ExlService Holdings, Inc. (Nasdaq:EXLS), a leading provider of outsourcing and transformation services, today announced its financial results for the first quarter of 2012.
Rohit Kapoor, Vice Chairman and CEO, commented: "In the first quarter, EXL met its expectations for sequential revenue growth, driven in part by expansion at several of our strategic outsourcing customers. Our transformation business trailed our expectations, as the start dates of certain projects were pushed back, thereby negatively affecting our revenues and gross margin. I am optimistic that we shall see clear improvement over the course of the year in the transformation business, based on strong momentum in our analytics practice. The demand environment remains healthy, reflecting increasing market acceptance of our services. I am also pleased that we have recently strengthened our senior leadership with key additions and that the team is focused on executing against the exciting market growth opportunity we have before us."
Vishal Chhibbar, CFO, commented: "In the first quarter, EXL achieved revenues of $104.6 million, up 43% year-over-year, due both to growth from existing and new clients and from acquisitions. During the quarter, we managed expenses to better leverage our general and administrative costs, which offset a reduction in gross margin.
For 2012, we are maintaining our adjusted diluted EPS guidance of $1.50 to $1.55. Since we last provided guidance, the Indian rupee has depreciated by approximately 8%. Should the rupee stay at its current level throughout 2012, it would reduce our annual forecasted revenues by approximately $6.0 million. We are also seeing some delays among new and existing clients in decision making for large outsourcing initiatives. At current foreign exchange rates, we expect revenues to be at the bottom of our current guidance range of $445.0 million to $455.0 million, primarily due to the rupee depreciation. Should the rupee change, or if there is a change in the pace of decision making on the part of our clients, we will adjust our revenue guidance accordingly."
Financial Highlights — First Quarter 2012
Reconciliations of adjusted financial measures to GAAP are included at the end of this release.
- Revenues for the quarter ended March 31, 2012 were $104.6 million compared to $72.9 million for the quarter ended March 31, 2011 and$102.6 million for the quarter ended December 31, 2011. Outsourcing services revenues for the quarter ended March 31, 2012 were $89.7 million compared to $56.8 million for the quarter ended March 31, 2011 and $85.6 for the quarter ended December 31, 2011. Transformation services revenues for the quarter ended March 31, 2012 were $14.9 million compared to $16.1 million in the quarter ended March 31, 2011 and$17.0 million for the quarter ended December 31, 2011.
- Gross margin for the quarter ended March 31, 2012 was 36.3% compared to 39.3% for the quarter ended March 31, 2011 and 39.5% for the quarter ended December 31, 2011. Outsourcing services gross margin for the quarter ended March 31, 2012 was 37.1% compared to 39.8% for the quarter ended March 31, 2011 and 39.5% for the quarter ended December 31, 2011. Transformation services gross margin for the quarter ended March 31, 2012 was 31.5% compared to 37.9% for the quarter ended March 31, 2011 and 39.6% for the quarter endedDecember 31, 2011.
- Operating margin for the quarter ended March 31, 2012 was 10.0% compared to 10.3% for the quarter ended March 31, 2011 and 12.4% for the quarter ended December 31, 2011. Adjusted operating margin for the quarter ended March 31, 2012 was 13.9% compared to 14.3% for the quarter ended March 31, 2011 and 15.9% for the quarter ended December 31, 2011.
- Net income for the quarter ended March 31, 2012 was $8.9 million compared to $8.4 million for the quarter ended March 31, 2011 and $9.6 million for the quarter ended December 31, 2011. Adjusted EBITDA for the quarter ended March 31, 2012 was $19.5 million compared to $14.6 million for the quarter ended March 31, 2011 and $21.5 million for the quarter ended December 31, 2011.
- Diluted earnings per share for the quarter ended March 31, 2012 was $0.27 compared to $0.27 for the quarter ended March 31, 2011 and $0.29for the quarter ended December 31, 2011. Adjusted diluted earnings per share for the quarter ended March 31, 2012 was $0.36 compared to$0.33 for the quarter ended March 31, 2011 and $0.37 for the quarter ended December 31, 2011.
Business Announcements
- Won eight new clients in the first quarter of 2012, including three new outsourcing clients and five new transformation clients.
- Expanded multiple outsourcing services relationships, including migrating 22 new processes in the first quarter of 2012.
- Obtained CORE URAC accreditation, Version 3.0. EXL provides medical review and clinical management support to the insurance and healthcare industries and has demonstrated its commitment to enable group health, workers compensation and clinical care processes by obtaining this critical accreditation.
- Appointed Rohit Kapoor as Vice Chairman and CEO, Pavan Bagai as President and Chief Operating Officer, and William (Bill) Bloom, as President, Global Client Services.
- Strengthened our leadership with two additions to our executive committee: Mohan A.V.K., Global Head of Human Resources, and Doney Largey, Global Head of Finance & Accounting Center of Excellence.
- Grew headcount as of March 31, 2012 to approximately 19,164, compared to approximately 13,030 as of March 31, 2011.
- Managed employee attrition for the quarter ended March 31, 2012 to 29.7%.
2012 Outlook
- At current foreign exchange rates, we expect revenues to be at the bottom of our current guidance range of $445.0 million to $455.0 million, primarily due to recent rupee depreciation.
- Adjusted earnings per share, excluding the impact of stock-based compensation expense, amortization of intangibles and associated tax impacts, remains the same at $1.50 to $1.55.
