EXL Reports 2013 First Quarter Results

EXL Reports 2013 First Quarter Results

         Quarterly Revenues of $116.0 Million, Up 11% Year over Year

  Adjusted Diluted Earnings Per Share (EPS) of $0.40, Up 11% Year over Year

NEW YORK, May 1, 2013 (GLOBE NEWSWIRE) -- ExlService Holdings, Inc.
(Nasdaq:EXLS), a leading provider of outsourcing and transformation services,
today announced its financial results for the first quarter of 2013.

Rohit Kapoor, Vice Chairman and CEO, commented: "In the first quarter, EXL
posted sequential growth in our outsourcing business, due to contributions
from our insurance and healthcare and utilities verticals.Our transformation
business started the year slowly, similar to last year. While we have
experienced some delays in discretionary project-based spending on the part of
clients and prospects, the pipeline remains strong across our businesses.We
are encouraged by our progress with both new and existing clients.

We expect our transformation businessto pick up through the year, due to
strong demand for proprietary, industry-tailored analytical insights. We are
investing in strategic growth initiatives such as decision analytics and
healthcare business process management. And, as always, we remain focused on
delivering significant business impact across our client base."

Vishal Chhibbar, CFO, commented: "In the first quarter, EXL generated revenues
of $116.0 million, up 11% year-over-year, driven by 9% growth in outsourcing
and 24% growth in transformation services. Excluding previously announced
client transitions, constant currency revenues grew 18% year-over-year. This
quarter we delivered adjusted diluted earnings per share of $0.40, up 11%
year-over-year, driven by revenue growth.

"For 2013, we are maintaining our revenues guidance of $495 million to $505
million and our adjusted diluted EPS guidance of $1.77 to $1.85. While we are
maintaining our guidance for 2013, we anticipate most of our growth will occur
in the second half of the year."

Financial Highlights – First Quarter 2013

Reconciliations of adjusted financial measures to GAAP are included at the end
of this release.

  *Revenues for the quarter ended March 31, 2013 were $116.0 million compared
    to $104.6 million for the quarter ended March 31, 2012 and $117.7 million
    for the quarter ended December 31, 2012. Outsourcing services revenues
    for the quarter ended March 31, 2013 were $97.6 million compared to $89.7
    million for the quarter ended March 31, 2012 and $96.1 million for the
    quarter ended December 31, 2012. Transformation services revenues for the
    quarter ended March 31, 2013 were $18.4 million compared to $14.9 million
    for the quarter ended March 31, 2012 and $21.5 million for the quarter
    ended December 31, 2012.
    
  *Gross margin for the quarter ended March 31, 2013 was 37.1% compared to
    36.3% for the quarter ended March 31, 2012 and 40.1% for the quarter ended
    December 31, 2012. Outsourcing services gross margin for the quarter ended
    March 31, 2013 was 39.0% compared to 37.1% for the quarter ended March 31,
    2012 and 41.5% for the quarter ended December 31, 2012. Transformation
    services gross margin for the quarter ended March 31, 2013 was 27.1%
    compared to 31.5% for the quarter ended March 31, 2012 and 33.6% for the
    quarter ended December 31, 2012. 
    
  *Operating margin for the quarter ended March 31, 2013 was 10.2% compared
    to 10.0% for the quarter ended March 31, 2012 and 13.2% for the quarter
    ended December 31, 2012. Adjusted operating margin for the quarter ended
    March 31, 2013 was 14.7% compared to 13.9% for the quarter ended March 31,
    2012 and 16.3% for the quarter ended December 31, 2012.
    
  *Net income for the quarter ended March 31, 2013 was $9.8 million compared
    to $8.9 million for the quarter ended March 31, 2012 and $12.2 million for
    the quarter ended December 31, 2012.Adjusted EBITDA for the quarter ended
    March 31, 2013 was $21.9 million compared to $19.5 million for the quarter
    ended March 31, 2012 and $24.5 million for the quarter ended December 31,
    2012.
    
