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Winning in the Digital World
INVESTOR DAY, June 20, 2017
© ExlService Holdings, Inc. Safe harbor statement
This presentation contains forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control. Forward-looking statements include information concerning the Company's possible or assumed future results of operations, including descriptions of its business strategy. These statements may include words such as "may," "will," "should," "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions. These statements are based on assumptions that we have made in light of management's experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. You should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect the Company's actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors are discussed in more detail in the Company's filings with the Securities and Exchange Commission, including the Company’s Registration Statement on Form S-3 (containing a prospectus), the Company's Annual Report on Form 10-K for the year ended December 31, 2016 and the Company’s Quarterly Reports on Form 10-Q for the quarters ended June 30, 2016, September 30, 2016 and March 31, 2017. These risks could cause actual results to differ materially from those implied by forward-looking statements in this presentation. You should keep in mind that any forward-looking statement made herein, or elsewhere, speaks only as of the date on which it is made. New risks and uncertainties come up from time to time, and it is impossible to predict these events or how they may affect the Company. The Company has no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws. This presentation is not a prospectus and any decision to purchase securities in the proposed offering should be made solely on the basis of the information contained or incorporated by reference in the final prospectus supplement and the accompanying prospectus.
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 2 Speakers & Topics
8:00 – 8:30 Registration 8:30 – 9:00 Winning in the Digital World Rohit Kapoor, Vice Chairman & Chief Executive Officer 9:00 – 9:20 Next Generation Operations Pavan Bagai, President & Chief Operating Officer 9:20 – 9:40 Expanding our Leadership in Analytics Vivek Jetley, Senior Vice President, Co-Head of Analytics 9:40 – 9:55 Continuing our Dominance in Insurance Vikas Bhalla, Executive Vice President, Head of Insurance 9:55 – 10:10 Break 10:10 – 10:25 Accelerating our Growth in Healthcare Rembert de Villa, Executive Vice President, Head of Healthcare 10:25 – 10:45 Executing on our Go To Market Nagaraja Srivatsan, Executive Vice President & Chief Growth Officer 10:45 – 11:05 Delivering on our Financial Goals Vishal Chhibbar, Executive Vice President, Chief Financial Officer 11:05 – 11:20 Closing Remarks and Q&A Rohit Kapoor, Vice Chairman & Chief Executive Officer 11:30 Tour of the Digital Experience Center 12:30 Lunch
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 3 Image window size is 10” x 4.82”
Winning in the Digital World
©Rohit ExlService Kapoor, Holdings, Inc.Vice | Chairman & Chief Executive Officer The market we operate in remains attractive
Operations Management Analytics Global sourcing market will $200B+ Big Data and Analytics be $225B+ by 20201 Spending market by 20202
1 Expected to grow at 6-7% Services related spending to grow at 15%2 Greater acceptance on end to end outsourcing Explosion of data (onshore + offshore)
Increase in first time Sharp decline in cost of outsourcers computing power dollar
1. The IT-BPM Sector in India Strategic Review 2017 by NASSCOM 2. Worldwide Semiannual Big Data and Analytics Spending Guide 2017-20 by IDC
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 5 Key trends impacting our business
Multi channel touch-points for the end-customer Ultra-customized and personalized service offerings Focus on end Small turning radius with increased speed of market customer experience offerings
Increased adoption of Advanced Automation and Robotics Accelerated use of Advanced Analytics capabilities Leverage Digital (machine learning, artificial intelligence) to drive technologies insights
Changes in geo-political setup Changes in macro- Uncertainty in the regulatory environment environment
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 6 EXL Value Proposition
We combine EXL is a leading design domain operations thinking expertise management and analytics company that designs and enables agile, customer-centric operating models to to deliver market-leading our improve revenue business proprietary growth and and outcomes Business profitability digital EXLerator of our clients. technologies Framework®
