exls-20260930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________________________________

FORM 10-Q

_________________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 001-33089

_________________________________________________________

EXLSERVICE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

_________________________________________________________


Delaware		82-0572194
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

320 Park Avenue,	29th Floor,
New York,	New York	10022
(Address of principal executive offices)		(Zip code)

(212) 277-7100

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:	Trading symbol(s)	Name of Each Exchange on Which Registered:
Common Stock, par value $0.001 per share	EXLS	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None

________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and

(2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 23, 2026, there were 150,788,731 shares of the registrant’s common stock outstanding, par value $0.001 per share.

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TABLE OF CONTENTS



		PAGE
ITEM
	Part I. Financial Information	3

1.	FINANCIAL STATEMENTS (UNAUDITED)
	Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025	3
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2026 and 2025	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2026 and 2025	5
	Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2026 and 2025	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025	8
	Notes to Consolidated Financial Statements	9

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40

3.	Quantitative and Qualitative Disclosures About Market Risk	55

4.	Controls and Procedures	55

	Part II. Other Information	55

1.	Legal Proceedings	55

1A.	Risk Factors	55

2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

3.	Defaults Upon Senior Securities	56

4.	Mine Safety Disclosures	56

5.	Other Information	56

6.	Exhibits	58

Signatures		59

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EXLSERVICE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except per share amount and share count)


		As of
	Notes	September 30, 2026		December 31, 2025

Assets
Current assets:
Cash and cash equivalents	7	$	154,066	$	146,326
Short-term investments	8	178,612		182,041
Restricted cash	7	13,916		12,392
Accounts receivable, net	4	457,287		343,105
Other current assets	11	155,262		146,093
Total current assets		959,143		829,957
Property and equipment, net	9	122,884		111,821
Operating lease right-of-use assets	21	94,517		97,411
Restricted cash	7	7,092		7,251
Deferred tax assets, net	22	129,734		129,968
Goodwill	10	581,595		419,654
Other intangible assets, net	10	99,523		36,204
Long-term investments	8	6,450		8,198
Other assets	12	72,471		61,771
Total assets		$	2,073,409	$	1,702,235
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	6,505	$	4,753
Current portion of long-term borrowings	18	9,703		4,886
Deferred revenue		20,257		15,356
Accrued employee costs		155,231		146,775
Accrued expenses and other current liabilities	13	232,400		135,498
Current portion of operating lease liabilities	21	20,093		16,857

Total current liabilities		444,189		324,125
Long-term borrowings, less current portion	18	501,346		293,712
Operating lease liabilities, less current portion	21	84,205		88,167
Deferred tax liabilities, net	22	2,591		2,125
Other non-current liabilities	14	112,990		81,401
Total liabilities		1,145,321		789,530
Commitments and contingencies	25
Stockholders’ equity:
Preferred stock, $0.001 par value; 15,000,000 shares authorized, none issued		—		—
Common stock, $0.001 par value; 400,000,000 shares authorized, 210,148,341 shares issued and 151,027,513 shares outstanding as of September 30, 2026 and 208,855,566 shares issued and 156,430,028 shares outstanding as of December 31, 2025	19	210		209
Additional paid-in capital		750,312		677,562
Retained earnings		1,733,342		1,532,979
Accumulated other comprehensive loss	15	(230,031)		(180,727)
Total including shares held in treasury		2,253,833		2,030,023
Less: 59,120,828 shares as of September 30, 2026 and 52,425,538 shares as of December 31, 2025, held in treasury, at cost	19	(1,325,745)		(1,117,318)
Total stockholders’ equity		928,088		912,705
Total liabilities and stockholders’ equity		$	2,073,409	$	1,702,235

See accompanying notes to unaudited consolidated financial statements.

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EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except per share amount and share count)


		Three months ended September 30,				Nine months ended September 30,
	Notes	2026		2025		2026		2025
Revenues, net	3, 4	$	633,959	$	529,585	$	1,799,073	$	1,545,064
Cost of revenues(1)		392,824		325,649		1,109,894		953,626
Gross profit(1)		241,135		203,936		689,179		591,438
Operating expenses:
General and administrative expenses		79,872		66,251		223,359		185,217
Selling and marketing expenses		53,542		46,383		150,371		127,754
Depreciation and amortization expense	9, 10	18,865		15,128		47,472		42,740

Total operating expenses		152,279		127,762		421,202		355,711
Income from operations		88,856		76,174		267,977		235,727
Foreign exchange gain/(loss), net		1,502		(1,013)		4,246		2,390
Interest expense	18	(6,336)		(4,923)		(15,355)		(13,349)
Other income, net	6	2,639		4,459		5,160		14,833
Income before income tax expense and earnings from equity affiliates		86,661		74,697		262,028		239,601
Income tax expense	22	17,939		16,456		61,683		48,498
Income before earnings from equity affiliates		68,722		58,241		200,345		191,103
Gain/ (loss) from equity-method investment		49		(80)		18		(330)
Net income		$	68,771	$	58,161	$	200,363	$	190,773
Earnings per share:	5
Basic		$	0.45	$	0.36	$	1.30	$	1.18
Diluted		$	0.45	$	0.36	$	1.30	$	1.17
Weighted average number of shares used in computing earnings per share:	5
Basic		151,784,913		160,495,712		153,447,201		161,963,152
Diluted		152,570,075		161,714,486		154,086,471		163,481,053

(1) Exclusive of depreciation and amortization expense.

See accompanying notes to unaudited consolidated financial statements.

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EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In thousands)


		Three months ended September 30,				Nine months ended September 30,
	Notes	2026		2025		2026		2025
Net income		$	68,771	$	58,161	$	200,363	$	190,773
Other comprehensive income/(loss):
Unrealized loss on cash flow hedges	17	(8,712)		(25,816)		(45,759)		(10,392)
Retirement benefits	20	—		—		(1,177)		—
Currency translation adjustments		(6,699)		(17,986)		(29,790)		(10,053)
Reclassification adjustments:
Loss on cash flow hedges(1)	17	9,114		1,636		21,843		2,680
Retirement benefits(2)	20	402		(113)		1,145		(341)
Income tax effects relating to above(3)	22	(454)		7,736		4,434		3,851
Total other comprehensive loss		(6,349)		(34,543)		(49,304)		(14,255)
Total comprehensive income		$	62,422	$	23,618	$	151,059	$	176,518

(1)These are reclassified to net income and are included in revenues, net, cost of revenues and operating expenses, as applicable in the unaudited consolidated statements of income.

(2)These are reclassified to net income and are included in other income, net in the unaudited consolidated statements of income.

(3)These are income tax effects recognized on cash flow hedges, retirement benefits and currency translation adjustments.

See accompanying notes to unaudited consolidated financial statements.

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EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the three months ended September 30, 2026 and 2025

(In thousands, except share count)


		Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(loss)		Treasury Stock			Total

	Notes	Shares	Amount								Shares	Amount
Balance as of June 30, 2026		210,101,885	$	210	$	724,432	$	1,664,571	$	(223,682)	(58,356,813)	$	(1,299,289)	$	866,242
Stock issued against stock-based compensation plans	23	46,456	—		338		—		—		—	—		338
Stock-based compensation	23	—	—		25,542		—		—		—	—		25,542
Acquisition of treasury stock	19	—	—		—		—		—		(764,015)	(26,211)		(26,211)

Excise tax on repurchase of common stock, net of stock issuances	19	—	—		—		—		—		—	(245)		(245)

Other comprehensive loss	15	—	—		—		—		(6,349)		—	—		(6,349)
Net income		—	—		—		68,771		—		—	—		68,771
Balance as of September 30, 2026		210,148,341	$	210	$	750,312	$	1,733,342	$	(230,031)	(59,120,828)	$	(1,325,745)	$	928,088


		Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(loss)		Treasury Stock			Total

	Notes	Shares	Amount								Shares	Amount
Balance as of June 30, 2025		207,810,635	$	207	$	625,984	$	1,414,572	$	(134,434)	(45,981,304)	$	(845,379)	$	1,060,950
Stock issued against stock-based compensation plans	23	127,376	—		3,843		—		—		—	—		3,843
Stock-based compensation	23	—	—		23,139		—		—		—	—		23,139
Acquisition of treasury stock	19	—	—		—		—		—		(771,520)	(33,467)		(33,467)
Accelerated share repurchase	5, 19	—	—		(25,000)		—		—		(2,302,556)	(100,000)		(125,000)
Excise tax on repurchase of common stock, net of stock issuances	19	—	—		—		—		—		—	(694)		(694)

Other comprehensive loss	15	—	—		—		—		(34,543)		—	—		(34,543)
Net income		—	—		—		58,161		—		—	—		58,161
Balance as of September 30, 2025		207,938,011	$	207	$	627,966	$	1,472,733	$	(168,977)	(49,055,380)	$	(979,540)	$	952,389

See accompanying notes to unaudited consolidated financial statements.

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EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the nine months ended September 30, 2026 and 2025

(In thousands, except share count)


		Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(loss)		Treasury Stock			Total

	Notes	Shares	Amount								Shares	Amount
Balance as of December 31, 2025		208,855,566	$	209	$	677,562	$	1,532,979	$	(180,727)	(52,425,538)	$	(1,117,318)	$	912,705
Stock issued against stock-based compensation plans	23	1,292,775	1		3,749		—		—		—	—		3,750
Stock-based compensation	23	—	—		72,274		—		—		—	—		72,274
Acquisition of treasury stock	19	—	—		—		—		—		(2,548,610)	(85,312)		(85,312)
Accelerated share repurchases	5, 19	—	—		(3,273)		—		—		(4,146,680)	(121,727)		(125,000)
Excise tax on repurchase of common stock, net of stock issuances	19	—	—		—		—		—		—	(1,388)		(1,388)


Other comprehensive loss	15	—	—		—		—		(49,304)		—	—		(49,304)
Net income		—	—		—		200,363		—		—	—		200,363
Balance as of September 30, 2026		210,148,341	$	210	$	750,312	$	1,733,342	$	(230,031)	(59,120,828)	$	(1,325,745)	$	928,088


		Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(loss)		Treasury Stock			Total

	Notes	Shares	Amount								Shares	Amount
Balance as of December 31, 2024		206,510,587	$	206	$	588,583	$	1,281,960	$	(154,722)	(44,709,375)	$	(786,165)	$	929,862
Stock issued against stock-based compensation plans	23	1,427,424	1		5,665		—		—		—	—		5,666
Stock-based compensation	23	—	—		58,718		—		—		—	—		58,718
Acquisition of treasury stock	19	—	—		—		—		—		(2,043,449)	(92,710)		(92,710)
Accelerated share repurchases	5, 19	—	—		(25,000)		—		—		(2,302,556)	(100,000)		(125,000)
Excise tax on repurchase of common stock, net of stock issuances	19	—	—		—		—		—		—	(665)		(665)

Other comprehensive loss	15	—	—		—		—		(14,255)		—	—		(14,255)
Net income		—	—		—		190,773		—		—	—		190,773
Balance as of September 30, 2025		207,938,011	$	207	$	627,966	$	1,472,733	$	(168,977)	(49,055,380)	$	(979,540)	$	952,389

See accompanying notes to unaudited consolidated financial statements.

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EXLSERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)


	Nine months ended September 30,
	2026		2025
Cash flows from operating activities:
Net income	$	200,363	$	190,773
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	47,133		42,877
Stock-based compensation expense	72,274		58,718
Reduction in the carrying amount of operating lease right-of-use assets	21,437		18,393
Fair value mark-to-market on investments	(4,643)		(3,191)
Unrealized foreign currency exchange gain, net	(15,361)		(10,978)
Deferred income tax benefit	(6,776)		(6,520)
Others, net	4,996		1,975
Change in operating assets and liabilities:
Accounts receivable	(106,786)		(45,395)
Other current and non-current assets	(18,013)		(5,352)
Income taxes payable, net	23,317		(960)

Deferred revenue	4,815		(1,984)
Accrued employee costs	(7,405)		(1,193)
Accounts payable, accrued expenses and other liabilities	12,318		15,068
Operating lease liabilities	(18,865)		(18,895)
Net cash provided by operating activities	208,804		233,336

Cash flows from investing activities:
Purchases of property and equipment	(44,125)		(41,727)
Proceeds from sale of property and equipment	260		315

Purchases of investments	(205,090)		(247,289)
Proceeds from redemption of investments	204,647		207,266
Business acquisition (net of cash and cash equivalents acquired)	(153,838)		—
Investment in equity affiliate	(600)		(1,174)
Net cash used for investing activities	(198,746)		(82,609)

Cash flows from financing activities:
Principal payments of finance lease liabilities	(509)		(365)
Proceeds from borrowings	882,000		175,000
Repayments of borrowings	(668,250)		(108,750)
Acquisition of treasury stock	(212,439)		(218,908)
Proceeds from issuance of common stock	4,583		5,094
Payment of debt issuance costs	(3,518)		—
Net cash provided by/(used for) financing activities	1,867		(147,929)
Effect of exchange rate changes	(2,820)		5,637
Net increase in cash, cash equivalents and restricted cash	9,105		8,435
Cash, cash equivalents and restricted cash at the beginning of the period	165,969		171,398
Cash, cash equivalents and restricted cash at the end of the period	$	175,074	$	179,833

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	14,235	$	12,473
Supplemental disclosure of non-cash investing and financing activities:
Additions to property and equipment not yet paid	$	5,294	$	3,379
Assets acquired under finance lease	$	904	$	733

See accompanying notes to unaudited consolidated financial statements.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2026

(In thousands, except per share amount and share count)

1. Organization

ExlService Holdings, Inc. (“ExlService Holdings”) is organized as a corporation under the laws of the State of Delaware. ExlService Holdings, together with its subsidiaries and affiliates (collectively, the “Company”), is 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. The Company 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.

