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What changed in ExlService Holdings, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of ExlService Holdings, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+457 added−477 removedSource: 10-K (2026-02-24) vs 10-K (2025-02-25)

Top changes in ExlService Holdings, Inc.'s 2025 10-K

457 paragraphs added · 477 removed · 302 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

62 edited+67 added−76 removed20 unchanged
Biggest changeSome of our key solutions are: • Insurance Large Language Model (“LLM”) is an industry-specific LLM that supports critical claims and underwriting-related tasks, such as claims reconciliation, data extraction and interpretation, question-answering, anomaly detection and chronology summarization. • Generative AI platform for the development and deployment of our proprietary solutions, including, among others, Smart Agent Assist, Claims Assist, Conversational Business Intelligence and Code Harbor. • Xtrakto.AI is a patented and AI-powered solution designed to alleviate the challenges of managing unstructured data. 1 Table of Contents • PayMentor is an AI-powered collections and receivables management solution designed to optimize the debt collection process. • Digital Finance Suite automates and streamlines financial processes and key finance and accounting tasks, which helps customers gain real-time visibility into financial operations leading to faster decision making and reduced risks, among others. • Data and AI-led Customer Experience: Delivers AI-infused customer experiences across multiple customer journeys and touchpoints. • Digital Lending and Embedded Financing: AI-powered financing solution that reimagines and delivers a seamless and end-to-end origination, service and payments journeys for multiple credit and loan products across industries. • Data and AI-led Automation Solution eliminates friction and fragmentation in transaction processing using some of our proprietary workflow solutions.
Biggest changeFor example, Insurance LLM is an industry-specific LLM that supports claims and underwriting-related tasks, such as claims reconciliation, data extraction and interpretation, question-answering, anomaly detection and chronology summarization. • EXLData.AI, an agentic AI-native solution which modernizes and unifies fragmented, siloed enterprise data embeds intelligence across the full data lifecycle using agentic architecture, integrates seamlessly with Databricks, Snowflake, AWS and other ecosystems, and accelerates AI adoption by making enterprise data “AI ready”. • Generative AI platform for the development and deployment of our proprietary solutions, including, among others, Smart Agent Assist, Claims Assist, Conversational Business Intelligence and Code Harbor. • Xtrakto.AI is a patented and AI-powered solution designed to alleviate the challenges of managing unstructured data.
Independently or while working on client engagements, we also often develop new tools, methodologies and models, including AI and ML models that can be leveraged for various use cases. We endeavor to negotiate contracts that give us ownership or broad licenses to use, develop, demonstrate and offer such newly developed intellectual property assets to or for other clients.
Independently or while working on client engagements, we also often develop new tools, methodologies and models, including AI/LLM and ML models that can be leveraged for various use cases. We endeavor to negotiate contracts that give us ownership or broad licenses to use, develop, demonstrate and offer such newly developed intellectual property assets to or for other clients.
We operate in a highly competitive and rapidly evolving global market. We seek to continue providing value to our clients with our deep industry knowledge, ability to advise clients on how to transform their processes and deliver transformation that drives business value, and ability to provide innovative services and solutions, including digital offerings that incorporate AI and ML capabilities.
We operate in a highly competitive and rapidly evolving global market. We seek to continue providing value to our clients with our deep industry knowledge, ability to advise clients on how to transform their processes and deliver transformation that drives business value, and ability to provide innovative services and solutions, including digital offerings that incorporate AI/LLM and ML capabilities.
EXL harnesses the power of data, AI, and deep industry knowledge to transform businesses, including the world’s leading corporations in industries including insurance, healthcare, banking and capital markets, retail, communications and media, and energy and infrastructure, among others. EXL was founded in 1999 with the core values of innovation, collaboration, excellence, integrity and respect.
EXL 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. EXL was founded in 1999 with the core values of innovation, collaboration, excellence, integrity and respect.
The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically through the EDGAR System. You may access the information filed by us with the SEC by visiting its website. We also maintain a website at http://ir.exlservice.com.
The SEC maintains a website at https://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically through the EDGAR System. You may access the information filed by us with the SEC by visiting its website. We also maintain a website at https://ir.exlservice.com.
We provide a suite of data and AI-led finance and accounting services that include financial planning and analysis, decision support, GAAP and statutory reporting and compliance services in addition to core finance operations.
In addition, we provide a suite of data and AI-led finance and accounting services that include financial planning and analysis, decision support, GAAP and STAT accounting, regulatory and statutory reporting, and compliance services in addition to core finance operations.
See Part I, Item 1A, “Risk Factors” under “Risks Related to Our Business––We may fail to attract and retain enough sufficiently trained employees to support our operations or professionals with sufficient leadership capabilities” and “Employee wage increases may prevent us from sustaining our competitive advantage and may reduce our profit margin.” 10 Table of Contents Sustainability Strategy The world we work and live in is powered by innovation.
See Part I, Item 1A, “Risk Factors” under “Risks Related to Our Business––We may fail to attract and retain enough sufficiently trained employees to support our operations or professionals with sufficient leadership capabilities” and “Employee wage increases may prevent us from sustaining our competitive advantage and may reduce our profit margin.” Sustainability Strategy The world we work and live in is powered by innovation.
We also provide subrogation services to property and casualty insurers using a business process-as-a-service delivery model and our proprietary Subrosource® software platform, the largest commercial end-to-end subrogation platform. Subrosource® integrates with client systems, manages recovery workflow, increases recoveries and reduces costs.
In addition, we provide subrogation services to property and casualty insurers using a business process-as-a-service delivery model and our proprietary Subrosource® software platform, the largest commercial end-to-end subrogation platform. Subrosource® integrates with client systems, manages recovery workflow, increases recoveries and reduces costs.
We compete against these entities by working to differentiate ourselves as a strategic partner for businesses with deep industry expertise, sophisticated data and analytics capabilities, innovative digital operations and solutions and technology strong client relationships, leading industry talent, superior process capabilities and differentiated technology, which enable us to respond rapidly to market trends and the evolving needs of our clients.
We compete against these entities by working to differentiate ourselves as a strategic partner for businesses with deep industry expertise, sophisticated data and AI capabilities, innovative digital operations and solutions, strong client relationships, leading industry talent, advanced process capabilities and differentiated technology, which enable us to respond rapidly to market trends and the evolving needs of our clients.
We provide end-to-end third-party administration for life and annuity insurance policies, which includes digital customer acquisition services using a SaaS delivery model through our LifePRO® and Life Digital Suite platforms that help clients administer life insurance, annuities and credit life and disability insurance policies.
We also provide end-to-end third-party administration for life and annuity insurance policies, which include digital customer acquisition services using a SaaS delivery model through our LifePRO® and Life Digital Suite platforms that help clients administer life insurance, annuities and credit life and disability insurance policies.
We provide end-to-end digital transformation solutions and data and AI-led operations services across the insurance industry encompassing claims processing, premium and benefit administration, agency management, account reconciliation, policy research, underwriting support, new business acquisition, policy servicing, premium audit, surveys, billing and collection, commercial and residential survey and customer service using digital technology, AI, including generative AI, machine learning (“ML”) and advanced automation.
We provide end-to-end data and AI-led solutions and services and digital operations solutions and services across the insurance industry encompassing claims management, premium and benefit administration, agency management, account reconciliation, actuarial and risk analytics, policy research, digital marketing, new business acquisition, underwriting support, policy servicing, premium audit, surveys, billing and collection, commercial and residential survey and customer service using digital technology, AI, including agentic AI, generative AI, machine learning (“ML”) and advanced automation.
We believe there are significant opportunities for additional growth within our existing clients, and we seek to expand these relationships by: • Increasing the depth and breadth of the services we provide across our clients’ value chains and geographies; • Offering the full suite of EXL services, which includes AI-powered digital operations and solutions, consulting and data analytics services; and • Supporting our clients’ geographic expansions by leveraging our global footprint.
We believe there are significant opportunities for additional growth within our existing clients, and we seek to expand these relationships by: • Increasing the depth and breadth of the services we provide across our clients’ value chains and geographies; • Offering the full suite of our services, which include data and AI-led solutions and services and digital operations solutions and services; and • Supporting our clients’ geographic expansions by leveraging our global footprint.
We also leverage strategic partnerships with third parties to facilitate our solution offerings to clients, including, among others, robotics and process automation software providers, platform providers, and AI solutions providers.
We also leverage strategic partnerships with third parties to facilitate our services or solution offerings to clients, including, among others, robotics and process automation software providers, platform providers, foundry partners, and AI solutions providers.
See Part I, Item 1A, “Risk Factors” under “Risks Related to the International Nature of Our Business––Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, including, accreditation or licensing standards that govern our business, and violations of these requirements could harm our business.” We benefit from certain corporate tax holidays for our operations located in qualified Philippines Economic Zone Authority units.
See Part I, Item 1A, “Risk Factors” under “Risks Related to the International Nature of Our Business––Our global operations subject us to numerous legal and regulatory requirements, including, accreditation or licensing standards that govern our business.” We benefit from certain corporate tax holidays for our operations located in qualified Philippines Economic Zone Authority units.
Employee Retention Our attrition rate for employees who had been with EXL for more than 180 days was 26.1% and 25.8% for the years ended December 31, 2024 and 2023, respectively. As competition in our industry increases, our turnover rate could increase.
Employee Retention Our attrition rate for employees who had been with EXL for more than 180 days was 23.6% and 26.1% for the years ended December 31, 2025 and 2024, respectively. As competition in our industry increases, our turnover rate could increase.
In this Annual Report on Form 10-K, we use the terms “EXL,” “we,” “us,” “our” or the “Company” to refer to ExlService Holdings, Inc. and its subsidiaries. 12 Table of Contents
In this Annual Report on Form 10-K, we use the terms “EXL,” “we,” “us,” “our” or the “Company” to refer to ExlService Holdings, Inc. and its subsidiaries. 11 Ta ble of Contents
We are managing our business in accordance with the applicable guidelines issued by the Philippines Fiscal Incentives Review Board to continue availing the tax holidays. 11 Table of Contents In 2023, we established an international business headquarters in Dublin, Ireland, and qualify for a reduced tax rate.
We are managing our business in accordance with the applicable guidelines issued by the Philippines Fiscal Incentives Review Board to continue availing the tax holidays. In 2023, we established an international business headquarters in Dublin, Ireland, and qualify for a reduced tax rate. We monitor our operations to ensure we continue to qualify for the reduced rate.
Our new reportable segments, aligned to our IMUs, effective from the first quarter of 2025 will be as follows: • Insurance, • Healthcare and Life Sciences, • Banking, Capital Markets and Diversified Industries, • International Growth Markets 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 former Healthcare reportable segment, and including data and analytics services, 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 and Asia-Pacific geographies across all industry verticals.
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 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 IMU to represent all our services and solutions offerings to clients in the United Kingdom, Europe, Middle East, Asia-Pacific and South Africa geographies across all industry verticals.
Our sales and client management teams are aligned by industry verticals, and have expertise in data and AI, analytics services, and digital operations and solutions. As of December 31, 2024, we employed approximately 320 sales, marketing, business development, and client management professionals based in various geographies, including the United States, the United Kingdom, Ireland, Australia and India.
Our sales and client management teams are aligned by IMUs, and have expertise in data and AI-led solutions and services and digital operations solutions and services. As of December 31, 2025, we employed approximately 390 sales, marketing, business development, and client management professionals based in various geographies, including the United States, the United Kingdom, Ireland, Australia and India.
These 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.
Our IMUs focus on managing customer relationships and delivering the “One EXL” value proposition to clients, maintaining a unified go-to-market approach and being integrally responsible for growth, profitability and client satisfaction.
Expanding our Services in Large Addressable Markets We continue to focus on the insurance, healthcare, banking and capital markets, retail, communications and media, and energy and infrastructure industries, among others, which are large markets with high demand, as well as pursuing opportunities in emerging industries.
Expanding our Addressable Markets Our continued focus is on the insurance, healthcare and life sciences, banking, capital markets and diversified industries including retail, communications and media, and energy and infrastructure industries, among others, which are large markets with high demand, as well as pursuing opportunities in emerging industries.
We do this through our data and AI-led value creation framework to enable better and faster decision making, leveraging our end-to-end data and analytics capabilities to drive improved business outcomes, and we re-design operating models to integrate advanced technology into operational workflows. Below are some of our strategic focus areas.
We do this through our data and AI-led value creation framework to 4 Ta ble of Contents enable better and faster decision making, leveraging our end-to-end data and analytics capabilities to drive improved business outcomes, and re-designing operating models to integrate AI and advanced technology into operational workflows.
We also intend to cultivate long-term relationships with medium-sized companies in our focus industries by leveraging our data analytics, and digital operations and solutions offerings.
We also intend to cultivate long-term relationships with medium-sized companies in our industries by leveraging our data, AI solutions and services, and digital capabilities.
Our top three, five and ten clients generated 16.4%, 22.9% and 34.0% of our revenues, respectively, in 2023. No client accounted for more than 10% of our total revenues in 2024 or 2023. Our revenue concentration with our top clients remains consistent year-over-year and we continue to develop relationships with new clients to diversify our client base.
Our top three, five and ten clients generated 17.2%, 23.0% and 33.2% of our revenues, respectively, in 2024. No client accounted for more than 10% of our total revenues in 2025 or 2024. Our revenue concentration with our top clients typically remains consistent year-over-year, but we continue to develop relationships with new clients to diversify our client base.
Clients We generated revenues from approximately 570 clients and 560 clients in 2024 and 2023, respectively (with annual revenue exceeding $50,000 per client). We won 69 and 63 new clients during 2024 and 2023, respectively. Our top three, five and ten clients generated 17.2%, 23.0% and 33.2% of our revenues, respectively, in 2024.
Clients We generated revenues from approximately 590 clients and 570 clients in 2025 and 2024, respectively (with annual revenue exceeding $50,000 per client). We won 65 and 69 new clients during 2025 and 2024, respectively. Our top three, five and ten clients generated 17.8%, 23.9% and 34.0% of our revenues, respectively, in 2025.
We continue to obtain licenses and accreditations required from time to time by our business operations. Our healthcare platform and infrastructure have also been assessed and certified by HITRUST®, an information protection standards organization and certifying body.
Our relevant healthcare systems and endpoints have also been assessed and certified by HITRUST®, an information protection standards organization and certifying body. We obtain additional licenses and accreditations as may be required from time-to-time by our business operations.
Our key digital and AI capabilities that drive data and technology-led transformation for our clients include generative AI, reinforcement learning, hyper-automation, cloud data management, conversational AI, robotics, enterprise architecture development, integration platform as a service and AI for Operations.
Our key digital and AI capabilities that drive data and technology-led transformation for our clients include generative AI, reinforcement learning, hyper automation, cloud data management, conversational AI, robotics, enterprise architecture development, integration platform as a service and AI for operations. Some of our key solutions are: • EXL Domain or Industry Specific Large Language Model (“LLM”).
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 capabilities specific to various industries and client needs.
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 (“SGUs”) to focus on rapidly advancing our operational, analytics, data management, digital engineering, and AI capabilities specific to our chosen industries.
Our dedicated employee relations function helps to foster a supportive and responsive work environment that seeks to understand and address employees’ needs, concerns, and aspirations and provide timely and tailored responses. Our approach is centered on attracting, developing, and retaining top-tier professionals, for a skilled and engaged workforce that drives organizational excellence.
Our dedicated employee relations function helps to foster a supportive and responsive work environment that seeks to understand and address employees’ needs, concerns, and aspirations and provide timely and tailored responses. Our overall approach focuses on building a skilled and engaged workforce that drives excellence across our business.
Our employees leverage their expertise to help build market-relevant technical and life skills programs that we deploy in communities we operate. We seek out community-based, regional, and global partners and emphasize employee volunteering. We actively engage with our stakeholders to ensure that our community engagement activities are responsive to the needs of our communities and to foster long term relationships.
We seek out community-based, regional, and global partners and emphasize employee volunteering. We actively engage with our stakeholders to ensure that our community engagement activities are responsive to the needs of our communities and to foster long term relationships.
We monitor our operations to ensure we continue to qualify for the reduced rate. In the Philippines and Ireland, we are subject to a minimum tax rate under the Pillar Two Framework prescribed by Organization for Economic Co-operation and Development (“OECD”).
In the Philippines and Ireland, we are subject to a minimum tax rate under the Pillar Two Framework prescribed by Organization for Economic Co-operation and Development (“OECD”). The OECD continues to release additional guidance on the Pillar Two Framework and we will continue to evaluate any potential impact on our operations.
We believe that the loss of any of our ten largest clients could have a material adverse effect on our financial performance.
We believe that the loss of any significant client in a particular segment could have a material adverse effect on the financial performance of that segment.
We provide third-party administrator insurance services from India and the Philippines in a majority of states in the United States. Further we are licensed or otherwise eligible to provide third-party administrator services in all states within the United States, as well as utilization review, claims adjuster and insurance producer services in select states.
We are licensed or otherwise eligible to provide third-party administrator services throughout the United States, as well as utilization review, claims adjuster and insurance producer services in select states. We require certain categories of our professionals to be individually licensed, as applicable.
Our approach prioritizes attracting top talent and enhancing their expertise, including in the areas of AI technologies, through targeted learning academies, stringent promotion criteria, and specialized client and industry-focused training programs. We offer competitive, performance-driven compensation packages, including incentive-based rewards.
We are committed to strengthening their expertise, including data and AI-led capabilities, through targeted learning academies, stringent promotion criteria, and specialized client and industry-focused training programs. We offer competitive, performance-driven compensation packages, including incentive-based rewards.
The recruitment process involves comprehensive assessments, including multiple rounds of video interviews, before extending offers, as well as a background check process is conducted in alignment with client mandates. Our hybrid working model offers employees enhanced flexibility.
Our hiring model involves comprehensive assessments, multiple rounds of video interviews, and background checks aligned with client mandates before extending offers. Our hybrid working model offers employees enhanced flexibility.