cutting-edge analytics
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 7 Our addressable market opportunity has increased multi-fold
Tot al O p e rat i on s (Onshore + Offshore) Offshore Revenue Higher value Operations Expansion (Est. Penetration capture in a 20-25%) digital world
Client Optimize costs Improve Revenue Growth Goals Global Delivery Advanced Analytics Advanced End- customer Automation and Experience Robotics Digital
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 8 Power of Integration of Operations Management and Analytics
Top 50 Clients1 2013 2016
Revenue contribution to 88% 76% EXL Revenues1
23 32
Penetration of Penetration of Penetration of Operations 25 Analytics in Analytics in Management in Operations Operations 16 Analytics Management Management 89%, 93% 52% 33% 2 2
Operations Operations Management Analytics Management only and Analytics only
1. In 2013, top 50 Clients and the revenue exclude large transitioning client
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 9 Strategic Digital Transformation Partner
Lead with Analytics
Digitize operations management
Strengthen Analytics leadership position
Leverage consulting as “Tip of Spear”
Focus on our core domains
Build global talent base with digital expertise
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 10 Client Testimonial: http://info1.exlservice.com/guardian-life- insurance-company-of-america
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 11 Image window size is 10” x 4.82”
Next Generation Operations Pavan Bagai, President & Chief Operating Officer Operations Management: Accelerated Evolution
Advanced Analytics Advanced Automation & Robotics End-to-End Functions Extreme Extreme End Customer Experience Transformation Business Outcomes Point Automation Cloud Analytics Modeling Complex Processes Efficiency and Effectiveness
Incremental Functional Outcomes Transformation Six Sigma Platforms / BPaaS Labor Arbitrage Non-core Processes Cost Reduction
Process Process SLA Delivery
Improvement Technology Agnostic
2004-10 2011-15 2016 & Beyond FTE Pricing Transaction Pricing Outcome Pricing
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 13 Extreme Transformation: Multiple Dimensions
LEVERS Benefits Multi
Advanced Automation Speed - TM & Robotics Accuracy shoring STRUCTURES STRUCTURES erator Advanced Intelligence EXL Analytics Insights FRAMEWORK Redesign Design Thinking Optimization PricingInnovative Customer Experience
Partnerships Capability Access Specialization
DOMAIN EXPERTISE
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 14 Integration of Advanced Analytics
Problem Identification Speech Robotics Artificial Natural Language Analytics Intelligence Processing
Effective Utilization of Agents Leaner Organizational Leverage Data and Relationship Managers Structure and Better Control Sets
Modeling & Algorithms Image Deep Robotics Spatial Analytics Learning Analytics Faster Processing and Optimized Supply Chains Embed in Information Summarization and Manufacturing Operations
Efficiency & Effectiveness
Neural Internet of Natural Language Deep Networks Things Processing Learning Superior Richer Customer Insights Insights From Huge Volume Outcomes for Behavioral Marketing of Unstructured Data
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 15 Leveraging Automation & Robotics
Investment Partners/Engagements Outcomes
Team of 90+ Robotics Genesys Cortana Built library of 600+ proprietary professionals; ramping to 200+ and partner bots Nuance Google Cloud Tripling investment in Digital 15 existing client operations; from 2015 to 2017 to 2% of SYSTRAN AntWorks 5 strategic new client wins revenue Xamarin WorkFusion 6 client consulting Digital Experience Centers engagements and Innovation Labs PhoneGap UiPath Functional and industry Built CTO team (200+) and IBM Bluemix Coupa domain solutions expanded CIO development team Blue Prism Automation Solution accelerators and Anywhere cognitive bots BlackLine Systems 80+ point automation tools, solutions and mobile apps
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 16 Digital Operations : Opportunity > Threat
Market Expansion
Margin Growth
New Age Engagement Models Competitive Advantage
Stronger Relationships
Counter Obsolescence
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 17 Image window size is 10” x 4.82”
Expanding our Leadership in Analytics Vivek Jetley, Senior Vice President, Co-Head of Analytics Delivering Industry-leading Growth
Average Annual Growth Rate : ~2x of industry average1 over 5 years; ~3X revenue since 2014
Analytics growth: 2012-2017 $200 M +
