EXL Reports 2010 Third Quarter Results
ExlService Holdings, Inc. (NASDAQ: EXLS), a leading provider of outsourcing and transformation services, today announced its financial results for the quarter ended September 30, 2010. portion of your press release.
- (1888PressRelease) December 03, 2010 - Rohit Kapoor, President and CEO, commented: "EXL experienced a record quarter of growth driven by a significant number of new process migrations in outsourcing services and exceptionally strong demand for transformation services. Our focus remains on acquiring new clients, growing existing client relationships, and making the right investments to sustain our growth. We are making significant investments in sales and marketing and developing proprietary solutions that leverage our domain expertise. Our focused strategy is proving successful in the marketplace and we are extremely well positioned to benefit from the continued growth in the offshore BPO market."
Vishal Chhibbar, CFO, commented: "EXL's revenues this quarter grew 40.3% year-over-year and 11.5% sequentially. Our third quarter results exceeded our expectations driven by organic revenue growth across service lines. Our enhanced gross and operating margins put us squarely on track to deliver our targets for annual margin expansion. We generated strong cash flow from operations for the quarter of $16.7 million, while still making the required growth investments in sales and marketing and capacity expansion. We are pleased to increase our calendar year 2010 revenue guidance to approximately $247.0 million, based upon a seasonal decline in transformation services revenues that is in the fourth quarter. We are also increasing our adjusted operating margin guidance to between 14.0% and 14.5%, despite the recent appreciation in our cost currencies."
Financial Highlights
Reconciliations of adjusted financial measures to GAAP are included at the end of this release.
• Revenues for the quarter ended September 30, 2010 were $67.6 million compared to $48.2 million for the quarter ended September 30, 2009 and $60.6 million for the quarter ended June 30, 2010. Outsourcing services revenues for the quarter ended September 30, 2010 were $50.5 million compared to $37.7 million in the quarter ended September 30, 2009 and $46.6 million in the quarter ended June 30, 2010. Transformation services revenues for the quarter ended September 30, 2010 were $17.1 million compared to $10.5 million in the quarter ended September 30, 2009 and $14.1 million in the quarter ended June 30, 2010.
• Gross margin for the quarter ended September 30, 2010 was 40.0% compared to 40.2% for the quarter ended September 30, 2009 and 38.2% for the quarter ended June 30, 2010. Outsourcing services gross margin for the quarter ended September 30, 2010 was 41.3% compared to 41.0% for the quarter ended September 30, 2009 and 38.6% for the quarter ended June 30, 2010. Transformation services gross margin for the quarter ended September 30, 2010 was 35.9% compared to 37.5% for the quarter ended September 30, 2009 and 37.2% for the quarter ended June 30, 2010.
• Operating margin for the quarter ended September 30, 2010 was 10.3% compared to 10.7% for the quarter ended September 30, 2009 and 8.7% for the quarter ended June 30, 2010. Adjusted operating margin, excluding the impact of stock-based compensation expense and amortization of intangibles, for the quarter ended September 30, 2010 was 14.5% compared to 14.8% for the quarter ended September 30, 2009 and 13.5% for the quarter ended June 30, 2010.
• Net income for the quarter ended September 30, 2010 was $7.8 million compared to $4.0 million for the quarter ended September 30, 2009 and $4.9 million for the quarter ended June 30, 2010. Adjusted EBITDA for the quarter ended September 30, 2010 was $13.3 million compared to $10.0 million for the quarter ended September 30, 2009 and $11.5 million for the quarter ended June 30, 2010.
• Diluted earnings per share to common stockholders for the quarter ended September 30, 2010 were $0.26 compared to $0.14 for the quarter ended September 30, 2009 and $0.16 for the quarter ended June 30, 2010. Adjusted diluted earnings per share, excluding the impact of stock-based compensation expense and amortization of intangibles, for the quarter ended September 30, 2010 were $0.32 compared to $0.19 for the quarter ended September 30, 2009 and $0.23 for the quarter ended June 30, 2010.
Business Announcements
• Featured in Forbes' list of "America's 100 Best Small Companies" based on earnings growth, sales growth, return on equity in the past 12 months and 5 years as well as comparative stock performance against peers.
• Expanded multiple outsourcing services relationships with the migration of 28 new processes during the quarter.
• Won 2 new transformation services clients.
• Invested in our business development capability by hiring an experienced Client Executive to expand our presence in the financial services vertical.
• Strengthened the travel vertical by hiring a senior corporate advisor to expand our service offerings in the travel vertical and to participate in client pursuits.
• Commenced collaboration with Microsoft as part of its Insurance Value Chain partnership ecosystem, to provide solution development and application enhancement for current EXL LifePRO® clients and prospects.
• Partnered with Datanomic, a compliance and data management solutions specialist, to provide joint, end-to-end compliance solutions and services.
• Launched four new transformation services solutions designed to help clients address process management issues to enhance operational effectiveness and efficiency and to reduce costs.
• Headcount for the quarter ended September 30, 2010 was approximately 12,200. Experienced attrition in the third quarter of 32.8% for billable employees compared to 22.0% in the quarter ended September 30, 2009 and 34.6% in the quarter ended June 30, 2010.
2010 Outlook
The Company is increasing its guidance for calendar year 2010:
• Revenues of approximately $247.0 million.
• Adjusted operating margin, excluding the impact of stock-based compensation expense and amortization of intangibles, of between 14.0% and 14.5%, at prevailing exchange rates.
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