These initiatives reflect our core values and will make us a stronger, more impactful organization to work for that can deliver exceptional results for our clients, employees, communities and stockholders. Our most recent Sustainability Report is available on our website.
These initiatives reflect our core values and will make us a stronger, more impactful organization to work for that can deliver exceptional results for our clients, employees, communities and stockholders. Community Activities Our community engagement strategy focuses on four key pillars: education, digital skills development, employee engagement, and community impact.
Our Healthcare strategic business unit primarily serves U.S.-based healthcare payers, providers and pharmacy benefit managers organizations. We combine deep healthcare domain expertise with data and AI-led insights and technology-enabled services to transform how care is delivered, managed and paid.
We combine deep healthcare and life sciences domain expertise with data, analytics and AI-led insights and technology-enabled services to transform how care is delivered, managed and paid at these organizations.
We provide services related to care management, utilization management, disease management, payment integrity, revenue optimization and customer engagement directly addressing the market need for improved healthcare outcomes, patient and provider experience and access to the healthcare system in the healthcare market and optimized healthcare spend. We offer digital operations, SaaS and platform services designed to serve the healthcare industry.
We provide services related to care management, utilization management, disease management, payment integrity, revenue optimization and customer engagement, commercial analytics, regulatory support, which address the market need for improved healthcare outcomes, enhanced patient and provider experience and optimized healthcare spending.
Data, AI, analytics and digital have become core to virtually every significant move a business makes to serve customers, optimize business processes, stay competitive and grow. Our vision of being an indispensable partner for data and AI-led transformation reflects the long-term priorities of our clients' businesses across industry sectors, and we continue to evolve our offerings to drive business outcomes.
Our vision of being an indispensable partner for data and AI-led transformation reflects the long-term priorities of our clients' businesses across industry sectors, and we continue to evolve our offerings with a variety of AI services and solutions.
The process has continuously evolved, incorporating AI-based smart screening and real-time proctored online assessments, and in 2024, we introduced a recruitment solution across seven of our geographies, which automates key recruitment processes, streamlines workflows for hiring managers and recruiters, and establishes a standardized approach to talent acquisition.
In 2024 and 2025, we introduced a recruitment solution across seven of our geographies, which automates key recruitment processes, streamlines workflows for hiring managers and recruiters, and establishes an improved and standardized approach to talent acquisition, all aimed at providing a seamless candidate application experience.
Leveraging digital-first and multi-channel communication strategies, we continuously refine our approaches to keep our global workforce informed and engaged. 9 Table of Contents Employee Benefits and Experience We offer a competitive compensation and benefits program that we refer to as our “Total Rewards” program, which is designed to attract, motivate, and retain top talent and support the diverse needs of our workforce.
By leveraging digital-first and multi-channel communication strategies, we continuously refine our approaches to keep our global workforce informed, aligned and engaged. 8 Ta ble of Contents Employee Benefits and Experience As a global organization in data and AI-led solutions and services and digital operations solutions and services, we continue to evolve our “Total Rewards” framework to attract, engage, and retain top talent while meeting the diverse needs of our workforce.
For further details, refer to Part I, Item 1A, “Risk Factors” under “Risks Related to Our Business––We face competition globally from other providers and from our clients, who may build global capability centers to perform digital operations and solutions and analytics services themselves, either in-house or other arrangements.” Many companies, including some of our clients, opt to perform some or all of their front-, middle- and back-office analytics and processes internally, utilizing their own employees and digital applications to provide these services as part of their regular business operations.
For further details, refer to Part I, Item 1A, “Risk Factors” under “Risks Related to Our Business––We face competition globally from other providers and from our clients, who may build global capability centers to provide data and AI-led solutions and services and digital operations solutions and services themselves, either in-house or other arrangements.” Intellectual Property Our intellectual property consists of proprietary platforms, software, data, databases, models, methodologies, know-how, names, designs, domains, user interfaces, applications and operating procedures among other materials.
Our strategic business units, which provide digital operations and solutions, are described below: Our Insurance strategic business unit serves property and casualty insurance, life insurance, disability insurance, insurance brokers, reinsurers, annuity and retirement services and insurtech companies.
Insurance: Our Insurance IMU serves property and casualty insurance, life insurance, disability insurance, insurance brokers, reinsurers, annuity and retirement services and insurtech companies. Our data and AI-led solutions and services and digital operations solutions and services span across the insurance value chain.
Our integrated care management offering, including our proprietary clinical data, connects payers, providers and members to increase efficiencies and effectiveness across all aspects of care management, including medical, pharmacy and behavioral health.
Our integrated care management offering, including our proprietary clinical data, connects payers, providers and members to increase efficiency and effectiveness across all aspects of care management, including medical, pharmacy and behavioral health. 3 Ta ble of Contents Our Life Sciences offerings combine domain expertise, data engineering, AI-driven insight generation, and digital operations to deliver outcomes across commercial, clinical, regulatory, and patient support functions.
We are also well-positioned with our suite of advanced analytics, data and AI-powered digital solutions on the cloud to create integrated services and solutions under one brand. Cultivating Long-term Relationships and Expanding our Client Base We continue to maintain our focus on cultivating long-term client relationships as well as attracting new clients.
Cultivating Long-term Relationships and Expanding our Client Base We continue to maintain our focus on cultivating long-term client relationships as well as attracting new clients.
We compete primarily against: • large global companies with digital operations and solutions and operations capabilities, such as Accenture, Cognizant Technology Solutions, Genpact Limited, IBM, Infosys, NTT DATA, Tata Consultancy Services, and WNS (Holdings); • niche industry-specific digital operations and solutions providers such as Cotiviti and Optum Health; • niche analytics services and digital platform providers; and • leading accounting and management consulting firms.
We compete primarily against: • large global companies with data and AI-led capabilities, who help to implement AI into business workflows such as Cognizant Technology Solutions, Genpact Limited, Infosys, NTT DATA, and Tata Consultancy Services; • niche industry-specific digital operations solutions and services providers such as Cotiviti and Optum Health; • niche analytics/AI services providers and platform providers such as Fractal, Latentview Analytics and platform vendors like Guidewire; • pure-play AI solutions / platform vendors such as Salesforce, Gradient AI; • global capability centers or other internal resources of a potential client; and 6 Ta ble of Contents • leading management consulting firms providing AI advisory and embedding AI solutions in workflows such as Accenture, Deloitte, Capgemini.
We believe our key advantage over in-house business processes and analytics management lies in our ability to orchestrate relevant domain, data, digital, 7 Table of Contents advanced analytics and human design expertise to enable delivery of sustainable outcomes allowing companies to focus on their customers, core products and markets.
We believe our key advantage is our ability to orchestrate AI, domain expertise, data, digital, advanced analytics and human design expertise to enable delivery of business.
Our operations have consistently remained unaffected by industry or labor disruptions, underscoring our favorable employee relations. Recruiting, Developing and Engaging our Employees We have developed a comprehensive and integrated talent management framework that fosters collaboration among our recruitment, capability development, and business human resources teams.
Recruiting, Developing and Engaging our Employees We have developed a comprehensive and integrated talent management framework that fosters collaboration among our recruitment, capability development, and business human resources teams while supporting the dynamic requirements of our IMUs and SGUs. We prioritize attracting top talent with skills relevant to the services delivered within these IMUs and SGUs.
The International Growth Markets business unit will help strategically expand our footprint in markets outside of Americas and drive focus on offerings and expansion in those markets in new and existing clients.
The International Growth Markets IMU is helping 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 solutions and services and digital operations solutions and services.
We reinvent business models, drive better business outcomes and unlock growth with speed for our clients through advanced analytics and AI -powered digital solutions on the cloud.
Business Strategy We are a global data and AI company that provides strategic data and AI-led solutions and services and digital operations solutions and services to our clients. We help our clients reinvent their business models, drive better business outcomes and unlock growth with speed.
However, each agreement is individually negotiated with the client. Competition Competition in the data analytics and digital operations and solutions industry is intense and growing.
Our contracts with clients typically take the form of a master services agreement (MSA), which is a framework agreement that we then supplement with statements of work (SOWs), which are each individually negotiated with the client. Competition Competition in the data and AI-led solutions and services and digital operations solutions and services industry is intense and growing.
We consider many of our business processes and implementation methodologies to be trade secrets or proprietary know-how and confidential information. We seek to protect our intellectual property through a combination of patent, trademark, copyright and trade secret laws, as well as through confidentiality procedures and contractual provisions.
We seek to protect our intellectual property through a combination of patent, trademark, copyright and trade secret laws, as well as through confidentiality procedures and contractual provisions. In recent years, we have continued to expand our patent portfolio. In 2025, we added 9 new patents, increasing our total number of patents to 12 since the inception of our patent program.
We have implemented a framework of practices, processes, and programs designed to make learning accessible, collaborative, and integrated into daily workflows. Through virtual training and upskilling opportunities, our employees engage in continuous development.
To make our strategy impactful, we identify critical skills and roles required across each IMU and SGU and then build a talent pipeline through market mapping exercises followed by initiatives to attract and retain talent. We have implemented a framework of practices, processes, and programs designed to make learning accessible, collaborative, and integrated into daily workflows.
Demand for our services is expected to continue to exhibit growth in the next several years. Integrating our Data and AI-Led and Domain Capabilities 5 Table of Contents The combination of our data and AI-led capabilities and domain expertise has been central to our market differentiation.
Integrating our Data and AI-Led Capabilities and Domain Expertise The combination of our data and AI-led capabilities and domain expertise has been central to our market differentiation. Our unique combination of long standing, trusted industry client relationships, data and analytics foundation and AI-powered workflows drive our sustainable revenue growth.
We also continue to build our client portfolio and increase client penetration across all of our services offerings. We are strategically equipped to help clients apply relevant digital technologies to enterprise processes and business priorities at every step of the digital transformation journey, by bringing together domain expertise with data, advanced analytics, cloud, AI and ML.
We also continue to build our client portfolio and increase client penetration across all of our services offerings. We are strategically equipped to help our clients through each step of their digital transformation journeys based on our deep baseline understanding of their businesses and processes gained from delivering digital operations solutions and services.
By leveraging our end-to-end offerings, we develop industry-specific AI and advanced analytics solutions and generate data insights, which makes us well-positioned to benefit from this global trend. Sales, Marketing and Client Management We market and sell our services to existing and prospective clients through our sales and client management teams, partner relationships, industry forums, and marketing programs.
We aim to position EXL as a preferred partner by leveraging our strengths in domain and data, investing in partner capabilities and aligning go-to-market activities with key partners. Sales, Marketing and Client Management We market and sell our services to existing and prospective clients through our sales and client management teams, partner relationships, industry forums, and marketing programs.
Capability Development We continue to promote opportunities for large-scale upskilling and reskilling of our employees, while also fostering a learning environment conducive to individual skill-building and career advancement.
Capability Development We continue to promote large-scale upskilling and reskilling while fostering a learning environment that supports individual skill-building and long-term career advancement. We operate in a democratized learning ecosystem that enables employees to drive their own development through AI-based recommendations, curated content libraries, intelligent web-sourced resources, peer learning groups, hands-on labs, and supervisor dashboards.
Our talent strategy aims to facilitate EXL’s current needs and support the long-term business objective of transforming data into a competitive edge for our clients. To achieve these objectives, we identify critical skills and roles that are our core business requirements and then build a talent pipeline through market mapping exercises followed by initiatives to attract and retain talent.
Our talent strategy is designed to address our current needs while supporting the long-term business objective of transforming data into a competitive edge for our clients.
Environmental, Health and Safety Our environmental, health and safety (“EHS”) program is focused on reducing our carbon footprint, conserving energy, minimizing waste, and achieving workplace safety objectives in order to drive business performance. Our delivery centers are ISO 45001:2018 and ISO 14001:2015 certified, meeting international standards for health and safety and effective environmental management systems, respectively.
In 2025, we continued to reduce our carbon footprint, improve energy efficiency, minimize waste, and strengthen water management across our delivery centers. Our major delivery centers are certified to ISO 14001:2015 and ISO 45001:2018, supporting consistent environmental management and workplace safety practices.
Our data and AI-led digital operations and solutions infuse advanced analytics, AI, generative AI, cloud, ML and robotics capabilities to improve efficiency, business outcomes and the consumer experience in healthcare across patient/member management, contracting and network management, health and care management, claims administration and business operations.
We leverage AI, including agentic AI and generative AI, ML, advanced analytics, and cloud-based solutions across the segment to enhance value-based care, optimize claims, and ensure regulatory compliance to deliver improved efficiency, business outcomes and consumer experience.
Regulation Our operations are subject to rules, regulations and statutes in the jurisdictions in which we have operations and where we deliver services as a result of the diverse and complex nature of our offerings. Consequently, we comply with certain rules and regulations applicable to us in delivering our services.
Where aligned with operational requirements, we integrate EHS considerations into facility planning, procurement, and business operations. 10 Ta ble of Contents Regulation We comply with various local rules, regulations and statutes as a result of the diverse and complex nature of our offerings. We provide third-party administrator insurance services from India and the Philippines.
As of December 31, 2024, we have a team of over 59,500 employees, including approximately 39,100 in India, 12,000 in the Philippines, 4,200 in South Africa, 2,800 in the United States, and 1,500 across other countries. As a data and AI-driven digital organization, our talent strategy is focused on building a team with deep expertise in these fields.
Global Presence • We have a workforce of over 65,000 professionals as of December 31, 2025. • Our teams operate across six continents and from over 50 offices worldwide, with our largest talent presence in India and Philippines with approximately 43,200 in India and 13,400 in Philippines, complemented by teams of about 4,100 in South Africa, 2,900 in the United States and 1,500 across other countries. 7 Ta ble of Contents Our Culture We believe in a shared purpose—for our clients, colleagues, partners, and communities.
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We are headquartered in New York and have approximately 59,500 employees spanning six continents. We deliver advanced analytics and AI-powered digital operations and solutions to our clients, driving enterprise-scale business transformation initiatives that leverage our deep domain expertise in generative AI and cloud technology.
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We are headquartered in New York and have over 65,000 employees spanning six continents. Using our deep understanding of the industry that we have developed in over 25 years of managing critical business operations, we help enterprises unlock the full value of their structured and unstructured data and embed AI into their workflows.
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Our data and AI-led value creation framework enables better and faster decision making, leveraging our end-to-end data, analytics, AI capabilities and deep industry knowledge to drive improved business outcomes, and re-designing of operating models to integrate advanced technology into operational workflows.
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We deliver business outcomes for our clients at speed and scale, by reinventing their business models through advanced analytics and AI powered digital operations to help them achieve superior customer experience, higher productivity, cost efficiency and business growth.
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We embed AI, digital operations and solutions into clients’ businesses and introduce our data and AI-led approach to transform operations with every new engagement, which helps our clients achieve better customer experience, higher productivity, cost efficiency and improved business outcomes.
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One of our key assets is 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).
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Through the end of 2024, we managed and reported financial information through our four reportable segments or strategic business units: Insurance, Healthcare, Analytics and Emerging Business, which reflected how management reviewed financial information and made operating decisions throughout that period.
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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.
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Our strategic business units align our products and services with how we manage our business, approach our key markets and interact with our clients. These business units develop client-specific solutions, build capabilities, maintain a unified go-to-market approach and are integrally responsible for service delivery, customer satisfaction, growth and profitability.
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In the first quarter of 2025, we implemented operational and structural changes to accelerate the execution of our data and AI strategy and align with how our management reviews financial information and makes operating decisions.
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By integrating AI, data and analytics directly into our client workflows, we drive intelligence into our clients’ digital operations that drive superior sales outcomes, optimize costs and power resilient and agile business models.
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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. Our Services We provide data and AI-led solutions and services and digital operations solutions and services to our clients.
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Digital Operations and Solutions Our digital operations and solutions, which we deploy for our clients from our Insurance, Healthcare and Emerging Business strategic business units, are focused on solving complex industry challenges. We use a focused industry vertical approach, and our solutions are designed to help our clients realize their business and innovation goals and improve their strategic competitive position.
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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.
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Some of our data and AI-driven digital operations and solutions include: a) multi-modal data ingestion using AI, and converting unstructured content into curated and usable data, b) real-time and comprehensive data insights with end-to-end data management and 360-degree customer views for our clients, c) omni-channel and frictionless customer experience including self-service, conversational AI and smart agent assist, d) AI-powered automation of transaction processing and e) automated quality, compliance and audits.
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Our sales and client management teams operate primarily from the United States, India, the United Kingdom, Ireland and Australia. 1 Ta ble of Contents Data and AI-led In our data and AI-led solutions and services we embed data and AI into client workflows, leveraging our deep domain knowledge, analytics, data management and digital engineering expertise.
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Using these solutions, we have transformed client operations such as underwriting operations, claims processing, accounts payables processing, utilization management, member and provider contact center services and collections and accounts receivables.
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Our industry-specific offerings are designed to help our clients address large and complex business challenges, accelerate growth, improve customer experience, enhance efficiency, and deliver lasting competitive advantages. As clients evolve from digital operations to data and AI-powered operations, this evolution represents the next stage of enterprise transformation.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Our Industry Our industry may not develop in ways that we currently anticipate due to negative public reaction in the United States and elsewhere to offshore outsourcing, anti-outsourcing executive action, legislation or otherwise. 22 Table of Contents Offshore outsourcing is a politically sensitive topic in the United States and elsewhere, and many organizations and public figures have publicly expressed concern about a perceived association between offshore outsourcing providers and the loss of jobs in the United States, where the majority of our clients are located, and elsewhere.
Biggest changeRisks Related to Our Industry Our industry may not develop in ways that we currently anticipate due to negative public reaction in the United States and elsewhere to offshore outsourcing, anti-outsourcing executive action, legislation or otherwise.
This has caused, and may in the future cause, clients to delay or stop using some of our existing services as they evaluate and pivot to newer technologies, including our own data and AI-led solutions.
This has caused, and may in the future cause, clients to delay or stop using some of our existing services as they evaluate and pivot to newer technologies, including our own data and AI-led solutions and services.
Outside parties may attempt to fraudulently induce employees, clients to disclose sensitive information in order to gain access to our data or our clients’ data.
