ExlService Q2 Earnings Call Highlights

ExlService reported revenue of $594.8 million, up 15.6% year over year, while adjusted diluted EPS increased 22.3% to $0.59. Data and AI-led revenue rose 30% and represented 61% of total revenue. Its acquisition of iMerit is expected to close July 31 and contribute $28 million to $32 million in 2026 revenue. ExlService increased its full-year revenue guidance to $2.39 billion-$2.415 billion and adjusted EPS guidance to $2.25-$2.29. Management plans increased investment in sales, data management and AI capabilities, which is expected to pressure second-half operating margins. ExlService reported second-quarter 2026 revenue of $594.8 million, up 15.6% year over year on a reported basis and 15.9% on a constant-currency basis, as growth accelerated across each of its operating segments. Adjusted diluted earnings per share rose 22.3% from a year earlier to $0.59. Chairman and Chief Executive Officer Rohit Kapoor said the company entered 2026 with positive momentum that strengthened through the first half, supported by enterprise demand for data, AI engineering and AI-enabled operations. He said clients are increasingly moving from AI proof-of-concept projects toward production deployments, while also investing in the data, governance, security and infrastructure needed to support AI across their organizations. “The effort that is required to enable AI for any enterprise is massive,” Kapoor said during the earnings call. “Clients are really struggling with this change, and we are in a great position to actually help them with this.” Data and AI-led services and solutions accounted for 61% of ExlService’s revenue in the quarter and increased 30% year over year. Kapoor noted that growth in the category has accelerated for four consecutive quarters, from 18% in the third quarter of 2025 to 30% in the latest period. The company said its reported digital operations revenue declined about 1.5% year over year, but management characterized that decline as a planned consequence of changing revenue mix. As AI becomes embedded into operations engagements, ExlService classifies that work as data and AI-led revenue because it is more intellectual-property-led and higher value, Kapoor said. ExlService said total operations revenue, which includes both digital operations and AI-led operations, rose 10% year over year. Kapoor said the company is introducing agentic AI into client processes such as insurance claims and underwriting, combining deterministic models designed to follow policies and regulations with probabilistic models used for judgment and decision-making. The work requires substantial customization by client, business line and geography, he said, even where the company can reuse common tools and components. Kapoor said ExlService’s existing operational relationships, workflow knowledge and familiarity with clients’ data give it an advantage in deploying those solutions. The company also highlighted token optimization as an emerging opportunity. Kapoor said ExlService has reduced token consumption for certain clients by as much as 80% through workflow-specific design and engineering, helping lower the costs associated with deploying AI models at scale. Insurance: Revenue was $197.8 million, up 14.9% year over year, driven by expansion and higher volumes in existing client relationships. Healthcare and life sciences: Revenue was $158 million, up 22% year over year, supported by Payment Integrity services, clie...