EXL Service - 10-Q quarterly report FY2025 Q3

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________________________________

FORM 10-Q

_________________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 001-33089

_________________________________________________________

EXLSERVICE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

_________________________________________________________


Delaware		82-0572194
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

320 Park Avenue,	29th Floor,
New York,	New York	10022
(Address of principal executive offices)		(Zip code)

(212) 277-7100

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:	Trading symbol(s)	Name of Each Exchange on Which Registered:
Common Stock, par value $0.001 per share	EXLS	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None

________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and

(2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 24, 2025, there were 158,700,885 shares of the registrant’s common stock outstanding, par value $0.001 per share.

Table of Contents

TABLE OF CONTENTS



		PAGE
ITEM
	Part I. Financial Information	3

1.	FINANCIAL STATEMENTS (UNAUDITED)
	Consolidated Balance Sheets as of September 30 , 2025 and December 31, 2024	3
	Consolidated Statements of Income for the Three and Nine Months Ended September 30 , 2025 and 2024	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30 , 2025 and 2024	5
	Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30 , 2025 and 2024	6
	Consolidated Statements of Cash Flows for the N ine Months Ended September 30 , 2025 and 2024	8
	Notes to Consolidated Financial Statements	9

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39

3.	Quantitative and Qualitative Disclosures About Market Risk	55

4.	Controls and Procedures	55

	Part II. Other Information	55

1.	Legal Proceedings	55

1A.	Risk Factors	55

2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

3.	Defaults Upon Senior Securities	56

4.	Mine Safety Disclosures	56

5.	Other Information	56

6.	Exhibits	58

Signatures		59

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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


		As of
	Notes	September 30, 2025		December 31, 2024

Assets
Current assets:
Cash and cash equivalents	7	$	160,309	$	153,355
Short-term investments	8	229,833		187,223
Restricted cash	7	11,319		9,972
Accounts receivable, net	4	351,426		304,322
Other current assets	11	139,059		140,317
Total current assets		891,946		795,189
Property and equipment, net	9	112,677		101,837
Operating lease right-of-use assets	21	72,346		68,784
Restricted cash	7	8,205		8,071
Deferred tax assets, net	22	115,825		104,747
Goodwill	10	419,871		420,387
Other intangible assets, net	10	39,511		49,331
Long-term investments	8	8,001		13,972
Other assets	12	65,250		56,085
Total assets		$	1,733,632	$	1,618,403
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	6,767	$	5,884
Current portion of long-term borrowings	18	4,886		4,886
Deferred revenue		17,497		19,264
Accrued employee costs		129,381		129,994
Accrued expenses and other current liabilities	13	129,297		113,597
Current portion of operating lease liabilities	21	19,174		16,491

Total current liabilities		307,002		290,116
Long-term borrowings, less current portion	18	349,934		283,598
Operating lease liabilities, less current portion	21	60,463		59,851
Deferred tax liabilities, net	22	2,465		1,403
Other non-current liabilities	14	61,379		53,573
Total liabilities		781,243		688,541
Commitments and contingencies	25
Stockholders’ equity:
Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued		—		—
Common stock, $0.001 par value; 400,000,000 shares authorized, 207,938,011 shares issued and 158,882,631 shares outstanding as of September 30, 2025 and 206,510,587 shares issued and 161,801,212 shares outstanding as of December 31, 2024	19	207		206
Additional paid-in capital		627,966		588,583
Retained earnings		1,472,733		1,281,960
Accumulated other comprehensive loss	15	(168,977)		(154,722)
Total including shares held in treasury		1,931,929		1,716,027
Less: 49,055,380 shares as of September 30, 2025 and 44,709,375 shares as of December 31, 2024, held in treasury, at cost	19	(979,540)		(786,165)
Total stockholders’ equity		952,389		929,862
Total liabilities and stockholders’ equity		$	1,733,632	$	1,618,403

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

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


		Three months ended September 30,				Nine months ended September 30,
	Notes	2025		2024		2025		2024
Revenues, net	3, 4	$	529,585	$	472,073	$	1,545,064	$	1,356,946
Cost of revenues (1)		325,649		293,806		953,626		849,336
Gross profit (1)		203,936		178,267		591,438		507,610
Operating expenses:
General and administrative expenses		66,251		57,495		185,217		167,195
Selling and marketing expenses		46,383		37,568		127,754		108,982
Depreciation and amortization expense	9, 10	15,128		13,799		42,740		39,055

Total operating expenses		127,762		108,862		355,711		315,232
Income from operations		76,174		69,405		235,727		192,378
Foreign exchange gain/(loss), net		(1,013)		278		2,390		673
Interest expense	18	(4,923)		(5,526)		(13,349)		(14,145)
Other income, net	6	4,459		4,374		14,833		11,876
Income before income tax expense and earnings from equity affiliates		74,697		68,531		239,601		190,782
Income tax expense	22	16,456		15,460		48,498		43,086
Income before earnings from equity affiliates		58,241		53,071		191,103		147,696
Loss from equity-method investment		(80)		(34)		(330)		(71)
Net income		$	58,161	$	53,037	$	190,773	$	147,625
Earnings per share:	5
Basic		$	0.36	$	0.33	$	1.18	$	0.90
Diluted		$	0.36	$	0.33	$	1.17	$	0.90
Weighted average number of shares used in computing earnings per share:	5
Basic		160,495,712		161,732,872		161,963,152		163,197,767
Diluted		161,714,486		163,187,733		163,481,053		164,620,081

(1) Exclusive of depreciation and amortization expense.

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In thousands)


		Three months ended September 30,				Nine months ended September 30,
	Notes	2025		2024		2025		2024
Net income		$	58,161	$	53,037	$	190,773	$	147,625
Other comprehensive income/(loss):
Unrealized gain/(loss) on cash flow hedges	17	(25,816)		10,097		(10,392)		7,257

Currency translation adjustments		(17,986)		5,770		(10,053)		(483)
Reclassification adjustments:
(Gain)/loss on cash flow hedges (1)	17	1,636		(882)		2,680		(850)
Retirement benefits (2)	20	(113)		(153)		(341)		(455)
Income tax effects relating to above (3)	22	7,736		(1,317)		3,851		(1,022)
Total other comprehensive income/(loss)		(34,543)		13,515		(14,255)		4,447
Total comprehensive income		$	23,618	$	66,552	$	176,518	$	152,072

(1)These are reclassified to net income and are included in revenues, cost of revenues, operating expenses and interest expense, as applicable in the unaudited consolidated statements of income.

(2)These are reclassified to net income and are included in other income, net in the unaudited consolidated statements of income.

(3)These are income tax effects recognized on cash flow hedges, retirement benefits and currency translation adjustments.

See accompanying notes to unaudited consolidated financial statements.

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EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the three months ended September 30, 2025 and 2024

(In thousands, except share count)


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

	Notes	Shares	Amount								Shares	Amount
Balance as of June 30, 2025		207,810,635	$	207	$	625,984	$	1,414,572	$	(134,434)	(45,981,304)	$	(845,379)	$	1,060,950
Stock issued against stock-based compensation plans	23	127,376	—		3,843		—		—		—	—		3,843
Stock-based compensation	23	—	—		23,139		—		—		—	—		23,139
Acquisition of treasury stock	19	—	—		—		—		—		(771,520)	(33,467)		(33,467)
Excise tax on repurchase of common stock, net of stock issuances	19	—	—		—		—		—		—	(694)		(694)
Accelerated share repurchase	5, 19	—	—		(25,000)		—		—		(2,302,556)	(100,000)		(125,000)
Other comprehensive loss	15	—	—		—		—		(34,543)		—	—		(34,543)
Net income		—	—		—		58,161		—		—	—		58,161
Balance as of September 30, 2025		207,938,011	$	207	$	627,966	$	1,472,733	$	(168,977)	(49,055,380)	$	(979,540)	$	952,389


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

	Notes	Shares	Amount								Shares	Amount
Balance as of June 30, 2024		204,783,113	$	204	$	520,922	$	1,178,251	$	(136,108)	(42,606,731)	$	(710,663)	$	852,606
Stock issued against stock-based compensation plans	23	533,889	1		2,414		—		—		—	—		2,415
Stock-based compensation	23	—	—		21,232		—		—		—	—		21,232
Acquisition of treasury stock	19	—	—		—		—		—		(1,009,246)	(34,830)		(34,830)

Excise tax on repurchase of common stock, net of stock issuances	19	—	—		—		—		—		—	(412)		(412)
Accelerated share repurchase	5, 19	—	—		27,862		—		—		(820,433)	(27,862)		—
Other comprehensive income	15	—	—		—		—		13,515		—	—		13,515
Net income		—	—		—		53,037		—		—	—		53,037
Balance as of September 30, 2024		205,317,002	$	205	$	572,430	$	1,231,288	$	(122,593)	(44,436,410)	$	(773,767)	$	907,563

See accompanying notes to unaudited consolidated financial statements.

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EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the nine months ended September 30, 2025 and 2024

(In thousands, except share count)


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

	Notes	Shares	Amount								Shares	Amount
Balance as of December 31, 2024		206,510,587	$	206	$	588,583	$	1,281,960	$	(154,722)	(44,709,375)	$	(786,165)	$	929,862
Stock issued against stock-based compensation plans	23	1,427,424	1		5,665		—		—		—	—		5,666
Stock-based compensation	23	—	—		58,718		—		—		—	—		58,718
Acquisition of treasury stock	19	—	—		—		—		—		(2,043,449)	(92,710)		(92,710)
Excise tax on repurchase of common stock, net of stock issuances	19	—	—		—		—		—		—	(665)		(665)
Accelerated share repurchase	5, 19	—	—		(25,000)		—		—		(2,302,556)	(100,000)		(125,000)

Other comprehensive loss	15	—	—		—		—		(14,255)		—	—		(14,255)
Net income		—	—		—		190,773		—		—	—		190,773
Balance as of September 30, 2025		207,938,011	$	207	$	627,966	$	1,472,733	$	(168,977)	(49,055,380)	$	(979,540)	$	952,389


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

	Notes	Shares	Amount								Shares	Amount
Balance as of December 31, 2023		203,410,038	$	203	$	508,028	$	1,083,663	$	(127,040)	(38,132,158)	$	(575,417)	$	889,437
Stock issued against stock-based compensation plans	23	1,906,964	2		4,361		—		—		—	—		4,363
Stock-based compensation	23	—	—		57,179		—		—		—	—		57,179
Acquisition of treasury stock	19	—	—		—		—		—		(2,133,735)	(69,458)		(69,458)
Excise tax on repurchase of common stock, net of stock issuances	19	—	—		—		—		—		—	(1,030)		(1,030)
Accelerated share repurchase	5, 19	—	—		2,862		—		—		(4,170,517)	(127,862)		(125,000)
Other comprehensive income	15	—	—		—		—		4,447		—	—		4,447
Net income		—	—		—		147,625		—		—	—		147,625
Balance as of September 30, 2024		205,317,002	$	205	$	572,430	$	1,231,288	$	(122,593)	(44,436,410)	$	(773,767)	$	907,563

See accompanying notes to unaudited consolidated financial statements.

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EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)


	Nine months ended September 30,
	2025		2024
Cash flows from operating activities:
Net income	$	190,773	$	147,625
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	42,877		39,068
Stock-based compensation expense	58,718		57,179
Reduction in the carrying amount of operating lease right-of-use assets	18,393		16,070
Fair value mark-to-market of investments	(3,191)		(1,233)
Unrealized foreign currency exchange (gain)/loss, net	(10,978)		(3,064)
Deferred income tax benefit	(6,520)		(25,423)






Others, net	1,975		(341)
Change in operating assets and liabilities:
Accounts receivable	(45,395)		(28,900)
Other current and non-current assets	(5,352)		(6,961)
Income taxes payable, net	(960)		(8,438)


Deferred revenue	(1,984)		35
Accrued employee costs	(1,193)		(6,435)
Accounts payable, accrued expenses and other liabilities	15,068		10,177
Operating lease liabilities	(18,895)		(15,180)
Payment of contingent consideration	—		(11,000)
Net cash provided by operating activities	233,336		163,179

Cash flows from investing activities:
Purchases of property and equipment	(41,727)		(36,188)
Proceeds from sale of property and equipment	315		172
Investment in equity affiliate	(1,174)		(600)

Business acquisition (net of cash acquired)	—		(24,466)
Purchases of investments	(247,289)		(225,555)
Proceeds from redemption of investments	207,266		192,162
Net cash used for investing activities	(82,609)		(94,475)

Cash flows from financing activities:
Principal payments of finance lease liabilities	(365)		(222)
Proceeds from borrowings	175,000		290,000
Repayments of borrowings	(108,750)		(145,000)

Acquisition of treasury stock	(218,908)		(195,880)
Payment of contingent consideration	—		(4,000)
Proceeds from issuance of common stock	5,094		3,524
Payment of debt issuance costs	—		(593)
Net cash used for financing activities	(147,929)		(52,171)
Effect of exchange rate changes	5,637		1,330
Net increase in cash, cash equivalents and restricted cash	8,435		17,863
Cash, cash equivalents and restricted cash at the beginning of the period	171,398		145,401
Cash, cash equivalents and restricted cash at the end of the period	$	179,833	$	163,264

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	12,473	$	14,346
Income taxes	$	55,119	$	78,069
Supplemental disclosure of non-cash investing and financing activities:
Additions to property and equipment not yet paid	$	3,379	$	2,756
Assets acquired under finance lease	$	733	$	972

See accompanying notes to unaudited consolidated financial statements.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2025

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

1. Organization

ExlService Holdings, Inc. (“ExlService Holdings”) is organized as a corporation under the laws of the State of Delaware. ExlService Holdings, together with its subsidiaries and affiliates (collectively, the “Company”), is a global data and artificial intelligence (“AI”) company that offers services and solutions to reinvent client business models, drive better outcomes and unlock growth with speed. The Company harnesses the power of data, AI, and deep industry knowledge to transform businesses, including the world’s leading corporations in industries including insurance, healthcare and life sciences, banking and capital markets, retail, communications and media, and energy and infrastructure, among others.

