ExlService (EXLS 1.39%), a global data and artificial intelligence services provider, reported results for the second quarter of fiscal 2025 on July 29, 2025. The key news: GAAP revenue reached $514.5 million for Q2 2025, rising 14.7% year-over-year and bettering analyst expectations by $8.6 million (GAAP). Adjusted earnings per share (Non-GAAP) came in at $0.49, also above the $0.45 analyst consensus (Non-GAAP). Net income (GAAP) grew sharply to $66.1 million. Management raised its full-year 2025 outlook ranges for both revenue and adjusted diluted EPS (non-GAAP). Overall, the quarter delivered solid growth and outperformance on the metrics that matter most to investors.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.49 | $0.45 | $0.40 | 20.3% |
| EPS (GAAP) | $0.40 | $0.28 | 43.9% | |
| Revenue (GAAP) | $514.5 million | $505.92 million | $448.4 million | 14.7% |
| Adjusted Operating Margin | 19.6% | 19.8% | (0.2 pp) | |
| Net Income (GAAP) | $66.1 million | $45.8 million | 44.3% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q4 2024 earnings report.
About the Business and Strategic Focus
ExlService specializes in helping companies transform their operations using data, analytics, and artificial intelligence. Its main markets include insurance, healthcare and life sciences, banking and capital markets, and international growth industries. The company partners with clients to modernize systems, automate business processes, and unlock value from data.
Recently, ExlService has focused on expanding in large, opportunity-rich industries where companies increasingly need digital transformation services. It integrates advanced analytics and AI capabilities with deep expertise in each client’s sector. Building and maintaining long-term relationships, optimizing global delivery, and forming technology partnerships are central to its approach. These areas are key to sustaining growth and keeping its edge as a technology-enabled solutions provider.
Highlights From the Quarter: Segment Performance and Key Developments
During the period, ExlService achieved double-digit revenue growth in each of its four main business segments in Q2 2025. The healthcare and life sciences segment led performance, with revenue increasing from $106.1 million in Q2 2024 to $129.5 million in Q2 2025. Revenue grew year-over-year in each of its four main business segments, with insurance growing 8.6%.
Gross profit margin, which measures profitability after direct costs, increased by 0.6 percentage points compared to Q2 2024. Operating income margin, which represents profit from core business operations as a percentage of revenue, rose from 13.7% in Q2 2024 to 15.8%. However, adjusted operating margin—used by the company to reflect performance excluding non-core costs—narrowed slightly by 0.2 percentage points year over year to 19.6%. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin also edged down modestly. These trends indicate that while overall profitability improved, adjusted operating margin narrowed slightly year-over-year.
The quarter brought significant recognition for ExlService’s data and AI capabilities. It received the World Economic Forum’s 2025 MINDS award for Code Harbor™, an AI-powered software modernization tool. The company also strengthened partnerships with leading technology firms including Microsoft, Amazon Web Services (AWS), and Databricks, earning industry certifications and expanding AI solution offerings across client platforms. This progress supports ExlService's positioning as a leading provider of AI-embedded workflow solutions—the kind that help clients automate tasks and modernize systems efficiently.
Thirteen new clients signed up during the quarter, underscoring momentum in business development. The company also announced a $125 million accelerated share repurchase, using available cash to buy back stock under an ongoing $500 million authorization.
Financial Outlook and What to Watch
For fiscal 2025, management raised its revenue forecast to a range of $2.05 billion to $2.07 billion, calling for 12% to 13% year-over-year revenue growth. Its adjusted diluted EPS (non-GAAP) guidance is now $1.86 to $1.90, an increase from the $1.83 to $1.89 prior range. These higher targets reflect strong momentum and continued investment in data and AI to drive future growth.
Looking ahead, investors and industry watchers may pay close attention to trends in margins, as management expects gross margins to increase and operating margins to remain similar or improve slightly. Stock-based compensation also remains a notable non-cash expense. Management did not announce a dividend, signaling capital is being used for investment and share repurchases at this stage.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