$165.7M $122.2M Revenue
$65.6M $37.0M $45.5M
2012 2013 2014 2015 2016 2017 F* Over 2/3rd of our revenue is Annuity-based and recurring ~ 62% increase in revenue per FTE (3) ~ 36% Gross Margin in 2016 (2) Key
Metrics + ~ 600+ bps increase in profitability (3)
(1) Worldwide Semiannual Big Data and Analytics Spending Guide from International Data Corporation (IDC), Oct 2016 (2) FY 2016 actuals (3) Compared to FY 2014
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 19 Well positioned for Analytics market leadership
Differentiation through our core strengths
Capability End-to-end capability across Data management, data-driven products, Advanced Analytics, Reporting & Visualization
Domain Extensive experience 7 out of Top 10 9 out of Top 15 Expertise in our current domains US Banks US P&C Insurers
Delivery 2500+ Data scientists Preferred Recruiter at Top strength Masters in Quant, Economics, OR ; Top Global Global schools Engineering and Management professionals; PhDs
Go To Market Dedicated Hunters and Account Managers for Analytics Plan
Investments in Product Development, Key Investments in AI, building IP Methodology and R&D Teams Robotics, Big data…
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 20 Addressable market now includes the entire data and analytics spend at clients
Our offerings span the entire CXO suite
Deep knowledge of structured data sources
Data Solutions Ability to curate relevant datasets for specific client challenges
Enterprise Data Management – Design, architect, implement & operate
Analytical Industrial-strength delivery capability with 2500+ Analytics resources Services Domain experts in our established verticals
Deep knowledge of areas of advanced analytical methodology
IP-enabled Proprietary products leveraging our AI and big data capabilities Products Workflows and knowhow for setting up decision platforms
Closing the Support for business decisions and owning outcomes end-to-end
loop Margin expansion through non-linear revenue growth
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 21 Our expanded offerings are creating strong demand from existing and new customers
Drivers of growth across our portfolio
Larger scope New lines Data-enabled New at Top 10 of business solutions geographies Existing Customers Strategic Increasing need for data and Large Analytics programs Growth analytics at our 20+ regional at 10+ UK and Europe Initiatives banks and credit unions banks and insurers
Ramp-up and 40+ new clients acquired in the last 2 years Expansion Long-term and Annuity contracts; Centers of Excellence New Customers Targeted Top 11-50 Banking and Insurance clients Acquisition Top 25 Healthcare clients Top 25 Retail & Media clients
Cross-sell Increased 20+ selected large Operations Management Wins Penetration customers Data solutions and IP-enabled products
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 22 Our “Land & Expand” Account Strategy helps us grow $10M+ relationships Growth at a Top 5 Global Bank
~320 Growth within Cards Risk FTEs
20 FTEs Growth with Other Groups Impact
EXL’s Penetration
Phase I Phase II Phase III Phase IV
Initial Solidifying Credibility Strategic Partner Expansion
MIS / Reporting Analytical Insight Innovation Diversification Competitive pilot : Expand into critical End to end New.. Won BI work from regulatory areas analytics support Business Units: Store Cards, existing vendor Retail Bank
20% efficiency through More pilots for advanced “Strategic partner” Functions: Marketing, automation analytics Finance, Products
Geo: Mexico, Colombia
Establish superiority over Showcase benefits of Diversification into new Taste of high end work existing vendor synergy client groups
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 23 Investment in AI based solutions for our key industry verticals is paying off
Products and R&D Team Sample AI Products
Data Scientists ML Engineers
Big Data Experts App Developers
Areas of Expertise Machine Learning Text Mining & NLP Information Extraction Tool: AI-based solution that automates the manual task of information extraction from unstructured documents
• Extraction Advanced Visualization Speech Analytics • Classification • Entity Recognition Images OCR Info Extraction Tool Output
Market Traction Potential Impact Image Analytics IoT • Currently being deployed at EXL • FTE reduction by 30- customers 50% • 4-5 pilot • Turnaround Time Geospatial Network Analytics implementations reduction by 20-30% being launched • Quality improvement • Discussions with large by 30% Ops mgmt customers
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 24 Image window size is 10” x 4.82”
Continuing our Dominance in Insurance