The Company’s clients are located principally in the United States of America and the United Kingdom.

2. Summary of Significant Accounting Policies

(a)Basis of Preparation and Principles of Consolidation

The unaudited consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

The unaudited consolidated financial statements reflect all adjustments (of a normal and recurring nature) that management considers necessary for a fair presentation of such statements for the interim periods presented. The unaudited consolidated statements of income for the interim periods presented are not necessarily indicative of the results for the full year or for any subsequent period.

The accompanying unaudited consolidated financial statements include the financial statements of ExlService Holdings and all of its subsidiaries. The standalone financial statements of subsidiaries are fully consolidated on a line-by-line basis. Intra-group balances and transactions, and gains and losses arising from intra-group transactions, are eliminated while preparing consolidated financial statements. The Company’s investments in equity affiliates are recorded using equity method of accounting.

In the first quarter of 2025, the Company implemented operational and structural changes to accelerate the execution of its data and AI strategy. Under the new structure, the Company reports its financial performance based on new segments described in Note 3 - Segment Information to the unaudited consolidated financial statements. In conjunction with the new reporting structure, the Company has recast prior period amounts, wherever applicable, to conform to the way the Company internally manages and monitors segment performance. This change primarily impacted Note 3 - Segment Information and Note 10 - Goodwill and Other Intangible Assets to the unaudited consolidated financial statements. This change in segment presentation does not affect the Company’s unaudited consolidated statements of income, balance sheets or statements of cash flows.

(b)Use of Estimates

The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities included in the unaudited consolidated financial statements. Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from these estimates. The significant estimates that affect the unaudited consolidated financial statements include, but are not limited to, estimates of the contingent consideration, credit risk of customers, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, variable consideration in a customer contract, expected recoverability from customers

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

with contingent fee arrangements, estimated costs to complete fixed price contracts, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments and stock-based awards, and useful life of long-lived assets and other intangible assets. The significant assumptions underneath these estimates include, but are not limited to assumptions to calculate stock-based compensation expense, determine pattern of generation of economic benefits to calculate depreciation and amortization for long-lived assets and other intangible assets, and recoverability of long-lived assets, goodwill and other intangible assets.

(c)Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (“Accounting Standards Codification (“ASC”) Topic 740”), Improvements to Income Tax Disclosures. This ASU expands disclosures relating to the entity’s income tax rate reconciliation, income taxes paid and certain other disclosures related to income taxes. The ASU is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of the new disclosure requirements. This ASU will affect the Company’s annual income tax disclosures but is not expected to impact its consolidated balance sheets or statements of income for the year ending December 31, 2025.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income (“ASC Topic 220”): Expense Disaggregation Disclosures. This ASU improves disclosures relating to the disaggregation of income statement expenses, requires additional disclosures about the nature of expenses in commonly presented financial statement captions on an annual and interim basis for all public business entities. The ASU will be effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (“ASC Topic 326”): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU provides a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC Topic 606. The ASU will be effective for annual reporting periods beginning after December 15, 2025, including interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of this ASU and does not expect it to have a material effect on the consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40). This ASU enhances the guidance for internal-use software development costs by removing references to project stages and simplifying the criteria for when capitalization of software development costs shall begin. The ASU will be effective for annual reporting periods beginning after December 15, 2027, including interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

(d)Recently Adopted and Applicable Accounting Pronouncements

In March 2024, the FASB issued ASU No. 2024-01, Compensation-Stock Compensation (“ASC Topic 718”). This ASU clarifies how to evaluate whether profits interest and similar awards given to employees and non-employees are within the scope of share-based payment arrangement under ASC Topic 718. The ASU will be effective for annual periods beginning after December 15, 2024, including interim periods within those years, with early adoption permitted. The Company has early adopted this ASU beginning January 1, 2024. The adoption of this ASU did not have a material impact on the Company’s unaudited consolidated financial statements.

3. Segment Information

The Company is a provider of data and AI-led and digital operations services in an integrated manner for clients across industry verticals.

In the first quarter of 2025, the Company implemented operational and structural changes to align with how the Company’s Chief Operating Decision Maker (“CODM”) reviews financial information and makes operating decisions. This new operating model comprises of Industry Market Units (“IMUs”) which focus on delivering higher value to clients by

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

leveraging full suite of capabilities; and Strategic Growth Units which rapidly advance the capabilities specific to various industries and client needs.

Consequently, the Company realigned its reportable segments to the IMUs as follows:

•Insurance

•Healthcare and Life Sciences,

•Banking, Capital Markets and Diversified Industries,

•International Growth Markets

The primary changes in the new reportable segments reflect 1) the integration of the former Analytics reportable segment as a core capability within each of the IMUs, ensuring alignment with the specialized needs of clients across IMUs, 2) the reorganization of the former Emerging Business reportable segment into a Banking, Capital Markets and Diversified Industries reportable segment, excluding Life Sciences, which is now a part of the new Healthcare and Life Sciences reportable segment, and 3) the formation of International Growth Markets as a separate business unit to represent all service and solutions offerings to clients in the United Kingdom, Europe, Middle East, Asia-Pacific and South Africa geographies across all industry verticals. The International Growth Markets business unit will help the Company to strategically expand its footprint in markets outside of North America and drive focus on offerings and expansion in those markets in new and existing clients.

In addition, revenues by service type are now presented as data and AI-led and digital operations services. Revenues attributable to geographical regions are now presented as North America (including the United States, Canada and Mexico), the United Kingdom & Europe, and the Rest of World.

The Company has recast segment disclosures for the prior periods presented herein to conform to the new segment structure. This change in segment presentation does not affect the Company’s unaudited consolidated statements of income, balance sheet or statements of cash flows.

The Company’s Chief Executive Officer has been identified as the CODM. The CODM generally reviews financial information such as revenues, cost of revenues and gross profit to allocate an overall budget and measure segment performance.

Revenues and cost of revenues for the three months ended September 30, 2025 and 2024, respectively, for each of the reportable segments, are as follows:


	Three months ended September 30, 2025
	Insurance		Healthcare and Life Sciences		Banking, Capital Markets and Diversified Industries		International Growth Markets		Total

Revenues, net	$	180,547	$	135,271	$	120,996	$	92,771	$	529,585
Cost of revenues (1)
Employee costs	96,661		63,561		65,116		49,106		274,444
Infrastructure and technology costs	13,670		7,490		6,617		8,920		36,697
Other costs (2)	4,080		5,999		2,908		1,521		14,508
Gross profit (1)	$	66,136	$	58,221	$	46,355	$	33,224	$	203,936
Operating expenses									127,762
Income from operations									76,174
Foreign exchange gain, net, interest expense and other income, net									(1,477)
Income before income tax expense and earnings from equity affiliates									$	74,697

(1) Exclusive of depreciation and amortization expense.

(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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


	Three months ended September 30, 2024
	Insurance		Healthcare and Life Sciences		Banking, Capital Markets and Diversified Industries		International Growth Markets		Total
Revenues, net	$	166,416	$	111,197	$	108,300	$	86,160	$	472,073
Cost of revenues (1)
Employee costs	85,808		51,096		59,446		45,851		242,201
Infrastructure and technology costs	12,744		7,578		5,817		8,104		34,243
Other costs (2)	8,097		5,052		2,699		1,514		17,362
Gross profit (1)	$	59,767	$	47,471	$	40,338	$	30,691	$	178,267
Operating expenses									108,862
Income from operations									69,405
Foreign exchange gain, net, interest expense and other income, net									(874)
Income before income tax expense and earnings from equity affiliates									$	68,531

(1) Exclusive of depreciation and amortization expense.

(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.

Revenues and cost of revenues for the nine months ended September 30, 2025 and 2024, respectively, for each of the reportable segments, are as follows:


	Nine months ended September 30, 2025
	Insurance		Healthcare and Life Sciences		Banking, Capital Markets and Diversified Industries		International Growth Markets		Total
Revenues, net	$	524,777	$	390,352	$	359,787	$	270,148	$	1,545,064
Cost of revenues (1)
Employee costs	282,580		183,457		195,568		143,563		805,168
Infrastructure and technology costs	40,296		21,295		19,153		25,375		106,119
Other costs (2)	13,010		15,915		9,039		4,375		42,339
Gross profit (1)	$	188,891	$	169,685	$	136,027	$	96,835	$	591,438
Operating expenses									355,711
Income from operations									235,727
Foreign exchange gain, net, interest expense and other income, net									3,874
Income before income tax expense and earnings from equity affiliates									$	239,601

(1) Exclusive of depreciation and amortization expense.

(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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


	Nine months ended September 30, 2024
	Insurance		Healthcare and Life Sciences		Banking, Capital Markets and Diversified Industries		International Growth Markets		Total
Revenues, net	$	483,142	$	317,970	$	316,126	$	239,708	$	1,356,946
Cost of revenues (1)
Employee costs	250,580		145,870		176,044		128,927		701,421
Infrastructure and technology costs	36,677		18,863		15,973		22,471		93,984
Other costs (2)	28,633		14,143		7,170		3,985		53,931
Gross profit (1)	$	167,252	$	139,094	$	116,939	$	84,325	$	507,610
Operating expenses									315,232
Income from operations									192,378
Foreign exchange gain, net, interest expense and other income, net									(1,596)
Income before income tax expense and earnings from equity affiliates									$	190,782

(1) Exclusive of depreciation and amortization expense.

(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.

Revenues, net by service type, were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Data and AI-led (1)	$	298,470	$	253,616	$	845,169	$	722,743
Digital operations (2)	231,115		218,457		699,895		634,203
Revenues, net	$	529,585	$	472,073	$	1,545,064	$	1,356,946

(1) Data and AI-led revenue comes from AI-powered solutions and services in which the Company embeds data and AI into client workflows. Leveraging the Company’s depth of domain knowledge, analytics, data management and digital engineering expertise, the Company’s industry-specific offerings are designed to help clients accelerate growth, improve customer experience, enhance efficiency, and deliver lasting competitive advantages. As clients evolve from digital operations to data and AI-powered operations and outcomes, these capabilities represent the next stage of enterprise transformation.

(2) Digital operations revenue comes from the Company’s industry-specific solutions and services that help clients run essential business functions with greater speed, accuracy, and efficiency. The Company applies deep industry expertise and tailored technology—whether its proprietary technology or client technology—to solve complex challenges and drive measurable outcomes. These digital operations deployments form the foundation for future client transformation opportunities to infuse AI into client workflows and unlock even greater value.

All four reportable segments of the Company include revenues from both data and AI-led and digital operations services.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

The Company attributes revenues based on geographical markets where the customer operations being served by it are located.


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Revenues, net
North America	$	436,865	$	385,914	$	1,275,036	$	1,117,238

United Kingdom & Europe	78,980		71,457		228,999		201,269
Rest of World	13,740		14,702		41,029		38,439

Revenues, net	$	529,585	$	472,073	$	1,545,064	$	1,356,946

Revenues, net by industry verticals, were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Insurance	$	211,147	$	197,045	$	614,730	$	565,764
Healthcare and Life Sciences	135,503		111,496		391,066		318,834
Banking, Capital Markets and Diversified Industries	182,935		163,532		539,268		472,348
Revenues, net	$	529,585	$	472,073	$	1,545,064	$	1,356,946

Long-lived assets by geographic area, which consist of property and equipment, net and operating lease ROU assets were as follows:


	As of
	September 30, 2025		December 31, 2024
Long-lived assets
India	$	64,094	$	63,040
North America	52,585		52,510
The Philippines	36,676		25,881
South Africa	20,542		23,828
Rest of World	11,126		5,362
Long-lived assets	$	185,023	$	170,621

4. Revenues, net and Accounts Receivable, net

Refer to Note 3 - Segment Information to the unaudited consolidated financial statements for revenues disaggregated by reportable segments, service type, geography and industry verticals.

Contract balances

The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers:


	As of
	September 30, 2025		December 31, 2024

Accounts receivable, net	$	351,426	$	304,322
Contract assets	$	31,148	$	39,700
Contract liabilities:
Deferred revenue (consideration received in advance)	$	12,239	$	15,484
Consideration received for process transition activities	$	30,595	$	21,993

Table of Contents

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

Accounts receivable includes $147,896 and $121,817 as of September 30, 2025 and December 31, 2024, 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 no performance risk associated with its unbilled receivables. Contract assets as of September 30, 2025 and December 31, 2024, includes receivables of $25,863 and $33,472, respectively, from our payment integrity services. There are no performance risks associated with these contract assets.

