ExlService Holdings Inc

CoStar Group was the weakest performer among nine data and business process services stocks tracked in the second quarter, while EXL led the group with the biggest analyst estimate beat and highest full-year guidance raise. CoStar reported revenues of $925 million, up 18.4% year over year and in line with expectations, but delivered the weakest guidance update and weakest full-year guidance update among its peers. EXL posted revenues of $594.8 million, up 15.6% year over year and beating estimates by 3.5%, with full-year revenue guidance also above expectations. Equifax reported revenues of $1.7 billion, up 10.6% year over year and in line with estimates, but slightly missed full-year EPS guidance. TransUnion reported revenues of $1.31 billion, up 14.9% year over year and beating estimates by 1.8%, while ADP reported revenues of $5.47 billion, up 6.8% year over year and beating estimates by 0.7%. As a group, revenues beat consensus estimates by 1% while next quarter's revenue guidance was 1.3% below, and share prices are up 7.8% on average since the latest earnings results.

EXL announced the closing of a new $1 billion senior secured credit facility with PNC Bank as administrative agent and a syndicate of lenders. The five-year agreement includes a $400 million term loan and permits revolver borrowings of up to $600 million, with an accordion feature allowing expansion equal to the greater of $470 million or 100% of EBITDA for the trailing four quarters. The facility increases EXL's borrowing capacity from the previous limit of $600 million and provides greater covenant flexibility to support the company's business strategy. Chief Financial Officer Maurizio Nicolelli said the expanded debt capacity gives the company flexibility to pursue targeted mergers and acquisitions while continuing to return capital to shareholders under its $500 million share repurchase authorization. Bank of America, JPMorgan Chase Bank, and TD Bank acted as joint lead arrangers on the transaction.

ExlService Holdings has completed its acquisition of iMerit, a leader in AI model training, evaluation and reinforcement learning. The deal creates an end-to-end AI platform for enterprises, combining EXL’s data and AI expertise with iMerit’s technology and generative AI experience. iMerit founder and CEO Radha Ramaswami Basu joins EXL as Executive Vice President, Head of iMerit, and becomes a member of the executive committee. EXL chairman and CEO Rohit Kapoor called the acquisition a transformational pivot that deepens vertically specialized AI capabilities and expands reach into high-growth AI technology sectors.

ExlService Holdings reported second quarter revenues of $595 million, up 16% year over year, and raised its full-year revenue guidance to a range of $2.39 billion to $2.415 billion. Adjusted earnings per share increased by 22%, and data and AI-led services represented 61% of revenue. Insurance and healthcare segments grew 15% and 22% respectively, while digital operations revenue declined approximately 1.5% due to AI-driven business mix shifts. The company also announced the acquisition of iMerit to enhance AI capabilities and increased its adjusted diluted EPS guidance to a range of $2.25 to $2.29.

A new study from EXL finds that while 75% of UK business leaders believe they are ahead of competitors on enterprise AI integration, only 12% qualify as AI Leaders who have embedded AI into high-impact workflows and are seeing notable return on investment. The third annual EXL UK Enterprise AI Study, based on a survey of 212 C-suite and senior decision makers across banking, finance, insurance, retail, and utilities, reveals a significant disconnect between self-assessment and actual progress. Data remains the biggest challenge, cited by 77% of respondents, even as improving data quality and accessibility is seen as the most important step for scaling AI. Utility companies generated the biggest financial improvements from AI, with average gains of 27% from AI and 28% from agentic AI across cost reduction, revenue growth, and margin expansion, while insurers saw the smallest returns at 18% and 17% respectively. The study also shows that 35% of AI Leaders have completely redesigned their enterprise-wide operating model to deploy AI, compared to 38% of Laggards who now report doing so, up from just 3% in last year's study.

StockStory identifies CarGurus and EXL as two small-cap stocks with strong potential, while naming Resideo as one to avoid. CarGurus, a digital auto marketplace, boasts an 88.4% gross margin and 32.5% annual EPS growth over three years, with improving free cash flow. EXL, a data analytics and AI solutions provider, achieved 17.2% annual revenue growth over five years and expanded its free cash flow margin by 5.2 percentage points, with EPS growth of 21.4% outpacing revenue gains. In contrast, Resideo, a home comfort and security products company, saw its free cash flow margin shrink by 20.7 percentage points over five years and posted slower 7.5% annual revenue growth, signaling capital consumption and waning returns.

Data and business process services stocks reported a strong first quarter, with revenues beating analysts' consensus estimates by 2.7% and next quarter's revenue guidance coming in 0.8% above expectations. TransUnion posted revenues of $1.25 billion, up 13.7% year on year and exceeding estimates by 2.7%, though it missed EPS guidance for the next quarter. Planet Labs delivered the highest guidance raise and fastest revenue growth among its peers, with revenues of $94.15 million, up 42.1% year on year and beating estimates by 4.3%, yet its stock fell 29.8% since reporting. Verisk reported revenues of $782.6 million, up 3.9% year on year and beating estimates by 1.3%, while EXL posted revenues of $570.4 million, up 13.8% year on year and surpassing estimates by 2%. Fair Isaac Corporation achieved the biggest analyst estimate beat with revenues of $691.7 million, up 38.7% year on year and topping estimates by 9.1%, but had the weakest full-year guidance update among its peers.

ExlService Holdings has signed a deal to acquire iMerit for up to $310 million. The transaction includes an upfront payment of $170 million and up to $140 million in incentives and earnouts over two years, contingent on meeting specified targets. The deal is expected to close in the third quarter of 2026. EXL CEO Rohit Kapoor said the acquisition strengthens the company's AI strategy and ability to help clients move from experimentation to production. iMerit specializes in training large language and multimodal models to improve accuracy, precision, and effectiveness.

A new study from EXL finds a significant gap between perceived and actual progress on enterprise AI adoption. While 76% of companies believe they are ahead of competitors, only 10% meet the criteria of an AI Leader, defined as those embedding AI into core workflows and achieving notable ROI. These AI Leaders report 27% revenue growth, 26% cost reduction, and 22% margin improvement in areas where AI is implemented. The study, based on a survey of 322 C-suite and senior decision makers across six industries, identifies operating model transformation as a key differentiator, with 44% of Leaders completely redesigning enterprise-wide operating models compared to 23% of Laggards. Data readiness remains the top barrier to scaling AI, cited by seven in ten respondents.