The Company’s clients are located principally in the United States of America (“U.S.”) and the United Kingdom (“U.K.”).

2. Summary of Significant Accounting Policies

(a)Basis of Preparation and Principles of Consolidation

The unaudited consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

The unaudited consolidated financial statements reflect all adjustments (of a normal and recurring nature) that management considers necessary for a fair presentation of such statements for the interim periods presented. The unaudited consolidated statements of income for the interim periods presented are not necessarily indicative of the results for the full year or for any subsequent period.

The accompanying unaudited consolidated financial statements include the financial statements of ExlService Holdings and all of its subsidiaries. The standalone financial statements of subsidiaries are fully consolidated on a line-by-line basis. All intercompany balances and transactions are eliminated in consolidation. The Company’s investments in equity affiliates are recorded using equity method of accounting.

(b)Use of Estimates

The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities included in the unaudited consolidated financial statements. Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from those estimates. The significant estimates that affect the unaudited consolidated financial statements include, but are not limited to, estimates of the fair value of the identifiable intangible assets and contingent consideration, purchase price allocation, including revenue projections and the discount rate applied within the discounted cash flow model for business acquisitions, credit risk of customers, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, variable consideration in a customer contract, expected recoverability from customers with contingent fee arrangements, estimated costs to complete fixed price contracts, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments and stock-based awards, and useful life of long-lived assets and other intangible assets. The significant assumptions underneath these estimates include, but are not limited to assumptions to calculate stock-based compensation expense, determine pattern of generation of economic benefits to calculate depreciation and amortization for long-lived assets and other intangible assets, and recoverability of long-lived assets, goodwill and other intangible assets.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

(c)Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement - Reporting Comprehensive Income (“ASC Topic 220”): Expense Disaggregation Disclosures. This ASU improves disclosures relating to the disaggregation of income statement expenses, requires additional disclosures about the nature of expenses in commonly presented financial statement captions on an annual and interim basis for all public business entities. The ASU will be effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40). This ASU enhances the guidance for internal-use software development costs by removing references to project stages and simplifying the criteria for when capitalization of software development costs shall begin. The ASU will be effective for annual reporting periods beginning after December 15, 2027, including interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-10, Government Grants (“ASC Topic 832”): Accounting for Government Grants Received by Business Entities. This ASU provides authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants for business entities, creating a framework that previously did not exist under U.S. GAAP. The ASU will be effective for annual reporting periods beginning after December 15, 2028, including interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (“ASC Topic 270”): Narrow-Scope Improvements. This ASU provides a comprehensive list of interim disclosures that are required by U.S. GAAP and incorporates disclosure principle of material events or changes occurred since the prior year-end. The ASU will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

(d)Recently Adopted and Applicable Accounting Pronouncements

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (“ASC Topic 326”): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU provides a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC Topic 606. The ASU is effective for annual reporting periods beginning after December 15, 2025, including interim periods within those years, with early adoption permitted. The Company has adopted this ASU beginning January 1, 2026. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and disclosures.

3. Segment Information

The Company is a provider of data and AI-led solutions and services and digital operations solutions and services in an integrated manner for clients across industry verticals.

The Company’s operating model is comprised of Industry Market Units (“IMUs”) to focus on delivering higher value to clients leveraging full suite of capabilities and Strategic Growth Units to focus on rapidly advancing the capabilities specific to various industries and client needs. The Company manages and reports financial information through its four reportable segments that are aligned to its IMUs: Insurance, Healthcare and Life Sciences, Banking, Capital Markets and Diversified Industries, and International Growth Markets, which reflects the manner in which the Company’s Chief Operating Decision Maker (“CODM”) reviews financial information and makes operating decisions.

The Company’s Chief Executive Officer has been identified as the CODM. The CODM generally reviews and uses financial information such as revenues, cost of revenues, and gross profit predominantly in the annual budgeting and forecasting process to allocate an overall budget, measure segment performance, and evaluate pricing strategy. The CODM considers budget-to-actuals variances on a quarterly basis for making decisions about the allocation of operating and capital resources to each segment.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

The acquisition of I Merit Inc. (“iMerit”) is included in the Healthcare and Life Sciences, Banking, Capital Markets and Diversified Industries, and International Growth Markets reportable segments. Refer to Note 10 - Business Combinations, Goodwill and Other Intangible Assets to the unaudited consolidated financial statements for further details.

Revenues, net and cost of revenues for the three months ended September 30, 2026 and 2025, respectively, for each of the reportable segments, are as follows:


	Three months ended September 30, 2026
	Insurance		Healthcare and Life Sciences		Banking, Capital Markets and Diversified Industries		International Growth Markets		Total

Revenues, net	$	208,493	$	160,399	$	153,482	$	111,585	$	633,959
Cost of revenues(1)
Employee costs	108,719		69,689		83,159		56,567		318,134
Infrastructure and technology costs	15,853		9,134		10,089		11,454		46,530
Other costs(2)	8,521		9,007		7,444		3,188		28,160
Gross profit(1)	$	75,400	$	72,569	$	52,790	$	40,376	$	241,135
Operating expenses									152,279
Income from operations									88,856
Foreign exchange gain, net, interest expense and other income, net									(2,195)
Income before income tax expense and earnings from equity affiliates									$	86,661

(1) Exclusive of depreciation and amortization expense.

(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.


	Three months ended September 30, 2025
	Insurance		Healthcare and Life Sciences		Banking, Capital Markets and Diversified Industries		International Growth Markets		Total
Revenues, net	$	180,547	$	135,271	$	120,996	$	92,771	$	529,585
Cost of revenues(1)
Employee costs	96,661		63,561		65,116		49,106		274,444
Infrastructure and technology costs	13,670		7,490		6,617		8,920		36,697
Other costs(2)	4,080		5,999		2,908		1,521		14,508
Gross profit(1)	$	66,136	$	58,221	$	46,355	$	33,224	$	203,936
Operating expenses									127,762
Income from operations									76,174
Foreign exchange gain, net, interest expense and other income, net									(1,477)
Income before income tax expense and earnings from equity affiliates									$	74,697

(1) Exclusive of depreciation and amortization expense.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.

Revenues and cost of revenues for the nine months ended September 30, 2026 and 2025, respectively, for each of the reportable segments, are as follows:


	Nine months ended September 30, 2026
	Insurance		Healthcare and Life Sciences		Banking, Capital Markets and Diversified Industries		International Growth Markets		Total
Revenues, net	$	600,206	$	470,287	$	414,731	$	313,849	$	1,799,073
Cost of revenues(1)
Employee costs	314,640		203,517		225,791		162,866		906,814
Infrastructure and technology costs	46,400		26,224		26,154		32,676		131,454
Other costs(2)	22,244		25,120		16,390		7,872		71,626
Gross profit(1)	$	216,922	$	215,426	$	146,396	$	110,435	$	689,179
Operating expenses									421,202
Income from operations									267,977
Foreign exchange gain, net, interest expense and other income, net									(5,949)
Income before income tax expense and earnings from equity affiliates									$	262,028

(1) Exclusive of depreciation and amortization expense.

(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.


	Nine months ended September 30, 2025
	Insurance		Healthcare and Life Sciences		Banking, Capital Markets and Diversified Industries		International Growth Markets		Total
Revenues, net	$	524,777	$	390,352	$	359,787	$	270,148	$	1,545,064
Cost of revenues(1)
Employee costs	282,580		183,457		195,568		143,563		805,168
Infrastructure and technology costs	40,296		21,295		19,153		25,375		106,119
Other costs(2)	13,010		15,915		9,039		4,375		42,339
Gross profit(1)	$	188,891	$	169,685	$	136,027	$	96,835	$	591,438
Operating expenses									355,711
Income from operations									235,727
Foreign exchange gain, net, interest expense and other income, net									3,874
Income before income tax expense and earnings from equity affiliates									$	239,601

(1) Exclusive of depreciation and amortization expense.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

(2) Other costs primarily include travel and entertainment costs and other direct pass-through expenses related to client contracts for the Company’s direct marketing business.

Revenues, net by service type, were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Data and AI-led(1)	$	406,886	$	298,470	$	1,111,066	$	845,169
Digital operations(2)	227,073		231,115		688,007		699,895
Revenues, net	$	633,959	$	529,585	$	1,799,073	$	1,545,064

(1) Data and AI-led revenue is derived from the Company’s Data Management, Analytics, AI services and solutions businesses. It includes revenue from fully integrated business operations like payment integrity services and platform-based solutions and services, which combine operations, technology, data, analytics, and AI. It also includes revenue from operations that embed data and AI within clients’ operational workflows.

(2) Digital operations revenue is derived from managed services that blend Company’s deep domain expertise with industry-specific solutions and services to operate clients’ business functions with enhanced productivity, greater speed and improved accuracy. These digital operations deployments form the foundation for future client transformation opportunities to infuse AI into client workflows and unlock even greater value.

All four reportable segments of the Company include revenues from both data and AI-led solutions and services and digital operations solutions and services.

The Company attributes revenues based on geographical markets where the customer operations being served by it are located.


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Revenues, net
North America	$	521,328	$	436,865	$	1,484,064	$	1,275,036

United Kingdom & Europe	95,249		78,980		267,170		228,999
Rest of World	17,382		13,740		47,839		41,029

Revenues, net	$	633,959	$	529,585	$	1,799,073	$	1,545,064

Revenues, net by industry verticals, were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Insurance	$	246,402	$	211,147	$	706,163	$	614,730
Healthcare and Life Sciences	160,914		135,503		471,286		391,066
Banking, Capital Markets and Diversified Industries	226,643		182,935		621,624		539,268
Revenues, net	$	633,959	$	529,585	$	1,799,073	$	1,545,064

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

Long-lived assets by geographic area, which consist of property and equipment, net and operating lease ROU assets were as follows:


	As of
	September 30, 2026		December 31, 2025
Long-lived assets
India	$	73,405	$	63,999
North America	57,510		60,575
The Philippines	33,549		36,480
South Africa	16,676		19,635
Rest of World	36,261		28,543
Long-lived assets	$	217,401	$	209,232

4. Revenues, net and Accounts Receivable, net

Refer to Note 3 - Segment Information to the unaudited consolidated financial statements for revenues disaggregated by reportable segments, service type, geography and industry verticals.

Contract balances

The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers:


	As of
	September 30, 2026		December 31, 2025

Accounts receivable, net	$	457,287	$	343,105
Contract assets	$	41,433	$	31,901
Contract liabilities:
Deferred revenue (consideration received in advance)	$	11,736	$	9,216
Consideration received for process transition activities	$	32,776	$	32,247

Accounts receivable includes $188,494 and $141,653 as of September 30, 2026 and December 31, 2025, respectively, representing unbilled receivables. The Company has accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers and considers no performance risk associated with its unbilled receivables. Contract assets as of September 30, 2026 and December 31, 2025, include receivables of $34,611 and $24,849, respectively, from payment integrity services. There are no performance risks associated with these contract assets.

There were no significant cumulative catch-up impact or impairment related to contract assets as of September 30, 2026 and December 31, 2025.

Revenue recognized during the three and nine months ended September 30, 2026 and 2025, which was included in the contract liabilities balance at the beginning of the respective periods:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Deferred revenue (consideration received in advance)	$	1,646	$	1,815	$	8,144	$	13,121
Consideration received for process transition activities	$	2,429	$	1,264	$	6,353	$	3,919

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

Contract acquisition and fulfillment costs

The following table provides details of the Company’s contract acquisition and fulfillment costs:


	Contract Acquisition Costs
	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Opening balance	$	1,606	$	2,192	$	1,947	$	2,287
Additions	11		198		11		563
Amortization	(163)		(235)		(504)		(695)
Closing balance	$	1,454	$	2,155	$	1,454	$	2,155


	Contract Fulfillment Costs
	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Opening balance	$	38,621	$	38,938	$	39,223	$	36,022
Additions	2,317		1,683		5,491		7,168
Amortization	(2,398)		(1,388)		(6,174)		(3,957)
Closing balance	$	38,540	$	39,233	$	38,540	$	39,233

There was no significant impairment for contract acquisition and contract fulfillment costs as of September 30, 2026 and December 31, 2025.

Allowance for expected credit losses

The following table provides information about accounts receivable, net of allowance for expected credit losses:


	As of
	September 30, 2026		December 31, 2025
Accounts receivable, including unbilled receivables	$	460,829	$	345,980
Less: Allowance for expected credit losses	(3,542)		(2,875)
Accounts receivable, net	$	457,287	$	343,105

The movement in “Allowance for expected credit losses” was as follows:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Opening balance	$	3,281	$	4,727	$	2,875	$	3,528
Additions	290		8		806		1,256
Reductions due to write-off of accounts receivable	(29)		(8)		(139)		(55)
Currency translation adjustments	—		—		—		(2)
Closing balance	$	3,542	$	4,727	$	3,542	$	4,727

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

Customer and credit risk concentration

No single customer accounted for more than 10% of the Company's revenues, net during the three and nine months ended September 30, 2026 and 2025. The Company’s management believes that the loss of any of its top ten clients could have a material adverse effect on its financial performance.