There were no significant cumulative catch-up impact or impairment related to contract assets as of September 30, 2025 and December 31, 2024.

Revenue recognized during the three and nine months ended September 30, 2025 and 2024, which was included in the contract liabilities balance at the beginning of the respective periods:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Deferred revenue (consideration received in advance)	$	1,815	$	803	$	13,121	$	9,095
Consideration received for process transition activities	$	1,264	$	717	$	3,919	$	1,996

Contract acquisition and fulfillment costs

The following table provides details of the Company’s contract acquisition and fulfillment costs:


	Contract Acquisition Costs
	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Opening balance	$	2,192	$	1,990	$	2,287	$	2,122
Additions	198		6		563		377
Amortization	(235)		(218)		(695)		(721)
Closing balance	$	2,155	$	1,778	$	2,155	$	1,778


	Contract Fulfillment Costs
	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Opening balance	$	38,938	$	30,404	$	36,022	$	24,673
Additions	1,683		3,530		7,168		10,814
Amortization	(1,388)		(713)		(3,957)		(2,266)
Closing balance	$	39,233	$	33,221	$	39,233	$	33,221

There was no significant impairment for contract acquisition and contract fulfillment costs as of September 30, 2025 and December 31, 2024.

Allowance for expected credit losses

The following table provides information about accounts receivable, net of allowance for expected credit losses:


	As of
	September 30, 2025		December 31, 2024
Accounts receivable, including unbilled receivables	$	356,153	$	307,850
Less: Allowance for expected credit losses	(4,727)		(3,528)
Accounts receivable, net	$	351,426	$	304,322

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

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


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Opening balance	$	4,727	$	3,560	$	3,528	$	3,703
Additions / (reductions)	8		342		1,256		274
Reductions due to write-off of accounts receivable	(8)		(27)		(55)		(103)
Currency translation adjustments	—		(1)		(2)		—
Closing balance	$	4,727	$	3,874	$	4,727	$	3,874

Customer and credit risk concentration

No single customer accounted for more than 10% of the Company's revenues, net during the three and nine months ended September 30, 2025 and 2024. 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 September 30, 2025 and December 31, 2024.

5. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Numerator:
Net income	$	58,161	$	53,037	$	190,773	$	147,625
Denominator:
Basic weighted average common shares outstanding	160,495,712		161,732,872		161,963,152		163,197,767
Dilutive effect of stock-based awards	1,218,774		1,454,861		1,517,901		1,422,314

Diluted weighted average common shares outstanding	161,714,486		163,187,733		163,481,053		164,620,081
Earnings per share:
Basic	$	0.36	$	0.33	$	1.18	$	0.90
Diluted	$	0.36	$	0.33	$	1.17	$	0.90
Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share	1,448,090		1,790,695		831,678		2,762,178

In March 2024, the Company entered into a master confirmation (the “Master Accelerated Share Repurchase Confirmation”) and a supplemental confirmation (together, the “2024 ASR Agreement”), with Citibank, N.A. (“Citibank”). On July 29, 2025, the Company entered into a new supplemental confirmation to the prior Master Accelerated Share Repurchase Confirmation (together, the “2025 ASR Agreement”). During the three months ended September 30, 2025, 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 $25,000 was initially recorded in additional paid-in capital, which reflects the pending settlement of the 2025 ASR Agreement.

Had the 2025 ASR Agreement been settled as of September 30, 2025, 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 2025 ASR Agreement was excluded from the computation of diluted earnings per share as its inclusion would have been anti-dilutive.

Refer to Note 19 - Capital Structure to the unaudited consolidated financial statements for further details.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

6. Other Income, net

Other income, net consists of the following:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Gain on sale and fair value mark-to-market on investments	$	2,196	$	1,766	$	6,403	$	3,944
Interest and dividend income	2,134		2,547		7,441		7,206
Fair value changes of contingent consideration (1)	—		—		—		589
Others, net	129		61		989		137
Other income, net	$	4,459	$	4,374	$	14,833	$	11,876

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

7. Cash, Cash Equivalents and Restricted Cash

For the purposes of unaudited consolidated statements of cash flows, cash, cash equivalents and restricted cash consist of the following:


	As of
	September 30, 2025		September 30, 2024		December 31, 2024
Cash and cash equivalents	$	160,309	$	150,102	$	153,355
Restricted cash (current) (1)	11,319		7,342		9,972
Restricted cash (non-current) (2)	8,205		5,820		8,071
Cash, cash equivalents and restricted cash	$	179,833	$	163,264	$	171,398

(1) 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.” Restricted cash also includes funds held as collateral in a dedicated bank account for irrevocable letters of credit issued in favor of third parties for facility leases.

(2) Restricted cash (non-current) represents deposits 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.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

8. Investments

Investments consist of the following:


	As of
	September 30, 2025		December 31, 2024
Short-term investments
Mutual funds	$	174,761	$	108,251
Term deposits	55,072		78,972
Short-term investments	$	229,833	$	187,223

Long-term investments
Term deposits	$	2,454	$	9,295

Investment in equity affiliate	5,547		4,677
Long-term investments	$	8,001	$	13,972

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

9. Property and Equipment, net

Property and equipment consists of the following:


	As of
	September 30, 2025		December 31, 2024
Property and equipment, gross	$	392,338	$	356,060
Less: Accumulated depreciation and amortization	(279,661)		(254,223)
Property and equipment, net	$	112,677	$	101,837

During the three and nine months ended September 30, 2025, there were no material changes in estimated useful lives of property and equipment during the ordinary course of operations.

The depreciation and amortization expense, excluding amortization of acquisition-related intangibles, recognized in the unaudited consolidated statements of income was as follows:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Depreciation and amortization expense	$	11,818	$	10,350	$	32,907	$	29,449

Internally developed software costs, included in property and equipment was as follows:


	As of
	September 30, 2025		December 31, 2024
Cost	$	66,005	$	60,447
Less : Accumulated amortization	(47,203)		(38,243)
Internally developed software, net	$	18,802	$	22,204

The amortization expense on internally developed software recognized in the unaudited consolidated statements of income was as follows:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Amortization expense	$	3,498	$	2,961	$	8,981	$	8,408

Table of Contents

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

During the three and nine months ended September 30, 2025 and 2024, there were no indicators of impairment related to capitalized software.

10. Goodwill and Other Intangible Assets

Goodwill

In the first quarter of 2025, the Company implemented operational and structural changes which resulted in the realignment of its reporting segments. Refer to Note 3- Segment Information for further details. Goodwill has been re-allocated to reporting units based on the relative fair value approach.

The Company tested goodwill for impairment prior to the segment realignment and immediately thereafter, for events and conditions identified in accordance with the guidance in ASC Topic 350, Intangibles- Goodwill and Other. The fair value of the reporting units was calculated using a discounted cash flow model using estimated future cash flows. The results of the evaluation demonstrated that the fair value of each reporting unit exceeded its book value as of the date of the segment realignment.

The following table sets forth details of changes in goodwill by reportable segment of the Company:


	Insurance		Healthcare and Life Sciences		Banking, Capital Markets and Diversified Industries		International Growth Markets		Total



Balance as of December 31, 2024	$	77,099	$	189,621	$	100,639	$	53,028	$	420,387


Currency translation adjustments	165		(21)		(366)		(294)		(516)
Balance as of September 30, 2025	$	77,264	$	189,600	$	100,273	$	52,734	$	419,871

During the three and nine months ended September 30, 2025 and 2024, the Company performed an assessment to determine whether events or circumstances exist that may lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Based on such assessment, the Company concluded that there was no impairment on goodwill during the three and nine months ended September 30, 2025 and 2024.

Other Intangible Assets

Information regarding the Company’s intangible assets is set forth below:


	As of September 30, 2025						As of December 31, 2024
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	108,550	$	(70,255)	$	38,295	$	108,550	$	(60,667)	$	47,883
Developed technology	3,633		(3,516)		117		3,529		(3,311)		218
Trade names and trademarks	1,700		(1,517)		183		1,700		(1,442)		258
Non-compete agreements	300		(284)		16		300		(228)		72
	114,183		(75,572)		38,611		114,079		(65,648)		48,431
Indefinite-lived intangible assets:
Trade names and trademarks	900		—		900		900		—		900
Other intangible assets	$	115,083	$	(75,572)	$	39,511	$	114,979	$	(65,648)	$	49,331

Table of Contents

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

The amortization expense recognized in the unaudited consolidated statements of income was as follows:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Amortization expense	$	3,310	$	3,449	$	9,833	$	9,606

During the three and nine months ended September 30, 2025 and 2024, there were no indicators of impairment related to intangible assets.

Estimated future amortization expense related to finite-lived intangible assets as of September 30, 2025 was as follows:


2025 (October 1 - December 31)	$	3,302
2026	12,786
2027	11,844
2028	9,227
2029	1,452
Total	$	38,611

11. Other Current Assets

Other current assets consist of the following:


	As of
	September 30, 2025		December 31, 2024
Advance income tax, net	$	49,862	$	49,377
Contract assets	27,660		36,072
Prepaid expenses	26,176		21,061
Receivables from statutory authorities	19,506		19,407

Deferred contract fulfillment costs	5,327		4,281

Derivative instruments	3,915		1,973
Others	6,613		8,146
Other current assets	$	139,059	$	140,317

12. Other Assets

Other assets consist of the following:


	As of
	September 30, 2025		December 31, 2024
Deferred contract fulfillment costs	$	33,906	$	31,741
Deposits with statutory authorities	7,463		7,312
Lease deposits	7,451		6,495
Prepaid expenses	5,444		2,775
Contract assets	3,488		3,628
Derivative instruments	780		852
Others	6,718		3,282
Other assets	$	65,250	$	56,085

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

13. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:


	As of
	September 30, 2025		December 31, 2024
Accrued expenses	$	63,803	$	63,548
Payable to statutory authorities	23,501		22,935
Client liabilities	16,753		9,711
Derivative instruments	12,877		7,454
Accrued capital expenditures	3,379		2,059
Contingent consideration	2,700		1,280

Income taxes payable	237		284
Others	6,047		6,326
Accrued expenses and other current liabilities	$	129,297	$	113,597

14. Other Non-Current Liabilities

Other non-current liabilities consist of the following:


	As of
	September 30, 2025		December 31, 2024
Deferred transition revenue	$	25,364	$	18,213
Retirement benefits	22,862		24,795
Derivative instruments	9,036		4,363
Unrecognized tax benefits	2,373		1,966
Contingent consideration	—		1,420


Others	1,744		2,816
Other non-current liabilities	$	61,379	$	53,573

15. Accumulated Other Comprehensive Income/(Loss)

Accumulated other comprehensive income/(loss) (“AOCI”) consists of actuarial gain/(loss) on retirement benefits and foreign currency translation adjustments. In addition, the Company enters into foreign currency forward contracts and interest rate swaps, which are designated as cash flow hedges, as applicable, in accordance with ASC Topic 815, Derivatives and Hedging. Cumulative changes in the fair values of cash flow hedges are recognized in AOCI on the Company’s consolidated balance sheets. The fair value changes are reclassified from AOCI to unaudited consolidated statements of income upon settlement of foreign currency forward contracts designated as cash flow hedges of a forecast transaction, whereas such changes for interest rate swaps are reclassified over the term of the contract. The following table sets forth the changes in AOCI during the nine months ended September 30, 2025 and 2024:

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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


	Accumulated Other Comprehensive Income/(Loss)
	Currency translation adjustments		Unrealized gain/(loss) on cash flow hedges		Retirement benefits		Total
Balance as of December 31, 2024	$	(146,998)	$	(7,548)	$	(176)	$	(154,722)
Loss recognized during the period	(10,053)		(10,392)		—		(20,445)

Reclassification to net income (1)	—		2,680		(341)		2,339
Income tax effects (2)	2,146		1,744		(39)		3,851
Accumulated other comprehensive loss as of September 30, 2025	$	(154,905)	$	(13,516)	$	(556)	$	(168,977)

Balance as of December 31, 2023	$	(132,643)	$	4,198	$	1,405	$	(127,040)
Gain/(Loss) recognized during the period	(483)		7,257		—		6,774

Reclassification to net income (1)	—		(850)		(455)		(1,305)
Income tax effects (2)	146		(1,165)		(3)		(1,022)
Accumulated other comprehensive income/(loss) as of September 30, 2024	$	(132,980)	$	9,440	$	947	$	(122,593)

(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.

