments in digital and generative AI capabilities of $8.3 million, higher sales and marketing spend of $1.9 million, restructuring costs, litigation settlement costs and associated legal fees of $3.1 million and higher other operating costs of $2.1 million. This was partially offset by foreign exchange gain, net of hedging of $0.9 million, during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Depreciation and Amortization.


	Six months ended June 30,						Percentage change
	2024		2023		Dollar Change
	(dollars in millions)
Depreciation expense	$	19.1	$	18.3	$	0.8	4.6	%
Intangible amortization expense	6.2		8.3		(2.1)		(26.3)	%
Depreciation and amortization expense	$	25.3	$	26.6	$	(1.3)	(5.1)	%

The increase in depreciation expense of $0.8 million was primarily due to investments in digital capabilities, computers and networking equipment during the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The decrease in intangibles amortization expense of $2.1 million during the six months ended June 30, 2024, compared to the six months ended June 30, 2023 was primarily due to end of useful lives for certain intangible assets.

Income from Operations. Income from operations decreased by $1.3 million, or 1.0%, from $124.3 million for the six months ended June 30, 2023 to $123.0 million for the six months ended June 30, 2024, primarily due to higher SG&A expenses, partially offset by higher revenues during the six months ended June 30, 2024.

Foreign Exchange Gain, net. Foreign exchange gains and losses are primarily attributable to the movement of the U.S. dollar against the Indian rupee, the Philippine peso, the U.K. pound sterling and the South African rand during the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The average exchange rate of the U.S. dollar against the Indian rupee increased from 82.22 during the six months ended June 30, 2023 to 83.27 during the six months ended June 30, 2024. The average exchange rate of the U.S. dollar against the Philippine peso increased from 55.18 during the six months ended June 30, 2023 to 57.27 during the six months ended June 30, 2024. The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.24 during the six months ended June 30, 2023 to 1.26 during the six months ended June 30, 2024. The average exchange rate of the U.S. dollar against the South African rand increased from 18.46 during the six months ended June 30, 2023 to 18.74 during the six months ended June 30, 2024.

We recorded a foreign exchange gain, net of $0.4 million, each, for the six months ended June 30, 2023 and 2024.

Interest expense. Interest expense increased from $6.6 million for the six months ended June 30, 2023 to $8.6 million for the six months ended June 30, 2024, primarily due to a higher average outstanding balance under our revolving credit facility and a higher effective interest rate of 6.6% during the six months ended June 30, 2024, compared to 6.1% during the six months ended June 30, 2023.

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Other Income, net.


	Six months ended June 30,						Percentage change
	2024		2023		Change
Gain on sale and mark-to-market on investments	$	2.2	$	2.7	$	(0.5)	(20.5)	%
Interest and dividend income	4.7		3.4		1.3		38.1	%
Fair value changes of contingent consideration	0.6		—		0.6		100.0	%
Other, net	(0.1)		(0.3)		0.2		(125.6)	%
Other income, net	$	7.4	$	5.8	$	1.6	29.0	%

Other income, net increased by $1.6 million, from $5.8 million for the six months ended June 30, 2023 to $7.4 million for the six months ended June 30, 2024. The increase is primarily due to higher yield on our investments of $0.8 million, a decrease of $0.6 million in contingent consideration liability related to our June 2022 acquisition of Inbound Media Group, LLC as a result of fair value adjustment and lower other expenses of $0.2 million during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Income Tax Expense. The effective tax rate increased from 19.1% during the six months ended June 30, 2023 to 22.6% during the six months ended June 30, 2024. We recorded income tax expense of $27.6 million and $23.6 million for the six months ended June 30, 2024 and 2023, respectively. The increase in income tax expense was primarily as a result of lower excess tax benefits related to stock-based compensation during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, and an increase in non-deductible expenses, partially offset by lower profit during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Net Income. Net income decreased from $100.4 million for the six months ended June 30, 2023 to $94.6 million for the six months ended June 30, 2024, primarily due to higher income tax expense of $4.0 million, higher interest expense of $2.0 million and a decrease in income from operations of $1.3 million, partially offset by higher other income, net of $1.6 million.