To reduce credit risk, the Company conducts ongoing credit evaluations of its customers. No customer accounted for more than 10% of accounts receivable, net, as of September 30, 2026 and December 31, 2025.

5. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Numerator:
Net income	$	68,771	$	58,161	$	200,363	$	190,773
Denominator:
Basic weighted average common shares outstanding	151,784,913		160,495,712		153,447,201		161,963,152
Dilutive effect of stock-based awards	785,162		1,218,774		639,270		1,517,901

Diluted weighted average common shares outstanding	152,570,075		161,714,486		154,086,471		163,481,053
Earnings per share:
Basic	$	0.45	$	0.36	$	1.30	$	1.18
Diluted	$	0.45	$	0.36	$	1.30	$	1.17
Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share	683,007		1,448,090		1,579,819		831,678

On March 16, 2026, the Company entered into a fixed dollar accelerated share repurchase transaction pursuant to a confirmation (“2026 ASR Agreement”) with Morgan Stanley & Co. LLC (“Morgan Stanley”). During the nine months ended September 30, 2026, the Company recorded the initial delivery and final settlement of shares in treasury stock, which resulted in an immediate reduction of its outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share.

Refer to Note 19 - Capital Structure to the unaudited consolidated financial statements for further details.

6. Other Income, net

Other income, net consists of the following:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Interest and dividend income	$	2,007	$	2,134	$	5,997	$	7,441
Gain on sale and fair value mark-to-market on investments	1,585		2,196		4,625		6,403
Fair value changes of contingent consideration (1)	—		—		(3,000)		—
Others, net	(953)		129		(2,462)		989
Other income, net	$	2,639	$	4,459	$	5,160	$	14,833

(1) Refer to Note 16 - Fair Value Measurements to the unaudited consolidated financial statements for further details.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

7. Cash, Cash Equivalents and Restricted Cash

For the purposes of unaudited consolidated statements of cash flows, cash, cash equivalents and restricted cash consist of the following:


	As of
	September 30, 2026		September 30, 2025		December 31, 2025
Cash and cash equivalents	$	154,066	$	160,309	$	146,326
Restricted cash (current)(1)	13,916		11,319		12,392
Restricted cash (non-current)(2)	7,092		8,205		7,251
Cash, cash equivalents and restricted cash	$	175,074	$	179,833	$	165,969

(1) Restricted cash (current) primarily represents funds held on behalf of customers in dedicated bank accounts. The corresponding liability against the same is included under “Accrued expenses and other current liabilities.” Restricted cash also includes funds held as collateral in a dedicated bank account for irrevocable letters of credit issued in favor of third parties for facility leases.

(2) Restricted cash (non-current) represents deposits with banks against bank guarantees issued through banks in favor of relevant statutory authorities for equipment imports, deposits for obtaining indirect tax registrations and for demands against pending income tax and value added tax (“VAT”) assessments. Due to the associated restrictions, these deposits with banks are anticipated to mature one year after the balance sheet date.

8. Investments

Investments consist of the following:


	As of
	September 30, 2026		December 31, 2025
Short-term investments
Mutual funds(1)	$	127,419	$	129,549
Term deposits	51,193		52,492
Short-term investments	$	178,612	$	182,041

Long-term investments
Investment in equity affiliate	$	6,190	$	5,572

Term deposits	260		2,626
Long-term investments	$	6,450	$	8,198

(1) Refer to Note 16 - Fair Value Measurements to the unaudited consolidated financial statements for further details.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

9. Property and Equipment, net

Property and equipment consist of the following:


	As of
	September 30, 2026		December 31, 2025
Property and equipment, gross	$	400,268	$	367,558
Less: Accumulated depreciation and amortization	(277,384)		(255,737)
Property and equipment, net	$	122,884	$	111,821

During the three and nine months ended September 30, 2026, there were no material changes in estimated useful lives of property and equipment during the ordinary course of operations.

The depreciation and amortization expense, excluding amortization of acquisition-related intangibles, recognized in the unaudited consolidated statements of income was as follows:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Depreciation and amortization expense	$	12,568	$	11,818	$	34,691	$	32,907

Internally developed software costs included in property and equipment were as follows:


	As of
	September 30, 2026		December 31, 2025
Cost	$	66,051	$	59,391
Less: Accumulated amortization	(47,579)		(39,332)
Internally developed software, net	$	18,472	$	20,059

The amortization expense on internally developed software recognized in the unaudited consolidated statements of income was as follows:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Amortization expense	$	3,196	$	3,498	$	8,247	$	8,981

During the three and nine months ended September 30, 2026 and 2025, there were no indicators of impairment related to capitalized software.

10. Business Combinations, Goodwill and Other Intangible Assets

I Merit Inc.

On July 31, 2026, the Company, through its wholly owned subsidiary Clairvoyant AI, Inc., completed the acquisition of I Merit Inc., a Delaware Corporation (“iMerit”), pursuant to a securities purchase agreement dated June 22, 2026 (the "Purchase Agreement"). The Company purchased 100% of the issued and outstanding equity securities in iMerit.

iMerit is a recognized leader in AI model training, evaluation and reinforcement learning. It is focused on helping its clients train large language and multimodal models to improve accuracy, precision, and effectiveness. The acquisition strengthens the Company's ability to help enterprises achieve measurable outcomes from AI, builds partnerships with leading foundation model builders and expands its reach into high-growth AI tech sectors.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

The base purchase consideration payable at the closing was $170,000, excluding cash and cash equivalents acquired, debt and other estimated post-closing adjustments. The Purchase Agreement allows the sellers the ability to earn up to $125,000 of contingent consideration, based on the achievement of certain performance goals by iMerit during the two years ending June 30, 2028. The Purchase Agreement also allows for deferred consideration of $15,000, payable six months following the closing date. A portion of the purchase consideration otherwise payable was placed into escrow as security for the post-closing working capital adjustments and the indemnification obligations under the Purchase Agreement. To finance the acquisition, the Company utilized available cash on hand and borrowing from its credit facility.

The total purchase consideration consisted of the following:


Cash	$	161,779
Fair value of contingent consideration	53,100
Deferred consideration	15,000
Total purchase consideration	$	229,879

Contingent consideration and deferred consideration are presented under “Accrued expenses and other current liabilities” and “Other non-current liabilities,” as applicable, in the consolidated balance sheets, and are initially classified as non-cash investing activities under ASC Topic 230, Statement of Cash Flows.

The fair value of assets acquired and liabilities assumed from the acquisition of iMerit is based on a preliminary valuation and, as such, the Company's estimates and assumptions are subject to change within the measurement period. The Company is in the process of finalizing the adjustments related to debt, working capital position, tax and other post-closing adjustments, which, when determined, may result in the recognition of additional assets or liabilities as of the acquisition date, and shall, accordingly, lead to the finalization of the purchase consideration. The measurement period will not exceed one year from the acquisition date.

The Company’s preliminary purchase price allocation to net tangible and intangible assets of iMerit as of July 31, 2026 is as follows:


Cash and cash equivalents	$	8,756
Accounts receivable, net	9,306
Intangible assets, net
Customer-related intangibles	60,100
Developed technology	13,300
Trade names and trademarks	2,700
Other assets(1)	18,417
Accrued expenses and other current liabilities	(17,786)
Deferred tax liabilities, net	(10,965)
Other liabilities(2)	(17,050)
Goodwill	163,101
Total purchase consideration	$	229,879

(1) Includes property and equipment, net, operating lease right-of-use assets, other current assets, and other assets.

(2) Includes accounts payable, current and non-current portion of operating lease liabilities, and other non-current liabilities.

The fair value of customer-related intangible assets was determined using the multi-period excess earnings method, while the fair value of developed technology was determined using the replacement cost method. These intangible assets are amortized on a straight-line basis, which approximates the economic pattern of benefits, over the estimated weighted average useful lives of 7 years for customer-related intangible assets and 3 years for developed technology assets.

As of the acquisition date, the Company recognized an indemnification asset of $12,069 related to potential pre-closing income tax and indirect tax obligations, including estimated interest and penalties, as covered under the terms of the Purchase

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

Agreement. The indemnification asset is presented under “Other assets” and the $12,069 related tax obligations under "Other non-current liabilities" in the consolidated balance sheets.

The goodwill recognized represents the acquired capabilities, operating synergies and other benefits expected to result from combining the acquired operations with the Company’s existing operations. Goodwill is not deductible for income tax purposes. In connection with the acquisition, goodwill has been allocated to the Company’s Healthcare and Life Sciences, Banking, Capital Markets and Diversified Industries, and International Growth Markets reportable segments based on the Company’s assessment of the nature of services rendered by iMerit and allocated to each segment using a relative fair value method.

Acquisition-related costs are expensed as incurred and are included in “General and administrative expenses” in the unaudited consolidated statements of income. The Company recognized acquisition-related costs of $869 and $2,763 during the three and nine months ended September 30, 2026, respectively.

The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s unaudited consolidated financial statements with effect from the date of the acquisition. The acquisition did not materially impact the Company's financial position, results of operations or cash flows, and therefore, the Company has not provided unaudited supplemental pro forma results.

Goodwill

The following table sets forth details of changes in goodwill by reportable segment of the Company:


	Insurance		Healthcare and Life Sciences		Banking, Capital Markets and Diversified Industries		International Growth Markets		Total



Balance as of December 31, 2025	$	77,269	$	189,594	$	100,153	$	52,638	$	419,654
Acquisition	—		16,310		138,636		8,155		163,101

Currency translation adjustments	(30)		(35)		(607)		(488)		(1,160)
Balance as of September 30, 2026	$	77,239	$	205,869	$	238,182	$	60,305	$	581,595

During the three and nine months ended September 30, 2026 and 2025, the Company performed an assessment to determine whether events or circumstances exist that may lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Based on such assessment, the Company concluded that there was no impairment on goodwill as of September 30, 2026 and 2025.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

Other Intangible Assets

Information regarding the Company’s intangible assets is set forth below:


	As of September 30, 2026						As of December 31, 2025
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-lived intangible assets:
Customer-related intangibles	$	168,650	$	(85,167)	$	83,483	$	108,550	$	(73,482)	$	35,068
Developed technology	16,917		(4,352)		12,565		3,636		(3,558)		78
Trade names and trademarks	4,400		(1,825)		2,575		1,700		(1,542)		158
Non-compete agreements	300		(300)		—		300		(300)		—

	190,267		(91,644)		98,623		114,186		(78,882)		35,304

Indefinite-lived intangible assets:	900		—		900		900		—		900
Other intangible assets	$	191,167	$	(91,644)	$	99,523	$	115,086	$	(78,882)	$	36,204

The amortization expense recognized in the unaudited consolidated statements of income was as follows:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Amortization expense	$	6,297	$	3,310	$	12,781	$	9,833

During the three and nine months ended September 30, 2026 and 2025, there were no indicators of impairment related to intangible assets.

Estimated future amortization expense related to finite-lived intangible assets as of September 30, 2026 was as follows:


2026 (October 1 - December 31)	$	7,038
2027	27,431
2028	22,647
2029	12,206
2030	8,183
2031 and thereafter	21,118
Total	$	98,623

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

11. Other Current Assets

Other current assets consist of the following:


	As of
	September 30, 2026		December 31, 2025
Advance income tax, net	$	41,167	$	51,984
Contract assets	37,228		27,083
Prepaid expenses	34,475		26,465
Receivables from statutory authorities	24,072		21,374

Deferred contract fulfillment costs	8,129		7,077

Derivative instruments	2,839		4,640
Others	7,352		7,470
Other current assets	$	155,262	$	146,093

12. Other Assets

Other assets consist of the following:


	As of
	September 30, 2026		December 31, 2025
Deferred contract fulfillment costs	$	30,411	$	32,146
Deposits with statutory authorities	7,773		7,859
Lease deposits	7,690		7,087
Prepaid expenses	7,213		6,761
Contract assets	4,205		4,818
Derivative instruments	661		1,424
Others	14,518		1,676
Other assets	$	72,471	$	61,771

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

13. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:


	As of
	September 30, 2026		December 31, 2025
Accrued expenses	$	74,009	$	64,220
Contingent consideration	38,300		5,000
Derivative instruments	33,787		15,443

Payable to statutory authorities	30,046		27,222
Income taxes payable	15,511		2,587
Deferred consideration	15,000		—
Client liabilities	14,271		12,601
Others	11,476		8,425
Accrued expenses and other current liabilities	$	232,400	$	135,498

14. Other Non-Current Liabilities

Other non-current liabilities consist of the following:


	As of
	September 30, 2026		December 31, 2025
Retirement benefits	$	35,213	$	41,632
Deferred transition revenue	24,255		26,139
Contingent consideration	22,800		—
Derivative instruments	13,197		9,765
Unrecognized tax benefits	2,556		2,176


Others	14,969		1,689
Other non-current liabilities	$	112,990	$	81,401

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

15. Accumulated Other Comprehensive Income/(Loss)

The following table sets forth the changes in Accumulated other comprehensive income/(loss) (“AOCI”) during the nine months ended September 30, 2026 and 2025:


	Accumulated Other Comprehensive Income/(Loss)
	Currency translation adjustments		Unrealized gain/(loss) on cash flow hedges		Retirement benefits		Total
Balance as of December 31, 2025	$	(156,548)	$	(15,490)	$	(8,689)	$	(180,727)
Loss recognized during the period	(29,790)		(45,759)		(1,177)		(76,726)

Reclassification to net income(1)	—		21,843		1,145		22,988
Income tax effects(2)	—		4,564		(130)		4,434
Balance as of September 30, 2026	$	(186,338)	$	(34,842)	$	(8,851)	$	(230,031)

Balance as of December 31, 2024	$	(146,998)	$	(7,548)	$	(176)	$	(154,722)
Loss recognized during the period	(10,053)		(10,392)		—		(20,445)

Reclassification to net income(1)	—		2,680		(341)		2,339
Income tax effects(2)	2,146		1,744		(39)		3,851
Balance as of September 30, 2025	$	(154,905)	$	(13,516)	$	(556)	$	(168,977)

(1) Refer to Note 17 - Derivatives and Hedge Accounting and Note 20 - Employee Benefit Plans to the unaudited consolidated financial statements for reclassification to net income.