16. Fair Value Measurements

Assets and Liabilities Measured at Fair Value

The following table sets forth the Company’s assets and liabilities that were recognized at fair value:


	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
As of September 30, 2025	(Level 1)		(Level 2)		(Level 3)		Total
Assets
Cash equivalents - Money market funds (1)	$	64,268	$	—	$	—	$	64,268
Mutual funds (2)	174,761		—		—		174,761
Derivative financial instruments	—		4,695		—		4,695
Total	$	239,029	$	4,695	$	—	$	243,724
Liabilities
Derivative financial instruments	$	—	$	21,913	$	—	$	21,913
Contingent consideration (3)	—		—		2,700		2,700
Total	$	—	$	21,913	$	2,700	$	24,613

Table of Contents

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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



	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
As of December 31, 2024	(Level 1)		(Level 2)		(Level 3)		Total
Assets
Cash equivalents - Money market funds (1)	$	54,925	$	—	$	—	$	54,925
Mutual funds (2)	108,251		—		—		108,251
Derivative financial instruments	—		2,825		—		2,825
Total	$	163,176	$	2,825	$	—	$	166,001
Liabilities
Derivative financial instruments	$	—	$	11,817	$	—	$	11,817
Contingent consideration (3)	—		—		2,700		2,700
Total	$	—	$	11,817	$	2,700	$	14,517

(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.

Fair Value of Contingent Consideration:

The fair value measurement of contingent consideration is determined using Level 3 inputs. The Company’s contingent consideration represents a component of the total purchase consideration for business acquisitions. The measurement is calculated using unobservable inputs based on the Company’s own assessment of achievement of certain performance goals. The Company estimated the fair value of the contingent consideration based on the Monte Carlo simulation model.

The following table summarizes the changes in the fair value of contingent consideration:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Opening balance	$	2,700	$	—	$	2,700	$	15,589
Acquisitions	—		7,700		—		7,700
Fair value changes	—		—		—		(589)
Payments	—		—		—		(15,000)
Closing balance	$	2,700	$	7,700	$	2,700	$	7,700

During the three and nine months ended September 30, 2025 and 2024, there were no transfers among Level 1, Level 2 and Level 3.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

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. Derivatives and Hedge Accounting

The Company uses derivative instruments to mitigate cash flow volatility from risk of fluctuations in foreign currency exchange rates and interest rates. The Company enters into foreign currency forward contracts to hedge cash flow risks from forecasted revenues and other transactions denominated in certain foreign currencies. These contracts qualify as cash flow hedges under ASC Topic 815, Derivatives and Hedging, and are with counterparties that are highly rated financial institutions.

The following table sets forth the aggregate notional amount of derivatives in cash flow hedging relationship:


	As of
	September 30, 2025	December 31, 2024
Foreign currency forward contracts denominated in:
Sell U.S. dollar (USD)	1,149,500	984,300
Buy U.S. dollar (USD)	31,609	—

The Company estimates that approximately $8,660 of derivative loss, net, excluding tax effects, included in AOCI, representing changes in the value of cash flow hedges based on exchange rates prevailing as of September 30, 2025, could be reclassified into earnings within the next twelve months. As of September 30, 2025, the maximum outstanding term of the cash flow hedges was approximately 45 months.

The Company also enters into foreign currency forward contracts to hedge its intercompany balances and other monetary assets and liabilities denominated in currencies other than functional currencies, against the risk of fluctuations in foreign currency exchange rates associated with remeasurement of such assets and liabilities to functional currency. These foreign currency forward contracts do not qualify as fair value hedges under ASC Topic 815, Derivatives and Hedging. Changes in the fair value of these financial instruments are recognized in the unaudited consolidated statements of income and are included in the foreign exchange gain/(loss) line item.

The following table sets forth the aggregate notional principal amounts of outstanding foreign currency forward contracts for derivatives not designated as hedging instruments:


	As of
Foreign currency forward contracts denominated in:	September 30, 2025	December 31, 2024
Sell USD	226,932	179,491
Sell GBP	35,138	20,956
Sell EUR	8,932	9,008
Sell AUD	4,889	4,770

Buy USD (1)	5,455	10,594

(1) This includes $5,455 and $10,006 related to USD purchases against sale of ZAR 94,303 and ZAR 188,373 as of September 30, 2025 and December 31, 2024, respectively.

Table of Contents

EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

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


	Derivatives in cash flow hedging relationships				Derivatives not designated as hedging instruments
	As of				As of
	September 30, 2025		December 31, 2024		September 30, 2025		December 31, 2024
Assets:
Other current assets	$	3,900	$	1,711	$	15	$	262
Other assets	$	780	$	852	$	—	$	—
Liabilities:
Accrued expenses and other current liabilities	$	12,560	$	7,404	$	317	$	50
Other non-current liabilities	$	9,036	$	4,363	$	—	$	—

The following table sets forth the effect of foreign currency forward contracts and interest rate swaps on AOCI and the unaudited consolidated statements of income:


	Three months ended September 30,				Nine months ended September 30,
Derivative financial instruments:	2025		2024		2025		2024
Unrealized gain/(loss) recognized in other comprehensive income (“OCI”)
Derivatives in cash flow hedging relationships	$	(25,816)	$	10,097	$	(10,392)	$	7,257

Loss recognized in unaudited consolidated statements of income
Derivatives not designated as hedging instruments	$	(7,273)	$	(259)	$	(8,559)	$	(2,332)

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

The following table sets forth the location and amount of gain/(loss) recognized in unaudited consolidated statements of income for derivatives in cash flow hedging relationships and derivatives not designated as hedging instruments:


	Three months ended September 30,
	2025				2024
	As per unaudited consolidated statements of income		Gain/(loss) on derivative financial instruments		As per unaudited consolidated statements of income		Gain/(loss) on derivative financial instruments
Derivatives in cash flow hedging relationships
Location in unaudited consolidated statements of income where gain/(loss) was reclassified from AOCI
Revenues, net	$	529,585	$	(816)	$	472,073	$	—
Cost of revenues	$	325,649	(764)		$	293,806	518
General and administrative expenses	$	66,251	(99)		$	57,495	77
Selling and marketing expenses	$	46,383	(21)		$	37,568	9
Depreciation and amortization expense	$	15,128	64		$	13,799	38
Interest expense	$	4,923	—		$	5,526	240
Total before tax			(1,636)				882
Income tax effects on above			354				(107)
Net of tax			$	(1,282)			$	775

Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where gain/(loss) was recognized

Foreign exchange gain/(loss), net	$	(1,013)	$	(7,273)	$	278	$	(259)

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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


	Nine months ended September 30,
	2025				2024
	As per unaudited consolidated statements of income		Gain/(loss) on derivative financial instruments		As per unaudited consolidated statements of income		Gain/(loss) on derivative financial instruments
Derivatives in cash flow hedging relationships
Location in unaudited consolidated statements of income where gain/(loss) was reclassified from AOCI
Revenues, net	$	1,545,064	(1,844)		$	1,356,946	$	—
Cost of revenues	$	953,626	(817)		$	849,336	(64)
General and administrative expenses	$	185,217	(127)		$	167,195	156
Selling and marketing expenses	$	127,754	(30)		$	108,982	23
Depreciation and amortization expense	$	42,740	138		$	39,055	12
Interest expense	$	13,349	—		$	14,145	723
Total before tax			(2,680)				850
Income tax effects on above			571				(416)
Net of tax			$	(2,109)			$	434

Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where gain/(loss) was recognized

Foreign exchange gain/(loss), net	$	2,390	$	(8,559)	$	673	$	(2,332)

18. Borrowings

The following tables summarizes the Company’s debt position under its credit agreement with Citibank, N.A:


	As of
	September 30, 2025						December 31, 2024
	Revolving credit facility		Term loan facility		Total		Revolving credit facility		Term loan facility		Total
Current portion of long-term borrowings	$	—	$	5,000	$	5,000	$	—	$	5,000	$	5,000
Unamortized debt issuance costs	—		(114)		(114)		—		(114)		(114)
Current portion of long-term borrowings	—		4,886		4,886		—		4,886		4,886

Long-term borrowings	260,000		90,000		350,000		190,000		93,750		283,750
Unamortized debt issuance costs	—		(66)		(66)		—		(152)		(152)
Long-term borrowings	260,000		89,934		349,934		190,000		93,598		283,598
Borrowings	$	260,000	$	94,820	$	354,820	$	190,000	$	98,484	$	288,484

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

Unamortized debt issuance costs for the Company’s revolving credit facility of $604 and $895 as of September 30, 2025 and December 31, 2024, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.

Credit Agreement

The Company held a $300,000 revolving credit facility pursuant to its credit agreement (the “Credit Agreement”), dated as of November 21, 2017 with certain lenders and Citibank N.A. as Administrative Agent. This agreement was amended and restated in April 2022, followed by the First Amendment to Amended and Restated Credit Agreement in August 2024 (the “2024 Credit Agreement”). Among other things, the 2024 Credit Agreement increases revolving credit commitments to $500,000 and provides a new term loan facility of $100,000 with an annual repayment amount of 5%. The increased revolving credit facility and the new term loan facility both mature on April 18, 2027.

Under the 2024 Credit Agreement, obligations bear interest at a rate equal to specified prime rate (alternate base rate) or the adjusted secured overnight financing rate (SOFR) specified therein, plus, in each case, an applicable margin, and are guaranteed by the Company’s wholly-owned material domestic subsidiaries and secured by all or substantially all of the Company’s and its material domestic subsidiaries’ assets. The revolving credit commitments are subject to a commitment fee. The 2024 Credit Agreement includes a letter of credit sub facility and is voluntarily pre-payable from time to time without premium or penalty. Borrowings under the revolving credit facility can be used for working capital and general corporate purposes, including permitted acquisitions.

The effective interest rates of the revolving credit facility and the term loan facility are as follows:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Revolving credit facility	5.7	%	6.4	%	5.7	%	6.3	%
Term loan facility	5.7	%	6.8	%	5.7	%	6.8	%

As of September 30, 2025 and December 31, 2024, the Company was in compliance with the financial covenants under the 2024 Credit Agreement.

The maturity profile of the Company’s long-term borrowings, excluding debt issuance costs, outstanding as of September 30, 2025 was as follows:


	Revolving credit facility		Term loan facility


2025 (October 1 - December 31)	$	—	$	1,250
2026	—		5,000
2027	260,000		88,750
Total	$	260,000	$	95,000

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 September 30, 2025 and December 31, 2024, the Company had outstanding letters of credit of $741 and $761, respectively, that were not recognized in the consolidated balance sheets.

19. Capital Structure

Common Stock

The Company has one class of common stock outstanding.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

Share Repurchases

The Company purchased shares of its common stock from certain employees in connection with withholding tax payments related to the vesting of restricted stock units and performance-based restricted stock units, as below:


	Shares repurchased	Total consideration		Weighted average purchase price per share (1)
Three months ended September 30, 2025	—	$	—	$	—
Three months ended September 30, 2024	91,565	$	3,346	$	36.54

Nine months ended September 30, 2025	190,716	$	9,432	$	49.46
Nine months ended September 30, 2024	291,967	$	9,721	$	33.29

(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 restricted stock units.

On February 26, 2024, the Company’s board of directors authorized a $500,000 (excluding excise tax) common stock repurchase program beginning March 1, 2024 (the “2024 Repurchase Program”), and, on February 29, 2024, terminated the previous repurchase program, which had been effective since the beginning of 2022.

In March 2024, the Company entered into the 2024 ASR Agreement with Citibank to repurchase shares of its common stock for an aggregate purchase price of $125,000 under the 2024 Repurchase Program. The Company received an initial delivery of 3,350,084 shares in March 2024, representing 80% of the aggregate purchase price, which was recorded in treasury stock, while a prepayment of $25,000 was recorded in additional paid-in capital to reflect the pending settlement. The Company received an additional 820,433 shares upon final settlement in July 2024.

On July 29, 2025, the Company entered into the 2025 ASR Agreement with Citibank to repurchase shares of its common stock for an aggregate purchase price of $125,000, as part of the Company’s 2024 Repurchase Program. Upon payment of the aggregate purchase price of $125,000, the Company received an initial delivery of 2,302,556 shares of its common stock at an initial price of $43.43 per share, representing 80% of the aggregate purchase price. The Company funded the repurchase with available cash on hand and borrowing from its revolving credit facility. The 2025 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 2025 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 price of the Common Stock during the term of the 2025 ASR Agreement, less a discount and subject to adjustments pursuant to the terms and conditions of the 2025 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. The final settlement of the 2025 ASR Agreement is expected to be completed on December 1, 2025, subject to acceleration at Citibank’s discretion, which could be completed as early as October 30, 2025.

Under the Company’s repurchase program, 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.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

The Company purchased shares of its common stock, for a total consideration including commissions but excluding excise tax, under its repurchase programs, as below:


	Shares repurchased	Total consideration		Weighted average purchase price per share
Three months ended September 30, 2025	3,074,076	$	133,467	$	43.42
Three months ended September 30, 2024	1,738,114	$	59,346	$	34.14

Nine months ended September 30, 2025	4,155,289	$	183,278	$	44.11
Nine months ended September 30, 2024	6,012,285	$	187,599	$	31.20

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, 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 $694 and $412, during the three months ended September 30, 2025 and 2024, respectively, and $665 and $1,030, during the nine months ended September 30, 2025 and 2024, respectively.