  *Diluted earnings per share for the quarter ended March 31, 2013 were $0.29
    compared to $0.27 for the quarter ended March 31, 2012 and $0.36 for the
    quarter ended December 31, 2012. Adjusted diluted earnings per share for
    the quarter ended March 31, 2013 were $0.40 compared to $0.36 for the
    quarter ended March 31, 2012 and $0.44 for the quarter ended December 31,
    2012.

Business Highlights

  *Wonseven new clients during the quarter, includingthree transformation
    clients andfour outsourcing clients.
    
  *Expanded multiple outsourcing services relationships, including migrating
    33 new processes in the first quarter of 2013.
    
  *Named a "High Performer" by research firm Horses for Sources (HfS) in "HfS
    Blueprint Axis: Finance and Accounting BPO, 2013."
    
  *Completed successful university recruiting season in India, including
    hiring approximately 160 graduates to EXL's decision analytics business
    from top universities such as the Indian Institutes of Management, Indian
    Institutes of Technology and National Institutes of Technology.
    
  *Commenced decision analytics operations in Bangalore, India, across
    several client relationships.
    
  *Commenced services from an operations center in Cebu, Philippines,
    specializing in insurance, healthcare and banking business process
    management.
    
  *Announced Rev-Lift, an integrated analytics and business process services
    solution using proprietary algorithms to identify and recover unbilled
    revenues for trucking and ocean carriers. EXL successfully implemented
    Rev-Lift with a leading North American Less-than-Truckload (LTL) carrier.
    
  *Grew headcount as of March 31, 2013 to 21,356, compared to 19,164 as of
    March 31, 2012 and 21,049 as of December 31, 2012.
    
  *Employee attrition for the quarter ended March 31, 2013declined to23.6%,
    compared with 29.7% for the quarter ended March 31, 2012 and 30.4% for the
    quarter ended December 31, 2012.

2013 Outlook

The Company is maintaining its guidance for calendar year 2013, based on
current visibility and an Indian rupee rate to theU.S. dollar of 54:

  *Revenues of $495 million to $505 million.
    
  *Adjusted diluted earnings per share, excluding the impact of stock-based
    compensation expense, amortization of intangibles and associated tax
    impacts, of $1.77 to $1.85.

Conference Call

EXL will host a conference call on Thursday, May 2, 2013 at 10:00 a.m. (ET) to
discuss the Company's quarterly operating and financial results. The
conference call will be available live via the internet by accessing the
investor relations section of EXL's website at ir.exlservice.com, where an
accompanying investor-friendly spreadsheet of historical operating and
financial data can also be accessed. Please go to the website at least
fifteen minutes prior to the call to register, download and install any
necessary audio software.

To listen to the conference call via phone, please dial 1-877-303-6384 or
1-224-357-2191 and an operator will assist you.For those who cannot access
the live broadcast, a replay will be available on the EXL website
(ir.exlservice.com).

About ExlService Holdings, Inc.

ExlService Holdings, Inc. (Nasdaq:EXLS) is a leading provider of outsourcing
and transformation services. EXL primarily serves the needs of Global 1000
companies from global delivery centers in the insurance, healthcare,
utilities, banking and financial services, transportation and logistics and
travel sectors. EXL's outsourcing services include a full spectrum of business
process management services such as transaction processing and finance and
accounting services. Transformation services enable continuous improvement of
client processes by bringing together EXL's capabilities in decision
analytics, finance transformation and operations and process excellence
services. Find additional information about EXL at www.exlservice.com.

This press release contains forward-looking statements. You should not place
undue reliance on those statements because they are subject to numerous
uncertainties and factors relating to the Company's operations and business
environment, all of which are difficult to predict and many of which are
beyond the Company's control. Forward-looking statements include information
concerning the Company's possible or assumed future results of operations,
including descriptions of its business strategy. These statements may 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 management's experience in
the industry as well as its perceptions of historical trends, current
conditions, expected future developments and other factors it believes are
appropriate under the circumstances. You should understand that these
statements are not guarantees of performance or results. They involve known
and unknown risks, uncertainties and assumptions. Although the Company
believes that these forward-looking statements are based on reasonable
assumptions, you should be aware that many factors could affect the Company's
actual financial results or results of operations and could cause actual
results to differ materially from those in the forward-looking statements.
These factors are discussed in more detail in the Company's filings with the
Securities and Exchange Commission, including the Company's Annual Report on
Form 10-K for the year ended December 31, 2012. These risks could cause actual
results to differ materially from those implied by forward-looking statements
in this release. You should keep in mind that any forward-looking statement
made herein, or elsewhere, speaks only as of the date on which it is made. New
risks and uncertainties come up from time to time, and it is impossible to
predict these events or how they may affect the Company. The Company has no
obligation to update any forward-looking statements after the date hereof,
except as required by federal securities laws.