(2) These are income tax effects recognized on currency translation adjustments, cash flow hedges and retirement benefits. Refer to Note 22 - Income Taxes to the unaudited consolidated financial statements.

16. Fair Value Measurements

Assets and Liabilities Measured at Fair Value

The following table sets forth the Company’s assets and liabilities that were recognized at fair value:


	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
As of September 30, 2026	(Level 1)		(Level 2)		(Level 3)		Total
Assets
Cash equivalents - Money market funds(1)	$	47,238	$	—	$	—	$	47,238
Mutual funds(1)	127,419		—		—		127,419
Derivative financial instruments	—		3,500		—		3,500
Total	$	174,657	$	3,500	$	—	$	178,157
Liabilities
Derivative financial instruments	$	—	$	46,984	$	—	$	46,984
Contingent consideration(2)	—		—		61,100		61,100
Total	$	—	$	46,984	$	61,100	$	108,084

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)




	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
As of December 31, 2025	(Level 1)		(Level 2)		(Level 3)		Total
Assets
Cash equivalents - Money market funds(1)	$	50,971	$	—	$	—	$	50,971
Mutual funds(1)	129,549		—		—		129,549
Derivative financial instruments	—		6,064		—		6,064
Total	$	180,520	$	6,064	$	—	$	186,584
Liabilities
Derivative financial instruments	$	—	$	25,208	$	—	$	25,208
Contingent consideration(2)	—		—		5,000		5,000
Total	$	—	$	25,208	$	5,000	$	30,208

(1) Represents money market funds and short-term investments which are carried at the fair value option under ASC Topic 825, Financial Instruments.

(2) Contingent consideration is presented under “Accrued expenses and other current liabilities” and “Other non-current liabilities,” as applicable, in the consolidated balance sheets.

Fair Value of Derivative Financial Instruments:

Fair values for derivative financial instruments are based on independent sources including highly rated financial institutions and are classified as Level 2. Refer to Note 17 - Derivatives and Hedge Accounting to the unaudited consolidated financial statements for further details.

Fair Value of Contingent Consideration:

The fair value measurement of contingent consideration is determined using Level 3 inputs. The Company’s contingent consideration represents a component of the total purchase consideration for business acquisitions. The measurement is calculated using unobservable inputs based on the Company’s own assessment of achievement of certain performance goals. The Company estimated the fair value of the contingent consideration based on the Monte Carlo simulation model.

The following table summarizes the changes in the fair value of contingent consideration:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Opening balance	$	8,000	$	2,700	$	5,000	$	2,700
Acquisition	53,100		—		53,100		—
Fair value changes	—		—		3,000		—
Payments	—		—		—		—
Closing balance	$	61,100	$	2,700	$	61,100	$	2,700

During the three and nine months ended September 30, 2026 and 2025, there were no transfers among Level 1, Level 2 and Level 3.

Financial Instruments Not Carried at Fair Value:

The Company’s other financial instruments not carried at fair value consist primarily of cash and cash equivalents (except investments in money market funds, as disclosed above), short-term investments (except investments in mutual funds, as

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

disclosed above), restricted cash, accounts receivable, net, long-term investments, accrued capital expenditures, accrued expenses, client liabilities and interest payable on borrowings for which fair values approximate their carrying amounts. The carrying value of the Company’s outstanding revolving credit facility and term loan facility approximates its fair value because the Company’s interest rate yield is near current market rates for comparable debt instruments.

17. Derivatives and Hedge Accounting

The Company uses derivative instruments to mitigate cash flow volatility from risk of fluctuations in foreign currency exchange rates and interest rates. The Company enters into foreign currency forward contracts to hedge cash flow risks from forecasted revenues and other transactions denominated in certain foreign currencies. These contracts qualify as cash flow hedges under ASC Topic 815, Derivatives and Hedging, and are with counterparties that are highly rated financial institutions.

The following table sets forth the aggregate notional amount of derivatives in cash flow hedging relationship:


	As of
	September 30, 2026	December 31, 2025
Foreign currency forward contracts denominated in:
Sell U.S. dollar (USD)	886,900	1,134,800
Buy U.S. dollar (USD)	10,990	12,075

The Company estimates that approximately $30,660 of derivative loss, net, excluding tax effects, included in AOCI, representing changes in the value of cash flow hedges based on exchange rates prevailing as of September 30, 2026, could be reclassified into earnings within the next twelve months. As of September 30, 2026, the maximum outstanding term of the cash flow hedges was approximately 33 months.

The Company also enters into foreign currency forward contracts to hedge its 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. These foreign currency forward contracts do not qualify as fair value hedges under ASC Topic 815, Derivatives and Hedging. Changes in the fair value of these financial instruments are recognized in the unaudited consolidated statements of income and are included in the foreign exchange gain/(loss), net line item.

The following table sets forth the aggregate notional principal amounts of outstanding foreign currency forward contracts for derivatives not designated as hedging instruments:


	As of
Foreign currency forward contracts denominated in:	September 30, 2026	December 31, 2025
Sell USD	262,105	217,040
Sell GBP	37,287	35,962
Sell EUR	7,089	7,722
Sell AUD	2,958	4,917

Buy USD	3,296	1,837

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

The following table sets forth the fair value of the foreign currency forward contracts and their location on the consolidated balance sheets:


	Derivatives in cash flow hedging relationships				Derivatives not designated as hedging instruments
	As of				As of
	September 30, 2026		December 31, 2025		September 30, 2026		December 31, 2025
Assets:
Other current assets	$	2,783	$	4,444	$	56	$	196
Other assets	$	661	$	1,424	$	—	$	—
Liabilities:
Accrued expenses and other current liabilities	$	33,443	$	15,383	$	344	$	60
Other non-current liabilities	$	13,197	$	9,765	$	—	$	—

The following table sets forth the effect of foreign currency forward contracts on AOCI and the unaudited consolidated statements of income:


	Three months ended September 30,				Nine months ended September 30,
Derivative financial instruments:	2026		2025		2026		2025
Unrealized loss recognized in other comprehensive income (“OCI”)
Derivatives in cash flow hedging relationships	$	(8,712)	$	(25,816)	$	(45,759)	$	(10,392)

Loss recognized in unaudited consolidated statements of income
Derivatives not designated as hedging instruments	$	(2,889)	$	(7,273)	$	(11,603)	$	(8,559)

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

The following table sets forth the location and amount of gain/(loss) recognized in unaudited consolidated statements of income for derivatives in cash flow hedging relationships and derivatives not designated as hedging instruments:


	Three months ended September 30,
	2026				2025
	As per unaudited consolidated statements of income		Gain/(loss) on derivative financial instruments		As per unaudited consolidated statements of income		Gain/(loss) on derivative financial instruments
Derivatives in cash flow hedging relationships
Location in unaudited consolidated statements of income where gain/(loss) was reclassified from AOCI
Revenues, net	$	633,959	$	186	$	529,585	$	(816)
Cost of revenues	$	392,824	(7,976)		$	325,649	(764)
General and administrative expenses	$	79,872	(989)		$	66,251	(99)
Selling and marketing expenses	$	53,542	(131)		$	46,383	(21)
Depreciation and amortization expense	$	18,865	(204)		$	15,128	64

Total before tax			(9,114)				(1,636)
Income tax effects on above			1,840				354
Net of tax			$	(7,274)			$	(1,282)

Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where gain/(loss) was recognized

Foreign exchange gain/(loss), net	$	1,502	$	(2,889)	$	(1,013)	$	(7,273)

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)


	Nine months ended September 30,
	2026				2025
	As per unaudited consolidated statements of income		Gain/(loss) on derivative financial instruments		As per unaudited consolidated statements of income		Gain/(loss) on derivative financial instruments
Derivatives in cash flow hedging relationships
Location in unaudited consolidated statements of income where gain/(loss) was reclassified from AOCI
Revenues, net	$	1,799,073	325		$	1,545,064	$	(1,844)
Cost of revenues	$	1,109,894	(19,154)		$	953,626	(817)
General and administrative expenses	$	223,359	(2,357)		$	185,217	(127)
Selling and marketing expenses	$	150,371	(318)		$	127,754	(30)
Depreciation and amortization expense	$	47,472	(339)		$	42,740	138

Total before tax			(21,843)				(2,680)
Income tax effects on above			4,507				571
Net of tax			$	(17,336)			$	(2,109)

Derivatives not designated as hedging instruments
Location in unaudited consolidated statements of income where gain/(loss) was recognized

Foreign exchange gain/(loss), net	$	4,246	$	(11,603)	$	2,390	$	(8,559)

18. Borrowings

The following table summarizes the Company’s debt position:


	As of
	September 30, 2026						December 31, 2025
	Revolving credit facility		Term loan facility		Total		Revolving credit facility		Term loan facility		Total
Current portion of long-term borrowings	$	—	$	10,000	$	10,000	$	—	$	5,000	$	5,000
Unamortized debt issuance costs	—		(297)		(297)		—		(114)		(114)
Current portion of long-term borrowings	—		9,703		9,703		—		4,886		4,886

Long-term borrowings	115,000		387,500		502,500		205,000		88,750		293,750
Unamortized debt issuance costs	—		(1,154)		(1,154)		—		(38)		(38)
Long-term borrowings	115,000		386,346		501,346		205,000		88,712		293,712
Borrowings	$	115,000	$	396,049	$	511,049	$	205,000	$	93,598	$	298,598

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

Unamortized debt issuance costs for the Company’s revolving credit facility of $2,317 and $507 as of September 30, 2026 and December 31, 2025, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.

Credit Agreement

On August 18, 2026, the Company entered into a Revolving Credit and Term Loan Credit Agreement (the “2026 Credit Agreement”) with certain lenders and PNC Bank, National Association, as administrative agent. The 2026 Credit Agreement provides for (i) a $600,000 revolving credit facility (the “Revolving Credit Facility”), and (ii) a $400,000 term loan facility (the “Term Loan Facility,” and together with the Revolving Credit Facility, the “Credit Facilities”). Each of the Credit Facilities matures on August 18, 2031.

Subject to specified approvals and conditions, the 2026 Credit Agreement permits the Company to increase the aggregate revolving commitments and/or obtain incremental term loans, in an aggregate amount not to exceed the greater of $470,000 and 100% of the Company's EBITDA, less prior increases, plus additional amounts subject to compliance with certain leverage requirements.

Borrowings under the 2026 Credit Agreement bear interest, at the Company’s option, at (a) Term SOFR plus an applicable margin ranging from 1.00% to 1.75% per annum, (b) Daily Simple SOFR plus an applicable margin ranging from 1.00% to 1.75% per annum, or (c) the Alternate Base Rate plus an applicable margin ranging from 0.00% to 0.75% per annum. In each case, the applicable margin is determined based on the Company’s total net leverage ratio. The Company is also required to pay a commitment fee ranging from 0.125% to 0.25% per annum on the unused portion of the Revolving Credit Facility, based on the Company’s total net leverage ratio.

The Company used proceeds from the Credit Facilities to repay all outstanding obligations under its First Amendment to Amended and Restated Credit Agreement entered into in August 2024 (the “2024 Credit Agreement”) with Citibank, N.A., in an aggregate principal amount and accrued interest of $532,678. The 2024 Credit Agreement was terminated, and no early termination penalties or prepayment fees were paid in connection with the termination. The Company also expects to use the proceeds from the Credit Facilities for working capital, general corporate purposes, permitted acquisitions and share buybacks. The Term Loan Facility amortizes in quarterly installments through maturity, with the remaining outstanding balance due on August 18, 2031.