20. Employee Benefit Plans

The Company’s Gratuity Plan in India (the “India Plan”) provides for a lump sum payment to vested employees on retirement or upon termination of employment in an amount based on the respective employee’s salary and years of employment with the Company. In addition, the Company’s subsidiary operating in the Philippines conforms to the minimum regulatory benefit, which provide for lump sum payment to vested employees on retirement from employment in an amount based on the respective employee’s salary and years of employment with the Company (the “Philippines Plan”). Liabilities with regard to the India Plan and the Philippines Plan are determined by actuarial valuation using the projected unit credit method. Current service costs for these plans are accrued in the year to which they relate. Actuarial gains or losses or prior service costs, if any, resulting from amendments to the plans are recognized and amortized over the remaining period of service of the employees.

The India Plan is partially funded whereas the Philippines Plan is unfunded. The Company makes annual contributions to the India Plan established with insurance companies. Fund managers manage these funds and calculate the annual contribution required to be made by the Company and manage the India Plan, including any required payouts. These funds are managed on a cash accumulation basis, inclusive of interest which is declared periodically. The Company expects to earn a return of approximately 7.0% per annum on the India Plan for the year ending December 31, 2025.


Change in Plan Assets
Plan assets as of December 31, 2024	$	19,963
Actual return	1,130
Employer contribution	5,806
Benefits paid	(1,286)
Currency translation adjustments	(849)
Plan assets as of September 30, 2025	$	24,764

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

Components of net periodic benefit costs recognized in unaudited consolidated statements of income and actuarial (gain)/loss reclassified from AOCI, were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Service cost	$	1,359	$	1,117	$	4,148	$	3,325
Interest cost	500		386		1,526		1,160
Expected return on plan assets	(339)		(309)		(1,035)		(931)
Amortization of actuarial (gain)/loss, gross of tax	(113)		(153)		(341)		(455)
Net gratuity cost	$	1,407	$	1,041	$	4,298	$	3,099

Amortization of actuarial (gain)/loss, gross of tax	$	(113)	$	(153)	$	(341)	$	(455)
Income tax effects on above	(13)		(1)		(39)		(3)
Amortization of actuarial (gain)/loss, net of tax	$	(126)	$	(154)	$	(380)	$	(458)

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 3.0% of employee compensation within certain limits.

The Company’s contributions to various defined contribution plans were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Contribution to the 401(k) Plans	$	1,469	$	1,358	$	5,640	$	4,991
Contributions to the defined contribution plans in foreign subsidiaries of the Company	$	8,291	$	7,112	$	24,768	$	20,752

21. Leases

The Company conducts its operations using facilities leased under operating lease agreements that expire at various dates. The Company finances its use of certain motor vehicles and other equipment under various lease arrangements provided by financial institutions. The lease agreements do not contain any covenants to impose any restrictions except for market-standard practice for similar lease arrangements.

The Company had performed an evaluation of its contracts with suppliers in accordance with ASC Topic 842, Leases, and had determined that, except for leases for office facilities, motor vehicles and other equipment as described above, none of the Company’s contracts contain a lease.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

The components of lease cost, which are included in the Company’s unaudited consolidated statements of income, are as follows:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Finance lease:
Depreciation on underlying ROU assets	$	157	$	111	$	436	$	261
Interest on lease liabilities	79		53		225		134
	236		164		661		395
Operating lease (1)	6,414		5,995		19,121		17,088
Variable lease costs	1,227		1,240		3,514		3,329
Sublease income	(111)		(49)		(334)		(49)

Total lease cost	$	7,766	$	7,350	$	22,962	$	20,763

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

Supplemental cash flow and other information related to leases are as follows:


	Nine months ended September 30,
	2025			2024
Cash payments for amounts included in the measurement of lease liabilities :
Operating cash outflows for operating leases	$	18,895		$	15,180
Operating cash outflows for finance leases	$	79		$	134
Financing cash outflows for finance leases	$	365		$	222
ROU assets obtained in exchange for new operating lease liabilities	$	14,996		$	17,753
ROU assets obtained in exchange for new finance lease liabilities	$	733		$	972
Weighted average remaining lease term (in years)
Finance lease	2.7 years			3.2 years
Operating lease	4.5 years			4.9 years
Weighted average discount rate
Finance lease	15.1		%	14.9		%
Operating lease	8.1		%	7.9		%

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 $5,766 and $3,383, during the nine months ended September 30, 2025 and 2024, respectively, with a corresponding adjustment to ROU assets.

As of September 30, 2025 and December 31, 2024, the Company did not have any significant leases that have not yet commenced but that create significant rights and obligations for the Company.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

Maturities of lease liabilities as of September 30, 2025 were as follows:


	Operating Leases		Finance Leases
2025 (October 1 - December 31)	$	6,149	$	840
2026	24,463		776
2027	22,275		578
2028	18,895		366
2029	10,693		120
2030 and thereafter	13,260		—
Total lease payments	95,735		2,680
Less: Imputed interest	16,098		608
Present value of lease liabilities	$	79,637	$	2,072

22. Income Taxes

The Company determines the tax provision for interim periods using an estimate of its annual effective tax rate. Each quarter, the Company updates its estimate of annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment.

The effective tax rate decreased from 22.6% to 22.1%, during the three months ended September 30, 2024 and 2025, respectively. The Company recorded income tax expense of $16,456 and $15,460 during the three months ended September 30, 2025 and 2024, respectively. The increase in income tax expense was primarily driven by higher profit, and lower excess tax benefits, partially offset by lower state taxes and a decrease in non-deductible expenses during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The effective tax rate decreased from 22.6% to 20.3%, during the nine months ended September 30, 2024 and 2025, respectively. The Company recorded income tax expense of $48,498 and $43,086 during the nine months ended September 30, 2025 and 2024, respectively. The increase in income tax expense was primarily driven by higher profit, and an increase in non-deductible expenses, partially offset by lower state taxes and higher excess tax benefits during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

On July 4, 2025, President Trump signed new tax legislation known as the One Big Beautiful Bill Act (“OBBBA”), which effectively extends certain provisions of the 2017 Tax Cuts and Jobs Act, including adjustments to several provisions that were scheduled to sunset, phase out, or phase in. As a result of the Company’s election to expense research or experimental expenditures incurred in the United States and the related transition provisions, the Company’s U.S. cash taxes for 2025 will decrease, while there will be no significant impact on its effective tax rate.

Deferred income taxes recognized in OCI were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Deferred taxes benefit / (expense) recognized on:
Unrealized gain/(loss) on cash flow hedges	$	4,945	$	(342)	$	2,315	$	(1,581)
Reclassification adjustment for cash flow hedges	(354)		107		(571)		416
Reclassification adjustment for retirement benefits	(13)		(1)		(39)		(3)

Currency translation adjustments	3,158		(1,081)		2,146		146
Total	$	7,736	$	(1,317)	$	3,851	$	(1,022)

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

23. Stock-Based Compensation

Stock-based compensation expense by function, as below, are included in the unaudited consolidated statements of income:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Cost of revenues	$	3,321	$	4,182	$	10,229	$	11,989
General and administrative expenses	9,037		8,514		22,840		22,635
Selling and marketing expenses	10,781		8,536		25,649		22,555
Total	$	23,139	$	21,232	$	58,718	$	57,179

Income tax benefit related to share-based compensation (1)	$	5,788	$	5,830	$	19,104	$	15,807

(1) Includes $64 and $1,673 during the three months ended September 30, 2025 and 2024, respectively, and $14,792 and $9,214 during the nine months ended September 30, 2025 and 2024, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No. 2016-09, Compensation - Stock Compensation.

On June 17, 2025, the Company’s stockholders approved 2025 Omnibus Incentive Plan (the "2025 Plan"), which among other things, reserves 6,800,000 shares (as adjusted under the terms thereof) of the Company’s common stock for grant of awards under the 2025 Plan, at which time new awards under the 2018 Omnibus Incentive Plan (the "2018 Plan") were not permitted to be made, but outstanding awards under the 2018 Plan will continued to be governed by the terms thereof. As of September 30, 2025, the Company had 5,702,547 shares available for future grants under the 2025 Plan.

Stock Options

Stock option activity under the Company’s stock-based compensation plans is shown below:


	Number of Options		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (Years)
Outstanding at December 31, 2024	1,768,305		$	30.14	$	25,187	8.5
Granted	—		—		—		—
Exercised	—		—		—		—
Forfeited	(33,585)		30.15		—		—
Outstanding at September 30, 2025	1,734,720		$	30.14	$	24,102	7.7
Vested and exercisable at September 30, 2025	861,740		$	30.14	$	11,973	7.7
Weighted average grant date fair value of per unit of stock option granted during the period	$	—

As of September 30, 2025, unrecognized compensation cost of $9,067 is expected to be expensed over a weighted average period of 1.8 years.

Share Matching Program

Under the Company’s 2018 Plan, the Company established a share matching program (“SMP”) for executive officers and other specified employees. Under the SMP, the Company agreed to issue a number of restricted stock units equal to the number of newly acquired shares of the Company's common stock.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

Restricted stock unit activity under the SMP is shown below:


	Restricted Stock Units (SMP)
	Number	Weighted Average Fair Value
Outstanding as of December 31, 2024*	144,845	$	24.95
Granted	—	—
Vested*	(144,845)	24.95
Forfeited	—	—
Outstanding as of September 30, 2025*	—	$	—

* As of September 30, 2025 and December 31, 2024 restricted stock units vested for which the underlying common stock is yet to be issued are 217,230 and 72,385, respectively.

Restricted Stock Units

Restricted stock unit activity under the Company’s stock-based compensation plans is shown below:


	Restricted Stock Units
	Number	Weighted Average Fair Value
Outstanding as of December 31, 2024*	3,240,200	$	28.82
Granted	1,050,019	50.62
Vested*	(1,321,833)	26.55
Forfeited	(125,336)	36.27
Outstanding as of September 30, 2025*	2,843,050	$	37.60

* As of September 30, 2025 and December 31, 2024 restricted stock units vested for which the underlying common stock is yet to be issued are 346,431 and 289,547, respectively.

As of September 30, 2025, unrecognized compensation cost of $80,207 is expected to be expensed over a weighted average period of 2.7 years.

Performance Based Stock Awards

Under the Company’s equity incentive plans, the Company grants performance-based restricted stock units (“PRSUs”) to executive officers and other specified employees. During the nine months ended September 30, 2025, under the 2025 Plan and the 2018 Plan, the Company granted 40% of each award recipient’s equity grants in the form of PRSUs that cliff vest at the end of a three-year period based on an aggregated revenue target for a three-year period (“PU”). The remaining 60% 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 PRSU agreements, and are measured over a three-year performance period (“MU”).

PRSU activity under the Company’s stock plans is shown below:


	Revenue Based PRSUs			Market Condition Based PRSUs
	Number	Weighted Average Fair Value		Number	Weighted Average Fair Value
Outstanding as of December 31, 2024	537,944	$	31.02	806,519	$	43.06
Granted	244,685	49.28		366,915	76.08
Vested	—	—		—	—
Forfeited	(15,561)	38.03		(23,321)	56.12
Outstanding as of September 30, 2025	767,068	$	36.70	1,150,113	$	53.33

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

As of September 30, 2025, unrecognized compensation cost of $45,697 is expected to be expensed over a weighted average period of 1.8 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 15% of the participating employee’s compensation during the offering period, subject to a cap of $25 per employee per calendar year. The Company has reserved 4,000,000 shares of common stock for issuance under the 2022 ESPP.

The seventh offering period under the 2022 ESPP commenced on July 1, 2025 with a term of six months.

Activity under the Company’s 2022 ESPP is shown below:


	Number	Total Proceeds Received
Shares available for issuance as of December 31, 2024	3,672,744
Issuance of common stock related to the:
Fifth offering period	64,939	$	1,823
Sixth offering period	97,536	$	3,844
Shares available for issuance as of September 30, 2025	3,510,269
Contributions received for the seventh offering period up to September 30, 2025	—	$	1,356

24. Related Party Disclosures

The Company provides data and AI-led services to Corridor Platforms, Inc., which is an equity affiliate of the Company. The Company recognized revenues, net of $42 and $80 during the three months ended September 30, 2025 and 2024, respectively, and $126 and $382 during the nine months ended September 30, 2025 and 2024, respectively. The Company had outstanding accounts receivable, net of $14 and $56, related to this service contract as of September 30, 2025 and December 31, 2024, respectively.

25. Commitments and Contingencies

Capital Commitments

As of September 30, 2025 and December 31, 2024, the Company had committed to spend approximately $6,000 and $6,500, respectively, net of capital advances, under agreements to purchase 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. The Company committed to make an aggregate investment of $4,000 in the Partnership. As of September 30, 2025, the Company has invested $2,400 in the Partnership and is committed to make further investments up to an amount of $1,600.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

Other Commitments

Certain units of the Company’s Indian subsidiaries were established as 100% 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 September 30, 2025 and December 31, 2024 is $46,645 and $49,588, respectively. The Company has made payments and/or provided bank guarantees against these demands in the amounts of $7,757 and $7,506, as of September 30, 2025 and December 31, 2024, 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.

Pursuant to reviewing the Company’s annual VAT and service tax filings, the Indian tax authorities raised aggregate demands for tax years 2015 and 2017, in the amounts of $5,249 and $5,339, as of September 30, 2025 and December 31, 2024, respectively. The Company has provided bank guarantees against these demands in the amounts of $5,148 and $5,339, as of September 30, 2025 and December 31, 2024, 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 technical merits.