Vikas Bhalla, Executive Vice President, Head of Insurance Recognized as the Leader
Ranked in ‘top-right’ / leader quadrant by multiple industry analysts / research firms
Everest Group PEAK Matrix for P&C Insurance BPO1
75th percentile High LEADERS EXL MAJOR CONTENDERS CSC Cognizant
WNS Genpact TCS
Conduent percentile
Shearwater Health Accenture th
Capita 75 Infosys Sutherland
Market Success Market Mphasis HCL Syntel Leaders Aspirants percentile ASPIRANTS th th Major Star 25 Intelenet NIIT Contenders Performers (Revenue, number of clients, and revenue growth) andrevenue clients, of number (Revenue, Low Capgemini Low 25th percentile High P&C Insurance BPO delivery capability (Scale, scope, technology solutions & innovation, delivery footprint, and buyer satisfaction)
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 26 Contributed 43% of EXL revenues
1 Marquee list of Fortune 500 and Global 1000 clients with multiple senior relationships 8 of Top 10 US Insurers 2 out of 5 Leading UK Insurers 2 Leading Australian Insurers
2 12,000+ 2,500+ 3,000+ 500+ 70+ Domain Certified Claims + U/W Analytics Actuarial Experts (AICPCU, CII, specialists professionals staff LOMA)
3 Analytics and Technology Platform capabilities across insurance lifecycle
®
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 27 Delivered strong performance
$294M $220Ma 15 16%+ 30 Clients with CAGR New Clients $5M+ in 2016 vs. 8b in 2014 2014 2016
New New Delivery New Market Geographies Capabilities
Increased Addressable Market
a. Excluding disentanglement costs of a large transitioning client b. Excluding a large transitioning client
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 28 Continue to dominate the market
Gain share at existing Win greater proportion clients of new deals Cross-sell (Operations + Power of ‘One’ EXL Analytics + Consulting + Platforms) UK and APAC
Integrated Offerings ‘Hunting’ capacity
Expand capabilities End-to-end customer across value chain acquisition solution ® (LISS + LifePRO + Onshore delivery RPM + Operations)
Domain Expertise
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 29 Cross-sell to gain share
Key Client Relationships BPO Analytics Platforms Consulting F&A
Large US Life & Annuities Insurer H L L L
Large UK General Insurer H L L H
Global Multinational Insurer
US Mutual Insurer
American Mutual Insurance Company
Leading US P&C Insurer
Global Life & Annuities Insurer
Large P&C Insurer
Large Personal Lines P&C Insurer
Leading US P&C Insurer
Recent Strategic Win - Client 1
Recent Strategic Win - Client 2
Low Medium High
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 30 End-to-end customer acquisition solution
Need: ~70% Opportunity: $600B+ in annual Life Insurance sales begin online premiums and $6B in agency commissions
Target Engage Convert Retain
Digital Marketing Digital Sales Digital Underwriting Digital Service RPM Database LISS LISS LifePro® RPM Marketing RPM Database Actuarial Analytics Digital-Suite Analytics Analytics Robotics & RPM Database Automation Customer Sales Operations Operations Analytics Contact Center Operations
Why will we win? We are the only service provider with an end-to-end capability set
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 31 Image window size is 10” x 4.82”
Accelerating our Growth in Healthcare
Rembert de Villa, Executive Vice President, Head of Healthcare Helping Clients Solve Key Industry Problems
EXL Healthcare Service Offerings — Healthcare Analytics • Payer Analytics • Provider Analytics • Customer Acquisition High Cost Operations Management • Clinical and Pharmacy Process Management • Provider Services Lack of • Member/Patient Engagement • Eligibility and Payments Improvement • Revenue Cycle Management in Outcomes Care Management Platform • Utilization Management • Case Management • Disease Management Poor Access Healthcare Consulting • Medical cost Management • Compliance Cost Management Finance and Accounting
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 33 Strong Performance in High-Growth Market
Market Opportunity Revenue (2013-2016) Population Health Management Revenue Cycle Management ~9bn ~4bn
H ~5bn 20+% Payment Integrity Annual ~2bn Revenue ~3bn Growth Optimization Customer Engagement F&A Medical M Coding
Claims Ability to Compete to Ability
L Back Office (Procurement, Provider Product HR, Other Platforms Development 10% 15% Market Growth Rate
Adjacent Market Opportunity EXL Focus Areas
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 34 Clients and People
Deep Client Relationships Best People in Industry
> 5 of the top 10 U.S. Insurers > 3,000+ Professionals