The obligations under the 2026 Credit Agreement are guaranteed by the Company's wholly owned material domestic subsidiaries and are secured by liens on substantially all of the assets of the Company and the guarantors and pledges of the equity interests in certain subsidiaries, in each case subject to certain exceptions and exclusions. The 2026 Credit Agreement contains customary affirmative and negative covenants, including, but not limited to, restrictions on the Company's ability to incur indebtedness, create liens, make certain investments, pay dividends and other distributions, enter into certain mergers, consolidations, liquidations or acquisitions, dispose of certain assets or subsidiaries, and requires the Company to maintain a minimum interest coverage ratio of 3.00 to 1.00 and a maximum total net leverage ratio of 3.50 to 1.00, in each case measured as of the last day of each fiscal quarter for the four consecutive fiscal quarters then ended. The maximum total net leverage ratio may be increased to 4.00 to 1.00 for four consecutive fiscal quarters following certain qualifying material acquisitions. The 2026 Credit Agreement also contains customary events of default.

The effective interest rates of the revolving credit facility and the term loan facility are as follows:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Revolving credit facility	5.1	%	5.7	%	5.1	%	5.7	%
Term loan facility	5.0	%	5.7	%	5.1	%	5.7	%

As of September 30, 2026 and December 31, 2025, the Company was in compliance with the financial covenants under the 2026 Credit Agreement and the 2024 Credit Agreement, respectively.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

The maturity profile of the Company’s long-term borrowings, excluding debt issuance costs, outstanding as of September 30, 2026 was as follows:


	Revolving credit facility		Term loan facility


2026 (October 1 - December 31)	$	—	$	2,500
2027	—		10,000
2028	—		15,000
2029	—		20,000
2030	—		20,000
2031	115,000		330,000
Total	$	115,000	$	397,500

Letters of Credit

In the ordinary course of business, the Company provides standby letters of credit to third parties primarily for facility leases. As of September 30, 2026 and December 31, 2025, the Company had outstanding letters of credit of $1,137 and $1,598, respectively, that were not recognized in the consolidated balance sheets.

19. Capital Structure

Common Stock

The Company has one class of common stock outstanding.

Share Repurchases

The Company purchased shares of its common stock from certain employees in connection with withholding tax payments related to the vesting of restricted stock units and performance-based restricted stock units, as below:


	Shares repurchased	Total consideration		Weighted average purchase price per share (1)
Three months ended September 30, 2026	—	$	—	$	—
Three months ended September 30, 2025	—	$	—	$	—

Nine months ended September 30, 2026	129,695	$	4,847	$	37.37
Nine months ended September 30, 2025	190,716	$	9,432	$	49.46

(1) The weighted average purchase price per share is based on the closing price of the Company’s common stock on the Nasdaq Global Select Market on the trading day prior to the applicable vesting date of the restricted stock units.

On February 26, 2024, the Company’s board of directors authorized a $500,000 (excluding excise tax) common stock repurchase program beginning March 1, 2024 (the “2024 Repurchase Program”), which was terminated effective February 28, 2026.

On February 19, 2026, the Company’s board of directors authorized a $500,000 (excluding excise tax) common stock repurchase program effective February 28, 2026 (the “2026 Repurchase Program”), which replaced the 2024 repurchase program.

On March 16, 2026, the Company entered into the 2026 ASR Agreement with Morgan Stanley to repurchase shares of its common stock for an aggregate purchase price of $125,000, as part of the Company’s 2026 Repurchase Program. Upon payment of the aggregate purchase price of $125,000, the Company received an initial delivery of 3,346,720 shares of its common stock at an initial price of $29.88 per share, representing 80% of the aggregate purchase price. The Company funded the repurchase with available cash on hand and borrowing from its revolving credit facility. The 2026 ASR Agreement was accounted for as a treasury

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

stock transaction and forward stock purchase agreement indexed to the Company’s common stock. The forward stock purchase agreement was classified as an equity instrument under ASC Topic 815-40, Contracts in Entity's Own Equity, and deemed to have a fair value of zero at the effective date. The prepayment of $25,000 was initially recorded in additional paid-in capital, which reflected the pending settlement of the 2026 ASR Agreement. Under the terms of the 2026 ASR Agreement, the ultimate number of shares of common stock that the Company repurchased was based on the average of the daily volume-weighted average prices of the common stock during the term of the 2026 ASR Agreement, less a discount and subject to adjustments pursuant to the terms and conditions of the 2026 ASR Agreement.

On May 13, 2026, upon final settlement of the 2026 ASR Agreement, the Company received 799,960 additional shares of its common stock based on a daily volume-weighted average price of $30.14 per share during the term of the 2026 ASR Agreement. The additional shares received were recorded as treasury stock at a fair market value of $27.16 per share.

Under the Company’s repurchase program, shares may be purchased by the Company from time to time from the open market and through private transactions, or otherwise, as determined by the Company’s management as market conditions warrant. Repurchases may be discontinued at any time by the management.

The Company purchased shares of its common stock, for a total consideration including commissions but excluding excise tax, under its repurchase programs, as below:


	Shares repurchased	Total consideration		Weighted average purchase price per share
Three months ended September 30, 2026	764,015	$	26,211	$	34.31
Three months ended September 30, 2025	3,074,076	$	133,467	$	43.42

Nine months ended September 30, 2026	6,565,595	$	205,465	$	31.29
Nine months ended September 30, 2025	4,155,289	$	183,278	$	44.11

Repurchased shares have been recorded as treasury shares and will be held until the Company’s board of directors designates that these shares be retired or used for other purposes.

Pursuant to the Inflation Reduction Act, the Company is required to pay a 1% excise tax on the fair market value of each share of common stock repurchased, net of stock issuances. The Company recognized excise tax of $245 and $694, during the three months ended September 30, 2026 and 2025, respectively, and $1,388 and $665, during the nine months ended September 30, 2026 and 2025, respectively.

20. Employee Benefit Plans

The Company maintains a Gratuity Plan in India (the “India Plan”) and a retirement benefit plan in the Philippines (the “Philippines Plan”). The India Plan is partially funded whereas the Philippines Plan is unfunded. The Company expects to earn a return of approximately 7.5% per annum on the India Plan for the year ending on December 31, 2026.


Change in Plan Assets
Plan assets as of December 31, 2025	$	24,358
Actual return	1,663
Acquisition adjustments	6
Employer contribution	13,566
Benefits paid	(2,205)
Currency translation adjustments	(1,513)
Plan assets as of September 30, 2026	$	35,875

During the year ended December 31, 2025, the implementation of the new Labor Codes in India resulted in the recognition of prior service cost in OCI. During March 2026, following the implementation of a revised salary structure, the Company

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

performed an updated actuarial valuation and recognized additional prior service cost of $1,177 in OCI. The prior service cost recognized is being amortized over the estimated remaining service period of the defined benefit obligation.

Components of net periodic benefit costs recognized in unaudited consolidated statements of income and retirement benefits reclassified from AOCI, were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Service cost	$	1,999	$	1,359	$	6,009	$	4,148
Interest cost	732		500		2,173		1,526
Expected return on plan assets	(401)		(339)		(1,218)		(1,035)
Reclassification of retirement benefits from AOCI:
Amortization of actuarial gain	(174)		(113)		(518)		(341)
Amortization of prior service cost	576		—		1,663		—


Net periodic benefit cost	$	2,732	$	1,407	$	8,109	$	4,298

Reclassification of retirement benefits from AOCI, gross of tax	$	402	$	(113)	$	1,145	$	(341)
Income tax effects	(145)		(13)		(426)		(39)
Reclassification of retirement benefits from AOCI, net of tax	$	257	$	(126)	$	719	$	(380)

The Company maintains several 401(k) plans (the “401(k) Plans”) under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), covering all eligible employees, as defined in the Code as a defined contribution plan. The Company may make discretionary contributions of up to a maximum of 3.0% of employee compensation within certain limits.

The Company’s contributions to various defined contribution plans were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Contribution to the 401(k) Plans	$	1,531	$	1,469	$	6,053	$	5,640
Contributions to the defined contribution plans in foreign subsidiaries of the Company	$	9,462	$	8,291	$	27,522	$	24,768

21. Leases

The Company conducts its operations using facilities leased under operating lease agreements that expire at various dates, with options to extend or terminate before expiration date. The Company finances its use of certain motor vehicles, leasehold improvements and other equipment under various lease arrangements provided by financial institutions. The lease agreements do not contain any covenants to impose any restrictions except for market-standard practice for similar lease arrangements.

The Company had performed an evaluation of its contracts with suppliers in accordance with ASC Topic 842, Leases, and had determined that, except for leases for office facilities, motor vehicles and other equipment as described above, none of the Company’s contracts contain a lease.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

The components of lease cost, which are included in the Company’s unaudited consolidated statements of income, are as follows:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Finance lease:
Depreciation on underlying ROU assets	$	204	$	157	$	541	$	436
Interest on lease liabilities	110		79		244		225
	314		236		785		661
Operating lease(1)	7,491		6,414		21,756		19,121
Variable lease costs	1,599		1,227		3,958		3,514
Sublease income	—		(111)		—		(334)

Total lease cost	$	9,404	$	7,766	$	26,499	$	22,962

(1) Includes short-term leases, which are immaterial.

Supplemental cash flow and other information related to leases are as follows:


	Nine months ended September 30,
	2026			2025
Cash payments for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	18,865		$	18,895
Operating cash outflows for finance leases	$	244		$	79
Financing cash outflows for finance leases	$	509		$	365
ROU assets obtained in exchange for new operating lease liabilities	$	14,197		$	14,996
ROU assets obtained in exchange for new finance lease liabilities	$	904		$	733
Weighted average remaining lease term (in years)
Finance lease	2.6 years			2.7 years
Operating lease	6.4 years			4.5 years
Weighted average discount rate
Finance lease	13.8		%	15.1		%
Operating lease	7.5		%	8.1		%

As part of the Company’s efforts to optimize its existing network of operations centers, the Company continued to evaluate its office facilities to determine where it can exit or consolidate its use of office space. The Company modified certain of its operating leases, resulting in an increase in lease liabilities by $4,797 and $5,766, during the nine months ended September 30, 2026 and 2025, respectively, with a corresponding adjustment to ROU assets.

As of September 30, 2026 and December 31, 2025, the Company did not have any significant leases that have not yet commenced but that create significant rights and obligations for the Company.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

Maturities of lease liabilities as of September 30, 2026 were as follows:


	Operating Leases		Finance Leases
2026 (October 1 - December 31)	$	6,647	$	999
2027	27,227		897
2028	24,429		610
2029	15,962		305
2030	11,663		239
2031 and thereafter	45,002		—
Total lease payments	130,930		3,050
Less: Imputed interest	26,632		618
Present value of lease liabilities	$	104,298	$	2,432

22. Income Taxes

The Company determines the tax provision for interim periods using an estimate of its annual effective tax rate. Each quarter, the Company updates its estimate of annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment.

The effective tax rate for the three months ended September 30, 2026 was 20.7%, a decrease from 22.1% for the three months ended September 30, 2025. The Company recorded income tax expense of $17,939 and $16,456 for the three months ended September 30, 2026 and 2025, respectively. The increase in income tax expense for the three months ended September 30, 2026 was primarily a result of higher profit, compared to the three months ended September 30, 2025.

The effective tax rate for the nine months ended September 30, 2026 was 23.5%, an increase from 20.3% for the nine months ended September 30, 2025. The Company recorded income tax expense of $61,683 and $48,498 for the nine months ended September 30, 2026 and 2025, respectively. The increase in income tax expense for the nine months ended September 30, 2026 was primarily a result of higher profit and lower excess tax benefits related to stock-based compensation, partially offset by a decrease in non-deductible compensation expenses, compared to the nine months ended September 30, 2025.

Deferred income taxes recognized in OCI were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Deferred taxes benefit / (expense) recognized on:
Unrealized gain/(loss) on cash flow hedges	$	1,531	$	4,945	$	9,071	$	2,315
Reclassification adjustment for cash flow hedges	(1,840)		(354)		(4,507)		(571)
Retirement benefits	—		—		296		—

Reclassification adjustment for retirement benefits	(145)		(13)		(426)		(39)

Currency translation adjustments	—		3,158		—		2,146
Total	$	(454)	$	7,736	$	4,434	$	3,851

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

23. Stock-Based Compensation

Stock-based compensation expense by function, as below, are included in the unaudited consolidated statements of income:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025
Cost of revenues	$	3,628	$	3,321	$	10,221	$	10,229
General and administrative expenses	10,771		9,037		30,802		22,840
Selling and marketing expenses	11,143		10,781		31,251		25,649
Total	$	25,542	$	23,139	$	72,274	$	58,718

Income tax benefit related to share-based compensation(1)	$	6,445	$	5,788	$	13,858	$	19,104

(1) Includes $(55) and $64 during the three months ended September 30, 2026 and 2025, respectively, and $1,208 and $14,792 during the nine months ended September 30, 2026 and 2025, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No. 2016-09, Compensation - Stock Compensation.

As of September 30, 2026 and December 31, 2025, the Company had 3,058,467 and 5,919,466 shares, respectively, available for future grants under the 2025 Omnibus Incentive Plan (the “2025 Plan”).