Outside parties may attempt to fraudulently induce employees or clients to disclose sensitive information in order to gain access to our data or our clients’ data.
The market price of our common stock has at times experienced or may experience substantial price volatility as a result of, among other reasons, variations between our actual and anticipated financial results, announcements by us and our competitors, terrorist attacks, natural disasters, epidemics or pandemics, or other such events impacting countries where we or our clients have operations, loss of one or more significant clients, announcements of technological developments, projections or speculation about our business or that of our competitors by the media or investment analysts, the effect of any stock split, or uncertainty about current global economic conditions.
The market price of our common stock has at times experienced or may experience substantial price volatility as a result of, among other reasons, variations between our actual and anticipated financial results, announcements by us and our competitors, terrorist attacks, natural disasters, epidemics or pandemics, or other such events impacting countries where we or our clients have operations, loss of one or more significant clients, announcements of technological developments, projections or speculation about our business or that of our competitors by the media or investment analysts, the effect of any stock split, or uncertainty about current global economic and political conditions.
We provide services to clients throughout the world, therefore we and our clients (who sometimes impose those requirements on us) are subject to numerous, and sometimes conflicting, changing and evolving laws and regulations on matters as diverse as import/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, government affairs, internal and disclosure control obligations, securities regulation, including anti-competition, anti-money-laundering and anti-corruption laws (including the U.S.
We provide services to clients throughout the world, therefore we and our clients (who sometimes impose those requirements on us) are subject to numerous, changing and evolving laws and regulations on matters as diverse as import/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, government affairs, internal and disclosure control obligations, securities regulation, including anti-competition, anti-money-laundering and anti-corruption laws (including the U.S.
The imposition of these tariffs or other trading regulations by the U.S. government on foreign countries, or by foreign countries on the U.S., could result in a global trade war which may significantly affect our customers’ businesses and therefore their ability or willingness to engage us for our offerings, which may result in the loss of customers and harm our operating performance, sales and earnings.
The imposition of these tariffs, taxes or other trading regulations by the U.S. government on foreign countries, or by foreign countries on the U.S., could result in a global trade war which may significantly affect our customers’ businesses and therefore their ability or willingness to engage us for our offerings, which may result in the loss of customers and harm our operating performance, sales and earnings.
We do not anticipate any significant Pillar Two impacts, but will continue to evaluate any changes and potential impact on our consolidated financial statements. We earn a significant amount of our earnings in countries outside of the United States and we periodically evaluate opportunities to repatriate these earnings to fund our global operations, including acquisitions and debt management.
We do not anticipate any significant Pillar Two Framework impacts, but will continue to evaluate any changes and potential impact on our consolidated financial statements. We earn a significant amount of our earnings in countries outside of the United States and we periodically evaluate opportunities to repatriate these earnings to fund our global operations, including acquisitions and debt management.
High turnover among skilled professionals in AI and data science could lead to disruptions in project continuity, increased recruitment costs, and strain our human resources. Additionally, retaining employees with leadership capabilities who can guide strategic AI and data initiatives is critical for achieving long-term organizational goals.
High turnover among skilled professionals in AI and data science could lead to disruptions in project continuity, increased recruitment costs, and strain our human resources. Additionally, retaining employees with leadership capabilities who can lead strategic data and AI initiatives is critical for achieving long-term organizational goals.
In addition, we monitor infringing or potentially infringing activities by third parties on our IP portfolio through cybersecurity “watchdog” technologies and take action to enforce offensive action when necessary to protect our intellectual property. Clients and business partners typically agree in writing to confidential treatment of our information.
In addition, we monitor infringing or potentially infringing activities by third parties on our IP portfolio through cybersecurity “watchdog” technologies and take action to enforce infringing action when necessary to protect our intellectual property. Clients and business partners typically agree in writing to confidential treatment of our intellectual property and information.
Our operations centers and our data and voice communications, particularly in India, the Philippines and South Africa, may be damaged or disrupted as a result of natural disasters such as earthquakes, floods, volcano eruptions, heavy rains, drought, extreme heat, epidemics or pandemics, tsunamis and cyclones, technical disruptions such as electricity or infrastructure breakdowns, including damage to telecommunications cables, computer glitches and electronic viruses or man-made events such as political unrest, terrorist attacks, other acts of violence or war, protests, riots and labor unrest.
Our operations centers and our data and voice communications, particularly in India, the Philippines and South Africa, may be damaged or disrupted as a result of natural disasters such as earthquakes, floods, volcano eruptions, heavy rains, drought, extreme heat, epidemics or pandemics, tsunamis and cyclones, technical disruptions such as electricity or infrastructure breakdowns, including damage to telecommunications cables, computer glitches and electronic viruses or man-made events such as political unrest, terrorist attacks, military confrontations, other acts of violence or war, protests, riots and labor unrest.
Acquisitions, including completed acquisitions, involve a number of risks, including diversion of management’s attention, ability to finance the acquisition on attractive terms, failure to retain key personnel or valuable clients, legal liabilities and the need to amortize acquired intangible assets or recognize any impairment on goodwill and intangible assets, any of which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Acquisitions, including completed acquisitions, involve several risks, including diversion of management’s attention, ability to finance the acquisition on attractive terms, failure to retain key personnel or valuable clients, legal liabilities and the need to amortize acquired intangible assets or recognize any impairment on goodwill and intangible assets, any of which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Changes in our operating model or other changes to our infrastructure facilities or how we are organized, as the needs and size of our business change, limit our ability to forecast the need to hire additional skilled employees as and when they are required to meet the ongoing needs of our clients, and we may not be able to develop and improve our internal systems.
Changes in our delivery model or other changes to our infrastructure facilities or how we are organized, as the needs and size of our business change, limit our ability to forecast the need to hire additional skilled employees as and when they are required to meet the ongoing needs of our clients, and we may not be able to develop and improve our internal systems.
We report our operating results in U.S. dollars, yet a portion of our revenues and expenses are denominated in currencies other than the U.S. dollar. Accordingly, we must translate such revenues and expenses, as well as corresponding assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period, as applicable.
We report our operating results in U.S. dollars, but a portion of our revenues and expenses are denominated in currencies other than the U.S. dollar. Accordingly, we must translate such revenues and expenses, as well as corresponding assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period, as applicable.
In recent years, immigration authorities, in the United States as well as other countries where our clients are based, have increased the level of scrutiny in granting such visas and work permits, which may be affected by changes in legislation and enforcement due to political and other factors which may be difficult to predict.
In recent years, immigration authorities, in the United States as well as other countries where our clients are based, have increased the level of scrutiny and otherwise limited the granting of such visas and work permits, which may be affected by changes in legislation and enforcement due to political and other factors which may be difficult to predict.
Any future determination to pay dividends will be at the discretion of our board of directors and will be dependent on then-existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, including restrictions under our credit agreement, business prospects and other factors that our board of directors considers relevant.
Any future determination to pay dividends will be at the discretion of our board of directors and will be dependent on then-existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, including restrictions under our credit agreement, business prospects and other relevant factors.
Internal control over financial reporting has inherent limitations, including human error, sample-based testing, the possibility that controls could be circumvented or become inadequate because of changed conditions, unidentified controls, and fraud, which might not prevent or detect all misstatements or fraud, and could result in adverse consequences to us, including, but not limited to, a loss of investor confidence in the reliability of our financial results, which could cause the market price of our stock to decline.
Internal control over financial reporting has inherent limitations, including human error, sample-based testing, the possibility that controls could be circumvented or become inadequate because of changed conditions, unidentified controls, and fraud, which might not prevent or detect all misstatements or fraud, and could result in adverse consequences to us, including, but not limited to, a loss of investor confidence in the reliability of our financial 23 Ta ble of Contents results, which could cause the market price of our stock to decline.
However, these measures may not prevent misappropriation or infringement of our intellectual property and a 16 Table of Contents resulting loss of competitive advantage. Additionally, we may not be successful in obtaining or maintaining patents, trademarks or other intellectual property rights protections for which we have applied or may in the future apply.
However, these measures may not prevent misappropriation or infringement of our intellectual property and a resulting loss of competitive advantage. Additionally, we may not be successful in obtaining or maintaining patents, trademarks or other intellectual property rights protections for which we have applied or may in the future apply.
The terms of our project-based engagements generally do not exceed one year and may not produce ongoing or recurring business for us once the project is completed, and these contracts typically permit a client to terminate the agreement with shorter term notice.
The term of our project-based engagements generally does not exceed one year and may not produce ongoing or recurring business for us once the project is completed, and these contracts typically permit a client to terminate the agreement with shorter term notice.
Our success depends in part on the demand for our services and solutions, which could be negatively affected by a number of factors that may be outside of our control, including, for example, economic and political volatility or changed market conditions.
Our success depends in part on the demand for our services and solutions, which could be negatively affected by several factors that may be outside of our control, including, for example, economic and political volatility or changed market conditions.
Although we devote substantial resources to protect our information assets and our clients’ confidential information, any network infrastructure is to some extent vulnerable due to rapidly evolving cyberattacks, employee error, malfeasance, or a combination of the foregoing.
Although we devote substantial resources to protect our information assets and our clients’ confidential information, any network infrastructure is vulnerable to rapidly evolving cyberattacks, employee error, malfeasance, or a combination of the foregoing.
Our failure to identify suitable candidates or close transactions with potential acquisition targets for which we have invested significant time and resources could have a material adverse effect on our financial condition and cash flows.
Our failure to identify suitable candidates or close transactions with potential acquisition targets after we have invested significant time and resources could have a material adverse effect on our financial condition and cash flows.
Failing to secure such talent would create risks of revenue losses, reduced market competitiveness, and missed opportunities in key geographies.
Failing to secure such talent could create risks of revenue losses, reduced market competitiveness, and missed opportunities in key geographies.
Given the uncertainty over global economic conditions and regulatory, competitive or other factors outside of our control, including but not limited to conflicts between Russia and Ukraine, and Israel and Hamas, there can be no assurance that business activity will be maintained at our expected level in order to generate the anticipated cash flows from operations.
Given the uncertainty over global economic and political conditions, regulatory, competitive or other factors outside of our control, including but not limited to conflicts between Russia and Ukraine, and the Middle East, there can be no assurance that business activity will be maintained at our expected level in order to generate the anticipated cash flows from operations.
Our ability to maintain and grow demand for our services and solutions requires that we continue to develop and implement offerings that keep pace with changes in the industry and anticipate and respond to rapidly evolving technology and our clients’ evolving needs in areas such as AI, including generative AI, digital transformation and solutions, advanced analytics, cloud based solutions, data management, robotics and process automation, and data engineering, among others.
As a global data and artificial intelligence company, our ability to maintain and grow demand for our services and solutions requires that we continue to develop and implement offerings that keep pace with changes in the industry and anticipate and respond to rapidly evolving technology and our clients’ evolving needs in areas such as advanced AI, including generative AI, agentic AI, digital transformation and solutions, advanced analytics, cloud based solutions, data management, robotics and process automation, and data engineering, among others.
AI technologies are complex and are rapidly evolving, and we face significant competition, including from our own clients, who may potentially develop their own internal AI technology, or acquire such technology from third parties, which in each case, can lead to reduced demand for our services and solutions.
AI technologies, including cutting-edge technologies like agentic AI and generative AI, are complex and rapidly evolving, and we face significant competition, including from our own clients, who may potentially develop their own internal AI technology, or acquire such technology from third parties, which in each case, can lead to reduced demand for our services and solutions.
We may fail to attract and retain enough sufficiently trained employees to support our operations or professionals with sufficient leadership capabilities. Our success depends heavily on attracting, hiring, and retaining employees skilled in emerging areas, particularly artificial intelligence (AI), machine learning, data science, and digital transformation.
We may fail to attract and retain enough sufficiently trained employees to support our operations or professionals with sufficient leadership capabilities. Our success depends heavily on attracting, hiring, and retaining employees skilled in cutting-edge technologies, particularly artificial intelligence (AI), machine learning, data science, and digital transformation.
Given the complex, rapidly changing and competitive technological and business environment in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, any future infringement claim against us or our clients may cause us to alter our business practices, lose significant revenue, incur significant license, royalty or technology development expenses, or pay significant monetary damages or legal fees and costs.
Given the complex and competitive technological and business environment in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, any future infringement claim may cause us to alter our business practices, lose revenue, incur license, royalty or technology development expenses, or pay monetary damages or legal fees, which may be significant to us.
Our asset utilization levels are affected by a number of factors, 14 Table of Contents including our ability to transition employees from completed projects to new assignments, attract, train and retain employees, forecast demand for our services (including potential client terminations or reductions in required resources) and maintain an appropriate headcount in each of our locations, as well as our need to dedicate resources for employee training and development, other typically non-chargeable activities and optimizing our operational infrastructure.
Our asset utilization levels are affected by several factors, including our ability to transition employees from completed projects to new assignments, attract, train and retain employees, forecast demand for our services (including potential client terminations or reductions in required resources) and maintain an 13 Ta ble of Contents appropriate headcount in each of our locations, as well as our need to dedicate resources for employee training and development, other typically non-chargeable activities and optimizing our operational infrastructure.
The global stock markets have experienced, and may continue to experience, significant volatility from inflation and high interest rates, which could result in a material adverse effect on our stock price. Furthermore, if we fail to meet expectations relating to future growth and profitability, this may have a materially adverse effect on the trading price of our common stock.
The global stock markets have experienced, and may continue to experience, significant volatility from inflation and high interest rates, which could result in a material adverse effect on our stock price. Furthermore, if we fail to meet expectations for future growth and profitability, the trading price of our common stock may be materially adversely affected.
If we do not sufficiently invest in new technologies, adapt to industry developments, evolve and expand our business at sufficient speed and scale and successfully drive innovation, our ability to develop and maintain a competitive advantage, our growth strategy and our results of operations could be adversely affected.
If we do not sufficiently invest in new and rapidly evolving technologies, including advanced AI and automation, adapt to industry developments, evolve and expand our business at sufficient speed and scale and successfully drive innovation, our ability to develop and maintain a competitive advantage, our growth strategy and our results of operations could be adversely affected.
Developments in the industries we serve, which may be rapid, also could shift demand to new services and solutions. If, as a result of new technologies or developments in the industries we serve, our clients demand new services and solutions, we may be less competitive in these new areas or need to make significant investment to meet that demand.
If, as a result of new technologies or developments in the industries we serve, our clients demand new services and solutions, we may be less competitive in these new areas or need to make significant investment to meet that demand.
The services we provide are often critical to our clients’ businesses, and any failure to provide those services could result in a reduction in revenues or a claim for substantial damages against us, regardless of whether we are responsible for that failure.
The services we provide are often critical to our clients’ businesses, and any failure to provide those services could result in a reduction in our revenues or a claim for substantial damages against us, regardless of whether we or a third party vendor or partner is responsible for that failure.
Current or prospective clients may elect to perform such services themselves or may be discouraged from transferring these services to offshore providers to avoid any negative perception that may be associated with using an offshore provider. Measures aimed at limiting or restricting outsourcing by U.S. companies may be put forward by the President via executive action, U.S.
Current or prospective clients may elect to perform such services themselves or may be discouraged from transferring these services to offshore providers to avoid any negative perception that may be associated with using an offshore provider. Measures aimed at limiting or restricting outsourcing by U.S. companies may be put forward to address these concerns.
Such technological developments and spending delays can negatively impact our results of operations, if we are unable to introduce new pricing or commercial models that reflect the value of these technological developments or if the pace and level of spending on new technologies, and integration of the new technologies into our services, are not sufficient to make up for any shortfall, or if our existing services are otherwise displaced by such technologies.
Such technological developments and spending delays can negatively impact our results of operations, if our existing services are displaced by such newer technologies and we are unable to similarly pivot to offering services and solutions that incorporate such technologies or if we are unable to introduce new pricing or commercial models that reflect the value of these technological developments or if the pace and level of spending on new technologies are not sufficient to make up for any shortfall.
In particular, federal securities laws require us to maintain internal controls over financial reporting. Effective internal controls are necessary for us to provide reliable and accurate financial information and to effectively prevent fraud. We devote significant financial and managerial resources and time to comply with the internal control over financial reporting requirements and continue to enhance our controls.
Effective internal controls are necessary for us to provide reliable and accurate financial information and to effectively prevent fraud. We devote significant financial and managerial resources and time to comply with the internal control over financial reporting requirements and continue to enhance our controls.
We may not be able to maintain our culture and effectively communicate our core values, policies and procedures, strategies and goals, particularly given our world-wide operations, rate of new hires, and significant percentage of our employees who have the option to work remotely.
We may not be able to maintain our culture and effectively communicate our core values, policies and procedures, strategies and goals, particularly given our world-wide operations, rate of new hires, and significant percentage of remote employees.
If our estimates, or the assumptions underlying such estimates, are not correct, actual results may differ materially from our estimates, and we may need to, among other things, adjust revenues or accrue additional charges that could adversely affect our results of operations. We are exposed to credit risk and fluctuations in the market values of our investment and derivatives portfolios.
If our estimates, or the assumptions underlying such estimates, are not correct, actual results may differ materially from our estimates, and we may need to, among other things, adjust revenues or accrue additional charges that could adversely affect our results of operations.
Our disclosures on these matters, and any failure or perceived failure to achieve or accurately report on our initiatives, are subject to risks outside of our control and could harm our reputation.
Our brand and reputation are also associated with various corporate sustainability initiatives. Our disclosures on these matters, and any failure or perceived failure to achieve or accurately report on our initiatives, are subject to risks outside of our control and could harm our reputation.
The domestic and international capital and credit markets have in the past, and may in the future, experience volatility and disruption and uncertainty from geopolitical tensions, inflation, economic tensions, changes in legislation in the various jurisdictions in which we and our clients operate, changes in global trade policies, or global health emergencies or pandemics, which may affect our clients, us directly, or our client industries, and could result in changing demand patterns.
The capital and credit markets have experienced, and may experience, volatility from geopolitical and economic tensions, inflation, changes in legislation or global trade policies, or global health emergencies or pandemics, which may affect our clients, us directly, or our client industries, and could result in changing demand patterns.