> 35 Payers > 1,400+ Clinicians
> 15+ Providers > 600+ Analytics Professionals
> 1 in 6 American lives touched by > Chief Medical Officer our Care Management platform
> Clinical Health Solutions Leader
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 35 World Class Healthcare Academy
Clinical Leadership Capability Development Development
Clinical Process Customer Training Experience
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 36 Looking Ahead – Areas of Focus and Growth
1> Platform BPO and Onshore Operations
2> Payment Integrity
3> Population Health Management (Gaps-in-Care Closure)
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 37 Platform BPO and U.S. Operations
Can increase CARE RADIUS revenue per CARE MANAGEMENT PLATFORM person by
Utilization Disease Case >5x Management Management Management
Embedded Analytics
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 38 Payment Integrity Market - Problem
Paid by Medicare ~$190 billion $1.2 and Medicaid TRILLION Erroneous payments annually ~11% Paid in error ~$132 B
$1.1 Paid by Private Health Insurers TRILLION
~5.5% Paid in error ~$59 B
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 39 Payment Integrity - EXL Offering
Pre-Claim Pre-Payment Post-Payment Utilization Review Pre-Payment Review Post-payment Review Validation and Recovery Litigation Support
Bigger Faster Higher Better Pool of Evaluation Success Use of Ideas Rate Data
Results 10x – 15x Return for Client
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 40 Gaps-in-Care Closure — EXL Offering
$1.2 B+ of bonus payments foregone by 6 large payers on account of lower star ratings due to fewer gap closures
Data Conversion Data Abstraction Provider Outreach
Sample Results 96% 30% $10MM+ Increase in Increased case Worth of potential gap closure processing reimbursement on efficiency account of improved audit measures
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 41 Conclusion
> Continue to be relevant in a high-growth market
> Grow core business and capture strong position in Payment Integrity and Population Health (gaps-in-care closure)
> Drive innovation through integrated solutions, leading with analytics
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 42 Image window size is 10” x 4.82”
Executing on our Go To Market
Nagaraja Srivatsan, Executive Vice President & Chief Growth Officer How do we drive growth ?
> Expand our share of wallet • Grow and scale our Top 100 accounts • Cross-sell our service lines • Win and grow new customers • Leverage consulting as the “tip of the spear” to drive all of EXL service offerings
> Increase our brand recognition
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 44 Grow and scale our Top Accounts
Drive more $50M, $25M accounts
Dedicated client executives/ account managers for top accounts
Client 2014 2016 Mix 5 (> $25M) 4 (> $25M)
18 68 24 92 % ($5M-$25M) ($5M-$25M) 46 63 ($1-$5M) ($1-$5M)
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 45 Cross-sell all our services lines
Top 100 EXL Clients Top 100 EXL clients 2014 2016 $13.7M $13.2M per client per client 4 8
23 $3.4M $4.5M per client per client $3.5M $1.6M per client per client 29
1 line 2 lines 3+ lines 1 line 2 lines 3+ lines of business of business of business of business of business of business
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 46 Win and grow new customers
New Client Wins New logos acquired 40 in 2014 grew by 63%
34 2-year CAGR
26 New logos acquired in 2015 grew by 200% 2014 2015 2016 in 2016
Operations Management 20 25 21 Strong retention rate Analytics 6 9 19
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 47 Significant opportunity to increase our work with market leaders
Top 9 of 15 Top 5 of 10 US US P&C Healthcare insurers insurers P&C Healthcare insurers
Client Portfolio Top 3 of 10 Less than truckload players Mix Top 2 of 10 Full TT&L truckload players Top 2 of 5 Travel and Leisure
Top 12 of 15 US L&A Top 7 of 10 US insurers Banks L&A BFS
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 48 Leverage Consulting as “Tip of Spear”
Bring power of “One EXL” to drive digital transformation at all our 1 clients
Enable our clients to leverage “new delivery models” through 2 extreme transformation playbooks
Become the trusted advisors to the Chief Risk Officer and Chief 3 Financial Officer
Build industry leading Global Advanced Automation & Robotics 4 practice
5 Be Systems Implementation partner for all our proprietary and partner products
6 Deliver program management, change management and strategy assessments service lines to all our clients
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 49 Enhance the EXL Brand across all our stakeholders