EXLSERVICE HOLDINGS, INC.                                                   
CONSOLIDATED STATEMENTS OF INCOME                                           
(Unaudited)                                                                 
(In thousands, except share and per share amounts)                          
                                              
                                              Three months ended March 31,
                                              2013            2012
Revenues                                       $116,006     $104,608
Cost of revenues (exclusive of depreciation    72,913         66,672
and amortization)
Gross profit                                   43,093         37,936
Operating expenses:                                          
General and administrative expenses            15,045         13,347
Selling and marketing expenses                 9,755          7,799
Depreciation and amortization                  6,512          6,359
Total operating expenses                       31,312         27,505
Income from operations                         11,781         10,431
Other income/(expense) :                                     
Foreign exchange (loss)/gain                   (49)          1,058
Interest and other income, net                 1,027          447
Income before income taxes                     12,759         11,936
Income tax provision                           2,997          3,020
Net income                                     $9,762       $8,916
Earnings per share:                                          
Basic                                          $0.30        $0.28
Diluted                                        $0.29         $0.27
Weighted-average number of shares used in
computing earnings per share:
Basic                                          32,521,481     31,445,592
Diluted                                        33,719,794      32,783,855

                                                                
                                                                
EXLSERVICE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
                                                                
                                                     March 31,   December 31,
                                                      2013        2012
                                                     (Unaudited) 
Assets                                                           
Current assets:                                                  
Cash and cash equivalents                             $102,307    $103,037
Short-term investments                                6,263       6,137
Restricted cash                                       757         573
Accounts receivable, net                             76,612      73,729
Prepaid expenses                                      5,377       5,072
Deferred tax assets, net                              5,111       7,460
Advance income tax, net                               4,486       4,317
Other current assets                                  9,764       7,065
Total current assets                                  210,677     207,390
Fixed assets, net                                    38,973      39,356
Restricted cash                                       3,850       3,752
Deferred tax assets, net                              14,249      14,123
Intangible assets, net                               39,118      40,711
Goodwill                                              110,055     109,662
Other assets                                          20,930      20,860
Total assets                                          $437,852    $435,854
Liabilities and Stockholders' Equity                             
Current liabilities:                                             
Accounts payable                                      $3,322      $3,604
Deferred revenue                                      7,640       7,922
Accrued employee cost                                 17,596      29,393
Accrued expenses and other current liabilities        27,965      31,737
Current portion of capital lease obligations          1,616       1,685
Total current liabilities                             58,139      74,341
Capital lease obligations, less current portion       2,399       2,679
Non-current liabilities                               13,764      14,317
Total liabilities                                     74,302      91,337
Commitments and contingencies                                   
Preferred stock, $0.001 par value; 15,000,000 shares  --         --
authorized, none issued
Stockholders' equity:                                            
Common stock, $0.001 par value; 100,000,000 shares
authorized, 32,971,996 shares issued and 32,622,716
shares outstanding as of March 31, 2013 and           33          33
32,540,082 shares issued and 32,203,820 shares
outstanding as of December 31, 2012
Additional paid-in-capital                            200,813     195,248
Retained earnings                                     198,644     188,882
Accumulated other comprehensive loss                  (32,553)    (36,647)
Total stockholders' equity including shares held in   366,937     347,516
treasury
Less: 349,280 shares as of March 31, 2013 and 336,262
shares as of December 31, 2012, heldin treasury, at  (3,413)     (3,024)
cost
ExlService Holdings, Inc. stockholders' equity        363,524     344,492
Non-controlling interest                              26          25
Total stockholders' equity                            363,550     344,517
Total liabilities and stockholders' equity           $437,852    $435,854

                          EXLSERVICE HOLDINGS, INC.