If we are unable to invest in reskilling and upskilling our employees in the areas and skills that strategically important to our business, our ability to effectively lead our current projects and develop new business could be jeopardized, and our business, results of operations and financial condition could be adversely affected.
If we are unable to hire, reskill and upskill our employees in strategically important business areas our ability to effectively lead our current projects and develop new business could be jeopardized, and our business, results of operations and financial condition could be adversely affected.
Violations of any of these laws or regulations in the conduct of our business, including being unable to maintain our accreditations, licenses or other qualifications while working for our clients, could result in fines, criminal sanctions against us or our officers, prohibitions on doing business or suspension or disqualification from government contracting or contracting with private entities in certain highly regulated industries, damage to our reputation and other unintended consequences such as liability for monetary damages, fines and/or criminal prosecution including in the form of successor liability in certain circumstances for companies we invest in or acquire, unfavorable publicity, or restrictions on our ability to process information and allegations by our clients that we have not performed our contractual obligations and loss of clients.
Violations of these laws or regulations, including failure to maintain our accreditations, licenses or other qualifications, could result in fines, criminal sanctions, prohibitions on doing business or suspension or disqualification from government contracting or contracting with private entities, damage to our reputation and other unintended consequences such as liability for monetary damages, fines and/or criminal prosecution including in the form of successor liability arising from companies in which we invest or acquire, unfavorable publicity, or 21 Ta ble of Contents restrictions on our ability to process information and allegations by our clients that we have not performed our contractual obligations and loss of clients.
The majority of our digital operations and solutions contracts have longer terms, typically ranging from three to five years, and generally require a longer notice period for termination and may include an early termination fee to be paid to us, but this might not be sufficient to cover our costs or make up for the loss of revenues and profit upon termination of the contract.
Most of our digital operations solutions and services contracts are long term, typically ranging from three to five years, generally require a longer termination notice period and may include an early termination fee to be paid to us, which might not be sufficient to cover our costs or the loss of revenues and profit upon termination of the contract.
Security breaches expose us to a risk of loss of sensitive information, lawsuits from our employees, clients or their customers for breaching contractual confidentiality provisions or privacy laws, or investigations and penalties from regulators or criminal prosecution, remediation costs, increased costs for security measures, loss of revenue, damage to our reputation, and potential liability.
Security breaches or any negative impact resulting from such incursions into our systems and technology infrastructure and those of our clients, partners and suppliers, may expose us to a risk of loss of sensitive information, lawsuits from our employees, clients or their customers for breaching contractual confidentiality provisions or privacy laws, or investigations and penalties from regulators or criminal prosecution, remediation costs, increased costs for security measures, loss of revenue, damage to our reputation, and potential liability.
The ability of some of our executives and employees based in India and other foreign locations to work with and meet clients in the United States and other countries depends on their ability to obtain the necessary visas and work permits.
The ability of some of our executives and employees based in foreign locations to work with and meet clients abroad depends on their obtaining the necessary visas and work permits.
Industry pricing models are evolving, and clients increasingly request alternative pricing models , rather than annual or hourly billing rates. If we make inaccurate assumptions for contracts with such alternative pricing models including pricing for our digital capabilities and complex transformation services or are unable to offer competitive pricing, our profitability may be negatively affected.
If we make inaccurate assumptions for contracts with such alternative pricing models including pricing for our digital capabilities and complex transformation services or are unable to offer competitive pricing, our profitability may be negatively affected.
These provisions include provisions permitting the board of directors to fill vacancies created by its expansion, provisions requiring the vote of holders of two thirds of our common stock for certain amendments to our organizational documents, provisions barring stockholders from calling a special meeting of stockholders or requiring one to be called or from taking action by written consent and provisions that set forth advance notice procedures for stockholders’ nominations of directors and proposals for consideration at meetings of stockholders.
These provisions include permitting the board of directors to fill vacancies created by its expansion, requiring the vote of holders of two thirds of our common stock for certain amendments to our organizational documents, provisions barring stockholders from calling special stockholders’ meetings or acting by written consent, and setting forth advance notice procedures for stockholders’ director nominations and other stockholder proposals.
We could be required to indemnify our clients if they are sued by a third party for intellectual property infringement arising from materials that we have provided to the clients in connection with our services and solutions.
Non-practicing entities may also bring baseless, but nonetheless costly to defend, infringement claims. We could be required to indemnify our clients if they are sued by a third party for intellectual property infringement arising from materials that we have provided to the clients in connection with our services and solutions.
We could also experience financial or other setbacks if transactions encounter unanticipated problems, including problems related to execution, integration or underperformance relative to prior expectations, or problems with the intellectual property that we may acquire.
We could also experience financial or other setbacks if transactions encounter unanticipated problems, including related to execution, integration or underperformance, or problems with acquired intellectual property.
Client demand may be impacted by the selling cycle and terms of our client contracts. Consistent with industry practice, most of our client contracts may be terminated by our clients without cause and do not commit our clients to provide us with a specific volume of business.
Consistent with industry practice, most of our client contracts may be terminated by our clients without cause and do not commit our clients to provide us with a 12 Ta ble of Contents specific volume of business.
The loss of any of our key management personnel, particularly to competitors, could have a material adverse effect on our business, results of operations, financial condition and cash flows.
We do not maintain “key person” insurance covering any member of our management team. The loss of any of our key management personnel, particularly to competitors, could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Any deterioration of the credit and capital markets in the United States, the United Kingdom, Europe, Asia or other regions of the world could result in volatility of our investment earnings and impairments to our investment portfolio, which could negatively impact our financial condition and reported income.
Any deterioration in global credit or capital markets, or in the financial conditions of our banking and other counterparties, could result in volatility of our investment earnings and impairments to our investment portfolio, which could negatively impact our financial condition and reported income.
Without these investments, we risk losing key talent to competitors, jeopardizing our ability to innovate and grow. We also need to manage cultural differences among our employee populations and varying legal and regulatory regimes across jurisdictions, and that may create a risk for employment claims.
We also need to manage cultural differences among our employee populations and varying legal and regulatory regimes across jurisdictions, and that may create a risk for employment claims.
We do not intend to pay dividends in the foreseeable future, and, because we are also a holding company, we may be unable to pay dividends. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock.
For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock.
See Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk.” Additionally, because a majority of our employees are based in India, Philippines and South Africa and paid in Indian rupee or Philippine peso or South African rand, while our revenues are primarily reported in U.S. dollars and U.K. pound sterling, our employee costs as a percentage of revenues may increase or decrease significantly if the exchange rates among the Indian rupee, the Philippine peso, the U.K pound sterling, the South African rand and the U.S. dollar fluctuate significantly.
See Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk.” Additionally, because a majority of our employees are based in India, Philippines and South Africa and paid in Indian rupee or Philippine peso or South African rand, while our revenues are primarily earned in U.S. dollars and U.K. pound sterling, our employee costs as a percentage of revenues may increase or decrease significantly if the exchange rates among the Indian rupee, the Philippine peso, the U.K pound sterling, the South African rand and the U.S. dollar fluctuate significantly. 20 Ta ble of Contents Although we hedge a substantial portion of our foreign currency exposures, there is no assurance that our hedging strategy will be successful or cost-effective.
If our cash flow from operations declines, 21 Table of Contents we may not be able to service or refinance our current debt or obtain financing on favorable terms to us or at all, which could adversely affect our business and financial condition.
If our cash flow from operations declines, we may not be able to service or refinance our current debt or obtain additional financing on favorable terms to us or at all, which could adversely affect our business and financial condition. Our debt portfolio is on floating interest rates and is therefore fully exposed to interest rate fluctuations.
Although we maintain our facilities and communications links with business continuity and disaster recovery plans, disruptions could result from, among other things, technical breakdowns, computer glitches and viruses and weather conditions.
Our offshore operations centers require us to maintain active voice and data communications among our operations centers, our technology and data hubs and our clients’ offices. Although we maintain our facilities and communications links with business continuity and disaster recovery plans, disruptions could result from, among other things, technical breakdowns, computer glitches and viruses and weather conditions.
We currently benefit from corporate tax holidays in our qualified Philippines Economic Zone Authority operations centers in the Philippines. Our ability to utilize these tax holidays could be adversely affected by any new unfavorable tax legislative changes.
We currently benefit from corporate tax holidays in our qualified Philippines Economic Zone Authority operations centers. Our ability to utilize these tax holidays could be adversely affected by any new unfavorable tax legislative changes. We have established our headquarters for international business in Dublin, Ireland, and qualify for a reduced tax rate.
Our primary operating subsidiaries are organized outside the United States and some of our executive officers may reside outside of the United States. A substantial portion of our assets are located in India and the Philippines.
Investors may have difficulty effecting service of process or enforcing judgments obtained in the United States against our foreign subsidiaries or our executive officers. Our primary operating subsidiaries are organized outside the United States and some of our executive officers may reside outside of the United States. A substantial portion of our assets are located in India and the Philippines.
Any performance failure on the part of our vendors or partners, or the discontinuance by such vendors or partners of services that we rely on them to perform, could delay our performance, or require us to engage alternative third parties to perform the services at our cost or to perform the services ourselves, any of which could result in a negative impact on our reputation, a loss of revenue or adversely impact our cash flows and profitability.
Any performance failure or discontinuation on the part of our vendors or partners could delay our performance, or require us to find alternatives or perform the services ourselves, any of which could result in a negative impact on our reputation, a loss of revenue or adversely impact our cash flows and profitability.
To the extent that we are not able to control such costs by our efforts to add capacity in lower wage costs countries or share wage increases with our clients, wage increases may reduce our margins and cash flows.
To the extent that we cannot control such costs by adding capacity in lower wage countries or sharing such wage increases with our clients, our margins and cash flows may be impacted.
In addition, our investors may be unable to enforce against these persons outside the jurisdiction of their residence judgments obtained in courts of the United States, including judgments predicated solely upon the federal securities laws of the United States.
In addition, our investors may be unable to enforce against these persons outside the jurisdiction of their residence judgments obtained in courts of the United States, including judgments predicated solely upon the federal securities laws of the United States. Our global operations subject us to numerous legal and regulatory requirements, including, accreditation or licensing standards that govern our business.
We depend on certain significant vendors and partners for software, technology and data communications, related equipment and its maintenance, and third party components that we use to deliver our services, including cloud services. Our offshore operations centers require us to maintain active voice and data communications among our operations centers, our technology and data hubs and our clients’ offices.
We depend on certain significant vendors and partners for software, technology and data communications, including high-quality datasets, related equipment and its maintenance, and third party components that we use to deliver our services, including cloud services.
We may experience increased compliance burdens and costs to meet obligations related to new and existing laws and regulations related to sustainability matters. In addition, our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or may not meet the expectations of investors or other stakeholders.
In addition, our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or may not meet the expectations of investors or other stakeholders.
In many of our digital operations and solutions contracts we commit to long-term and other pricing structures (such as full-time equivalent-based pricing, fixed-price arrangements, transaction-based and outcome-based pricing) with our clients and therefore may bear the risk of cost overruns, completion delays, resource requirements, wage inflation and adverse movements in exchange rates in connection with these contracts.
In many of our digital operations solutions and services contracts we commit to long-term and alternative pricing structures, rather than annual or hourly billing rates, with our clients and therefore may bear the risk of cost overruns, completion delays, resource requirements, wage inflation and adverse movements in exchange rates in connection with these contracts.
Failure to consistently meet the service requirements of a client or errors made by our employees in the course of delivering services to our clients could disrupt the client’s business and result in a reduction in revenues or a claim for damages against us.
Failure to consistently meet the service level and performance requirements for our clients, or errors made by our employees in the course of delivering services to our clients, could disrupt the client’s business and result in a reduction in revenues or a claim for damages against us. 17 Ta ble of Contents If we fail to meet our contractual obligations or otherwise breach obligations to our clients or vendors, we could be subject to legal liability.
As part of our business strategy, we intend to continue to selectively consider acquisitions or investments, some of which may be material. Through the acquisitions we pursue, we may seek opportunities to expand the scope of our existing services, add new clients or enter new geographic markets.
Through the acquisitions we pursue, we may seek opportunities to expand the scope of our existing services, add new clients or enter new geographic markets.
If we breach any of these covenants and do not cure such breach within the applicable cure periods or obtain a waiver from the lenders, the outstanding indebtedness could be declared immediately due and payable and such acceleration could adversely affect our liquidity and financial condition.
If we breach these covenants and do not cure such breach within the applicable cure periods or obtain a waiver from the lenders, the outstanding indebtedness could be accelerated, which could adversely affect our liquidity and financial condition. Our cash flow from operations provides the primary source of funds for our debt service payments.
Increased competition, our inability to compete successfully against competitors, pricing pressures or loss of market share could impact our business, results of operations, financial condition and cash flows.
Increased competition, our inability to compete successfully against competitors, pricing pressures or loss of market share could impact our business, results of operations, financial condition and cash flows. We make estimates and assumptions in connection with the preparation of our consolidated financial statements, and any changes to those estimates and assumptions could adversely affect our financial results.
Our inability to manage our rapid infrastructure and personnel growth across countries could adversely affect our business operations. We have operations centers across India, the United States, the Philippines, South Africa, Colombia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and the Republic of Ireland. Our headcount has increased significantly over the past several years.
We have operations centers across India, the United States, the Philippines, South Africa, Colombia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and the Republic of Ireland. Our headcount has increased significantly over the past several years. We continue to look for operations centers at locations outside of our current operating geographies.
The global nature of our operations increases the difficulty of compliance. The new United States presidential administration has imposed or threatened significantly increased tariffs on foreign imports into the United States, particularly from China, Mexico and Canada, and the U.K. and the European Union.
The global nature of our operations increases the difficulty of compliance. The United States presidential administration has imposed or threatened significantly increased tariffs on foreign imports into the United States or service taxes on services provided to the U.S.
If we are unable to efficiently deploy talent because of increased regulation of immigration or work visas, including limitations placed on the number of visas granted, limitations on the type of work performed or location in which the work can be performed, and new or higher minimum salary requirements, it could be more difficult to staff our employees on client engagements and could increase our costs and have an adverse effect on our net income and cash flows. 20 Table of Contents Investors may have difficulty effecting service of process or enforcing judgments obtained in the United States against our foreign subsidiaries or our executive officers.
If visa regulation prevents us from effectively deploying talent, including because of limitations placed on the number of visas granted, limitations on the type of work performed or location in which the work can be performed, and new or higher minimum salary requirements, it could be more difficult to staff our employees on client engagements and could increase our costs and have an adverse effect on our net income and cash flows.
We also may need to increase the levels of employee compensation more rapidly than in the past to remain competitive in attracting and retaining the quality and number of employees that our business requires. Wages are generally higher for employees performing AI, analytics and digital transformation services than for employees performing digital operations and solutions.
We also may need to increase employee compensation more rapidly than in the past to attract and retain the employees that our business requires. Wages are generally higher for employees performing data and AI-led services than for employees performing digital operations services. As the scale of such services increases, wages as a percentage of revenues may increase.
We currently operate in the Philippines and Ireland where we will be subject to a minimum tax rate pursuant to the Pillar Two Framework prescribed by Organization for Economic Co-operation and Development (“OECD”). The OECD continues to release additional guidance on the Pillar Two Framework, with implementation generally effective for 2024.
Any change in our qualification for the reduced rate could adversely affect our overall tax liabilities. We currently operate in the Philippines and Ireland where we will be subject to a minimum tax rate pursuant to the Pillar Two Framework prescribed by Organization for Economic Co-operation and Development (“OECD”).
Our inability to execute our growth strategy, to ensure the continued adequacy of our current systems or to manage our expansion effectively could have a material adverse effect on our business, results of operations, financial condition and cash flows. 17 Table of Contents We may engage in strategic acquisitions or transactions, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Our inability to execute our growth strategy, to maintain adequate systems, or manage our talent and expansion effectively could have a material adverse effect on our business, results of operations, financial condition and cash flows.
In the United States, several states have enacted or are considering enacting privacy regulations, including, the California Consumer Privacy Act. In addition, there are privacy regulations in other jurisdictions, such as the General Data Protection Regulation in the European Union, the International Data Transfer Agreement in the United Kingdom and the Digital Personal Data Protection Act, 2023 in India.
In addition, there are privacy and data localization regulations in other jurisdictions, such as the General Data Protection Regulation in the European Union, the International Data Transfer Agreement in the United Kingdom and the Digital Personal Data Protection Act, 2023 in India. These privacy regulations impose privacy and data security compliance obligations and significant penalties for noncompliance.
Any of the above factors may adversely affect our business, results of operations, financial condition and cash flows. Risks Related to the International Nature of Our Business If the transfer pricing arrangements we have for controlled intercompany transactions among our subsidiaries are determined to be inappropriate, our tax liability may increase.
Risks Related to the International Nature of Our Business If the transfer pricing arrangements we have for controlled intercompany transactions among our subsidiaries are determined to be inappropriate, our tax liability may increase. The transfer pricing regulations in the countries we operate in require that controlled intercompany transactions be at arm’s-length.
These laws, regulations and standards may lack specificity and are subject to varying interpretations. Their application in practice may evolve over time, as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs of compliance as a result of ongoing revisions to such corporate governance standards.
These laws, regulations and standards may lack specificity and are subject to varying interpretations and evolution. This could result in continuing uncertainty regarding compliance matters and higher costs of compliance as a result of ongoing revisions to such corporate governance standards. In particular, federal securities laws require us to maintain internal controls over financial reporting.
Complying with changing regulatory requirements requires us to incur substantial costs, exposes us to potential regulatory action or litigation, and may require changes to our business practices in certain jurisdictions.
Complying with changing regulatory requirements requires us to incur substantial costs, exposes us to potential regulatory action or litigation, and may require changes to our business practices in certain jurisdictions. In addition, we may not be able to limit our liability to our clients with respect to breaches of our obligation to keep the information we receive from them confidential.