The Indian GST authorities rejected the Company’s refund claims in the amounts of $5,537 and $5,885 as of September 30, 2025 and December 31, 2024, 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 allowance was recorded against these GST receivables as of September 30, 2025 and December 31, 2024, 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 unaudited consolidated 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 assessment orders and in one case, has instituted an appeal against the order before the relevant tribunal while also making a payment under protest of the amount demanded. As of the reporting date, the Company’s management does not believe that the ultimate assessments in any of these matters will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. The Company will continue to monitor and evaluate its position based on future events and developments on these matters.

From time to time, the Company, its subsidiaries, and/or their present officers or directors, may be or have been, named as a defendant in litigation matters, including employment-related claims. The plaintiffs in those cases seek damages, including, where applicable, compensatory damages, punitive damages and attorney’s fees. With respect to pending litigation matters as of the reporting date, the Company believes that the damages claimed are without merit, and the Company intends to vigorously

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2025

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

defend them. The Company will continuously monitor developments on these matters to assess potential impacts to the financial statements.

The outcomes of legal actions are unpredictable and subject to significant uncertainties, and thus it is inherently difficult to determine the likelihood of the Company incurring a material loss or quantification of any such loss. With respect to certain pending litigation matters as of the reporting date, the Company has made provisions based on information currently available, including its evaluation of the facts underlying each matter and legal counsel’s advice on the estimated losses or range of reasonably possible losses. Based on the Company’s assessment, including the availability of insurance recoveries, the Company’s management does not believe that currently pending litigation, individually or in aggregate, will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. The Company will continuously monitor these matters to assess potential impacts to the financial statements.

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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, 2024. 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;

•use of AI technology presents competitive, operational, reputational and legal risks, and our use of AI technology may not be successful;

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

•our ability to successfully transition to and implement new organization structure;

•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, and on third party data use rights for certain of our offerings;

•employee wage increases;

•failure to protect our intellectual property;

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

•our ability to manage rapid infrastructure and personnel growth across countries;

•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, or acts of violence or war;

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•challenges by applicable tax authorities to transfer pricing determinations or the introduction of new or unfavorable tax legislation, tariffs, including legal restrictions on repatriation of funds held abroad;

•exposure to currency exchange rate fluctuations in the various currencies in which we do business including rising inflation, high interest rates and economic recessionary trends on currency exchange rates;

•restrictions on immigration and work permits;

•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 competitive terms, or exposure to interest rate fluctuations that are not fully hedged through interest rate swaps;

•negative public reaction in the United States or elsewhere to offshore outsourcing;

•effects of political and economic conditions globally including newly imposed U.S tariffs and any additional responsive non-U.S tariffs, 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 execute our sustainability-related initiatives.

These and other factors are more fully discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. 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 global data and artificial intelligence (“AI”) company that offers services and solutions to reinvent client business models, drive better outcomes and unlock growth with speed. We harness the power of data, AI, and deep industry knowledge to transform businesses, including the world’s leading corporations in industries including insurance, healthcare, life sciences, banking and financial services, media and retail, communications and media, and energy and infrastructure, among others.

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.

In the first quarter of 2025, we implemented operational and structural changes to align with how our management reviews financial information and makes operating decisions. The new operating model is comprised of Industry Market Units (“IMUs”) to focus on delivering higher value to clients leveraging our full suite of capabilities; and Strategic Growth Units to focus on rapidly advancing our operational, analytics, data engineering, and AI capabilities specific to our chosen industries. Our IMUs will focus on managing customer relationships and delivering the “One EXL” value proposition to clients, maintain a unified go-to-market approach and be integrally responsible for growth, profitability and client satisfaction.

Accordingly, our new reportable segments, aligned to our IMUs, are as follows:

•Insurance,

•Healthcare and Life Sciences,

•Banking, Capital Markets and Diversified Industries,

•International Growth Markets

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The primary changes in our new reportable segments reflect 1) the integration of our former Analytics reportable segment as a core capability within each of our IMUs, ensuring alignment with the specialized needs of our clients across IMUs, 2) the reorganization of our former Emerging Business reportable segment into a Banking, Capital Markets and Diversified Industries reportable segment, excluding Life Sciences, which is now a part of the new Healthcare and Life Sciences reportable segment, and 3) the formation of International Growth Markets as a separate business unit to represent all our service and solutions offerings to clients in the United Kingdom, Europe, Middle East, Asia-Pacific and South Africa geographies across all industry verticals. The International Growth Markets business unit will help strategically expand our footprint in markets outside of North America and drive focus on offerings and expansion in those markets in new and existing clients.

In addition, our revenues by service type are now presented as data and AI-led and digital operations services. Revenues attributable to geographical regions are now presented as North America (including the United States, Canada and Mexico), the United Kingdom and Europe, and Rest of World.

We have recast our segment disclosures for all prior periods presented to conform to the way we internally manage and monitor segment level performance of our business.

Revenues

For the three months ended September 30, 2025, we generated revenues of $529.6 million compared to revenues of $472.1 million for the three months ended September 30, 2024, an increase of $57.5 million, or 12.2%. For the nine months ended September 30, 2025, we generated revenues of $1,545.1 million compared to revenues of $1,356.9 million for the nine months ended September 30, 2024, an increase of $188.2 million, or 13.9%.

We serve clients mainly in North America, and the United Kingdom & Europe, with these two regions generating 82.5% and 14.9%, respectively, of our total revenues for the three months ended September 30, 2025, and 81.7% and 15.1%, respectively, of our total revenues for the three months ended September 30, 2024. For the nine months ended September 30, 2025, these two regions generated 82.5% and 14.8%, respectively, of our total revenues and 82.3% and 14.8%, respectively, of our total revenues for the nine months ended September 30, 2024.

For the three months ended September 30, 2025 and 2024, our total revenues from our top ten clients accounted for 34.5% and 34.2% of our total revenues, respectively. For the nine months ended September 30, 2025 and 2024, our total revenues from our top ten clients accounted for 33.8% and 33.2% 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 and AI-led and digital operations services to our clients. We market and sell our solutions and services to existing and prospective clients through our sales and client management teams, which are aligned by our IMUs. Our sales and client management teams operate primarily from the United States, India, the United Kingdom, Ireland and Australia.

Data and AI-led: Our data and AI-led revenue comes from AI-powered solutions and services in which we embed data and AI into client workflows. Leveraging our depth of domain knowledge, analytics, data management and digital engineering expertise, our industry-specific offerings are designed to help clients accelerate growth, improve customer experience, enhance efficiency, and deliver lasting competitive advantages. As clients evolve from digital operations to data and AI-powered operations and outcomes, these capabilities represent the next stage of enterprise transformation.

Digital operations: Our digital operations revenue comes from our industry-specific solutions and services that help clients run essential business functions with greater speed, accuracy, and efficiency. We apply deep industry expertise and tailored technology—whether our proprietary technology or client technology—to solve complex challenges and drive measurable outcomes. These digital operations deployments form the foundation for future client transformation opportunities to infuse AI into client workflows and unlock even greater value.

Our industry market units, which provide data and AI-led and digital operations services, are described below:

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Insurance: We combine our cloud-first digital insurance software solutions and industry expertise with generative AI, machine learning, advanced analytics, and platforms, to enable insurance businesses to transform operations and embed artificial intelligence into workflows. Our data and AI-powered operations and services span across the insurance value chain. We provide services to insurers in the areas of property and casualty, life, disability, annuity, and retirement services. Additionally, we serve insurance brokers, reinsurers, and insurtech companies.

Our offerings include digital marketing, new business acquisition, actuarial, underwriting support, claims processing, premium and benefit administration, policy servicing, premium audit, surveys, billing and collection, commercial and residential surveys, finance and accounting and customer service. This includes our Insurance Large Language Model (“LLM”), a specialized generative AI platform for claims, underwriting and subrogation, developed leveraging our deep experience and proprietary data in the insurance space.

Healthcare and Life Sciences: We work with clients across the healthcare ecosystem to meet their current and dynamic business challenges. We deliver integrated solutions and services at the intersection of domain, data, and AI to enable AI transformation for healthcare payers and providers, pharmacy benefit managers (“PBMs”), and life sciences organizations. Through the provision of a range of data and AI-powered operations and solutions, we focus on streamlining healthcare administration processes to enhance operational efficiency, aimed at reducing costs for both providers and consumers and improving consumer experience. We leverage innovative technologies to provide offerings intended to simplify complex workflows, minimize bureaucratic hurdles, and improve overall effectiveness.

For healthcare payers, we offer pre and post-pay auditing services, payment analytics, payment integrity, a care management platform and services and patient navigation. For healthcare providers, we offer revenue cycle management, digital transformation, data and analytics and call center modernization. For PBMs, we provide digital transformation, data and analytics and call center modernization. Within the life sciences space, we provide finance and accounting operations and data analytics. Across our segments, we leverage AI, analytics, and cloud-based solutions to enhance value-based care, optimize claims, and ensure regulatory compliance.

Banking, Capital Markets, and Diversified Industries: Our Banking and Capital Markets and Diversified Industries group delivers comprehensive solutions across retail and commercial banking, credit card services, payment services, fintech, banking infrastructure services, capital markets, mortgage services, utilities, retail and consumer packaged goods, media, communications and entertainment, travel and leisure, transportation and logistics, and other business services industries.

By integrating domain expertise with AI-driven data management, we empower financial institutions to innovate, enhance operational agility, and navigate evolving market demands. Our tailored services span retail banking operations such as digital lending solutions that enhance underwriting and compliance, sales and demand generation, omni-channel marketing, digital onboarding, know your customer (“KYC”)/anti-money laundering (“AML”) compliance, and collections; credit card services including customer acquisition, fraud management, and payment processing; and payment services structured for secure, multi-currency transaction processing. Additionally, we support fintechs with AI-driven hyper-personalization and analytics, while our capital markets solutions cover investment banking, asset management, custodian banking, and fund administration. Mortgage services include loan origination, account servicing, default management, and title settlement services. Our industry-leading AI and automation-driven service offerings drive efficiency and innovation across financial services.

Our enterprise services and solutions include domain-specific operations, finance and accounting, customer experience management, back-office operations, and revenue enhancement, such as pricing and billing, enabling our clients to deliver superior economic performance. For example, in the retail and consumer packaged goods sectors, we provide supply chain management services and AI-led advanced analytical services including merchandising, pricing, and demand forecasting and for our clients in the utilities sector, we offer AI-enabled operations and solutions related to end-to-end customer life cycle management, including onboarding and terminations, engineering field services, customer service, billing, and debt management and collections.

International Growth Markets: Our International Growth Markets (“IGM”) unit is focused on extending our global reach in growth markets outside North America. This provides us with opportunities to leverage our investments, experience, and expertise from the North America market to expand our global client base, drive further growth, and bring us closer to our

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customers across the world. IGM consists of dedicated teams servicing clients in the banking and capital markets, insurance, life sciences, energy and infrastructure, retail, consumer goods, and travel industries in growth markets. This unit is instrumental in localizing our global capabilities in these industry segments to align with the local regulatory, cultural, linguistic and economic needs. Across all regions in which we operate, we combine deep domain experience with our data and AI expertise to help clients innovate, enhance operational agility, adapt to changing market demands, and drive better business outcomes.

Pricing: 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 or emerging pricing models. Outcome-based pricing arrangements is an example of a non-linear pricing model where our revenues from platforms and solutions and the services we provide are compensated based on our clients’ usage or savings rather than the efforts we deploy 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.

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.

On July 4, 2025, President Trump signed new tax legislation known as the One Big Beautiful Bill Act (“OBBBA”), which effectively extends certain provisions of the 2017 Tax Cuts and Jobs Act, including adjustments to several provisions that were scheduled to sunset, phase out, or phase in. As a result of our election to expense research or experimental expenditures incurred in the United States and the related transition provisions, our U.S. cash taxes for 2025 will decrease, while there will be no significant impact on its effective tax rate.

Critical Accounting Policies and Estimates

In the first quarter of 2025, we implemented operational and structural changes which resulted in the realignment of our reporting segments. Refer to Note 3- Segment Information and Note 10- Goodwill and Other Intangible Assets to our unaudited consolidated financial statements for further details.

Goodwill has been re-allocated to reporting units based on the relative fair value approach. We tested goodwill for impairment prior to the segment realignment and immediately thereafter, for events and conditions identified in accordance with the guidance in ASC Topic 350, Intangibles- Goodwill and Other. The fair value of our reporting units was calculated using a discounted cash flow model using estimated future cash flows. The results of our evaluation demonstrated that the fair value of each reporting unit exceeded its book value as of the date of the segment realignment.

There have been no significant changes in our critical accounting policies and estimates during the nine months ended September 30, 2025, 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, 2024.