         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

        Reconciliation of Adjusted Financial Measures to GAAP Measures

In addition to its reported operating results in accordance with U.S.
generally accepted accounting principles (GAAP), EXL has included in this
release adjusted financial measures (adjusted EBITDA, adjusted net income and
adjusted diluted earnings per share) that the Securities and Exchange
Commission defines as "non-GAAP financial measures." The adjusted financial
measures disclosed by the Company should not be considered a substitute for,
or superior to, financial measures calculated in accordance with GAAP, and the
financial results calculated in accordance with GAAP and reconciliations from
those financial statements should be carefully evaluated.The Company believes
that providing these adjusted measures may help investors better understand
the Company's underlying financial performance. Management also believes that
these adjusted financial measures, when read in conjunction with the Company's
reported results, can provide useful supplemental information for investors
analyzing period to period comparisons of the Company's results and
comparisons of the Company's results with the results of other companies. The
Company believes that it is unreasonably difficult to provide its financial
outlook in accordance with GAAP for a number of reasons including, without
limitation, the Company's inability to predict its future stock-based
compensation expense under ASC Topic 718 and the amortization of intangibles
associated with further acquisitions. The Company also incurs significant
non-cash charges for depreciation that may not be indicative of the Company's
ability to generate cash flow.

Additionally, the Company provides certain information on a constant currency
basis, which reflects a comparison of current period results translated at the
prior period currency rates. This information is provided because the Company
believes that it provides useful incremental information to investors
regarding the Company's operating performance.

The following table shows the reconciliation of these adjusted financial
measures from GAAP measures for the three months ended March 31, 2013 and
March 31, 2012 and for the three months ended December 31, 2012:

Reconciliation of Adjusted Operating Income and Adjusted EBITDA
(Amounts in thousands)
                                                              
                                             Three Months Ended  Three Months
                                            March 31,           Ended
                                                                 December 31,
                                            2013      2012      2012
Net income (GAAP)                            $9,762  $8,916  $12,163
add: Income tax provision and other          2,019    1,515    3,375
income/(expense)
Income from operations (GAAP)                $11,781 $10,431 $15,538
add: Stock-based compensation expense (a)    3,645    2,743    2,087
add: Amortization of acquisition-related     1,634    1,394    1,555
intangibles (b)
Adjusted operating income (Non-GAAP)         $17,060 $14,568 $19,180
Adjusted operating income margin %           14.7%     13.9%     16.3%
add: Depreciation                            4,878    4,965    5,336
Adjusted EBITDA (Non-GAAP)                   $21,938 $19,533 $24,516
Adjusted EBITDA margin %                     18.9%     18.7%     20.8%

(a) To exclude stock-based compensation expense under ASC Topic 718.
(b) To exclude amortization of acquisition-related intangibles.

                                                         
                                                         
Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings Per Share
(Amounts in thousands, except per share data)
                                                         
                                       Three Months Ended  Three Months Ended
                                        March 31,           December 31,
                                       2013      2012      2012
Net income (GAAP)                       $9,762  $8,916  $12,163
add: Stock-based compensation expense   3,645    2,743    2,087
(a)
add: Amortization of                    1,634    1,394    1,555
acquisition-related intangibles (b)
subtract: Tax impact on stock-based     (1,396)  (1,086)  (687)
compensation expense
subtract: Tax impact on amortization of (191)    (187)    (218)
acquisition-related intangibles
Adjusted net income                     $13,454 $11,780 $14,900
Adjusted diluted earnings per share     $0.40   $0.36   $0.44
                                                         
(a) To exclude stock-based compensation expense under ASC Topic 718.
(b) To exclude amortization of acquisition-related intangibles.

CONTACT: Charles Murphy, CFA
         Head of Investor Relations
         ExlService Holdings, Inc.
         280 Park Avenue
         New York, NY 10017
         (212) 624-5913
         ir@exlservice.com