We face competition globally from other providers and from our clients, who may build global capability centers to perform digital operations and solutions and analytics services themselves, either in-house or other arrangements. The market for our services is highly competitive, and we expect competition to intensify and increase in the future as more companies enter the market.
We face competition globally from other providers and from our clients, who may build global capability centers to provide data and AI-led solutions and services and digital operations solutions and services themselves, either in-house or other arrangements.
These provisions of our restated certificate of incorporation, by-laws and Delaware law could discourage potential takeover attempts and reduce the price that investors might be willing to pay for shares of our common stock in the future which could reduce the market price of our stock.
These provisions of our certificate of incorporation, by-laws and Delaware law could discourage takeover attempts and reduce the price investors are willing to pay for our common stock, which could reduce the market price of our stock. 22 Ta ble of Contents We do not intend to pay dividends in the foreseeable future, and, because we are also a holding company, we may be unable to pay dividends.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis includes a mandatory annual information security training, periodic simulations such as red teaming and tabletops, regular communications on relevant topics and policies related to data privacy, phishing, email security best practices, among others. We provide specialized security training for certain roles with access to sensitive data, including human resources or employees who regularly handle personal or sensitive information.
Biggest changeTraining and Awareness We maintain a comprehensive information and cybersecurity awareness and training program for all employees and contracted resources. This includes a mandatory annual information security training, cyber awareness month, periodic simulations such as red teaming and tabletops, regular communications on relevant topics and policies related to data privacy, phishing, email security best practices, among others.
These policies, processes and practices are aimed at building a cyber-resilient organization by implementing and operationalizing cybersecurity capabilities to identify, protect, detect, respond and recover from cybersecurity threats and incidents and are guided by relevant regulatory and governance bodies, including but not limited to the Cyber Security Framework of the National Institute of Standards and Technology.
These policies, processes and practices are aimed at building a cyber-resilient organization by implementing and operationalizing cybersecurity capabilities to identify, protect, detect, respond and recover from cybersecurity threats and incidents and are guided by relevant regulatory and governance bodies, including but not limited to the Cyber Security Framework of the National Institute of Standards and Technology (NIST).
The Cyber Security program including security operations, governance, risk and compliance, data privacy, and business continuity is led by our Chief Information Security Officer (“CISO”) who has over 25 years of extensive experience in technology and data center architecture, client solutioning, complex program management and nearly a decade in cyber risk management, governance and incident handling.
The Cybersecurity program including security operations, governance, risk and compliance, data privacy, and business continuity is led by our Chief Information Security Officer (“CISO”) who has over 25 years of extensive experience in technology and data center architecture, client solutioning, complex program management and a decade in cyber risk management, governance and incident handling.
We have undertaken measures designed to comply with applicable privacy laws and regulations that are applicable to our services. These security capabilities are designed to mitigate vulnerabilities and the impact of cyber incidents. Cyber security is an inherent consideration for our data and AI-led digital solutions.
We have undertaken measures designed to comply with applicable privacy laws and regulations that are applicable to our services. These security capabilities are designed to mitigate vulnerabilities and the impact of cyber incidents. Cybersecurity is an inherent consideration for our data and AI-led solutions.
ITEM 1C. Cybersecurity 24 Table of Contents We maintain a comprehensive cybersecurity and data privacy program to safeguard the security, confidentiality, integrity, availability and protection of the Company’s and our clients’ information. Cyber security is also an inherent consideration for our data and AI-led solutions.
ITEM 1C. Cybersecurity We maintain a comprehensive cybersecurity and data privacy program to safeguard the security, confidentiality, integrity, availability and protection of the Company’s and our clients’ information. Cybersecurity is also an inherent consideration for our data and AI-led solutions. Specifically, we aim to proactively identify and mitigate data protection and privacy risks through responsible AI practices.
Incident Response and Recovery Planning While processes are in place to minimize the occurrence of a successful cyberattack, we have institutionalized detailed incident response procedures to address a cyber threat that may occur despite these safeguards. The response procedures are designed to identify, analyze, isolate and contain, remediate, and, if applicable, report any such material cyber incidents that occur.
Incident Response and Recovery Planning While processes are in place to minimize the occurrence of a successful cyberattack, we have institutionalized detailed incident response procedures to address a cyber threat that may occur despite these safeguards.
We aim to continually strengthen our cybersecurity posture and protocols by investing in people, processes and technology intended to protect information throughout the business life cycle and to manage cybersecurity risk, and we intend to continue to do so as cybersecurity risks and methods for preventing against them evolve.
We work to continually strengthen our cybersecurity posture and protocols by investing in people, processes and technology intended to protect information throughout the business life cycle and to manage evolving cybersecurity risk.
No assurance can be given that the policies and procedures outlined below will be properly followed in every instance or that they will be effective in safeguarding against every possible cybersecurity threat.
There can be no assurance that these policies and procedures will be effective in safeguarding against every possible cybersecurity or AI threat or that there will be no material incidents in the future.
We have developed a materiality assessment approach for cyber and a cyber crisis communication methodology for structured and timely notification to internal and external stakeholders. Further, we have empaneled specialized cyber partners to provide advanced investigation capabilities and response management support in case of a real cyber incident.
Further, we have empaneled specialized cyber partners to provide advanced investigation capabilities and response management support in case of a real cyber incident. Periodic tabletop and crisis simulation exercises are conducted to reinforce our incident response controls on an ongoing basis.
There is heightened focus on institutionalizing a Responsible AI framework that includes periodic Secure AI assessments to proactively identify and mitigate data protection and privacy risks.
We aim to conduct periodic assessments to proactively identify and mitigate data protection and privacy risks in AI and manage risks through a layered approach that combines human oversight, technology and security controls.
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Specifically, there is a heightened focus on institutionalizing a Responsible AI framework to proactively identify and mitigate data protection and privacy risks.
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The response procedures are 24 Ta ble of Contents designed to identify, analyze, isolate and contain, remediate, and, if applicable, report any such material cyber incidents that occur. We have developed a materiality assessment approach for cyber and a cyber crisis communication methodology for structured and timely notification to internal and external stakeholders.
Removed
Periodic tabletop and crisis simulation exercises are conducted to reinforce our incident response controls on an ongoing basis. Training and Awareness 25 Table of Contents We maintain a comprehensive information and cybersecurity awareness and training program for all employees and contracted resources.
Added
We provide specialized security training for certain roles with access to sensitive data, including human resources or employees who regularly handle personal or sensitive information.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. Properties Our corporate headquarters are located in New York.
Biggest changeITEM 2. Properties Our corporate headquarters are located in New York and we maintain our headquarters for international business in the Republic of Ireland.
We also have multiple operations centers and regional offices in the United States. Our corporate headquarters and all of our operations centers are leased under long-term leases with varying expiration dates, except for an operations center in Pune, India with an area of 86,361 sq. ft. and containing approximately 1,690 agent workstations, which we own.
We also have multiple operations centers and regional offices in the United States. Our corporate headquarters and all of our operations centers are leased under long-term leases with varying expiration dates, except for an operations center in Pune, India with an area of 86,361 sq. ft. and containing approximately 1,750 agent workstations, which we own.
We have multiple operations centers spread across India, the Philippines, South Africa, Columbia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and the Republic of Ireland with an aggregate area of approximately 1,810,000 square feet and a current installed capacity of approximately 28,000 workstations, including workstations for training and our employees in enabling functions.
We have multiple operations centers spread across India, the Philippines, South Africa, Colombia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and the Republic of Ireland with an aggregate area of approximately 1,994,000 square feet and a current installed capacity of approximately 31,000 workstations, including workstations for training and our employees in enabling functions.
Substantially all of our owned and leased property is used to service all of our reporting segments. We believe that our current facilities are adequate to support our existing operations, however we continue to optimize our existing network of operations centers to service our client, drive efficiencies and adapting the hybrid working model.
Substantially all of our owned and leased property is used to service all of our reporting segments. We believe that our current facilities are adequate to support our existing operations, however we continue to optimize our existing network of operations centers, including through our hybrid working model, to service our clients and drive efficiencies.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 25 - Commitments and Contingencies to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” for details regarding our tax proceedings. ITEM 4. Mine Safety Disclosures Not applicable. 26 Table of Contents PART II.
Biggest changeSee Note 25 - 25 Ta ble of Contents Commitments and Contingencies to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” for details regarding our tax proceedings.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring the three months ended December 31, 2024, 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 October 1, 2024 through October 31, 2024 — $ — — $ — — $ 334,692,888 November 1, 2024 through November 30, 2024 — — 41,919 42.63 41,919 $ 332,905,839 December 1, 2024 through December 31, 2024 11,869 45.93 219,177 45.63 231,046 $ 322,905,872 Total 11,869 $ 45.93 261,096 $ 45.14 272,965 — During the year ended December 31, 2024, we purchased 6,273,381 shares of our common stock for an aggregate purchase consideration of $196.5 million, including commission and excluding excise tax, representing an average purchase price per share of $31.33.
Biggest changeDuring the three months ended December 31, 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 Shares Privately Purchased, not Part of Publicly Announced Programs (1) 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 Number of Shares Purchased Average Price Paid per share October 1, 2025 through October 31, 2025 — $ — 915,871 $ 37.98 — $ — 915,871 $ 104,847,587 November 1, 2025 through November 30, 2025 — — 336,800 39.48 — — 336,800 $ 91,552,038 December 1, 2025 through December 31, 2025 38,767 42.75 526,750 41.49 1,551,970 40.83 2,117,487 $ 69,697,583 Total 38,767 $ 42.75 1,779,421 $ 39.30 1,551,970 $ 40.83 3,370,158 — (1) We purchased 1,551,970 shares as part of private transaction, from Orogen Echo LLC, for an aggregate purchase price of $63.4 million, under a Stock Purchase Agreement dated December 15, 2025, which is separate from the 2024 Repurchase Program.
Under these two repurchase programs, 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 two repurchase programs to comply with Rule 10b-18 under the Exchange Act.
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.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the Nasdaq Global Select Market under the symbol “EXLS.” As of February 21, 2025, there were 7 holders of record of our outstanding common stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the Nasdaq Global Select Market under the symbol “EXLS.” As of February 20, 2026, there were 7 holders of record of our outstanding common stock.
On February 26, 2024, our board of directors authorized a $500 million (excluding excise tax) common stock repurchase program beginning March 1, 2024 (the “2024 Repurchase Program”), and terminated the 2022 Repurchase Program on February 29, 2024.
Issuer Purchases of Equity Securities On February 26, 2024, our board of directors authorized a $500 million (excluding excise tax) common stock repurchase program beginning March 1, 2024 (the “2024 Repurchase Program”).
During the year ended December 31, 2024, we purchased 303,836 shares from employees in connection with withholding tax payments related to the vesting of restricted stock units for an aggregate purchase consideration of $10.3 million.
During the year ended December 31, 2025, we purchased 229,483 shares from employees in connection with withholding tax payments related to the vesting of restricted stock units for an aggregate purchase consideration of $11.1 million.
This graph will not be deemed to be incorporated by reference into any prior or subsequent filing under the Securities Act, or the Exchange Act.
This graph will not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This graph will not be deemed to be incorporated by reference into any prior or subsequent filing under the Securities Act, or the Exchange Act.
Performance Graph The following graph compares the cumulative total stockholder return on our common stock with the cumulative total return of the Nasdaq 100 Index (capitalization weighted) and our peer group of companies for the period beginning December 31, 2019.
Performance Graph The following graph compares the cumulative total stockholder return on our common stock with the cumulative total return of the Nasdaq Composite Index and S&P 500 Information Technology Index, capitalization weighted, for the period beginning December 31, 2020.
The weighted average purchase price of $33.79 was the closing price of our shares of our common stock on the Nasdaq Global Select Market on the trading day prior to the vesting date of the restricted stock units. 27 Table of Contents Pursuant to the Inflation Reduction Act, effective January 1, 2023, we are required to pay a 1% excise tax on the fair market value of each share of common stock repurchased, net of stock issuances.
Pursuant to the Inflation Reduction Act, effective January 1, 2023, we are required to pay a 1% excise tax on the fair market value of each share of common stock repurchased, net of stock issuances.
The returns assume that $100 was invested on December 31, 2019 and that all dividends were reinvested. The stock performance shown on the graph below is not indicative of future price performance. This graph will not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section.
As a result of such delisting, providing a comparison of the newly selected index (S&P 500 Information Technology Index) against the prior peer group is not meaningful. The returns assume that $100 was invested on December 31, 2020, and that all dividends were reinvested. The stock performance shown on the graph below is not indicative of future price performance.
Removed
Issuer Purchases of Equity Securities On October 5, 2021, our board of directors authorized a $300 million (excluding excise tax) common stock repurchase program beginning January 1, 2022 (the “2022 Repurchase Program”).
Added
During the year ended December 31, 2025, as part of our publicly announced program, we purchased 5,934,710 shares of our common stock for an aggregate purchase consideration of $253.2 million, including commission and excluding excise tax, representing an average purchase price per share of $42.67.
Removed
Our peer group of companies is comprised of two companies that we believe are our closest reporting issuer competitors: Genpact Limited and WNS (Holdings) Limited. The returns of the component entities of our peer group index are weighted according to the market capitalization of each company as of the beginning of each period for which a return is presented.
Added
The 27 Ta ble of Contents weighted average purchase price of $48.32 was the closing price of our shares of our common stock on the Nasdaq Global Select Market on the trading day prior to the vesting date of the restricted stock units.
Added
As of December 31, 2025, we included the S&P 500 Information Technology Index, because we believe it offers a better comparison of the industry performance, and removed the earlier peer group, which comprised two companies: Genpact Limited and WNS (Holdings) Limited, because WNS (Holdings) Limited was delisted on October 17, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThese 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, 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; • 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; 29 Table of Contents • telecommunications or technology disruptions or breaches, natural or other disasters, medical epidemics or pandemics, or acts of violence or war; • challenges by applicable tax authorities to transfer pricing determinations or the introduction of new or unfavorable tax legislation, 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 the rising inflation, high interest rates and economic recessionary trends on currency exchange rates; • restrictions on immigration and work permits; • difficulty of enforcing judgments against our foreign subsidiaries or officers; • 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 U.S. or elsewhere to offshore outsourcing; • effects of political and economic conditions globally, 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 meet our sustainability-related initiatives.
Biggest changeThese 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, agentic 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, including for our AI-related offerings; • our ability to attract 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, additional cybersecurity and privacy risks from growing use of AI, 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, including losing key talent to competitors; • our ability to successfully consummate or integrate strategic acquisitions including the impact from the impairment of goodwill and other intangible assets, if any; 29 Ta ble of Contents • legal liability arising out of customer and third party contracts; • increasing competition in our industry, including from other providers and from internal resources of our clients; • our ability to make accurate estimates and assumptions in connection with the preparation of our consolidated financial statements; • challenges related to upgrading our enterprise resource planning system; • credit risk fluctuations in the market values of our investment and derivatives portfolios; • telecommunications or technology disruptions or breaches, natural or other disasters, medical epidemics or pandemics, or acts of violence or war; • 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; and • negative public reaction in the United States or elsewhere to offshore outsourcing.
Our ability to utilize these tax holidays could be adversely affected by any new unfavorable tax legislative changes. We continuously monitor such changes to assess and quantify any potential impacts on our consolidated financial statements. In October 2021, the Organization for Economic Co-operation and Development (“OECD”) introduced Pillar Two Framework imposing a global minimum tax rate of 15%.
Our ability to utilize these tax holidays could be adversely affected by any new unfavorable tax legislative changes. We continuously monitor such changes to assess and quantify any potential impacts on our consolidated financial statements. In October 2021, the Organization for Economic Co-operation and Development (“OECD”) introduced the Pillar Two Framework imposing a global minimum tax rate of 15%.
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.
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. 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.
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 under our board-authorized stock repurchase program, which may require the use of significant cash resources and/or additional financing.
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 repurchases under our board-authorized stock repurchase program, which may require the use of significant cash resources and/or additional financing.
Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements included in this Annual Report on Form 10-K, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements included in this Annual Report on Form 10-K, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
Executive Overview We are a global data and artificial intelligence (“AI”) company that offers services and solutions to reinvent our client business models, drive better outcomes and unlock growth with speed.
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.
For fiscal 2024 and 2023, our total revenues from our top ten clients accounted for 33.2% and 34.0% 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.
For fiscal 2025 and fiscal 2024, our total revenues from our top ten clients accounted for 34.0% 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.
Cost of Revenues Our cost of revenues primarily consists of: • employee costs, which include salary, bonus and other compensation expenses; retirement benefits, recruitment and training costs; employee health and life insurance; transport; rewards and recognition for certain employees; and non-cash stock-based compensation expense; outsourced/subcontractors costs; • costs relating to our facilities and communications network, which include telecommunication and IT costs; facilities and customer management support; operational expenses for our operations centers; lease cost; and • other costs which primarily include travel and costs relating to our direct mail operations.
Cost of Revenues Our cost of revenues primarily consists of: • employee costs, which include salary, bonus and other compensation expenses; retirement benefits, recruitment and training costs; employee health and life insurance; transport; rewards and recognition for certain employees; and non-cash stock-based compensation expense; outsourced/subcontractors costs; • costs relating to our facilities and communications network, which include telecommunication and IT costs; facilities and customer management support; operational expenses for our operations centers; lease cost; and • other costs which primarily include travel and costs relating to our direct marketing business.
We expect to incur total capital expenditures of between $50 million to $55 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.
We expect to incur total capital expenditures of between $50 million to $55 million in fiscal 2026, 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.
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, banking and capital markets, retail, communications and media, and energy and infrastructure, among others.
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 and life sciences, banking and capital markets, retail, communications and media, and energy and infrastructure, among others.
A summary of our significant accounting policies is included in Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data.” We consider the policies discussed below to be critical to an understanding of our consolidated financial statements, as their application places the most significant demands on management’s judgment regarding matters that are inherently uncertain at the time an estimate is made.
A summary of our significant accounting policies is included in Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data.” We consider the following accounting estimates to be the most critical to an understanding of our consolidated financial statements, as their application places the most significant demands on management’s judgment regarding matters that are inherently uncertain at the time an estimate is made.
