ExlService (NASDAQ:EXLS) executives highlighted accelerating client adoption of data and AI initiatives as the company reported fourth-quarter and full-year 2025 results that management said exceeded expectations for both revenue and earnings per share. The company also provided 2026 guidance calling for continued organic growth and adjusted earnings expansion, while noting the expected impact of India’s new labor codes on costs.
Fourth-quarter and full-year results
EXL posted fourth-quarter revenue of $542.6 million, up 12.7% year-over-year on a reported basis and 12.6% on an organic constant-currency basis, according to prepared remarks delivered by President Vivek Jetley, who stepped in for CFO Maurizio Nicoletti due to a family matter. Adjusted EPS was $0.50, up 15% year-over-year.
Segment performance and mix shift toward data and AI
CEO Rohit Kapoor said EXL’s “data and AI pivot is well underway,” noting data and AI-led revenue grew 21% year-over-year in the fourth quarter and represented 57% of total revenue. Digital operations, which management said represents 43% of the business (excluding data and AI-led operations), grew 4% year-over-year.
The company also emphasized a “total operations” view (including both digital operations and data/AI-led operations). Management said total operations revenue grew 11% year-over-year in Q4 and 14% for the full year.
By segment in the fourth quarter (constant currency), Jetley reported:
- Insurance: Revenue of $185.8 million, up 7.2% year-over-year and up 2.9% sequentially, driven primarily by expansion in existing client relationships.
- Healthcare and life sciences: Revenue of $142.2 million, up 26.2% year-over-year and 5.1% sequentially, supported by higher volumes in payment services and expansion with existing clients.
- Banking, capital markets, and diversified industries: Revenue of $122.6 million, up 10.8% year-over-year and 1.3% sequentially, driven by expansion in existing clients and new wins.
- International growth markets: Revenue of $92.0 million, up 8.1% year-over-year, driven by higher volumes with existing clients and new wins.
Client demand, wins, and AI commercialization
Kapoor said the “dollar volume of wins” in Q4 was “more than double” that of any other quarter in 2025, and he described “accelerated decision-making” by clients moving transformation initiatives forward. In Q&A, he attributed momentum to enterprise clients shifting from AI proof-of-concepts toward scaled adoption, as well as a shift in some conversations from cost takeout to growth initiatives enabled by AI.
Management highlighted several client wins and expansions discussed on the call:
- A large North American insurance carrier selected EXL as an enterprise transformation data and AI partner for a multi-year initiative that includes deploying agentic AI into workflows, building a data strategy using EXLdata.ai, and transforming customer experience and operations. Kapoor said this was a brand-new customer and emphasized that the deal included “explicit pricing” for EXL’s IP, in addition to time-and-materials components.
- A top five healthcare payer expanded its relationship with EXL, selecting an AI-powered payment integrity solution to re-engineer clinical auditing processes, with goals including improved yield and productivity.
- A renewed and expanded multi-year engagement with a financial services company spanning AI services for risk strategy, regulatory modeling, forecasting, collections, and fraud.
Kapoor also discussed EXLdata.ai, introduced in Q4, describing it as an “agentic data solutions suite” aimed at helping clients modernize data foundations to enable AI use cases. He cited a consumer lending fintech project in which EXL modernized a technology stack from legacy on-premise systems to a cloud-native platform and “operationalized the new solution in just four months,” as well as a healthcare payer engagement to build a centralized, governed contract repository across structured and unstructured data to better align contract terms and claims adjudication.
Margins, cash flow, capital allocation, and labor code impacts
Jetley said SG&A expense as a percentage of revenue increased 130 basis points year-over-year to 21.2% in Q4, driven by investments in sales and marketing. Adjusted operating margin was 18.8% in the quarter, flat year-over-year.
For 2025, EXL generated cash flow from operations of $351 million, up 30.6% year-over-year, which management attributed to higher profitability and improved working capital management. As of December 31, the company reported $331 million of cash (including short- and long-term investments) and $299 million of revolver debt, resulting in a net cash position of $32 million. During 2025, EXL spent $53 million on capital expenditures and repurchased about 7.5 million shares for $317 million at an average price of $42.3 per share.
Management also addressed India’s New Labour Codes, which Jetley said did not materially impact the quarter’s income statement but produced a one-time $10.3 million increase in defined benefit liability on the balance sheet with an offsetting increase to accumulated other comprehensive income. Looking ahead, Jetley said EXL expects a prospective increase in employee costs, resulting in an approximate $0.02 to $0.03 dilution to adjusted EPS, which is included in guidance. In response to an analyst question, management said it expects to keep adjusted operating margin flat in 2026, noting the labor code impact is included in that expectation.
EXL’s board authorized a new $500 million share repurchase program effective February 28, 2026, for a two-year period. Management characterized the authorization as consistent with its capital allocation strategy and reflective of confidence in ongoing growth and free cash flow generation.
2026 outlook and competitive environment
For 2026, EXL guided revenue to $2.275 billion to $2.315 billion, representing 9% to 11% reported and constant-currency growth. Adjusted diluted EPS is expected to range from $2.14 to $2.19, representing 10% to 12% growth year-over-year. Additional assumptions included an expected foreign exchange gain of about $2 million, net interest expense of roughly $1 million, an effective tax rate of 21% to 22%, and capital expenditures of $50 million to $55 million.
In Q&A, Kapoor said the 2026 organic constant-currency growth guidance was consistent with the organic component of the prior year’s outlook, noting that 2025 guidance included inorganic growth from an acquisition. He also said visibility into the first half of 2026 is stronger than the second half and that EXL expects to “start out strong,” with guidance to be updated as visibility develops.
On competition, Kapoor said EXL is seeing a changing competitive set that includes hyperscalers, technology providers, and consulting firms in addition to traditional services competitors. He argued EXL’s differentiation stems from its integrated approach to embedding AI in regulated, domain-intensive workflows and its focus on delivering measurable business outcomes.
Kapoor also said EXL expects to be active in M&A as valuations become more attractive, with priorities including data readiness for AI, engineering skill sets to apply AI into enterprise workflows, acquiring new capabilities to bring to clients, and geographic diversification.
About ExlService (NASDAQ:EXLS)
ExlService Holdings, Inc (NASDAQ: EXLS) is a global operations management and analytics company that partners with clients in insurance, healthcare, banking, and financial services to drive digital transformation and operational excellence. The firm delivers analytics-driven solutions and business process outsourcing services, including claims adjudication, finance and accounting, data management, and customer service support. ExlService combines domain expertise with advanced analytics, artificial intelligence, and automation technologies to help organizations optimize processes, enhance customer experiences, and manage risk.
Founded in 1999 and headquartered in New York City, ExlService has grown through a mix of organic expansion and strategic acquisitions, earning recognition for its data analytics capabilities and industry-specific knowledge.