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Liquidity and Capital Resources


	Six months ended June 30,				Dollar Change		Percentage Change
	2024		2023
	(dollars in millions)
Opening cash, cash equivalents and restricted cash	$	141.0	$	125.6	$	15.4	14.1	%
Net cash provided by operating activities	53.0		63.6		(10.6)		(16.6)	%
Net cash (used for)/provided by investing activities	(43.2)		11.8		(55.0)		(467.0)	%
Net cash used for financing activities	(27.3)		(101.8)		74.5		(73.2)	%
Effect of exchange rate changes	(1.8)		1.5		(3.3)		(222.1)	%
Closing cash, cash equivalents and restricted cash	$	121.7	$	100.7	$	21.0	23.4	%

As of June 30, 2024 and 2023, we had $276.1 million and $250.0 million, respectively, in cash, cash equivalents and short-term investments, of which $241.3 million and $224.0 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes. We periodically evaluate opportunities to distribute cash among our group entities to fund our operations, expand our business and make strategic acquisitions in the United States and other geographies, and as and when we decide to distribute, we may have to accrue additional taxes in accordance with local tax laws, rules and regulations in the relevant foreign jurisdictions. During the six months ended June 30, 2024, one of our subsidiaries in India repatriated $18.3 million (net of $1.0 million withholding taxes) to the United States.

Operating Activities: Cash provided by operating activities were $53.0 million during the six months ended June 30, 2024, compared to $63.6 million during six months ended June 30, 2023, reflecting lower cash earnings and higher working capital needs. The major drivers contributing to the decrease of $10.6 million year-over-year included the following:

•Decrease in cash earnings including adjustments for non-cash and other items contributed lower cash flow of $9.3 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023. These adjustments include fair value mark-to-market of investments, unrealized foreign currency exchange (gain)/loss, net, stock-based compensation expense, depreciation and amortization of long-lived assets and intangibles acquired in business combination, among others.

•Changes in accounts receivable, including advance billings, contributed higher cash flow of $6.1 million in the six months ended June 30, 2024, compared to the six months ended June 30, 2023. Collections in accounts receivable, including advance billings, was driven by revenue growth during the six months ended June 30, 2024. Our days sales outstanding remained flat at 63 days as of June 30, 2024 and 2023.

•Payment of contingent consideration related to our December 2021 acquisition of Clairvoyant AI, Inc. (“Clairvoyant”) contributed to a higher cash payout of $11.0 million for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

•Lower income tax payments, net of refunds, contributed lower cash payouts of $3.7 million.

Investing Activities: Cash used for investing activities were $43.2 million for the six months ended June 30, 2024, compared to cash provided by investing activities of $11.8 million for the six months ended June 30, 2023. The decrease of $55.0 million was primarily due to net purchase of investments $20.0 million during six months ended June 30, 2024, compared to net redemption of investments $37.4 million during the six months ended June 30, 2023. This was partially offset by lower cash paid for purchase of long-lived assets, including investments in infrastructure, technology assets, software and product developments of $2.8 million during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Financing Activities: Cash used for financing activities were $27.3 million during the six months ended June 30, 2024, compared to $101.8 million during the six months ended June 30, 2023. The decrease of $74.5 million was primarily due to net proceeds from borrowings under our revolving credit facility of $135.0 million during the six months ended June 30, 2024, compared to net repayment of our borrowings of $30.0 million during the six months ended June 30, 2023. This was partially offset by higher purchases of treasury stock of $90.0 million under our share repurchase programs for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

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We expect to use cash from operating activities to maintain and expand our business by making investments, primarily related to building new digital capabilities, including generative AI and purchase telecommunications equipment and computer hardware and software in connection with managing client operations.

We incurred $23.3 million of capital expenditures during the six months ended June 30, 2024. We expect to incur total capital expenditures of between $50.0 million to $55.0 million in fiscal 2024, primarily to meet our growth requirements, including additions to our facilities as well as investments in technology applications, product development, digital technology, advanced automation, robotics and infrastructure.

In connection with any tax assessment orders that have been issued, or may be issued against us or our subsidiaries, we may be required to deposit additional amounts with the relevant authorities with respect to such assessment orders. See Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for further details.

We believe that our existing cash, cash equivalents and short-term investments and sources of liquidity will be sufficient to satisfy our cash requirements over the next 12 months. Our future cash requirements will depend on many factors, including our rate of revenue growth, our investments in strategic initiatives, applications or technologies, operation centers and acquisition of complementary businesses, continued 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 or significant stock repurchases, including any shares purchased under an accelerated stock repurchase program, 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 21 - Leases and Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for further information on material cash requirements from known contractual and other obligations.