See Part I, Item 1A, “Risk Factors” under “Risks Related to the International Nature of Our Business––Currency exchange rate fluctuations in the various 34 Table of Contents currencies in which we do business, or the failure of our hedging strategies to mitigate such fluctuations, could have a material adverse effect on our results of operations,” as well as Note 2 - Summary of Significant Accounting Policies and Note 17 - Derivatives and Hedge Accounting to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” and Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk-Components of Market Risk-Foreign Currency Risk.” Interest Expense Interest expense primarily consist of interest on our borrowings under our revolving credit facility, term loan facility and convertible senior notes, finance leases and notional interest implicit in the purchase of property and equipment.
See Part I, Item 1A, “Risk Factors” under “Risks Related to the International Nature of Our Business––Currency exchange rate fluctuations in the various currencies in which we do business, or the failure of our hedging strategies to mitigate such fluctuations, could have a material adverse effect on our results of operations,” as well as Note 2 - Summary of Significant Accounting Policies and Note 17 - Derivatives and Hedge Accounting to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” and Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk-Components of Market Risk-Foreign Currency Risk.” Interest Expense Interest expense primarily consists of interest on our borrowings under our revolving credit facility, term loan facility, finance leases and notional interest implicit in the purchase of property and equipment.
If actual results differ significantly from our estimates, stock-based compensation expense and our results of operations could be materially affected. Stock-based compensation expense associated with our 2022 Employee Stock Purchase Plan is measured at fair-value using a Black-Scholes option-pricing model at commencement of each offering period and recognized over that offering period.
If actual 36 Ta ble of Contents results differ significantly from our estimates, stock-based compensation expense and our results of operations could be materially affected. Stock-based compensation expense associated with our 2022 Employee Stock Purchase Plan is measured at fair-value using a Black-Scholes option-pricing model at commencement of each offering period and recognized over that offering period.
The revolving credit commitments under the 2024 Credit Agreement are subject to a commitment fee which is also tied to our total net leverage ratio, and ranges from 0.125% to 0.275% per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations.
The revolving credit commitments under the 2024 Credit Agreement are subject to a commitment fee which is also tied to our total net leverage ratio, and ranges from 0.13% to 0.28% per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations.
The guidance requires the use of significant estimates and assumptions in determining the fair value of identifiable assets acquired and liabilities assumed, including intangible assets and contingent consideration, and allocation of 36 Table of Contents purchase price over such assets and liabilities on the acquisition date.
The guidance requires the use of significant estimates and assumptions in determining the fair value of identifiable assets acquired and liabilities assumed, including intangible assets and contingent consideration, and allocation of purchase price over such assets and liabilities on the acquisition date.
In particular, we expect recruitment and 33 Table of Contents training costs to continue to increase as we hire additional staff to service new clients and train existing staff to provide them with evolving skill sets. There is significant competition for professionals with skills necessary to perform the services we offer to our clients.
In particular, we expect recruitment and training costs to continue to increase as we hire additional staff to service new clients and train existing staff to provide them with evolving skill sets. There is significant competition for professionals with skills necessary to perform the services we offer to our clients.
Foreign Exchange Gain, Net We report our financial results in U.S. dollars. Our revenues are primarily denominated in the U.S. dollar, however, a portion of our revenues are earned in the U.K. pound sterling representing 10.7% and 10.1% of our total revenues in fiscal 2024 and 2023, respectively.
Foreign Exchange Gain, Net We report our financial results in U.S. dollars. Our revenues are primarily denominated in the U.S. dollar, however, a portion of our revenues are earned in the U.K. pound sterling representing 10.6% and 10.7% of our total revenues in fiscal 2025 and fiscal 2024, respectively.
We also perform a quantitative assessment of goodwill impairment, if based on the qualitative factors, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
We also perform a quantitative assessment of goodwill impairment if, based on the qualitative factors assessed during the fourth quarter, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
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 fiscal 2024, compared to fiscal 2023.
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 fiscal 2025, compared to fiscal 2024. Interest expense .
In the ordinary course of business, we provide standby letters of credit to third parties primarily for facility leases. As of December 31, 2024 and 2023, we had outstanding letters of credit of $0.8 million and $0.5 million, respectively, that were not recognized in our consolidated balance sheets.
In the ordinary course of business, we provide standby letters of credit to third parties primarily for facility leases. As of December 31, 2025 and 2024, we had outstanding letters of credit of $1.6 million and $0.8 million, respectively, that were not recognized in our consolidated balance sheets.
We also incur a significant portion of our expenses in the Indian rupee, the Philippine peso, the South African rand and the U.K. pound sterling, representing 29.7%, 8.2%, 3.5% and 2.8%, respectively, of our total expenses in fiscal 2024, compared to 28.5%, 8.2%, 2.0% and 3.1%, respectively, of our total expenses in fiscal 2023.
We also incur a significant portion of our expenses in the Indian rupee, the Philippine peso, the South African rand and the U.K. pound sterling, representing 31.1%, 8.4%, 3.3% and 3.1%, respectively, of our total expenses in fiscal 2025, compared to 29.7%, 8.2%, 3.5% and 2.8%, respectively, of our total expenses in fiscal 2024.
Other income/(expense), net also consists of changes in fair value of contingent consideration related to business combinations, interest on refunds received from income tax authorities in India on completion of tax assessments, profit or loss on disposal of long-lived assets and components of net periodic benefit cost such as interest cost, expected return on plan assets and amortization of actuarial gain or loss.
Other income/(expense), net also consists of changes in fair value of contingent consideration related to business combinations, interest on refunds received from income tax authorities in India on completion of tax assessments, profit or loss on disposal of long-lived assets and components of net 34 Ta ble of Contents periodic benefit cost such as interest cost, expected return on plan assets, amortization of actuarial gain/(loss) and prior period service costs.
Such revisions in estimates of any potential liabilities could have a material impact on our results of operations, financial position and cash flows. 38 Table of Contents Results of Operations For a discussion of our results of operations for fiscal 2022, including a year-to-year comparison between fiscal 2023 and 2022, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for fiscal 2023, filed with the SEC on February 29, 2024.
Such revisions in estimates of any potential liabilities could have a material impact on our results of operations, financial position and cash flows. 37 Ta ble of Contents Results of Operations For a discussion of our results of operations for fiscal 2023, including a year-to-year comparison between fiscal 2024 and 2023, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for fiscal 2024, filed with the SEC on February 25, 2025.
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.
One of our key assets is 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).
These 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.
Our IMUs focus on managing customer relationships and delivering the “One EXL” value proposition to clients, maintaining a unified go-to-market approach and be integrally responsible for growth, profitability and client satisfaction.
See Note 25 - Commitments and Contingencies to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” 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 short-term cash requirements.
See Note 25 - Commitments and Contingencies to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” for further information. 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.
All references to years, unless otherwise noted, refer to our fiscal year, which ends on December 31. For example, a reference to “2024” or “fiscal 2024” means the 12-month period that ended on December 31, 2024. All references to quarters, unless otherwise noted, refer to the quarters of our fiscal year.
All references to years, unless otherwise noted, refer to our fiscal year, which ends on December 31. For example, a reference to “2025” or “fiscal 2025” means the 12-month period that ended on December 31, 2025. All references to quarters, unless otherwise noted, refer to the quarters of our fiscal year.
We generally experience a higher cost of revenues as a percentage of revenues during the initial 12 to 18 months in a long-term digital operations and solutions contract due to upfront investments in infrastructure, resource hiring and training during migration.
We generally experience a higher cost of revenues as a percentage of revenues during the initial 12 to 18 months in our long-term contracts due to upfront investments in infrastructure, resource hiring and training during migration.
Generally, we grant PRSUs cliff vest based on an aggregated revenue target (“PUs”) for a three-year period, while grants based on market conditions (“MUs”) are contingent on meeting or exceeding the total shareholder return relative to a group of peer companies specified under our 2018 Omnibus Incentive Plan (the “2018 Plan”), and are measured over a three-year performance period.
Generally, we grant PRSUs that cliff vest based on an aggregated revenue target (“PUs”) for a three-year period, while grants based on market conditions (“MUs”) are contingent on meeting or exceeding the total shareholder return relative to a group of peer companies, and are measured over a three-year performance period.
Our new reportable segments, aligned to our IMUs, effective for the first quarter of 2025 will be as follows: • Insurance, • Healthcare and Life Sciences, • Banking, Capital Markets and Diversified Industries, • International Growth Markets 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 former Healthcare reportable segment, and including data and analytics services, 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 and Asia-Pacific geographies across all industry verticals.
Accordingly, our new reportable segments, aligned to our IMUs, are as follows: • Insurance, • Healthcare and Life Sciences, • Banking, Capital Markets and Diversified Industries, 30 Ta ble of Contents • International Growth Markets 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 IMU to represent all our services and solutions offerings to clients in the United Kingdom, Europe, Middle East, Asia-Pacific and South Africa geographies across all industry verticals.
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 capabilities specific to various industries and client needs.
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.
The liability in respect of defined benefit plans is calculated annually by using the projected unit credit method and various actuarial assumptions including discount rates, mortality, expected return on assets, expected increase in the compensation rates and attrition rates. We evaluate these critical assumptions at least annually.
We have established adequate reserves to cover all uncertain tax positions. Employee Benefits The liability in respect of defined benefit plans is calculated annually by using the projected unit credit method and various actuarial assumptions including discount rates, mortality, expected return on assets, expected increase in the compensation rates and attrition rates. We evaluate these critical assumptions at least annually.
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, infrastructure and purchase telecommunications equipment and computer hardware and software in connection with managing client operations. 43 Table of Contents We incurred $46.3 million of capital expenditures during fiscal 2024.
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. 42 Ta ble of Contents We incurred $52.6 million of capital expenditure during fiscal 2025.
These adjustments include fair value changes in investments, unrealized foreign currency exchange gain, deferred tax effects, stock-based employee compensation, fair value changes in contingent consideration, depreciation and amortization of long-lived assets and intangibles acquired in business combinations, among others. • Changes in accounts receivable, including advance billings, contributed higher cash flow of $61.8 million for fiscal 2024, compared to fiscal 2023.
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, contributed lower cash flow of $51.8 million in fiscal 2025, compared to the fiscal 2024.
Financing Arrangements The following table summarizes our debt position: As of December 31, 2024 December 31, 2023 Revolving credit facility Term loan facility Total Revolving credit facility Term loan facility Total Current portion of long-term borrowings $ — $ 5.0 $ 5.0 $ 65.0 $ — $ 65.0 Unamortized debt issuance costs — (0.1) (0.1) — — — Total current portion of long-term borrowings — 4.9 4.9 65.0 — 65.0 Long-term borrowings 190.0 93.8 283.8 135.0 — 135.0 Unamortized debt issuance costs — (0.2) (0.2) — — — Total long-term borrowings 190.0 93.6 283.6 135.0 — 135.0 Total borrowings $ 190.0 $ 98.5 $ 288.5 $ 200.0 $ — $ 200.0 Credit Agreement We held a $300.0 million revolving credit facility pursuant to our credit agreement (the “Credit Agreement”), dated as of November 21, 2017, with certain lenders and Citibank N.A. as Administrative Agent, which was amended and restated on April 18, 2022 (the “2022 Credit Agreement”).
Financing Arrangements The following table summarizes our debt position: As of December 31, 2025 December 31, 2024 (dollars in millions) 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 205.0 88.8 293.8 190.0 93.8 283.8 Unamortized debt issuance costs — — — — (0.2) (0.2) Total long-term borrowings 205.0 88.8 293.8 190.0 93.6 283.6 Total borrowings $ 205.0 $ 93.7 $ 298.7 $ 190.0 $ 98.5 $ 288.5 Credit Agreement We held a $300.0 million revolving credit facility pursuant to our credit agreement (the “Credit Agreement”), dated as of November 21, 2017, with certain lenders and Citibank N.A. as Administrative Agent.
The major drivers contributing to the increase of $57.3 million year-over-year included the following: • Increase in cash earnings, including adjustments for non-cash and other items contributed higher cash flow of $18.0 million for fiscal 2024, compared to fiscal 2023.
The major drivers contributing to the increase of $82.2 million year-over-year included the following: • Increase in cash earnings, including adjustments for non-cash and other items contributed higher cash flow of $66.8 million for fiscal 2025, compared to fiscal 2024.
During 2024, some of our foreign subsidiaries repatriated $38.2 million (net of $2.6 million withholding taxes) to the United States. Operating Activities: Net cash provided by operating activities was $268.5 million for fiscal 2024, compared to $211.2 million for fiscal 2023, reflecting higher cash earnings, partially offset by higher working capital needs.
During 2025, some of our foreign subsidiaries repatriated $90.8 million (net of $5.6 million withholding taxes) to the United States. Operating Activities: Net cash provided by operating activities was $350.7 million for fiscal 2025, compared to $268.5 million for fiscal 2024, reflecting higher cash earnings and lower working capital needs.
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.
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.
Operating Expenses Selling, General and Administrative Expenses ("SG&A") Our General and Administrative expenses (“G&A”) comprise of expenses relating to salaries and benefits (including stock-based compensation), retirement benefits as well as costs related to recruitment, training and retention of senior management and other support personnel in enabling functions, telecommunications, utilities, travel and other miscellaneous administrative costs.
The cost of revenues as a percentage of revenues improves as we scale up, achieve operational efficiencies and complete the migration. 33 Ta ble of Contents Operating Expenses Selling, General and Administrative Expenses ("SG&A") Our General and Administrative expenses (“G&A”) comprise of expenses relating to salaries and benefits (including stock-based compensation), retirement benefits as well as costs related to recruitment, training and retention of senior management and other support personnel in enabling functions, telecommunications, utilities, travel and other miscellaneous administrative costs.
Type of Contracts Requiring Judgment Revenues from payment integrity services having contingent fee arrangements are recognized by us at the point in time when a performance obligation is satisfied, which is when we identify an overpayment claim. In such contracts, our consideration is contingent upon the actual collections made by our customers and net of any subsequent retraction claims.
Revenue Recognition Type of Contracts Requiring Judgment Revenues from payment integrity services having contingent fee arrangements are recognized by us at the point in time when a performance obligation is satisfied, which is when we identify an overpayment claim.
The increase in income tax expense was primarily as a result of higher profit, increase in non-deductible expenses and lower excess tax benefits related to stock-based compensation, partially offset by decrease in foreign tax rate differential during fiscal 2024, compared to fiscal 2023. Net Income .
The increase in income tax expense was primarily as a result of higher profit and an increase in non-deductible expenses, partially offset by higher excess tax benefits and foreign derived intangible income deduction during fiscal 2025, compared to fiscal 2024. Net Income .
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. Acquisition during the year 2024 On August 1, 2024, we completed the acquisition of Incandescent Technologies, Inc.
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.
The significant estimates and assumptions include, the timing and amount of future revenue and cash flows, discount rate reflecting the risk inherent in future cash flows and the long-term growth rate applied within the discounted cash flow model.
The significant estimates and assumptions include, the timing and amount of future revenue and cash flows, discount rate reflecting the risk inherent in future cash flows and the long-term growth rate applied within the discounted cash flow model. In the first quarter of 2025, we implemented operational and structural changes, which resulted in the realignment of our reporting segments.
The following table summarizes our results of operations: (dollars in millions) Fiscal 2024 Percentage of Revenues, net Fiscal 2023 Percentage of Revenues, net Dollar Change Percentage Change (A) (B) (C=A-B) Revenues, net $ 1,838.4 100.0 % $ 1,630.7 100.0 % $ 207.7 12.7 % Cost of revenues (1) 1,147.4 62.4 % 1,022.9 62.7 % 124.5 12.2 % Gross profit (1) 691.0 37.6 % 607.8 37.3 % 83.2 13.7 % Operating expenses: General and administrative expenses 225.7 12.3 % 198.3 12.2 % 27.4 13.8 % Selling and marketing expenses 146.5 8.0 % 120.2 7.3 % 26.3 21.9 % Depreciation and amortization expense 55.2 3.0 % 50.5 3.1 % 4.7 9.3 % Total operating expenses 427.4 23.2 % 369.0 22.6 % 58.4 15.8 % Income from operations 263.6 14.3 % 238.8 14.6 % 24.8 10.4 % Foreign exchange gain, net 0.9 — % 1.5 0.1 % (0.6) (40.0) % Interest expense (19.3) (1.0) % (13.2) (0.8) % (6.1) 46.2 % Other income, net 16.1 0.9 % 10.8 0.7 % 5.3 49.1 % Income before income tax expense and earnings from equity affiliates 261.3 14.2 % 237.9 14.6 % 23.4 9.8 % Income tax expense 62.9 3.4 % 53.5 3.3 % 9.4 17.6 % Income before earnings from equity affiliates 198.4 10.8 % 184.4 11.3 % 14.0 7.6 % Gain/(loss) from equity-method investment (0.1) — % 0.2 — % (0.3) (150.0) % Net income $ 198.3 10.8 % $ 184.6 11.3 % $ 13.7 7.4 % (1) Exclusive of depreciation and amortization expense.