Thought Analysts Improved NPS Leadership Recognitions 9% points Thought Earned mentions for innovation and Leadership RPA in Celent, Gartner, IDC and HfS + papers 40 published Increased coverage outside of YTD 2017 traditional BPO research (Aité, KLAS, Gartner, IDC) Downloads 2015 2016 1000+ YTD 2017 Profiled in Celent report on BFSI innovation labs
Winners Circle Leader Leader Leader Leader
“HfS Blueprint “Property and “NelsonHall “Magic Quadrant “Analytics Business Report: 2016 Casualty Insurance Analytics and for Finance and Process Services Population Health BPO – PEAK Reporting BPS Accounting BPO, (BPS) – PEAK and Care Matrix™ NEAT” (2015) 2015” Matrix™ Management Assessment 2017” Assessment 2017” Business Services”
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 50 Become a Strategic Digital Transformational Partner
Engage and Experience ONE
SEAMLESS CAPABILITY Insight and Context
Operations and Execution
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 51 Image window size is 10” x 4.82”
Delivering on our Financial Goals
Vishal Chhibbar, Executive Vice President, & Chief Financial Officer Proven business model driving growth and profitability
Revenue CAGR $750 17% $686 $628 o Over 80% of recurring/annuity $526 revenues $479 $443 $2.55 o $27,335 of $361 $2.33 revenue/employee $2.03 $1.82 o 30% increase $1.81 over 2012 $253 $1.58 $1.08 $1.39 o 121% of FCF/NI (3) 2010 2011 2012 2013 2014(1) 2015 2016 2017(2)
Revenue (in USD MM) Adjusted EPS
(1) Excluding reimbursement of transition & disentanglement costs Midpoint of guidance, (2) Mid-point of guidance (3) Free cash flow /Net income
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 53 Growth in both operating segments
Operations Management Analytics $166 USD MM $520 USD MM $506 $122
$460 $66 $433 $46 $406 $37
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
Constant currency Constant currency 8.2% CAGR from 2012 46.4% CAGR from 2012
Constant currency 13.2% CAGR
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 54 Diversified portfolio
2014 Q1 ‘17 77% BPO 27% 56% Analytics BPO Non-linear revenue Revenue Mix 17% improving realization. BPaaS 12% 11% TBP/OBP revenues BpaaS Analytics contribution ↑ 900 bps
Client concentration Top 1: 8% Top 1: 7% Mitigating risk on revenues Top 3:20% Top 3:17% while continuing to grow Top 5:29% Top 5:24% Top 10: 47% Top 10: 39%
6% 5% Others 24% Others 44% US India Expanded delivery footprint
Geographic 59% reducing dependency 38% diversification 11% India on India geography US 13% Philippines Philippines
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 55 Investing to transform and grow
USD MM Capex Opex $27
$17 $9 $10 $4
EXLeratorTM Investment Advanced Product & platform Growth & new in Analytics automation & investments geographies robotics investments
of investments in the last $67MM 3 years and growing
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 56 Margin improvement through disciplined execution
Tai lwi nds: Tai lwi nds: FX benefits Operational Better utilization in efficiencies Analytics Improved SG&A leverage acquisition Headwinds: margins Better utilization Acquisitions in consulting Investment in and Analytics new client ramps SG&A leverage Investment in 36.7% geographies 35.1%- Headwinds: Impact of 34.7% 35.4% FX Impact transitioning Investment in clients 14.8% 14.3%- capability Investments in 14.0% 14.5% development capability development 2014 (1) 2016 2017(E)
Gross margin Adjusted operating margin
Note: The above reasoning is for adjusted operating margin (1) 2014 Gross margin is "Excluding Reimbursement of transition and disentanglement costs"
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 57 Effectively deploying and managing capital
USD MM
$131
$274 $79 $36 $227 $45 (1)
$154 $182 Cash & short Cash from Acquisitions Capex Share Cash & short term operations buy back term investments investments 2013 2016
Adding shareholder value through share buyback and acquisitions
(1) Draw down of revolver
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 58 2017 guidance
Revenue USD MM
$740-$760
$686
2016 2017 guidance
Cents Adjusted EPS
3 250-260 6-9 (8)-(6)
16-21 233
2016 Revenue Margin Investments in Share 2017 Growth improvement Frontend & Buyback guidance Capability
(1) The guidance is at INR/USD FX of 66
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 59 Long term focus - 2017 and beyond
Double-digit revenue growth
Drive sustainable margin expansion
Enhancing Shareholder Value Invest in innovation and capability development
Acquisitions to add capability in digital, analytics and enhance geographic footprints