Stock Options

Stock option activity under the Company’s stock-based compensation plans is shown below:


	Number of Options		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (Years)
Outstanding as of December 31, 2025	1,734,720		$	30.14	$	21,344	7.5
Granted	—		—		—		—
Exercised	(11,195)		30.15		90		—
Forfeited	—		—		—		—
Outstanding as of September 30, 2026	1,723,525		$	30.14	$	7,315	6.7
Vested and exercisable as of September 30, 2026	1,287,010		$	30.14	$	5,462	6.7
Weighted average grant date fair value per unit of stock option granted during the period	$	—

As of September 30, 2026, unrecognized compensation cost of $3,818 is expected to be expensed over a weighted average period of 0.8 years.

Share Matching Program

Under the Company’s 2018 Omnibus Incentive Plan (the “2018 Plan”), the Company established a share matching program (“SMP”) for executive officers and other specified employees. Under the SMP, the Company agreed to issue a number of restricted stock units equal to the number of newly acquired shares of the Company's common stock.

As of September 30, 2026 and December 31, 2025, restricted stock units vested for which the underlying common stock is yet to be issued are nil and 31,662, respectively.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

Restricted Stock Units

Restricted stock unit activity under the Company’s stock-based compensation plans is shown below:


	Restricted Stock Units
	Number	Weighted Average Fair Value
Outstanding as of December 31, 2025(1)	2,789,601	$	37.65
Granted	1,840,408	31.31
Vested	(1,082,771)	34.77
Forfeited	(183,109)	36.11
Outstanding as of September 30, 2026(1)	3,364,129	$	35.19

(1) As of September 30, 2026 and December 31, 2025 restricted stock units vested for which the underlying common stock is yet to be issued are 328,139 and 348,636, respectively.

As of September 30, 2026, unrecognized compensation cost of $87,921 is expected to be expensed over a weighted average period of 2.7 years.

Performance-Based Stock Awards

Under the Company’s equity incentive plans, the Company grants performance-based restricted stock units (“PRSUs”) to executive officers and other specified employees. The Company generally grants 40% of each award recipient’s equity grants in the form of PRSUs that cliff vest at the end of a three-year period based on an aggregated revenue target for a three-year period (“PU”). The remaining 60% of each award recipient’s equity grants are PRSUs that are based on market conditions, contingent on the Company’s meeting a total shareholder return relative to a group of peer companies specified under PRSU agreements, and are measured over a three-year performance period (“MU”).

PRSU activity under the Company’s stock plans is shown below:


	Revenue Based PRSUs			Market Condition Based PRSUs
	Number	Weighted Average Fair Value		Number	Weighted Average Fair Value
Outstanding as of December 31, 2025	696,439	$	39.20	841,966	$	56.31
Granted	409,256	30.90		707,876	38.11
Vested	—	—		—	—
Forfeited	(23,337)	36.71		(34,987)	52.63
Outstanding as of September 30, 2026	1,082,358	$	36.12	1,514,855	$	47.89

As of September 30, 2026, unrecognized compensation cost of $58,553 is expected to be expensed over a weighted average period of 1.8 years.

Employee Stock Purchase Plan

On June 21, 2022, at the annual meeting of stockholders of the Company, the Company’s stockholders approved the ExlService Holdings, Inc. 2022 Employee Stock Purchase Plan (the “2022 ESPP”).

The 2022 ESPP allows eligible employees to purchase the Company’s shares of common stock through payroll deductions at a pre-specified discount to the lower of the closing price of the Company’s common shares on the date of offering or the last business day of each purchase interval. The dollar amount of shares of common stock that can be purchased under the 2022 ESPP must not exceed 15% of the participating employee’s compensation during the offering period, subject to a cap of $25 per employee per calendar year. The Company has reserved 4,000,000 shares of common stock for issuance under the 2022 ESPP.

The ninth offering period under the 2022 ESPP commenced on July 1, 2026 with a term of six months.

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

Activity under the Company’s 2022 ESPP is shown below:


	Number	Total Proceeds Received
Shares available for issuance as of December 31, 2025	3,510,269

Issuance of common stock related to the:
Seventh offering period	60,139	$	2,297
Eighth offering period	146,650	$	3,413
Shares available for issuance as of September 30, 2026	3,303,480
Contributions received for the ninth offering period up to September 30, 2026	—	$	3,122

24. Related Party Disclosures

The Company provides data and AI-led solutions and services to Corridor Platforms, Inc., which is an equity affiliate of the Company. The Company recognized revenues, net of $121 and $42, during the three months ended September 30, 2026 and 2025 respectively, and $302 and $126, during the nine months ended September 30, 2026 and 2025 respectively. The Company had outstanding accounts receivable, net of $128 and $28, related to this service contract as of September 30, 2026 and December 31, 2025, respectively.

25. Commitments and Contingencies

Capital Commitments

As of September 30, 2026 and December 31, 2025, the Company had committed to spend approximately $13,300 and $8,700, respectively, net of capital advances, under agreements to purchase property and equipment.

On June 15, 2023, the Company, along with other limited partners, entered into a limited partnership agreement with the general partner, PNP Financial Services Fund GP I, LLC and initial limited partner and outgoing partner, to form a partnership with the name Plug and Play Financial Services Fund I, L.P. (the “Partnership”) for the primary purpose of making investments in growth-stage technology companies. The Company committed to make an aggregate investment of $4,000 in the Partnership. As of September 30, 2026, the Company has invested $3,000 in the Partnership and is committed to make further investments up to an amount of $1,000.

Other Commitments

Certain units of the Company’s Indian subsidiaries were established as 100% Export-Oriented units or under the Software Technology Parks of India or Special Economic Zone scheme promulgated by the Government of India. These units are exempt from customs, central excise duties, and levies on imported and indigenous capital goods, stores, and spares. The Company has undertaken to pay custom duties, service taxes, levies, and liquidated damages payable, if any, in respect of imported and indigenous capital goods, stores and spares consumed duty free, in the event that certain terms and conditions are not fulfilled. The Company believes, however, that these units have in the past satisfied, and will continue to satisfy, the required conditions.

The Company’s operations centers in the Philippines are registered as qualified Philippines Economic Zone Authority units, which provides the Company fiscal incentives on the import of capital goods and local purchase of services and materials. The Company is required to meet certain requirements to retain the incentives. The Company has complied, and intends to continue compliance, with the requirements to avail itself of the incentives.

Contingencies

The transfer pricing regulations in the countries where the Company operates require that controlled intercompany transactions be at arm’s-length. Accordingly, the Company determines and documents pricing for controlled intercompany transactions based on an economic analysis as prescribed in the respective regulations. The tax authorities have jurisdiction to

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EXLSERVICE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

September 30, 2026

(In thousands, except per share amount and share count)

review the Company’s transfer pricing. If the Company’s transfer pricing is challenged by the authorities, they could assess additional tax, interest and penalties, thereby impacting the Company’s profitability and cash flows.

The Company is currently involved in transfer pricing and related income tax disputes with Indian tax authorities. The aggregate amount demanded by Indian tax authorities (net of advance payments) as of September 30, 2026 and December 31, 2025 is $39,525 and $42,205, respectively. The Company has made payments and/or provided bank guarantees against these demands in the amounts of $7,428 and $7,684, as of September 30, 2026 and December 31, 2025, respectively. The Company believes that its positions will more likely than not be sustained upon final examination by the tax authorities, and accordingly has not accrued any liabilities with respect to these matters in its consolidated financial statements.

Pursuant to reviewing the Company’s annual VAT and service tax filings, the Indian tax authorities raised aggregate demands for tax years 2015 and 2017, in the amounts of $4,863 and $5,186, as of September 30, 2026 and December 31, 2025, respectively. The Company has made payments and/or provided bank guarantees against these demands in the amounts of $4,773 and $5,090, as of September 30, 2026 and December 31, 2025, respectively. The Company has filed appeals against these matters and believes that it is more likely than not that upon final examination its position will be sustained based on technical merits.

The Indian Goods and Services Tax (“GST”) authorities rejected the Company’s refund claims in the amounts of $5,119 and $5,494 as of September 30, 2026 and December 31, 2025, respectively. The Company has filed appeals against these matters and believes that it is more likely than not that upon final examination its position will be sustained based on its technical merits. Accordingly, no allowances were recorded against these GST receivables as of September 30, 2026 and December 31, 2025, respectively.

Some of the Company’s subsidiaries in India have undergone assessments with the statutory authority with respect to defined contribution plan. Except for some components of the assessments for which the Company has recognized a provision in the unaudited consolidated financial statements, the Company believes that the amount demanded by such authority is not a meaningful indicator of the potential liabilities of the Company, and that these matters are without merit. The Company is defending against the assessment orders and in two cases, has instituted an appeal against the order before the relevant tribunal while also making a payment under protest of the amount demanded. As of the reporting date, the Company’s management does not believe that the ultimate assessments in any of these matters will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. The Company will continue to monitor and evaluate its position based on future events and developments on these matters.

From time to time, the Company, its subsidiaries, and/or their present officers or directors, may be or have been, named as a defendant in litigation matters, including employment-related claims. The plaintiffs in those cases seek damages, including, where applicable, compensatory damages, punitive damages and attorney’s fees. With respect to pending litigation matters as of the reporting date, the Company believes that the damages claimed are without merit, and the Company intends to vigorously defend them. The Company will continuously monitor developments on these matters to assess potential impacts to the financial statements.

The outcomes of legal actions are unpredictable and subject to significant uncertainties, and thus it is inherently difficult to determine the likelihood of the Company incurring a material loss or quantification of any such loss. With respect to certain pending litigation matters as of the reporting date, the Company has made provisions based on information currently available, including its evaluation of the facts underlying each matter and legal counsel’s advice on the estimated losses or range of reasonably possible losses. Based on the Company’s assessment, including the availability of insurance recoveries, the Company’s management does not believe that currently pending litigation, individually or in aggregate, will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. The Company will continuously monitor these matters to assess potential impacts to the financial statements.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in connection with our unaudited consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Some of the statements in the following discussion are forward looking statements.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. These statements often 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 our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These 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 and 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 announced or future 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, 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;

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•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.

These and other factors are more fully discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. These and other risks could cause actual results to differ materially from those implied by forward-looking statements in this Quarterly Report on Form 10-Q.

The forward-looking statements made by us in this Quarterly Report on Form 10-Q, or elsewhere, speak only as of the date on which they were made. New risks and uncertainties may occur from time to time, and it is impossible for us to predict those events or how they may affect us. We have no obligation to update any forward-looking statements in this Quarterly Report on Form 10-Q after the date of this Quarterly Report on Form 10-Q, except as required by federal securities laws.

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. 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.

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). 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.

We manage and report financial information through four reportable segments, aligned to our Industry Market Units (“IMUs”): Insurance, Healthcare and Life Sciences, Banking, Capital Markets and Diversified Industries, and International Growth Markets, which reflects the manner in which our management reviews financial information and makes operating decisions.

Recent Developments

On July 31, 2026, we completed the acquisition of I Merit Inc., a Delaware Corporation (“iMerit”), a recognized leader in AI model training, evaluation and reinforcement learning, through our wholly owned subsidiary Clairvoyant AI, Inc. pursuant to a securities purchase agreement dated June 22, 2026. It is focused on helping its clients train large language and multimodal models to improve accuracy, precision, and effectiveness. The acquisition strengthens our ability to help enterprises achieve measurable outcomes from AI, build partnerships with leading foundation model builders and expands our reach into high-growth AI tech sectors.

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Revenues

For the three months ended September 30, 2026, we generated revenues of $634.0 million compared to revenues of $529.6 million for the three months ended September 30, 2025, an increase of $104.4 million, or 19.7%. For the nine months ended September 30, 2026, we generated revenues of $1,799.1 million compared to revenues of $1,545.1 million for the nine months ended September 30, 2025, an increase of $254.0 million, or 16.4%.

We serve clients mainly in North America, and the United Kingdom & Europe, with these two regions generating 82.2% and 15.0%, respectively, of our total revenues for the three months ended September 30, 2026, and 82.5% and 14.9%, respectively, of our total revenues for the three months ended September 30, 2025. For the nine months ended September 30, 2026, these two regions generated 82.5% and 14.9%, respectively, of our total revenues and 82.5% and 14.8%, respectively, of our total revenues for the nine months ended September 30, 2025.

For the three months ended September 30, 2026 and 2025, our total revenues from our top ten clients accounted for 33.3% and 34.5% of our total revenues, respectively. For the nine months ended September 30, 2026 and 2025, our total revenues from our top ten clients accounted for 34.0% and 33.8% 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.

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. Our sales and client management teams operate primarily from the United States, India, the United Kingdom, Ireland and Australia.

Data and AI-led: Data and AI-led revenue is derived from our Data Management, Analytics, AI services and solutions businesses. It includes revenue from fully integrated business operations like payment integrity services and platform-based solutions and services, which combine operations, technology, data, analytics, and AI. It also includes revenue from operations that embed data and AI within clients’ operational workflows.

Digital operations: Digital operations revenue is derived from managed services that blend our deep domain expertise with industry-specific solutions and services to operate clients’ business functions with enhanced productivity, greater speed and improved accuracy. These digital operations deployments form the foundation for future client transformation opportunities to infuse AI into client workflows and unlock even greater value.

Our reportable segments, aligned to our IMUs, which provide data and AI-led solutions and services and digital operations solutions and services, are described below:

Insurance: We serve insurance brokers, reinsurers, and insurtech companies and provide services to insurers in the areas of property and casualty, life, disability, annuity, and retirement services.