The following table summarizes our results of operations: (dollars in millions) Fiscal 2025 Percentage of Revenues, net Fiscal 2024 Percentage of Revenues, net Dollar Change Percentage Change (A) (B) (C=A-B) Revenues, net $ 2,087.7 100.0 % $ 1,838.4 100.0 % $ 249.3 13.6 % Cost of revenues (1) 1,286.6 61.6 % 1,147.4 62.4 % 139.2 12.1 % Gross profit (1) 801.10 38.4 % 691.0 37.6 % 110.1 15.9 % Operating expenses: General and administrative expenses 255.3 12.2 % 225.7 12.3 % 29.6 13.1 % Selling and marketing expenses 172.9 8.3 % 146.5 8.0 % 26.4 18.0 % Depreciation and amortization expense 59.1 2.8 % 55.2 3.0 % 3.9 7.0 % Total operating expenses 487.3 23.3 % 427.4 23.2 % 59.9 14.0 % Income from operations 313.8 15.0 % 263.6 14.3 % 50.2 19.0 % Foreign exchange gain, net 2.8 0.1 % 0.9 — % 1.9 220.9 % Interest expense (17.6) (0.8) % (19.3) (1.0) % 1.7 (8.5) % Other income, net 16.0 0.8 % 16.1 0.9 % (0.1) (0.2) % Income before income tax expense and earnings from equity affiliates 315.0 15.1 % 261.3 14.2 % 53.7 20.5 % Income tax expense 63.7 3.1 % 62.9 3.4 % 0.8 1.3 % Income before earnings from equity affiliates 251.3 12.0 % 198.4 10.8 % 52.9 26.7 % Gain/(loss) from equity-method investment (0.3) — % (0.1) — % (0.2) 167.5 % Net income $ 251.0 12.0 % $ 198.3 10.8 % $ 52.7 26.6 % (1) Exclusive of depreciation and amortization expense.
The effective tax rate increased from 22.5% for fiscal 2023 to 24.1% for fiscal 2024. We recorded income tax expense of $62.9 million and $53.5 million for fiscal 2024 and 2023, respectively.
Income Tax Expense . The effective tax rate decreased from 24.1% for fiscal 2024 to 20.3% for fiscal 2025. We recorded income tax expense of $63.7 million and $62.9 million for fiscal 2025 and fiscal 2024, respectively.
Investing Activities: Cash used for investing activities were $119.1 million for fiscal 2024, compared to $12.0 million for fiscal 2023.
Investing Activities: Net cash used for investing activities were $49.2 million for fiscal 2025, compared to $119.1 million for fiscal 2024.
We market and sell our services to existing and prospective clients through our sales and client management teams, which are aligned by our clients’ industry verticals and our capabilities such as digital operations and solutions and analytics.
Our Business We provide data and AI-led solutions and services and digital operations solutions and 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.
Gross margin in Insurance increased by 90 bps from fiscal 2023, primarily due to operational efficiencies during fiscal 2024.
Gross margin in Insurance increased by 80 bps, primarily due to higher revenues and operational efficiencies during fiscal 2025, compared to fiscal 2024.
We serve clients mainly in the United States and the United Kingdom, with these two regions generating 82.6% and 11.7%, respectively, of our total revenues for fiscal 2024 and 84.1% and 10.9%, respectively, of our total revenues for fiscal 2023.
We serve clients mainly in the North America, and the United Kingdom & Europe, with these two regions generating 82.7% and 14.7%, respectively, of our total revenues for fiscal 2025 and 82.3% and 14.8%, respectively, of our total revenues for fiscal 2024.
The applicable margin on the term loan facility is also tied to our total net leverage ratio and ranges from 0.125% to 1.00% per annum on loans pegged to the specified prime rate, and 1.125% to 2.00% per annum on loans pegged to the adjusted SOFR.
The applicable margin on the revolving credit facility ranges from 0% to 0.75% per annum on loans pegged to the specified prime rate and 0.88% to 1.75% per annum on loans pegged to the adjusted SOFR, while the margin on the term loan facility ranges from 0.13% to 1.00% per annum on loans pegged to the specified prime rate, and 1.13% to 2.00% per annum on loans pegged to the adjusted SOFR.
This was partially offset by lower capital expenditures in infrastructure, technology assets, software and product developments of $6.5 million for fiscal 2024, compared to fiscal 2023. Financing Activities: Cash used for financing activities were $119.1 million for fiscal 2024, compared to $181.4 million for fiscal 2023.
This was partially offset by higher cash paid for capital expenditures, including investments in infrastructure, technology assets and digital capabilities of $6.2 million during fiscal 2025, compared to fiscal 2024. Financing Activities: Net cash used for financing activities were $312.8 million for fiscal 2025, compared to $119.1 million for fiscal 2024.
Net income increased from $184.6 million for fiscal 2023 to $198.3 million for fiscal 2024, primarily due to increase in income from operations of $24.8 million and higher other income, net of $5.3 million, partially offset by higher interest expense of $6.1 million, lower foreign exchange gain, net of $0.6 million and higher income tax expense of $9.4 million. 42 Table of Contents Liquidity and Capital Resources Fiscal Dollar Change 2024 2023 Percentage Change (dollars in millions) Opening cash, cash equivalents and restricted cash $ 145.4 $ 125.6 $ 19.8 15.7 % Net cash provided by operating activities 268.5 211.2 57.3 27.1 % Net cash used for investing activities (119.1) (12.0) (107.1) 892.7 % Net cash used for financing activities (119.1) (181.4) 62.3 (34.4) % Effect of exchange rate changes (4.3) 2.0 (6.3) (313.3) % Closing cash, cash equivalents and restricted cash $ 171.4 $ 145.4 $ 26.0 17.9 % As of December 31, 2024 and 2023, we had $340.6 million and $290.8 million, respectively, in cash, cash equivalents and short-term investments, of which $296.0 million and $237.7 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes.
The increase in net income by 26.6% during fiscal 2025, compared to fiscal 2024 was attributable to the aforementioned factors. 41 Ta ble of Contents Liquidity and Capital Resources Fiscal 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 350.7 268.5 82.2 30.6 % Net cash used for investing activities (49.2) (119.1) 69.9 (58.6) % Net cash used for financing activities (312.8) (119.1) (193.7) 162.6 % Effect of exchange rate changes 5.9 (4.3) 10.2 (235.8) % Closing cash, cash equivalents and restricted cash $ 166.0 $ 171.4 $ (5.4) (3.2) % As of December 31, 2025 and 2024, we had $328.4 million and $340.6 million, respectively, in cash, cash equivalents and short-term investments, of which $285.8 million and $296.0 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes.
Obligations under the 2024 Credit Agreement are guaranteed by our wholly-owned material domestic subsidiaries and are secured by all or substantially all of our and our material domestic subsidiaries’ assets.
The increased revolving credit facility and the new term loan facility both mature on April 18, 2027. 43 Ta ble of Contents Under the 2024 Credit Agreement, obligations are guaranteed by our wholly-owned material domestic subsidiaries and secured by substantially all of our and our material domestic subsidiaries’ assets.
With respect to any entity that benefits from a corporate tax holiday, deferred tax assets or liabilities for existing temporary differences are recorded only to the extent such temporary differences are expected to reverse following the expiration of the tax holiday. 37 Table of Contents We also evaluate potential exposures related to tax contingencies or claims made by the tax authorities in various jurisdictions in order to determine whether a reserve may be required.
With respect to any entity that benefits from a corporate tax holiday, deferred tax assets or liabilities for existing temporary differences are recorded only to the extent such temporary differences are expected to reverse following the expiration of the tax holiday.
The increase in cost of revenues in Analytics of $36.8 million from fiscal 2023 was primarily due to increases in employee-related costs of $34.8 million on account of higher headcount, restructuring costs and wage inflation, including incremental cost related to our August 2024 acquisition of ITI Data and higher technology costs of $8.6 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model, partially offset by lower other operating costs $4.2 million and foreign exchange gain, net of hedging of $2.4 million.
The increase in cost of revenues in Healthcare and Life Sciences by $57.0 million for fiscal 2025 was primarily due to increases in employee-related costs of $53.4 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher facilities costs of $2.0 million, higher technology costs of $1.6 million and other operating costs of $3.7 million, partially offset by a foreign exchange gain, net of hedging of $3.7 million.
The 2024 Credit Agreement bears interest at a rate equal to specified prime rate (alternate base rate) or adjusted SOFR, plus, in each case, an applicable margin.
We were in compliance with the financial covenants under the 2024 Credit Agreement. Under the 2024 Credit Agreement, obligations bear interest at a rate equal to either the specified prime rate (alternate base rate) or the adjusted secured overnight financing rate (SOFR), in each case plus an applicable margin tied to our total net leverage ratio.
Income from operations increased by $24.8 million, or 10.4%, from $238.8 million for fiscal 2023 to $263.6 million for fiscal 2024, primarily due to higher revenues and higher gross margins, partially offset by higher SG&A expenses during fiscal 2024. 41 Table of Contents Foreign Exchange Gain, net.
The increase in income from operations by 19.0% during fiscal 2025, compared to fiscal 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 $2.8 million for fiscal 2025, compared to a foreign exchange gain, net of $0.9 million for fiscal 2024.
The increase in cost of revenues in Emerging Business of $30.5 million from fiscal 2023 was primarily due to increases in employee-related costs of $28.6 million on account of higher headcount, restructuring costs and wage inflation, higher technology costs of $3.0 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model and higher other operating costs $2.0 million, partially offset by foreign exchange gain, net of hedging of $3.1 million.
The increase in cost of revenues in International Growth Markets by $23.1 million for fiscal 2025 was primarily due to increases in employee-related costs of $22.2 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 $3.9 million, partially offset by a foreign exchange gain, net of hedging of $3.0 million.
The increase in cost of revenues in Insurance of $48.6 million from fiscal 2023 was primarily due to increases in employee-related costs of $42.3 million on account of higher headcount, restructuring costs and wage inflation, higher technology costs of $4.8 million on account of increased subscription to cloud-based software licenses and our continued investments in our hybrid working model, higher facilities costs of $3.9 million and higher other operating costs of 40 Table of Contents $3.1 million, partially offset by foreign exchange gain, net of hedging of $5.5 million.
The increase in cost of revenues in Insurance by $28.9 million for fiscal 2025 was primarily due to increases in employee-related costs of $48.4 million on account of higher headcount and wage inflation, higher technology and facilities costs of $5.0 million, partially offset by lower mail and data expenses in our direct marketing business of $16.7 million, other operating 39 Ta ble of Contents costs of $2.3 million and a foreign exchange gain, net of hedging of $5.5 million.
Revenue growth in Insurance of $84.1 million from fiscal 2023, was primarily driven by expansion of business from our new and existing clients during fiscal 2024. Revenue growth in Healthcare of $10.4 million from fiscal 2023, was primarily driven by expansion of business from our existing clients during fiscal 2024.
Revenue growth in Healthcare and Life Sciences by 23.7% was driven by the expansion of business from our existing clients by 22.4% and new clients, including revenue from ITI Data, by 1.3% during fiscal 2025, compared to fiscal 2024.
Gross margin in Analytics increased by 70 bps from fiscal 2023, primarily due to higher revenues and operational efficiencies, partially offset by impact of restructuring costs of 40 bps during fiscal 2024. Selling, General and Administrative (“SG&A”) Expenses.
Gross margin in International Growth Markets increased by 40 bps, primarily due to higher revenues and operational efficiencies during fiscal 2025, compared to fiscal 2024. Selling, General and Administrative (“SG&A”) Expenses. SG&A expenses as a percentage of net revenues increased by 0.2% to 20.5% during fiscal 2025, compared to fiscal 2024.
Recent Accounting Pronouncements For a description of recent accounting pronouncements, see Note 2 - Summary of Significant Accounting Policies - Recent Accounting Pronouncements to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data.” 45 Table of Contents
The effective interest rates of the revolving credit facility and the term loan facility are as follows: Year ended December 31, 2025 2024 Revolving credit facility 5.7 % 6.3 % Term loan facility 5.7 % 6.5 % Recent Accounting Pronouncements For a description of recent accounting pronouncements, see Note 2 - Summary of Significant Accounting Policies - Recent Accounting Pronouncements to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data.” 44 Ta ble of Contents
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 Fiscal Dollar Change Percentage change Fiscal Percentage change 2024 2023 2024 2023 (dollars in millions) Insurance $ 390.4 $ 341.8 $ 48.6 14.2 % 36.4 % 35.5 % 0.9 % Healthcare 77.9 69.3 8.6 12.5 % 33.0 % 34.6 % (1.6) % Emerging Business 181.4 150.9 30.5 20.2 % 41.8 % 43.2 % (1.4) % Analytics 497.7 460.9 36.8 8.0 % 37.5 % 36.8 % 0.7 % Total $ 1,147.4 $ 1,022.9 $ 124.5 12.2 % 37.6 % 37.3 % 0.3 % Cost of revenues for fiscal 2024 increased by $124.5 million, or 12.2% compared to fiscal 2023.
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 Fiscal Dollar Change Percentage change Fiscal Percentage change 2025 2024 2025 2024 (dollars in millions) Insurance $ 453.8 $ 424.9 $ 28.9 6.8 % 36.1 % 35.3 % 0.8 % Healthcare and Life Sciences 300.2 243.2 57.0 23.5 % 43.6 % 43.6 % — % Banking, Capital Markets and Diversified Industries 298.8 268.6 30.2 11.2 % 38.1 % 37.1 % 1.0 % International Growth Markets 233.8 210.7 23.1 10.9 % 35.5 % 35.1 % 0.4 % Total $ 1,286.6 $ 1,147.4 $ 139.2 12.1 % 38.4 % 37.6 % 0.8 % Cost of revenues for fiscal 2025 increased by $139.2 million, or 12.1%, compared to fiscal 2024.
This increase in SG&A expenses was partially offset by foreign exchange gain, net of hedging of $1.4 million during fiscal 2024, compared to fiscal 2023. Depreciation and Amortization.
This increase in SG&A was partially offset by one-time restructuring and litigation settlement costs of $3.1 million incurred during fiscal 2024, compared to fiscal 2025. Depreciation and Amortization. Depreciation and amortization expenses as a percentage of net revenues decreased by 0.2% during fiscal 2025, compared to 2024.
The increased revolving credit facility and the new term loan facility both mature on April 18, 2027. 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 agreement includes a letter of credit sub-facility, permits voluntary prepayments without premium or penalty, and allows borrowings to be used for working capital, general corporate purposes, and permitted acquisitions.
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 pricing models. Outcome-based pricing arrangements are examples of non-linear pricing models where clients link revenues from platforms and solutions and the services we provide to usage or savings rather than the efforts deployed to provide these services.
Outcome-based pricing arrangements are 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.
The increase in cost of revenues in Healthcare of $8.6 million from fiscal 2023 was primarily due to increases in employee-related costs of $9.0 million on account of higher headcount and wage inflation, and higher technology costs of $1.3 million on account of increased subscription to cloud-based software licenses and use of the hybrid working model, partially offset by foreign exchange gain, net of hedging of $1.7 million.
The increase in cost of revenues in Banking, Capital Markets and Diversified Industries by $30.2 million for fiscal 2025 was primarily due to increases in employee-related costs of $28.9 million on account of higher headcount and wage inflation, including incremental costs related to the acquisition of ITI Data, higher technology costs of $2.2 million, higher facilities and other operating costs of $2.8 million, partially offset by a foreign exchange gain, net of hedging of $3.7 million.
We consider our historical experience, including trends with similar transactions and expectations regarding the contract in estimating the amount of variable consideration that should be recognized during a period. We believe that the expected value method is most appropriate for determining the variable consideration since we have a large number of contracts with similar nature of transactions/services.
We believe that the expected value method is most appropriate for determining the variable consideration since we have a large number of contracts with similar nature of transactions/services. Any adjustment required due to change in estimates are recorded in the period in which such change is identified.
This requires a high degree of our judgment and the need to involve fair value specialists to evaluate the reasonableness of our valuation methodology and the selection of inputs to the valuation. In addition, assets acquired and liabilities assumed including uncertain tax positions and tax-related valuation allowances in connection with business combinations are initially estimated as of the acquisition date.
This requires a high degree of our judgment and the need to involve fair value specialists to evaluate the reasonableness of our valuation methodology and the selection of inputs to the valuation.
Fiscal Dollar Change Percentage change 2024 2023 (dollars in millions) General and administrative expenses $ 225.7 $ 198.3 $ 27.4 13.8 % Selling and marketing expenses 146.5 120.2 26.3 21.9 % Selling, general and administrative expenses $ 372.2 $ 318.5 $ 53.7 16.8 % The increase in SG&A expenses of $53.7 million from fiscal 2023 was primarily due to higher employee-related costs of $34.2 million on account of higher headcount and wage inflation, including incremental costs related to our August 2024 acquisition of ITI Data, higher investments in digital and generative AI capabilities of $13.2 million, higher sales and marketing spend of $1.9 million, restructuring costs, litigation settlement costs and associated legal fees of $3.1 million and higher other operating costs of $2.7 million.
The increase in SG&A expenses by $56.0 million during fiscal 2025, compared to fiscal 2024 was primarily due to increases in employee-related costs of $52.9 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 $2.8 million, higher sales and marketing and other operating costs of $3.4 million.
Among other things, the 2024 Credit Agreement (a) provides for a $100.0 million increase to the revolving credit commitments such that the aggregate amount of revolving credit commitments available as of August 9, 2024 is equal to $500.0 million; and (b) provides for the issuance of a new term loan facility in the aggregate amount of $100.0 million with an annual prepayment amount of 5%.
The Credit 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 increased revolving credit commitments to $500.0 million and provided a new term loan facility of $100.0 million with an annual repayment amount of 5%.
If actual results differ significantly from our estimates, current service costs for defined benefit plans and our results of operations could be materially impacted. Contingencies Loss contingencies are recorded as liabilities when a loss is considered probable and the amount can be reasonably estimated.
Contingencies Loss contingencies are recorded as liabilities when a loss is considered probable and the amount can be reasonably estimated.
The increase in cost of revenues was primarily due to increases in employee-related costs including restructuring costs and technology costs, partially offset by foreign exchange gain, net of hedging.
The increase in cost of revenues was primarily due to increases in employee-related costs of $152.9 million on account of higher headcount and wage inflation, higher facilities, technology and other operating costs of $18.9 million, partially offset by lower mail and data expenses in our direct marketing business of $16.7 million and a foreign exchange gain, net of hedging of $15.9 million.
The increase was also due to higher purchases of treasury stock of $76.1 million under our share repurchase program for fiscal 2024, compared to fiscal 2023.
The increase of $193.7 million was primarily due to higher purchases of treasury stock of $120.6 million under our share repurchase programs and privately repurchased shares during fiscal 2025, compared to fiscal 2024 and lower net proceeds from borrowings of $78.1 million during fiscal 2025, compared to fiscal 2024.