In the ordinary course of business, we provide standby letters of credit to third parties primarily for facility leases. As of June 30, 2024 and December 31, 2023, we had outstanding letters of credit of $0.5 million, each, 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 (Debt Facility)

The following table summarizes our debt position:


	As of June 30,2024		As of December 31, 2023
	(dollars in millions)
	Revolving credit facility
Current portion of long-term borrowings	$	75.0	$	65.0

Long-term borrowings	260.0		135.0
Total borrowings	$	335.0	$	200.0

As of June 30, 2024 and December 31, 2023, we were in compliance with all financial and non-financial covenants under the 2022 Credit Agreement.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, see Note 2 - Summary of Significant Accounting Policies - Recent Accounting Pronouncements to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements.”

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

During the three months ended June 30, 2024, there were no material changes in our market risk exposure. For a discussion of our market risk associated with exchange rate risk and interest rate risk, see 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, 2023.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), to allow timely decisions regarding required disclosure. In connection with the preparation of this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of the CEO and CFO, of the effectiveness and operation of our disclosure controls and procedures as of June 30, 2024. Based upon that evaluation, our CEO and CFO have concluded that the Company’s disclosure controls and procedures, as of June 30, 2024, were effective.

Changes in Internal Control over Financial Reporting

During the three months ended June 30, 2024, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

In the course of our normal business activities, various lawsuits, claims and proceedings may be instituted or asserted against us. Although there can be no assurance, we believe that the disposition of matters currently instituted or asserted will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. See Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for details regarding our tax proceedings.

ITEM 1A. Risk Factors

We have disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, a number of risks which may materially affect our business, financial condition or results of operations. You should carefully consider those risk factors and the other information set forth elsewhere in this Quarterly Report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us may also materially adversely affect our business, financial condition and/or results of operations.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Use of Proceeds

None.

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Purchases of Equity Securities by the Issuer

During the three months ended June 30, 2024, purchases of common stock were as follows:


	Shares Purchased from Employees in connection with satisfaction of Withholding Tax Obligations			Shares Purchased as Part of Publicly Announced Programs			Total Number of Shares Purchased	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
Period	Number of Shares Purchased	Average Price Paid per share		Number of Shares Purchased	Average Price Paid per share
April 1, 2024 through April 30, 2024	—	$	—	—	$	—	—	$	375,000,000
May 1, 2024 through May 31, 2024	—	$	—	—	$	—	—	$	375,000,000
June 1, 2024 through June 30, 2024	—	$	—	297,353	$	29.67	297,353	$	366,176,899
Total	—	$	—	297,353	$	29.67	297,353	$	—

On October 5, 2021, our board of directors authorized a $300 million (excluding excise tax) common stock repurchase program beginning January 1, 2022 (the “2022 Repurchase Program”).

On February 26, 2024, our board of directors authorized a $500 million (excluding excise tax) common stock repurchase program beginning March 1, 2024 (the “2024 Repurchase Program”), and terminated the 2022 Repurchase Program on February 29, 2024.

Under our two repurchase programs, shares may be purchased by us from time to time from the open market and through private transactions, or otherwise, as determined by our management as market conditions warrant. We have structured open market purchases under our two repurchase programs to comply with Rule 10b-18 under the Exchange Act. Repurchases may be discontinued at any time by management.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

Rule 10b5-1 Trading Plans

During the three months ended June 30, 2024, no director or officer of the Company or a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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ITEM 6. Exhibits

The following exhibits are being filed as part of this report or incorporated by reference as indicated therein:



3.1						Fourth Amended and Restated Certificate of Incorporation of the Company, as in effect as of the date hereof (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 25, 2024).

3.2						Sixth Amended and Restated By-laws of the Company, as in effect as of the date hereof (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 21, 2023).

31.1						Certification of the Chief Executive Officer of ExlService Holdings, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of the Chief Financial Officer of ExlService Holdings, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2						Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101.INS						Inline XBRL Instance Document

101.SCH						Inline XBRL Taxonomy Extension Schema

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase

101.PRE						Inline XBRL Extension Presentation Linkbase

104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*This exhibit will not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: August 1, 2024	EXLSERVICE HOLDINGS, INC.

	By:	/S/ MAURIZIO NICOLELLI
		MAURIZIO NICOLELLI Chief Financial Officer (Duly Authorized Signatory, Principal Financial and Accounting Officer)

ExlService Holdings, Inc. - Quarter Report: 2024 June (Form 10-Q)

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