Focus on shareholder value creation through effective capital allocation
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 60 Image window size is 10” x 4.82”
Closing Remarks and Q&A
Rohit Kapoor, Vice Chairman & Chief Executive Officer Image window size is 10” x 4.82”
Tour of the Digital Experience Center Image window size is 10” x 4.82”
APPENDIX
©June ExlService 20, Holdings, 2017 Inc. | Appendix
EXLSERVICE HOLDINGS, INC. Reconciliation of Adjusted Financial Measures to GAAP Measures In addition to its reported operating results in accordance with U.S. generally accepted accounting principles (GAAP), EXL has included in this release certain financial measures (adjusted operating income, adjusted operating income margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted diluted earnings per share and information on a constant currency basis) that the Securities and Exchange Commission defines as “non-GAAP financial measures.” The non-GAAP financial measures disclosed by EXL should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from those financial statements should be carefully evaluated. EXL believes that providing these non-GAAP financial measures may help investors better understand EXL’s underlying financial performance. Management also believes that these non-GAAP financial measures, when read in conjunction with EXL’s reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company’s results and comparisons of the Company’s results with the results of other companies. Additionally, management considers some of these non-GAAP financial measures to determine variable compensation of its employees. EXL believes that it is unreasonably difficult to provide its earnings per share financial guidance in accordance with GAAP for a number of reasons, including, without limitation, EXL’s inability to predict its future stock-based compensation expense under ASC Topic 718, the amortization of intangibles associated with further acquisitions and the currency fluctuations. EXL also incurs significant non-cash charges for depreciation that may not be indicative of the Company’s ability to generate cash flow.
The information provided on a constant currency basis reflects a comparison of current period results translated at the prior period currency rates. EXL’s primary exchange rate exposure is with the Indian Rupee, the U.K. pound sterling and the Philippine peso. The average exchange rate of the U.S. Dollar against the Indian rupee decreased from 67.51 during the quarter ended March 31, 2016 to 66.46 during the quarter ended March 31, 2017, representing an appreciation of 1.6%. The average exchange rate of the U.S. Dollar against the Philippine peso increased from 47.09 during the quarter ended March 31, 2016 to 50.05 during the quarter ended March 31, 2017, representing a depreciation of 5.9%. The average exchange rate of the British Pound against the U.S. Dollar decreased from 1.42 during the quarter ended March 31, 2016 to 1.24 during the quarter ended March 31, 2017, representing a depreciation of 13.9%. This information is provided because EXL believes that it provides useful comparative incremental information to investors regarding EXL’s operating performance.
The following table shows the reconciliation of these non-GAAP financial measures from GAAP measures for the three months ended March 31, 2017 and 2016 and the three months ended December 31, 2016.
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 64 Reconciliation of Adjusted operating Income
(in USD MM) 2014 2015 2016 Revenue $499 $628 $686 Add: Reimbursement of transition and disentanglement costs $26 Adjusted Revenue $526 $628 $686
Income from operations $34 $67 $64 Add: Stock Compensation $11 $16 $20 Add: Amortization and impairment $7 $10 $12 Add: Reimbursement of transition and disentanglement costs $26
Adjusted Income from Operations $78 $94 $96 Adjusted Income from Operations margins 14.8% 14.9% 14.0%
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 65 Reconciliation of Adjusted Diluted EPS
(USD per share data) 2014 2015 2016 Diluted EPS $0.96 $1.51 $1.79
Add: Stock Compensation $0.33 $0.47 $0.57 Add: Amortization and impairment $0.20 $0.30 $0.34 Add: Reimbursement of transition and disentanglement costs $0.78 Subtract: Tax impact on stock compensation expense ($0.13) ($0.18) ($0.21) Subtract: Tax impact on amortization of intangibles ($0.03) ($0.07) ($0.09) Subtract: Tax impact on reimbursement of transition and disentanglement costs ($0.30) Subtract: Changes in fair value of Earn-out consideration, net of tax ($0.07)
Adjusted Diluted EPS $1.82 $2.03 $2.33
June 20, 2017 | © 2017 ExlService Holdings, Inc. | 66