Our days sales outstanding were 62 days as of December 31, 2024, compared to 64 days as of December 31, 2023. • Payment of contingent consideration related to our December 2021 acquisition of Clairvoyant contributed to a higher cash payout of $11.0 million for fiscal 2024, compared to fiscal 2023. • Changes in other assets, accounts payables including other liabilities contributed higher cash payout of $11.5 million for fiscal 2024, compared to fiscal 2023.
(“Clairvoyant”) contributed to a higher cash payout of $11.0 million during fiscal 2024, whereas no such payment occurred during fiscal 2025. • Changes in other assets, accounts payables including other liabilities contributed to lower cash payout of $56.2 million for fiscal 2025, compared to fiscal 2024.
Fiscal Dollar Change Percentage change 2024 2023 (dollars in millions) Gain on sale and mark-to-market on investments $ 5.7 $ 5.0 $ 0.7 12.9 % Interest and dividend income 9.9 8.0 1.9 23.6 % Fair value changes of contingent consideration 0.6 (1.9) 2.5 (131.0) % Others, net (0.1) (0.3) 0.2 (73.9) % Other income, net $ 16.1 $ 10.8 $ 5.3 (100.0) % Other income, net increased by $5.3 million, from $10.8 million for fiscal 2023 to $16.1 million for fiscal 2024.
Fiscal Dollar Change Percentage change 2025 2024 (dollars in millions) Gain on sale and fair value mark-to-market on investments $ 8.3 $ 5.7 $ 2.6 47.3 % Interest and dividend income 9.6 9.9 (0.3) (2.8) % Fair value changes of contingent consideration (2.3) 0.6 (2.9) NM (1) Others, net 0.4 (0.1) 0.5 NM (1) Other income, net $ 16.0 $ 16.1 $ (0.1) (0.2) % 40 Ta ble of Contents (1) Not Meaningful Other income, net decreased marginally by $0.1 million during fiscal 2025, compared to fiscal 2024 due to changes in the fair value of contingent consideration related to our August 2024 acquisition of ITI Data of $2.3 million and reversal of contingent consideration liability of $0.6 million related to our June 2022 acquisition of Inbound Media Group, LLC during fiscal 2024, partially offset by higher yield on our investments and other income of $1.9 million, and reversal of certain contingent liabilities of $0.9 million that were no longer required in fiscal 2025.
Revenue growth in Emerging Business of $46.0 million from fiscal 2023 was primarily driven by expansion of business from our new and existing clients of $45.4 million and an increase in revenues of $0.6 million that was mainly attributable to the appreciation of the U.K. pound sterling against the U.S. dollar during fiscal 2024.
Revenue growth in Banking, Capital Markets and Diversified Industries by 13.0% was driven by the expansion of business from our existing clients by 5.6% and new clients, including revenue from ITI Data, by 7.4% during fiscal 2025, compared to fiscal 2024.
The decrease in intangibles amortization expense of $1.1 million was primarily due to end of useful lives for certain intangible assets, partially offset by amortization of intangibles associated with our acquisition of ITI Data in August 2024 during fiscal 2024, compared to fiscal 2023. Income from Operations.
The increase in depreciation and amortization expense by 7.0% during fiscal 2025, compared to fiscal 2024 was primarily due to investments in infrastructure, technology assets and digital capabilities, partially offset by intangibles amortization expense. Income from Operations.
The increase in cash used for investing activities of $107.1 million year-over-year is primarily due to higher net purchase of investments of $88.8 million and net cash used for business acquisition of $24.3 million for fiscal 2024, compared to fiscal 2023.
The decrease of $69.9 million was primarily due to higher proceeds from redemption of investments of $52.3 million during fiscal 2025, as compared to fiscal 2024 and net cash used for business acquisition of $24.3 million during fiscal 2024 whereas no such payment occurred during fiscal 2025.
The first step is to evaluate the tax position for recognition by determining, based on the technical merits, that the position will, more likely than not, be sustained upon examination. The second step is to measure the tax benefit as the largest amount of the tax benefit that is more likely than not to be realized upon settlement.
We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. We recognize interest and penalties related to uncertain tax positions as a component of the provision for income taxes.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe fair values of these financial instruments as of December 31, 2024 and 2023 were insignificant and are included in the “Foreign exchange gain, net” in our consolidated statements of income. As of December 31, 2024 and 2023, the outstanding derivative instruments had maturities of a maximum of 31 days, each. Interest Rate Risk.
Biggest changeAs of December 31, 2025 and 2024, the outstanding derivative instruments had maturities of a maximum of 30 days and 31 days, respectively. Interest Rate Risk. We are also exposed to interest rate risk arising from our indebtedness.
We believe that we have no material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. The interest income from these funds is subject to fluctuations due to changes in interest rates. Declines in interest rates would reduce our future investment income.
We believe that we have no material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. The interest income from these funds is subject to fluctuations due to changes in interest rates. Decline in interest rates would reduce our future investment income.
The applicable margin on the term loan facility is also tied to our total net leverage ratio and ranges from 0.125% to 1.00% per annum on loans pegged to the specified prime rate, and 1.125% to 2.00% per annum on loans pegged to the adjusted SOFR.
The applicable margin on the term loan facility is also tied to our total net leverage ratio and ranges from 0.13% to 1.00% per annum on loans pegged to the specified prime rate, and 1.13% to 2.00% per annum on loans pegged to the adjusted SOFR.
The applicable margin on the revolving credit facility is tied to our total net leverage ratio and ranges from 0% to 0.75% per annum on loans pegged to the specified prime rate, and 0.875% to 1.75% per annum on loans pegged to the adjusted SOFR.
The applicable margin on the revolving credit facility is tied to our total net leverage ratio and ranges from 0% to 0.75% per annum on loans pegged to the specified prime rate, and 0.88% to 1.75% per annum on loans pegged to the adjusted SOFR.
The revolving credit commitments under the 2024 Credit Agreement are subject to a commitment fee which is also tied to our total net leverage ratio, and ranges from 0.125% to 0.275% per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations.
The revolving credit commitments under the 2024 Credit Agreement are subject to a commitment fee which is also tied to our total net leverage ratio, and ranges from 0.13% to 0.28% per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations.
We do not anticipate non-performance by the counterparties and, accordingly, do not require collateral. Credit losses and write-offs of accounts receivable balances historically have not been material. No single client owed more than 10% of our accounts receivable, net as on December 31, 2024 and 2023. 47 Table of Contents
We do not anticipate non-performance by the counterparties and, accordingly, do not require collateral. Credit losses and write-offs of accounts receivable balances historically have not been material. No single client owed more than 10% of our accounts receivable, net as on December 31, 2025 and 2024.
As of December 31, 2024 and 2023, we had outstanding cash flow hedges with notional amounts of $984.3 million and $722.8 million, respectively, with the maximum outstanding term of approximately 45 months and 42 months, respectively.
As of December 31, 2025 and 2024, we had outstanding cash flow hedges with notional amounts of $1,134.8 million and $984.3 million, respectively, with the maximum outstanding term of approximately 42 months and 45 months, respectively.
The mark-to-market gain/(loss), net upon fair valuation of outstanding cash flow hedges as of December 31, 2024 and 2023 was $(9.2) million and $5.4 million, respectively, and is included in “Accumulated other comprehensive income/(loss)” on our consolidated balance sheets.
The mark-to-market loss, net upon fair valuation of outstanding cash flow hedges as of December 31, 2025 and 2024 was $19.3 million and $9.2 million, respectively, and is included in “Accumulated other comprehensive income/(loss)” on our consolidated balance sheets.
The exchange rates among the Indian rupee, the Philippine peso, the U.K. pound sterling and the U.S. dollar have fluctuated within the fiscal 2024, over the recent years and may fluctuate in the future.
The exchange rates among the Indian rupee, the Philippine peso, the South African rand, the U.K. pound sterling and the U.S. dollar have fluctuated within the fiscal 2025, over the recent years and may fluctuate in the future.
A 50 basis point increase or decrease in short term rates would have impacted our interest and dividend income for fiscal 2024 by approximately $0.9 million. Credit Risk. As of December 31, 2024 and 2023, we have accounts receivable, net $304.3 million and $308.1 million, respectively. We believe that our credit policies reflect normal industry terms and business risk.
A 100 basis point increase or decrease in short term rates would have impacted our interest and dividend income for fiscal 2025 by approximately $1.7 million. Credit Risk. As of December 31, 2025 and 2024, we have accounts receivable, net $343.1 million and $304.3 million, respectively. We believe that our credit policies reflect normal industry terms and business risk.
Based upon our level of operations for fiscal 2024 and excluding any hedging arrangements that we had in place during that period, a 10% appreciation/depreciation in the Indian rupee, the Philippine peso and the U.K. pound sterling against the U.S. dollar would have increased/decreased our revenues by approximately $7.1 million, $0.5 million and $10.8 million, respectively and increased/decreased our expenses incurred by approximately $46.8 million, $12.9 million and $4.5 million, respectively for fiscal 2024.
Based upon our level of operations for fiscal 2025 and excluding any hedging arrangements that we had in place during that period, a 10% appreciation/depreciation in the Indian rupee, the Philippine peso, the South African rand and the U.K. pound sterling against the U.S. dollar would have increased/decreased our revenues by approximately $8.0 million, $0.2 million, $1.8 million and $14.4 million, respectively and increased/decreased our expenses incurred by approximately $55.2 million, $14.8 million, $5.9 million and $5.4 million, respectively for fiscal 2025.
Our senior management and our board of directors approve our treasury operations’ objectives and policies. The responsibilities of our treasury operations include management of cash resources, including borrowing strategies, implementing hedging strategies for foreign currency exposures, and ensuring compliance with market risk limits and policies. Components of Market Risk Foreign Currency Risk.
We manage market risk through our treasury operations using financial instruments. Our senior management and our board of directors approve our treasury operations’ objectives and policies. The responsibilities of our treasury operations include management of cash resources, including borrowing strategies, implementing hedging strategies for foreign currency exposures, and ensuring compliance with market risk limits and policies.
A significant portion of our expenses are incurred in the Indian rupee, the Philippine peso, the South African rand and the U.K. pound sterling, representing 29.7%, 8.2%, 3.5% and 2.8%, respectively, of our total expenses for fiscal 2024. We also incur expenses in the U.S. dollar and currencies of other countries where we have operations.
A significant portion of our expenses are incurred in the Indian rupee, the Philippine peso, the South African rand and the U.K. pound sterling, representing 31.1%, 8.4%, 3.3% and 3.1%, respectively, of our total expenses for fiscal 2025. We also incur expenses in the U.S. dollar and currencies of other countries where we have operations.
The swap transaction involves the exchange of fixed for floating interest payments. However, in circumstances where we believe additional fixed-rate debt would be beneficial, we may choose to terminate a previously executed swap, or swap certain floating interest payments to fixed.
However, in circumstances where we believe additional fixed-rate debt would be beneficial, we may choose to terminate a previously executed swap, or swap certain floating interest payments to fixed.
We are exposed to foreign currency exchange rate risk. Our revenues are primarily denominated in the U.S. dollar representing 85.1% of our total revenues and the U.K. pound sterling representing 10.7% of our total revenues for fiscal 2024.
Components of Market Risk Foreign Currency Risk. We are exposed to foreign currency exchange rate risk. Our revenues are primarily denominated in the U.S. dollar representing 84.7% of our total revenues and the U.K. pound sterling representing 10.6% of our total revenues for fiscal 2025.
The principal foreign currencies that are hedged are the Indian rupee, the Philippine peso and the South African rand. The impact related to these foreign currency forward contracts on earnings and/or cash flows is immaterial as the impact of the maturing cash flow hedges in respective periods are intended to primarily offset the foreign currency impact on the related expenses.
The impact related to these foreign currency forward contracts on earnings and/or cash flows is immaterial as the impact of the maturing cash flow hedges in respective periods are intended to primarily offset the foreign currency impact on the related revenue and expenses.
We are also exposed to interest rate risk arising from our indebtedness. In order to mitigate our exposure to fluctuations in interest rates and minimize the earnings and cash flow volatility associated with floating rate indebtedness, we enter into interest rate swaps to hedge cash flow risks on our revolving credit facility having floating interest rate obligations.
In order to mitigate our exposure to fluctuations in interest rates and minimize the earnings and cash flow volatility associated with floating rate indebtedness, we may enter into interest rate swaps to hedge cash flow risks on our revolving credit facility having floating interest rate obligations. The swap transaction involves the exchange of fixed for floating interest payments.
The increased credit facility and the new term loan facility both mature on April 18, 2027. The 2024 Credit Agreement bears interest at a rate equal to specified prime rate (alternate base rate) or adjusted SOFR, plus, in each case, an applicable margin.
The 2024 Credit Agreement bears interest at a rate equal to specified prime rate (alternate base rate) or adjusted SOFR, plus, in each case, an applicable margin.
Foreign currency forward contracts with notional amounts of the U.S. dollar (USD) 178.9 million, the U.K. pound sterling (GBP) 21.0 million, the Euro (EUR) 9.0 million, South African rand (ZAR) 10.0 million and the Australian dollar (AUD) 4.8 million were outstanding as of December 31, 2024 compared to USD 170.5 million, GBP 14.5 million, EUR 5.2 million, ZAR 150.2 million and AUD 3.5 million outstanding as of December 31, 2023.
Foreign currency forward contracts with notional amounts of the U.S. dollar (USD) 215.2 million, the U.K. pound sterling (GBP) 36.0 million, the Euro (EUR) 7.7 million, and the Australian dollar (AUD) 4.9 million were outstanding as of December 31, 2025 compared to USD 168.9 million, GBP 21.0 million, EUR 9.0 million and AUD 4.8 million outstanding as 45 Ta ble of Contents of December 31, 2024.
For fiscal 2024 and 2023, we recognized $0.6 million and $5.7 million, respectively, as foreign exchange loss from maturing cash flow hedges, which was largely offset by the foreign exchange translation gain on the related expenses. 46 Table of Contents We also enter into foreign currency forward contracts from time to time to hedge our 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.
We also enter into foreign currency forward contracts from time to time to hedge our 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.
Our exposure to market risk is a function of our expenses and revenue generating activities in foreign currencies. The objective of market risk management is to avoid excessive exposure to our earnings and equity of such market driven losses. We manage market risk through our treasury operations using financial instruments.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk General Our exposure to market risk arises from our expenses and revenue generating activities in foreign currencies, and changes in interest rates. The objective of market risk management is to avoid excessive exposure to our earnings and equity of such market driven losses.
A 50 basis point increase or decrease in interest rates would have impacted our interest expense for fiscal 2024 by approximately $1.8 million.
A 100 basis point increase or decrease in interest rates would have impacted our interest expense for fiscal 2025 by approximately $3.1 million. We had cash, cash equivalents and short-term investments totaling $328.4 million and $340.6 million as of December 31, 2025 and 2024, respectively.
As described in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we held a $300.0 million revolving credit facility and a letter of credit sub-facility pursuant to our Credit Agreement dated as of November 21, 2017, which was amended and restated on April 18, 2022 (the “2022 Credit Agreement”).
As described in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the 2024 Credit Agreement, provides for revolving credit commitments of $500.0 million and a term loan facility of $100.0 million, with an annual repayment of 5%. The revolving credit facility and the term loan facility both mature on April 18, 2027.
Removed
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk General Market risk is the volatility of future earnings and cash flows that may result from changes in interest rates and foreign currency exchange rates.
Added
The principal foreign currencies that are hedged are the Indian rupee, the Philippine peso and the South African rand.
Removed
The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market sensitive financial instruments including foreign currency receivables and payables.
Added
For fiscal 2025 and 2024, we recognized $5.0 million and $0.6 million, respectively, as foreign exchange loss from maturing cash flow hedges, which was largely offset by the foreign exchange translation gain on the related expenses.
Removed
Our foreign currency exchange rate risk primarily arises from our foreign currency revenues, expenses incurred by our subsidiaries, including foreign subsidiaries in foreign currencies and foreign currency accounts receivable and payable.
Added
The changes in the fair values of these financial instruments as of December 31, 2025 and 2024 were included in the “Foreign exchange gain, net” in our consolidated statements of income. See Note 17- Derivatives and Hedge Accounting to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” for further information.
Removed
The average exchange rate of the U.S dollar against the Indian rupee increased from 82.60 for fiscal 2023 to 83.76 for fiscal 2024, representing a depreciation of 1.4% against the U.S dollar.
Removed
The average exchange rate of the U.S dollar against the Philippine peso increased from 55.56 for fiscal 2023 to 57.39 for fiscal 2024, representing a depreciation of 3.3% against the U.S dollar.
Removed
The average exchange rate of the U.K. pound sterling against the U.S. dollar increased from 1.25 for fiscal 2023 to 1.28 for fiscal 2024, representing an appreciation of 2.6% against the U.S dollar.
Removed
As such, we may not purchase adequate contracts to insulate ourselves from the foreign exchange currency risks. In addition, any such contracts may not perform effectively as a hedging mechanism. We may, in the future, make changes to our hedging policies, and have done so in the past.
Removed
On April 18, 2022, we entered into the 2022 Credit Agreement, that provides for a $400.0 million revolving credit facility and a letter of credit sub-facility.
Removed
On August 9, 2024, we entered into the 2024 Credit Agreement, that provides for a $100.0 million increase to the revolving credit commitments such that the aggregate amount of revolving credit commitments available is now equal to $500.0 million and provides for the issuance of a new term loan facility in the aggregate amount of $100.0 million with an annual amortization of 5%.
Removed
We manage a portion of our interest rate risk related to our revolving credit facility having variable interest rate obligations by entering into interest rate swaps under which we receive floating rate payments based on SOFR and make payments based on a fixed rate.
Removed
As of December 31, 2024 and 2023, we had outstanding interest rate swaps having a notional amount of $nil and $75.0 million, respectively. We had cash, cash equivalents and short-term investments totaling $340.6 million and $290.8 million as of December 31, 2024 and 2023, respectively.

Other EXLS 10-K year-over-year comparisons