Executives at ExlService NASDAQ: EXLS told investors the company opened 2026 with “strong momentum,” driven by growing adoption of AI across regulated industries and a continued shift in its revenue mix toward data- and AI-led work.
On the company’s first-quarter 2026 earnings call, Chairman and CEO Rohit Kapoor said EXL generated revenue of $570 million, up 14% year-over-year, and adjusted earnings per share of $0.58, up 20%. CFO Maurizio Nicolelli reported revenue of $570.4 million, up 13.8% reported and 13.4% on a constant-currency basis, with 5.1% sequential constant-currency growth.
AI adoption driving mix shift toward “data and AI-led” revenue
Kapoor said EXL’s “data and AI-led” revenues grew 28% year-over-year in the quarter and now represent 60% of total company revenue. He attributed demand to “scaled deployments of AI inside core client workflows,” where EXL aims to deliver productivity and “superior risk-based outcomes.”
Kapoor emphasized that as EXL embeds AI into existing client workflows, engagements become “more intelligent, more IP-led, and more value-added,” and related revenue can migrate from the company’s digital operations category into the data and AI-led category. To provide more transparency, EXL also reports a “total operations” view in its investor fact sheet that combines digital operations and those operations that have migrated.
In Q1, Kapoor said:
- Total operations grew 10% year-over-year.
- Reported digital operations revenue was down 2% year-over-year due to the planned migration.
Kapoor also highlighted interest in EXL’s EXLdata.ai platform, which he said helps clients preserve domain-specific semantic context while building AI-ready data foundations. Later on the call, he described enterprise AI adoption as complex work that requires building usable structured and unstructured data foundations, iterating and refining models, encoding rules and context for regulated industries, and establishing “guardrails,” security, and other controls.
Segment performance led by Healthcare and Life Sciences
EXL reported year-over-year growth across each of its four operating segments. Kapoor said Insurance returned to double-digit growth as insurers accelerate AI adoption in underwriting, claims, and customer experience. He also pointed to “very high deal activity” in banking and continued international expansion.
Nicolelli provided segment-level results for the first quarter (constant currency growth rates unless otherwise stated):
- Insurance: revenue of $193.9 million, up 12.6% year-over-year and up 4.4% sequentially, driven by expansions, higher volumes, and new wins.
- Healthcare and Life Sciences: revenue of $151.9 million, up 21% year-over-year and up 6.8% sequentially, driven by higher volumes in payment services and expansion in other healthcare services.
- Banking, Capital Markets, and Diversified Industries: revenue of $127.4 million, up 8.1% year-over-year and up 4% sequentially, driven by new wins and client expansions.
- International Growth Markets: revenue of $97.1 million, up 10.9% year-over-year and up 5.4% sequentially, driven by ramp-ups, higher volumes, and new wins.
In response to questions about international exposure and geopolitical uncertainty, Kapoor said EXL has “very little and very limited exposure to the Middle East,” with most international revenue coming from the U.K., Europe, Australia, and New Zealand. He said the company was not seeing direct impacts from conflict, though “downstream second-degree or third-degree” effects were possible.
Margins, investments, and capital allocation
Nicolelli said SG&A expense as a percentage of revenue rose 20 basis points year-over-year to 20.4%, reflecting investments in data and AI-led solutions. Adjusted operating margin was 20.5%, up 40 basis points year-over-year, which Nicolelli said was “driven primarily by improved gross margins.” Effective tax rate was 21.9%, down 40 basis points year-over-year, attributed to higher profits in lower-tax jurisdictions.
On profitability expectations, Nicolelli said Q1 is typically a strong quarter and that EXL plans to make “additional investments, particularly into our data and AI capabilities” through the year. He reiterated an adjusted operating margin outlook in the mid-19% range for the rest of 2026, even as gross margin has improved, citing increased investment levels—particularly in R&D for AI capabilities.
EXL ended the quarter with $266 million in cash including short- and long-term investments and $417 million in revolver debt, for a net debt position of $151 million, according to Nicolelli. During the quarter, the company spent $13 million on capital expenditures and repurchased 4.4 million shares at an average price of $31, totaling $136 million. Nicolelli said the repurchase included 3.35 million shares received upfront as part of a previously announced $125 million accelerated share repurchase, with remaining shares expected in the second quarter.
Guidance raised as pipeline remains strong, with some industry softness
Kapoor said more than 75% of revenue is “recurring or annuity-like,” which he characterized as providing stability and visibility. For full-year 2026, EXL raised guidance to revenue of $2.3 billion to $2.33 billion, representing 10% to 12% constant-currency organic growth, and increased adjusted diluted EPS guidance to $2.18 to $2.23, implying 12% to 14% year-over-year growth.
Nicolelli said the revised revenue outlook is up $20 million at the midpoint and includes a $2 million FX headwind from the prior guide. He added that EXL remains “cautious” about macroeconomic and geopolitical uncertainty but raised guidance based on momentum and pipeline strength. The company also expects a foreign exchange gain of approximately $2 million to $3 million, net interest expense of approximately $6 million to $8 million, and a full-year effective tax rate of 21% to 22%. Capital expenditures are expected to be $50 million to $55 million.
During Q&A, Kapoor said EXL continues to see good momentum in insurance, banking, and healthcare, while noting “a little bit of softness” in retail and communication. He also said EXL is not seeing clients simply pushing for price reductions tied to AI, describing discussions as centered on “deterministic benefits” and a shift toward fixed-fee, milestone-based, and outcome-based commercial models as AI moves into production.
Kapoor also discussed M&A, saying EXL is seeing “a fairly strong pipeline of assets” and is focused on acquisitions that align with its goal of being “the AI strategic partner of choice.” He said the company hopes to close an acquisition “soon” but could not comment on timing.
Partner ecosystem and upcoming Investor and Analyst Day
Kapoor pointed to ongoing co-innovation with technology partners and said EXL’s partnerships are becoming “meaningful go-to-market and pipeline contributors.” He noted recent recognition including being named Advanced Technology Partner of the Year by NVIDIA, Best New Partner of the Year by Genesys, and AI and Machine Learning Market Disruptor of the Year by AWS.
The company also announced it will host its Investor and Analyst Day on May 13 in New York, where it plans to share its multi-year growth framework, AI monetization model, and client case studies, according to Kapoor.
About ExlService NASDAQ: EXLS
ExlService Holdings, Inc NASDAQ: EXLS is a global operations management and analytics company that partners with clients in insurance, healthcare, banking, and financial services to drive digital transformation and operational excellence. The firm delivers analytics-driven solutions and business process outsourcing services, including claims adjudication, finance and accounting, data management, and customer service support. ExlService combines domain expertise with advanced analytics, artificial intelligence, and automation technologies to help organizations optimize processes, enhance customer experiences, and manage risk.
Founded in 1999 and headquartered in New York City, ExlService has grown through a mix of organic expansion and strategic acquisitions, earning recognition for its data analytics capabilities and industry-specific knowledge.
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