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Results of Operations

The following table summarizes our results of operations for the three months ended September 30, 2025 and 2024:


									(dollars in millions)
	Three months ended September 30, 2025		Percentage of Revenues, net		Three months ended September 30, 2024		Percentage of Revenues, net		Dollar change		Percentage change
	(A)				(B)				(C=A-B)
Revenues, net	$	529.6	100.0	%	$	472.1	100.0	%	$	57.5	12.2	%
Cost of revenues (1)	325.6		61.5	%	293.8		62.2	%	31.8		10.8	%
Gross profit (1)	204.0		38.5	%	178.3		37.8	%	25.7		14.4	%
Operating expenses:
General and administrative expenses	66.3		12.5	%	57.5		12.2	%	8.8		15.2	%
Selling and marketing expenses	46.4		8.8	%	37.6		8.0	%	8.8		23.5	%
Depreciation and amortization expense	15.1		2.9	%	13.8		2.9	%	1.3		9.6	%

Total operating expenses	127.8		24.1	%	108.9		23.1	%	18.9		17.4	%
Income from operations	76.2		14.4	%	69.4		14.7	%	6.8		9.8	%
Foreign exchange gain/(loss), net	(1.0)		(0.2)	%	0.3		0.1	%	(1.3)		(464.4)	%
Interest expense	(4.9)		(0.9)	%	(5.5)		(1.2)	%	0.6		(10.9)	%
Other income, net	4.5		0.8	%	4.3		0.9	%	0.2		1.9	%

Income before income tax expense and earnings from equity affiliates	74.8		14.1	%	68.5		14.5	%	6.3		9.0	%
Income tax expense	16.5		3.1	%	15.5		3.3	%	1.0		6.4	%
Income before earnings from equity affiliates	58.3		11.0	%	53.0		11.2	%	5.3		9.7	%
Loss from equity-method investment	(0.1)		—	%	—		—	%	(0.1)		—	%
Net income	$	58.2	11.0	%	$	53.0	11.2	%	$	5.2	9.7	%

(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 September 30, 2025 Compared to Three Months Ended September 30, 2024

Revenues

The following table summarizes our revenues by reportable segments:


	Three months ended September 30,				Dollar change		Percentage change		Percentage of Total Revenues for the three months ended September 30,
	2025		2024						2025		2024
	(dollars in millions)
Insurance	$	180.5	$	166.4	$	14.1	8.5	%	34.1	%	35.3	%
Healthcare and Life Sciences	135.3		111.2		24.1		21.6	%	25.5	%	23.6	%
Banking, Capital Markets and Diversified Industries	121.0		108.3		12.7		11.7	%	22.8	%	22.9	%
International Growth Markets	92.8		86.2		6.6		7.7	%	17.6	%	18.2	%
Total revenues, net	$	529.6	$	472.1	$	57.5	12.2	%	100.0	%	100.0	%

Revenues for the three months ended September 30, 2025 were up by $57.5 million, or 12.2%, compared to the three months ended September 30, 2024, primarily driven by the expansion of business from our existing clients across all reportable segments by 9.7% and revenue from new client wins, including revenue from our August 2024 acquisition of Incandescent Technologies, Inc. (“ITI Data”) by 2.5% during the three months ended September 30, 2025.

Revenue growth in Insurance by 8.5% was driven by the expansion of business from our existing clients by 7.7% and new clients by 0.8% during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Revenue growth in Healthcare and Life Sciences by 21.6% was driven by the expansion of business from our existing clients by 20.5% and new clients including revenue from ITI Data by 1.1% during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Revenue growth in Banking, Capital Markets and Diversified Industries by 11.7% was driven by the expansion of business from our existing clients by 5.4% and new clients including revenue from ITI Data by 6.3% during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Revenue growth in International Growth Markets by 7.7% was driven by the expansion of business from our existing clients by 5.8% and new clients including revenue from ITI Data by 2.6%, partially offset by a foreign exchange loss, net of hedging by 0.7% during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

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 September 30,				Dollar change		Percentage change		Three months ended September 30,				Percentage change
	2025		2024						2025		2024
	(dollars in millions)
Insurance	$	114.4	$	106.6	$	7.8	7.3	%	36.6	%	35.9	%	0.7	%
Healthcare and Life Sciences	77.1		63.7		13.4		20.9	%	43.0	%	42.7	%	0.3	%
Banking, Capital Markets and Diversified Industries	74.6		68.0		6.6		9.8	%	38.3	%	37.2	%	1.1	%
International Growth Markets	59.5		55.5		4.0		7.4	%	35.8	%	35.6	%	0.2	%
Total	$	325.6	$	293.8	$	31.8	10.8	%	38.5	%	37.8	%	0.7	%

Cost of revenues for the three months ended September 30, 2025 increased by $31.8 million, or 10.8% compared to the three months ended September 30, 2024. The increase in cost of revenues was primarily due to increases in employee-related

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costs of $38.4 million on account of higher headcount and wage inflation, higher facilities, technology and other operating costs of $2.9 million, partially offset by lower mail and data expenses in our direct marketing business of $4.3 million and a foreign exchange gain, net of hedging of $5.2 million. Our gross margin for the three months ended September 30, 2025 was 38.5%, compared to 37.8% for the three months ended September 30, 2024, an increase of 70 basis points (“bps”) primarily driven by higher revenues and operational efficiencies, partially offset by increases in employee-related costs across all reportable segments during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The increase in cost of revenues in Insurance by $7.8 million for the three months ended September 30, 2025 was primarily due to increases in employee-related costs of $12.9 million on account of higher headcount and wage inflation, higher other operating costs of $0.9 million, partially offset by lower mail and data expenses in our direct marketing business of $4.3 million and a foreign exchange gain, net of hedging of $1.7 million. Gross margin in Insurance increased by 70 bps, primarily due to higher volumes in certain existing clients during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The increase in cost of revenues in Healthcare and Life Sciences by $13.4 million for the three months ended September 30, 2025 was primarily due to increases in employee-related costs of $13.6 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher facilities and other operating costs of $1.0 million, partially offset by a foreign exchange gain, net of hedging of $1.2 million. Gross margin in Healthcare and Life Sciences increased by 30 bps primarily due to higher volumes in certain existing clients during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The increase in cost of revenues in Banking, Capital Markets and Diversified Industries by $6.6 million for the three months ended September 30, 2025 was primarily due to increases in employee-related costs of $7.2 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher technology and other operating costs of $0.6 million, partially offset by a foreign exchange gain, net of hedging of $1.2 million. Gross margin in Banking, Capital Markets and Diversified Industries increased by 110 bps, primarily due to higher revenues and operational efficiencies during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The increase in cost of revenues in International Growth Markets by $4.0 million for the three months ended September 30, 2025 was primarily due to increases in employee-related costs of $4.7 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher technology and other operating costs of $0.4 million, partially offset by a foreign exchange gain, net of hedging of $1.1 million. Gross margin in International Growth Markets increased by 20 bps, primarily due to higher volumes in certain existing clients during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Selling, General and Administrative (“SG&A”) Expenses. SG&A expenses as a percentage of net revenues increased by 1.1% to 21.3% during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The increase in SG&A expenses by $17.6 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024 was primarily due to increases in employee-related costs of $17.0 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data and increase in investments in digital and generative AI capabilities and other operating costs of $0.6 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2025.

Depreciation and Amortization. Depreciation and amortization expenses as a percentage of net revenues remained flat during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The increase in depreciation and amortization expense by 9.6% during the three months ended September 30, 2025, compared to the three months ended September 30, 2024 was primarily due to investments in infrastructure, technology assets and digital capabilities.

Income from Operations. The increase in income from operations by 9.8% during the three months ended September 30, 2025, compared to the three months ended September 30, 2024 was primarily due to higher revenues and gross margins, partially offset by higher SG&A expenses.

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Foreign Exchange Gain, net. We recorded a foreign exchange loss, net of $1.0 million for the three months ended September 30, 2025, compared to a foreign exchange gain, net of $0.3 million for the three months ended September 30, 2024. 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 September 30, 2025, compared to the three months ended September 30, 2024.

Interest expense. The decrease in interest expense by $0.6 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024 was primarily due to lower average borrowings and a lower average effective interest rate of 5.7% during the three months ended September 30, 2025, compared to 6.5% during the three months ended September 30, 2024.

Other Income, net.


	Three months ended September 30,				Dollar change		Percentage change
	2025		2024
	(dollars in millions)
Gain on sale and fair value mark-to-market on investments	$	2.2	$	1.8	$	0.4	24.3	%
Interest and dividend income	2.1		2.5		(0.4)		(16.2)	%
Others, net	0.2		—		0.2		111.5	%
Other income, net	$	4.5	$	4.3	$	0.2	1.9	%

Other income, net increased marginally by $0.2 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Income Tax Expense. The effective tax rate decreased from 22.6% during the three months ended September 30, 2024 to 22.1% during the three months ended September 30, 2025. We recorded income tax expense of $16.5 million and $15.5 million for the three months ended September 30, 2025 and 2024, respectively. The increase in income tax expense was primarily as a result of higher profit and lower excess tax benefits, partially offset by lower state taxes and decrease in non-deductible expenses during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Net Income. The increase in net income by 9.7% during the three months ended September 30, 2025, compared to the three months ended September 30, 2024 was attributable to the aforementioned factors.

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Results of Operations

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024:


									(dollars in millions)
	Nine months ended September 30, 2025		Percentage of Revenues, net		Nine months ended September 30, 2024		Percentage of Revenues, net		Dollar change		Percentage change
	(A)				(B)				(C=A-B)
Revenues, net	$	1,545.1	100.0	%	$	1,356.9	100.0	%	$	188.2	13.9	%
Cost of revenues (1)	953.6		61.7	%	849.3		62.6	%	104.3		12.3	%
Gross profit (1)	591.5		38.3	%	507.6		37.4	%	83.9		16.5	%
Operating expenses:
General and administrative expenses	185.2		12.0	%	167.2		12.3	%	18.0		10.8	%
Selling and marketing expenses	127.8		8.3	%	109.0		8.0	%	18.8		17.2	%
Depreciation and amortization expense	42.8		2.8	%	39.0		2.9	%	3.8		9.4	%

Total operating expenses	355.8		23.0	%	315.2		23.2	%	40.6		12.8	%
Income from operations	235.7		15.3	%	192.4		14.2	%	43.3		22.5	%
Foreign exchange gain, net	2.4		0.2	%	0.7		—	%	1.7		255.1	%
Interest expense	(13.3)		(0.9)	%	(14.1)		(1.0)	%	0.8		(5.6)	%
Other income, net	14.8		1.0	%	11.8		0.9	%	3.0		24.9	%

Income before income tax expense and earnings from equity affiliates	239.6		15.5	%	190.8		14.1	%	48.8		25.6	%
Income tax expense	48.5		3.1	%	43.1		3.2	%	5.4		12.6	%
Income before earnings from equity affiliates	191.1		12.4	%	147.7		10.9	%	43.4		29.4	%
Loss from equity-method investment	(0.3)		—	%	(0.1)		—	%	(0.2)		364.8	%
Net income	$	190.8	12.3	%	$	147.6	10.9	%	$	43.2	29.2	%

(1) Exclusive of depreciation and amortization expense.

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Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Revenues

The following table summarizes our revenues by reportable segments:


	Nine months ended September 30,						Percentage change		Percentage of Total Revenues for the nine months ended September 30,
	2025		2024		Dollar change				2025		2024
	(dollars in millions)
Insurance	$	524.8	$	483.1	$	41.7	8.6	%	34.0	%	35.6	%
Healthcare and Life Sciences	390.4		318.0		72.4		22.8	%	25.3	%	23.4	%
Banking, Capital Markets and Diversified Industries	359.8		316.1		43.7		13.8	%	23.3	%	23.3	%
International Growth Markets	270.1		239.7		30.4		12.7	%	17.4	%	17.7	%
Total revenues, net	$	1,545.1	$	1,356.9	$	188.2	13.9	%	100.0	%	100.0	%

Revenues for the nine months ended September 30, 2025 were up by $188.2 million, or 13.9%, compared to the nine months ended September 30, 2024, primarily driven by the expansion of business from our existing clients across all reportable segments by 10.8% and revenue from new client wins, including revenue from ITI Data by 3.1% during the nine months ended September 30, 2025.