Our offerings include 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, finance and accounting, and customer service using digital technology, AI, including agentic AI, generative AI, machine learning (“ML”) and advanced automation. We also combine our cloud-first digital insurance software solutions and industry expertise with agentic AI, generative AI, machine learning, advanced analytics, and platforms. This includes our Insurance Large Language Model (“LLM”), a specialized generative AI platform for claims, underwriting and subrogation, developed leveraging our deep experience and proprietary data in the insurance industry. Additionally, we provide third-party administration for life and annuity insurance through our LifePRO® and Life Digital Suite SaaS platforms and also offer subrogation services to property and casualty insurers using our Subrosource® BPaaS platform.

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Healthcare and Life Sciences: We serve U.S.-based healthcare payers, providers, pharmacy benefit managers (“PBMs”), and life sciences organizations by combining deep healthcare and life sciences domain expertise with data, analytics and AI-led insights and technology-enabled services that transform how care is delivered, managed and paid.

We provide care management, utilization management, disease management, payment integrity, revenue optimization and customer engagement, commercial analytics and regulatory support services to improve healthcare outcomes, enhance patient and provider experience, optimize healthcare spending and streamline healthcare administration processes by simplifying complex workflows.

For healthcare payers, we offer payment integrity services, pre and post-pay auditing services, payment analytics, subrogation and claims recovery, care management and patient navigation solutions. For healthcare providers, we offer revenue cycle management, digital transformation, data-driven analytics and contact center solutions. For PBMs, we provide digital transformation, data and analytics and call center modernization. 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. Our AI capabilities also include specialized model training, evaluation and reinforcement learning, supported by a global network of domain specialists, including physicians, scientists and other subject matter experts. We leverage AI, analytics, and cloud-based solutions to enhance value-based care, optimize claims, and ensure regulatory compliance.

Banking, Capital Markets and Diversified Industries: Our Banking and Capital Markets and Diversified Industries group delivers comprehensive solutions across retail and commercial banking, credit card and payment services, fintech, wealth and retirement services, capital markets, utilities, retail and consumer packaged goods, communications, media and entertainment, travel and leisure, transportation and logistics, infrastructure and other business services industries.

By integrating deep domain expertise with AI-driven decision-making, we enable financial institutions to innovate, enhance operational agility, and adapt to evolving market demands. We provide risk management solutions, marketing and customer analytics solutions to our clients, along with our integrated operations services that encompass the full range of banking operations, including digital lending solutions that improve underwriting and compliance, omni-channel marketing, digital onboarding, know your customer (“KYC”)/anti-money laundering (“AML”) compliance, collections, fraud prevention, and customer servicing, among others. Our industry-leading AI and automation-driven service offerings drive operational efficiency and foster innovation across the financial services and other industries. Our AI capabilities also encompass multimodal data across text, image, video, voice and light detection and ranging (“LiDAR”), providing a strong foundation for AI solutions across high-tech, mobility, autonomous systems and physical AI, including robotics, autonomous vehicles and intelligent real-world environments.

Our enterprise services and solutions include domain-specific operations, integrated finance and accounting services, customer experience management, back-office operations, and revenue enhancement, such as pricing and billing, enabling our clients to deliver enhanced operational efficiency, and high-quality customer experiences. For example, in the retail and consumer packaged goods sectors, we enable advanced supply chain performance through AI-driven analytics services supporting smarter merchandising, dynamic pricing, and accurate demand forecasting and for our clients in the utilities sector, we offer AI-enabled operations and solutions related to end-to-end customer life cycle management, including onboarding and terminations, engineering field operations, billing, and debt management.

International Growth Markets: Our International Growth Markets (“IGM”) IMU is focused on strengthening our global footprint outside of North America. We ensure customized delivery while leveraging EXL’s global capabilities in data, AI, and digital operations to drive differentiated business outcomes for our clients in growth markets. This provides us with opportunities to leverage our investments, experience, and expertise from the North America market to expand our global client base, drive further growth, and bring us closer to our clients and partners across the world. IGM consists of dedicated teams servicing clients and localizing our global capabilities in insurance, life sciences, banking and capital markets, energy and infrastructure, retail, consumer goods, and travel industries in growth markets. Across all regions in which we operate, we combine deep domain experience with our data and AI expertise to help clients innovate, enhance operational agility, adapt to changing market demands, and drive better business transformation.

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Pricing: 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 or emerging pricing models. 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. We continue to observe a shift in the industry pricing models toward transaction-based pricing, outcome-based pricing and other alternative pricing models. 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.

Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies and estimates during the nine months ended September 30, 2026, as compared to the critical accounting policies and estimates referred in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Critical Accounting Estimates” and Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Results of Operations

The following table summarizes our results of operations for the three months ended September 30, 2026 and 2025:


									(dollars in millions)
	Three months ended September 30, 2026		Percentage of Revenues, net		Three months ended September 30, 2025		Percentage of Revenues, net		Dollar change		Percentage change
	(A)				(B)				(C=A-B)
Revenues, net	$	634.0	100.0	%	$	529.6	100.0	%	$	104.4	19.7	%
Cost of revenues (1)	392.8		62.0	%	325.6		61.5	%	67.2		20.6	%
Gross profit (1)	241.2		38.0	%	204.0		38.5	%	37.2		18.2	%
Operating expenses:
General and administrative expenses	79.9		12.6	%	66.3		12.5	%	13.6		20.6	%
Selling and marketing expenses	53.5		8.4	%	46.4		8.8	%	7.1		15.4	%
Depreciation and amortization expense	18.9		3.0	%	15.1		2.9	%	3.8		24.7	%

Total operating expenses	152.3		24.0	%	127.8		24.1	%	24.5		19.2	%
Income from operations	88.9		14.0	%	76.2		14.4	%	12.7		16.6	%
Foreign exchange gain/(loss), net	1.5		0.2	%	(1.0)		(0.2)	%	2.5		(248.3)	%
Interest expense	(6.3)		(1.0)	%	(4.9)		(0.9)	%	(1.4)		28.7	%
Other income, net	2.6		0.4	%	4.5		0.8	%	(1.9)		(40.8)	%

Income before income tax expense and earnings from equity affiliates	86.7		13.7	%	74.8		14.1	%	11.9		16.0	%
Income tax expense	17.9		2.8	%	16.5		3.1	%	1.4		9.0	%
Income before earnings from equity affiliates	68.8		10.8	%	58.3		11.0	%	10.5		18.0	%
Gain/ (loss) from equity-method investment	—		—	%	(0.1)		—	%	0.1		—	%
Net income	$	68.8	10.8	%	$	58.2	11.0	%	$	10.6	18.2	%

(1) Exclusive of depreciation and amortization expense.

Due to rounding, the numbers presented in the tables included in this Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may not add up precisely to the totals provided.

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Three Months Ended September 30, 2026 compared to Three Months Ended September 30, 2025

Revenues, net: The following table summarizes our revenues by reportable segments:


	Three months ended September 30,				Dollar change		Percentage change		Percentage of Total Revenues for the three months ended September 30,
	2026		2025						2026		2025
	(dollars in millions)
Insurance	$	208.5	$	180.5	$	28.0	15.5	%	32.9	%	34.1	%
Healthcare and Life Sciences	160.4		135.3		25.1		18.6	%	25.3	%	25.5	%
Banking, Capital Markets and Diversified Industries	153.5		121.0		32.5		26.8	%	24.2	%	22.8	%
International Growth Markets	111.6		92.8		18.8		20.3	%	17.6	%	17.6	%
Revenues, net	$	634.0	$	529.6	$	104.4	19.7	%	100.0	%	100.0	%

Revenues for the three months ended September 30, 2026 were up by $104.4 million, or 19.7%, compared to the three months ended September 30, 2025, driven by 13.9% growth from the expansion of business with existing clients across all reportable segments and 6.0% growth from new client wins, including 2.9% growth from our acquisition of iMerit, partially offset by 0.2% foreign exchange loss, net of hedging during the three months ended September 30, 2026.

Revenue growth in Insurance by 15.5% was driven by 14.7% growth from the expansion of business with existing clients and 0.8% growth from new clients during the three months ended September 30, 2026, compared to the three months ended September 30, 2025.

Revenue growth in Healthcare and Life Sciences by 18.6% was driven by 16.5% growth from the expansion of business with existing clients and 2.1% growth from new clients, including 1.4% growth from our acquisition of iMerit during the three months ended September 30, 2026, compared to the three months ended September 30, 2025.

Revenue growth in Banking, Capital Markets and Diversified Industries by 26.8% was driven by 19.2% growth from new clients, including 10.2% growth from our acquisition of iMerit, and 7.6% growth from the expansion of business with existing clients during the three months ended September 30, 2026, compared to the three months ended September 30, 2025.

Revenue growth in International Growth Markets of 20.3% was driven by 16.6% growth from the expansion of business with existing clients and 4.6% growth from new clients, including 1.1% growth from our acquisition of iMerit, partially offset by 0.9% foreign exchange loss, net of hedging during the three months ended September 30, 2026, compared to the three months ended September 30, 2025.

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
	Three months ended September 30,				Dollar change		Percentage change		Three months ended September 30,				Percentage change
	2026		2025						2026		2025
	(dollars in millions)
Insurance	$	133.1	$	114.4	$	18.7	16.3	%	36.2	%	36.6	%	(0.4)	%
Healthcare and Life Sciences	87.8		77.1		10.7		14.0	%	45.2	%	43.0	%	2.2	%
Banking, Capital Markets and Diversified Industries	100.7		74.6		26.1		34.9	%	34.4	%	38.3	%	(3.9)	%
International Growth Markets	71.2		59.5		11.7		19.6	%	36.2	%	35.8	%	0.4	%
Total	$	392.8	$	325.6	$	67.2	20.6	%	38.0	%	38.5	%	(0.5)	%

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Cost of revenues for the three months ended September 30, 2026 increased by $67.2 million, or 20.6% compared to the three months ended September 30, 2025. The increase in cost of revenues was due to increases in employee-related costs of $56.1 million on account of higher headcount and wage inflation, including incremental cost related to our acquisition of iMerit, higher technology costs of $8.1 million, and higher facilities and other operating costs of $8.3 million, partially offset by a foreign exchange gain, net of hedging of $5.3 million. Our gross margin for the three months ended September 30, 2026 was 38.0%, compared to 38.5% for the three months ended September 30, 2025, a decrease of 50 basis points (“bps”), primarily driven by investments in ramp-ups in certain existing clients and higher operating expenses.

The increase in cost of revenues in Insurance by $18.7 million for the three months ended September 30, 2026 was due to increases in employee-related costs of $15.6 million on account of higher headcount and wage inflation, higher technology costs of $2.3 million, and higher other operating costs of $1.8 million, partially offset by foreign exchange gain, net of hedging of $1.0 million. Gross margin in Insurance decreased by 40 bps, primarily due to investments in ramp-ups in certain existing clients during the three months ended September 30, 2026, compared to the three months ended September 30, 2025.

The increase in cost of revenues in Healthcare and Life Sciences by $10.7 million for the three months ended September 30, 2026 was due to increases in employee-related costs of $8.7 million on account of higher headcount and wage inflation, including incremental cost related to our acquisition of iMerit, higher technology costs of $1.7 million, and higher other operating costs of $1.6 million, partially offset by foreign exchange gain, net of hedging of $1.3 million. Gross margin in Healthcare and Life Sciences increased by 220 bps, primarily due to higher volumes from certain existing clients during the three months ended September 30, 2026, compared to the three months ended September 30, 2025.

The increase in cost of revenues in Banking, Capital Markets and Diversified Industries by $26.1 million for the three months ended September 30, 2026 was due to increases in employee-related costs of $21.6 million on account of higher headcount and wage inflation, including incremental cost related to our acquisition of iMerit, higher technology costs of $2.1 million, and higher other operating costs of $3.7 million, partially offset by foreign exchange gain, net of hedging of $1.3 million. Gross margin in Banking, Capital Markets and Diversified Industries decreased by 390 bps, primarily due to investments in ramp-ups, lower volumes from certain existing clients, and higher operating expenses during the three months ended September 30, 2026, compared to the three months ended September 30, 2025.

The increase in cost of revenues in International Growth Markets by $11.7 million for the three months ended September 30, 2026 was due to increases in employee-related costs of $10.2 million on account of higher headcount and wage inflation, including incremental cost related to our acquisition of iMerit, higher technology costs of $2.0 million, and higher facilities and other operating costs $1.2 million, partially offset by a foreign exchange gain, net of hedging of $1.7 million. Gross margin in International Growth Markets increased by 40 bps primarily due to foreign exchange gain, net of hedging during the three months ended September 30, 2026, compared to the three months ended September 30, 2025.

Selling, General and Administrative (“SG&A”) Expenses. SG&A expenses as a percentage of net revenues decreased from 21.3% during the three months ended September 30, 2025 to 21.0% during the three months ended September 30, 2026.

The increase in SG&A expenses by $20.7 million during the three months ended September 30, 2026, compared to the three months ended September 30, 2025 was primarily due to increases in employee-related costs of $14.1 million on account of higher headcount and wage inflation, including incremental cost related to our acquisition of iMerit, increased investments in digital and generative AI capabilities of $3.9 million, acquisition related expenses of $1.8 million and higher sales and marketing costs of $0.9 million.