Revenue growth in Insurance by 8.6% was driven by the expansion of business from our existing clients by 7.8% and new clients by 0.8% during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Revenue growth in Healthcare and Life Sciences by 22.8% was driven by the expansion of business from our existing clients by 21.5% and new clients including revenue from ITI Data by 1.3% during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Revenue growth in Banking, Capital Markets and Diversified Industries by 13.8% was driven by the expansion of business from our existing clients by 6.0% and new clients including revenue from ITI Data by 7.8% during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Revenue growth in International Growth Markets by 12.7% was driven by the expansion of business from our existing clients by 9.2% and new clients including revenue from ITI Data by 4.0%, partially offset by a foreign exchange loss, net of hedging by 0.5% during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

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
	Nine months ended September 30,				Dollar change		Percentage change		Nine months ended September 30,				Percentage change
	2025		2024						2025		2024
	(dollars in millions)
Insurance	$	335.9	$	315.9	$	20.0	6.3	%	36.0	%	34.6	%	1.4	%
Healthcare and Life Sciences	220.7		178.9		41.8		23.4	%	43.5	%	43.7	%	(0.2)	%
Banking, Capital Markets and Diversified Industries	223.7		199.2		24.5		12.3	%	37.8	%	37.0	%	0.8	%
International Growth Markets	173.3		155.3		18.0		11.5	%	35.8	%	35.2	%	0.6	%
Total	$	953.6	$	849.3	$	104.3	12.3	%	38.3	%	37.4	%	0.9	%

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Cost of revenues for the nine months ended September 30, 2025 increased by $104.3 million, or 12.3%, compared to the nine months ended September 30, 2024. The increase in cost of revenues was primarily due to increases in employee-related costs of $116.1 million on account of higher headcount and wage inflation, higher facilities, technology and other operating costs of $13.3 million, partially offset by lower mail and data expenses in our direct marketing business of $13.3 million and a foreign exchange gain, net of hedging of $11.8 million. Our gross margin for the nine months ended September 30, 2025 was 38.3% compared to 37.4% for the nine months ended September 30, 2024, an increase of 90 bps primarily driven by higher revenues and operational efficiencies, partially offset by increases in employee-related costs during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

The increase in cost of revenues in Insurance by $20.0 million for the nine months ended September 30, 2025 was primarily due to increases in employee-related costs of $35.7 million on account of higher headcount and wage inflation, higher technology costs of $2.8 million, partially offset by lower mail and data expenses in our direct marketing business of $13.3 million, other operating costs of $1.2 million and a foreign exchange gain, net of hedging of $4.0 million. Gross margin in Insurance increased by 140 bps, primarily due to higher revenues and operational efficiencies during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

The increase in cost of revenues in Healthcare and Life Sciences by $41.8 million for the nine months ended September 30, 2025 was primarily due to increases in employee-related costs of $39.8 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher facilities costs of $1.6 million, higher technology and other operating costs of $3.1 million, partially offset by a foreign exchange gain, net of hedging of $2.7 million. Gross margin in Healthcare and Life Sciences decreased by 20 bps, primarily due to lower revenues in certain existing clients during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

The increase in cost of revenues in Banking, Capital Markets and Diversified Industries by $24.5 million for the nine months ended September 30, 2025 was primarily due to increases in employee-related costs of $23.4 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher technology costs of $1.6 million, higher facilities and other operating costs of $2.4 million, partially offset by a foreign exchange gain, net of hedging of $2.9 million. Gross margin in Banking, Capital Markets and Diversified Industries increased by 80 bps, primarily due to higher revenues and operational efficiencies during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

The increase in cost of revenues in International Growth Markets by $18.0 million for the nine months ended September 30, 2025 was primarily due to increases in employee-related costs of $17.2 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher technology and other operating costs of $3.0 million, partially offset by a foreign exchange gain, net of hedging of $2.2 million. Gross margin in International Growth Markets increased by 60 bps, primarily due to higher revenues and operational efficiencies during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Selling, General and Administrative (“SG&A”) Expenses. SG&A expenses as a percentage of net revenues remained flat at 20.3% during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

The increase in SG&A expenses by $36.8 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024 was primarily due to increases in employee-related costs of $35.0 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, increase in investments in digital and generative AI capabilities of $2.1 million, higher sales and marketing costs of $1.0 million and other operating costs of $1.8 million. This increase in SG&A was partially offset by one-time restructuring and litigation settlement costs of $3.1 million incurred during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2025.

Depreciation and Amortization. Depreciation and amortization expenses as a percentage of net revenues decreased by 0.1% during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

The increase in depreciation and amortization expense by 9.4% during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024 was primarily due to investments in infrastructure, technology assets and digital capabilities.

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Income from Operations. The increase in income from operations by 22.5% during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024 was primarily due to higher revenues and gross margins, partially offset by higher SG&A expenses.

Foreign Exchange Gain, net. We recorded a foreign exchange gain, net of $2.4 million for the nine months ended September 30, 2025, compared to a foreign exchange gain, net of $0.7 million for the nine months ended September 30, 2024. 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 nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Interest expense. The decrease in interest expense by $0.8 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024 was primarily due to lower average borrowings and a lower average effective interest rate of 5.7% during the nine months ended September 30, 2025, compared to 6.3% during the nine months ended September 30, 2024.

Other Income, net.


	Nine months ended September 30,
	2025		2024		Dollar change		Percentage change
	(dollars in millions)
Gain on sale and fair value mark-to-market on investments	$	6.4	$	3.9	$	2.5	62.3	%
Interest and dividend income	7.4		7.2		0.2		3.3	%
Fair value changes of contingent consideration	—		0.6		(0.6)		(100.0)	%
Others, net	1.0		0.1		0.9		NM (1)
Other income, net	$	14.8	$	11.8	$	3.0	24.9	%

(1) Not Meaningful

The increase in other income, net by $3.0 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024 was primarily due to higher yield on our investments, and reversal of certain contingent liabilities of $0.9 million that were no longer required during the nine months ended September 30, 2025, partially offset by reversal of contingent consideration liability of $0.6 million related to our June 2022 acquisition of Inbound Media Group, LLC during the nine months ended September 30, 2024.

Income Tax Expense. The effective tax rate decreased from 22.6% during the nine months ended September 30, 2024 to 20.3% during the nine months ended September 30, 2025. We recorded income tax expense of $48.5 million and $43.1 million for the nine months ended September 30, 2025 and 2024, respectively. The increase in income tax expense was primarily as a result of higher profit and an increase in non-deductible expenses, partially offset by lower state taxes and higher excess tax benefits during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Net Income. The increase in net income by 29.2% during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024 was attributable to the aforementioned factors.

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Liquidity and Capital Resources


	Nine months ended September 30,				Dollar Change		Percentage Change
	2025		2024
	(dollars in millions)
Opening cash, cash equivalents and restricted cash	$	171.4	$	145.4	$	26.0	17.9	%
Net cash provided by operating activities	233.3		163.2		70.1		43.0	%
Net cash used for investing activities	(82.6)		(94.5)		11.9		(12.6)	%
Net cash used for financing activities	(147.9)		(52.2)		(95.7)		183.5	%
Effect of exchange rate changes	5.6		1.4		4.2		323.8	%
Closing cash, cash equivalents and restricted cash	$	179.8	$	163.3	$	16.5	10.1	%

As of September 30, 2025 and December 31, 2024, we had $390.1 million and $340.6 million, respectively, in cash, cash equivalents and short-term investments, of which $349.7 million and $296.0 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.

Operating Activities: Net cash provided by operating activities was $233.3 million during the nine months ended September 30, 2025, compared to $163.2 million during nine months ended September 30, 2024, reflecting higher cash earnings and lower working capital needs. The major drivers contributing to the increase of $70.1 million year-over-year included the following:

•An increase in cash earnings including adjustments for non-cash and other items contributed higher cash flow of $62.2 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. These adjustments include fair value changes in investments, unrealized foreign currency exchange (gain)/loss, net, stock-based employee compensation, depreciation and amortization of long-lived assets and intangibles acquired in business combinations, among others.

•Changes in accounts receivable, including advance billings, driven by revenue growth, contributed lower cash flow of $18.6 million in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. Our days sales outstanding were 63 days as of September 30, 2025, compared to 64 days as of September 30, 2024.

•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 during the nine months ended September 30, 2024, whereas no such payment occurred during the nine months ended September 30, 2025.

•Changes in other assets, accounts payables including other liabilities contributed to a lower cash payout of $15.5 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Investing Activities: Net cash used for investing activities was $82.6 million for the nine months ended September 30, 2025, compared to $94.5 million for the nine months ended September 30, 2024. The decrease of $11.9 million was primarily due to net cash used for business acquisition of $24.5 million during the nine months ended September 30, 2024 whereas no such payment occurred during the nine months ended September 30, 2025. This was partially offset by higher net purchase of investments of $6.6 million and higher cash paid for capital expenditures, including investments in infrastructure, technology assets and digital capabilities of $5.4 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Financing Activities: Net cash used for financing activities was $147.9 million during the nine months ended September 30, 2025, compared to $52.2 million during the nine months ended September 30, 2024. The increase of $95.7 million was primarily due to lower net proceeds from borrowings of $78.7 million during the nine months ended September 30, 2025, compared to nine months ended September 30, 2024 and higher purchases of treasury stock of

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$23.0 million under our share repurchase programs during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. This was partially offset by payment of contingent consideration related to our December 2021 acquisition of Clairvoyant of $4.0 million during the nine months ended September 30, 2024 whereas no such payment occurred during the nine months ended September 30, 2025.

On July 29, 2025, we entered into a new supplemental confirmation to the prior Master Accelerated Share Repurchase Confirmation (together, the “2025 ASR Agreement”) with Citibank to repurchase shares of our common stock for an aggregate purchase price of $125 million, as part of our 2024 Repurchase Program of $500 million. We funded the repurchase with available cash on hand and borrowing from our credit facility.

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 AI and purchase telecommunications equipment and computer hardware and software in connection with managing client operations.

We incurred $41.7 million of capital expenditures during the nine months ended September 30, 2025. We expect to incur total capital expenditures of between $50.0 million to $55.0 million in fiscal 2025, primarily to meet our growth requirements, including additions to our facilities and infrastructure, as well as investments in technology applications, product development, and other digital technologies.

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 like acquisition of complementary businesses, capital expenditures and continued stock repurchases, including accelerated stock repurchase 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, 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 20 - Employee Benefit Plans, Note 21 - Leases, Note 22 - Income Taxes 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 September 30, 2025 and December 31, 2024, we had outstanding letters of credit of $0.7 million and $0.8 million respectively, 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.

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Financing Arrangements

The following table summarizes our debt position:


	As of
	September 30, 2025						December 31, 2024
	Revolving credit facility		Term loan facility		Total		Revolving credit facility		Term loan facility		Total
Current portion of long-term borrowings	$	—	$	5.0	$	5.0	$	—	$	5.0	$	5.0
Unamortized debt issuance costs	—		(0.1)		(0.1)		—		(0.1)		(0.1)
Total current portion of long-term borrowings	—		4.9		4.9		—		4.9		4.9

Long-term borrowings	260.0		90.0		350.0		190.0		93.8		283.8
Unamortized debt issuance costs	—		(0.1)		(0.1)		—		(0.2)		(0.2)
Total long-term borrowings	260.0		89.9		349.9		190.0		93.6		283.6
Total borrowings	$	260.0	$	94.8	$	354.8	$	190.0	$	98.5	$	288.5

As of September 30, 2025 and December 31, 2024, we were in compliance with the financial covenants under our credit agreement with certain lenders and Citibank N.A. as administrative agent. See Note 18 – Borrowings to our unaudited consolidated financial statements.

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

There have been no material changes in our quantitative and qualitative disclosures about market risk from those disclosed in 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, 2024.

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 September 30, 2025. Based upon that evaluation, our CEO and CFO have concluded that the Company’s disclosure controls and procedures, as of September 30, 2025, were effective.

Changes in Internal Control over Financial Reporting

During the three months ended September 30, 2025, 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, 2024, 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 September 30, 2025, 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
July 1, 2025 through July 31, 2025	—	$	—	517,000	$	43.44	517,000	$	250,636,306
August 1, 2025 through August 31, 2025	—	$	—	2,345,713	$	43.43	2,345,713	$	123,769,283
September 1, 2025 through September 30, 2025	—	$	—	211,363	$	43.25	211,363	$	114,628,029
Total	—	$	—	3,074,076	$	43.42	3,074,076	$	—

On February 26, 2024, the Company’s board of directors authorized a $500 million (excluding excise tax) common stock repurchase program beginning March 1, 2024 (the “2024 Repurchase Program”).

On July 29, 2025, we entered into the 2025 ASR Agreement with Citibank to repurchase shares of our common stock for an aggregate purchase price of $125 million, as part of our 2024 Repurchase Program. Upon payment of the aggregate purchase price of $125 million, we received an initial delivery of 2,302,556 shares of our common stock at an initial price of $43.43 per share, representing 80% of the aggregate purchase price. See Note 19 – Capital Structure to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for further details.

Under our repurchase program, 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 repurchase program to comply with Rule 10b-18 under the Exchange Act. Repurchases may be discontinued at any time by management. Repurchased shares are recorded as treasury shares and are held until our board of directors designates that these shares be retired or used for other purposes.

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 September 30, 2025, no director or officer of the Company adopted or terminated 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, except as described below:

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Name and Title

Character of Trading Arrangement (1)

Date Adopted

Duration (2)

Aggregate Number of Shares of Common Stock to be Sold Pursuant to Trading Arrangement

Ajay Ayyappan,

Executive Vice President, General Counsel & Corporate Secretary

Rule 10b5-1
Trading Arrangement

August 11, 2025

March 6, 2026

24,494

(1) Except as indicated by footnote, each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended (the “Rule”).

(2) Except as indicated by footnote, each trading arrangement permits transactions through and including the earlier to occur of (a) the completion of all sales or (b) the date listed in the table. Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” only permits transactions upon expiration of the applicable mandatory cooling-off period under the Rule.

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INDEX TO EXHIBITS

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: October 28, 2025	EXLSERVICE HOLDINGS, INC.

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

EXL Service - 10-Q quarterly report FY2025 Q3

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