Depreciation and Amortization. Depreciation and amortization expenses as a percentage of net revenues increased by 0.1% during the three months ended September 30, 2026, compared to the three months ended September 30, 2025.

The increase in depreciation and amortization expense by $3.8 million during the three months ended September 30, 2026, compared to the three months ended September 30, 2025 was primarily due to an increase in amortization of intangibles of $3.0 million related to our acquisition of iMerit.

Income from Operations. The increase in income from operations by 16.6% during the three months ended September 30, 2026, compared to the three months ended September 30, 2025 was primarily due to higher revenues and gross profit, partially offset by higher SG&A expenses.

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Foreign Exchange Gain, net. We recorded a foreign exchange gain, net of $1.5 million for the three months ended September 30, 2026, compared to a foreign exchange loss, net of $1.0 million for the three months ended September 30, 2025. 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 the three months ended September 30, 2026, compared to the three months ended September 30, 2025.

Interest expense. The increase in interest expense by $1.4 million during the three months ended September 30, 2026, compared to the three months ended September 30, 2025 was primarily due to higher average borrowings.

Other Income, net.


	Three months ended September 30,				Dollar change		Percentage change
	2026		2025
	(dollars in millions)


Interest and dividend income	$	2.0	$	2.1	$	(0.1)	(6.0)	%
Gain on sale and fair value mark-to-market on investments	1.6		2.2		(0.6)		(27.8)	%

Others, net	(1.0)		0.2		(1.2)		NM(1)
Other income, net	$	2.6	$	4.5	$	(1.9)	(40.8)	%

(1) Not Meaningful

Other income, net decreased by $1.9 million during the three months ended September 30, 2026, compared to the three months ended September 30, 2025 primarily due to lower yield on our investments and higher other expenses, net.

Income Tax Expense. The effective tax rate for the three months ended September 30, 2026 was 20.7%, a decrease from 22.1% for the three months ended September 30, 2025. We recorded income tax expense of $17.9 million and $16.5 million for the three months ended September 30, 2026 and 2025, respectively. The increase in income tax expense was primarily as a result of higher profit, compared to the three months ended September 30, 2025.

Net Income. The increase in net income by 18.2% during the three months ended September 30, 2026, compared to the three months ended September 30, 2025 was attributable to the aforementioned factors.

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Results of Operations

The following table summarizes our results of operations for the nine months ended September 30, 2026 and 2025:


									(dollars in millions)
	Nine months ended September 30, 2026		Percentage of Revenues, net		Nine months ended September 30, 2025		Percentage of Revenues, net		Dollar change		Percentage change
	(A)				(B)				(C=A-B)
Revenues, net	$	1,799.1	100.0	%	$	1,545.1	100.0	%	$	254.0	16.4	%
Cost of revenues (1)	1,109.9		61.7	%	953.6		61.7	%	156.3		16.4	%
Gross profit (1)	689.2		38.3	%	591.5		38.3	%	97.7		16.5	%
Operating expenses:
General and administrative expenses	223.3		12.4	%	185.2		12.0	%	38.1		20.6	%
Selling and marketing expenses	150.4		8.4	%	127.8		8.3	%	22.6		17.7	%
Depreciation and amortization expense	47.5		2.6	%	42.8		2.8	%	4.7		11.1	%

Total operating expenses	421.2		23.4	%	355.8		23.0	%	65.4		18.4	%
Income from operations	268.0		14.9	%	235.7		15.3	%	32.3		13.7	%
Foreign exchange gain, net	4.2		0.2	%	2.4		0.2	%	1.8		77.7	%
Interest expense	(15.3)		(0.9)	%	(13.3)		(0.9)	%	(2.0)		15.0	%
Other income, net	5.2		0.3	%	14.8		1.0	%	(9.6)		(65.2)	%

Income before income tax expense and earnings from equity affiliates	262.1		14.6	%	239.6		15.5	%	22.5		9.4	%
Income tax expense	61.7		3.4	%	48.5		3.1	%	13.2		27.2	%
Income before earnings from equity affiliates	200.4		11.1	%	191.1		12.4	%	9.3		4.8	%
Gain/ (loss) from equity-method investment	—		—	%	(0.3)		—	%	0.3		(105.5)	%
Net income	$	200.4	11.1	%	$	190.8	12.3	%	$	9.6	5.0	%

(1) Exclusive of depreciation and amortization expense.

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Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Revenues, net: The following table summarizes our revenues by reportable segments:


	Nine months ended September 30,				Dollar change		Percentage change		Percentage of Total Revenues for the nine months ended September 30,
	2026		2025						2026		2025
	(dollars in millions)
Insurance	$	600.2	$	524.8	$	75.4	14.4	%	33.4	%	34.0	%
Healthcare and Life Sciences	470.3		390.4		79.9		20.5	%	26.1	%	25.3	%
Banking, Capital Markets and Diversified Industries	414.7		359.8		54.9		15.3	%	23.1	%	23.3	%
International Growth Markets	313.9		270.1		43.8		16.2	%	17.4	%	17.4	%
Revenues, net	$	1,799.1	$	1,545.1	$	254.0	16.4	%	100.0	%	100.0	%

Revenues for the nine months ended September 30, 2026 were up by $254.0 million, or 16.4%, compared to the nine months ended September 30, 2025, driven by 12.9% growth from the expansion of business with existing clients across all reportable segments and 3.5% growth from new client wins, including 1.0% growth from our acquisition of iMerit during the nine months ended September 30, 2026.

Revenue growth in Insurance by 14.4% was driven by 13.4% growth from the expansion of business with existing clients and 1.0% growth from new clients during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

Revenue growth in Healthcare and Life Sciences by 20.5% was driven by 19.4% growth from the expansion of business with existing clients and 1.1% growth from new clients, including growth from our acquisition of iMerit during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

Revenue growth in Banking, Capital Markets and Diversified Industries by 15.3% was driven by 9.5% growth from new clients, including 3.4% growth from our acquisition of iMerit, and 5.8% growth from the expansion of business with existing clients during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

Revenue growth in International Growth Markets of 16.2% was driven by 12.3% growth from the expansion of business with existing clients and 4.0% growth from new clients, including growth from our acquisition of iMerit, partially offset by 0.1% foreign exchange loss, net of hedging during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

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
	Nine months ended September 30,				Dollar change		Percentage change		Nine months ended September 30,				Percentage change
	2026		2025						2026		2025
	(dollars in millions)
Insurance	$	383.3	$	335.9	$	47.4	14.1	%	36.1	%	36.0	%	0.1	%
Healthcare and Life Sciences	254.9		220.7		34.2		15.5	%	45.8	%	43.5	%	2.3	%
Banking, Capital Markets and Diversified Industries	268.3		223.7		44.6		19.9	%	35.3	%	37.8	%	(2.5)	%
International Growth Markets	203.4		173.3		30.1		17.4	%	35.2	%	35.8	%	(0.6)	%
Total	$	1,109.9	$	953.6	$	156.3	16.4	%	38.3	%	38.3	%	—	%

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Cost of revenues for the nine months ended September 30, 2026 increased by $156.3 million, or 16.4%, compared to the nine months ended September 30, 2025. The increase in cost of revenues was due to increases in employee-related costs of $136.7 million on account of higher headcount and wage inflation, including incremental cost related to our acquisition of iMerit, higher technology costs of $22.7 million, and higher facilities and other operating costs of $15.3 million, partially offset by a foreign exchange gain, net of hedging of $18.4 million. Our gross margin remained flat during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

The increase in cost of revenues in Insurance by $47.4 million for the nine months ended September 30, 2026 was due to increases in employee-related costs of $42.5 million on account of higher headcount and wage inflation, higher technology costs of $6.6 million, and higher other operating costs of $2.7 million, partially offset by foreign exchange gain, net of hedging of $4.4 million. Gross margin in Insurance increased by 10 bps, primarily due to higher revenues and operational efficiencies during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

The increase in cost of revenues in Healthcare and Life Sciences by $34.2 million for the nine months ended September 30, 2026 was due to increases in employee-related costs of $27.3 million on account of higher headcount and wage inflation, including incremental cost related to our acquisition of iMerit, higher technology costs of $5.2 million, and higher other operating costs of $6.2 million, partially offset by foreign exchange gain, net of hedging of $4.5 million. Gross margin in Healthcare and Life Sciences increased by 230 bps, primarily due to higher revenues and operational efficiencies during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

The increase in cost of revenues in Banking, Capital Markets and Diversified Industries by $44.6 million for the nine months ended September 30, 2026 was due to increases in employee-related costs of $40.0 million on account of higher headcount and wage inflation, including incremental cost related to our acquisition of iMerit, higher technology costs of $5.0 million, and higher facilities and other operating costs of $4.2 million, partially offset by a foreign exchange gain, net of hedging of $4.6 million. Gross margin in Banking, Capital Markets and Diversified Industries decreased by 250 bps, primarily due to investments in ramp-ups, lower volumes from certain existing clients, and higher operating expenses during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

The increase in cost of revenues in International Growth Markets by $30.1 million for the nine months ended September 30, 2026 was due to increases in employee-related costs of $26.9 million on account of higher headcount and wage inflation, including incremental cost related to our acquisition of iMerit, higher technology costs of $5.9 million, and higher facilities and other operating costs of $2.2 million, partially offset by a foreign exchange gain, net of hedging of $4.9 million. Gross margin in International Growth Markets decreased by 60 bps, primarily due to investments in ramp-ups and lower volumes from certain existing clients during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

Selling, General and Administrative (“SG&A”) Expenses. SG&A expenses as a percentage of net revenues increased from 20.3% during the nine months ended September 30, 2025 to 20.8% during the nine months ended September 30, 2026.

The increase in SG&A expenses by $60.7 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025 was primarily due to increases in employee-related costs of $45.3 million on account of higher headcount and wage inflation, including incremental cost related to our acquisition of iMerit, increased investments in digital and generative AI capabilities of $7.9 million, higher sales and marketing costs of $3.8 million, and acquisition related expenses of $3.7 million.

Depreciation and Amortization. Depreciation and amortization expenses as a percentage of net revenues decreased by 0.2% during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

The increase in depreciation and amortization expense by $4.7 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025 was due to an increase in amortization of intangibles of $3.0 million in connection with our acquisition of iMerit, and investments in infrastructure, technology assets and digital capabilities of $1.7 million.

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Income from Operations. The increase in income from operations by 13.7% during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025 was primarily due to higher revenues and gross profit, partially offset by higher SG&A expenses.

Foreign Exchange Gain, net. We recorded a foreign exchange gain, net of $4.2 million for the nine months ended September 30, 2026, compared to a foreign exchange gain, net of $2.4 million for the nine months ended September 30, 2025. 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 the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

Interest expense. The increase in interest expense by $2.0 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025 was primarily due to higher average borrowings.

Other Income, net.


	Nine months ended September 30,				Dollar change		Percentage change
	2026		2025
	(dollars in millions)

Interest and dividend income	$	6.0	$	7.4	$	(1.4)	(19.4)	%
Gain on sale and fair value mark-to-market on investments	4.6		6.4		(1.8)		(27.8)	%
Fair value changes of contingent consideration	(3.0)		—		(3.0)		(100.0)	%

Others, net	(2.4)		1.0		(3.4)		(348.9)	%
Other income, net	$	5.2	$	14.8	$	(9.6)	(65.2)	%

Other income, net decreased by $9.6 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025 primarily due to changes in the fair value consideration related to our August 2024 acquisition of Incandescent Technologies, Inc. (“ITI Data”), lower yield on our investments and higher other expenses, net.

Income Tax Expense. The effective tax rate for the nine months ended September 30, 2026 was 23.5%, an increase from 20.3% for the nine months ended September 30, 2025. We recorded income tax expense of $61.7 million and $48.5 million for the nine months ended September 30, 2026 and 2025, respectively. The increase in income tax expense was primarily as a result of higher profit and lower excess tax benefits related to stock-based compensation, partially offset by a decrease in non-deductible compensation expenses, compared to the nine months ended September 30, 2025.

Net Income. The increase in net income by 5.0% during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025 was attributable to the aforementioned factors.

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Liquidity and Capital Resources


	Nine months ended September 30,				Dollar change		Percentage change
	2026		2025
	(dollars in millions)
Opening cash, cash equivalents and restricted cash	$	166.0	$	171.4	$	(5.4)	(3.2)	%
Net cash provided by operating activities	208.8		233.3		(24.5)		(10.5)	%
Net cash used for investing activities	(198.7)		(82.6)		(116.1)		140.6	%
Net cash provided by/(used for) financing activities	1.9		(147.9)		149.8		(101.3)	%
Effect of exchange rate changes	(2.9)		5.6		(8.5)		(150.0)	%
Closing cash, cash equivalents and restricted cash	$	175.1	$	179.8	$	(4.7)	(2.6)	%

As of September 30, 2026 and December 31, 2025, we had $332.7 million and $328.4 million, respectively, in cash, cash equivalents and short-term investments, of which $293.0 million and $285.8 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes. 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. During the nine months ended September 30, 2026, some of our foreign subsidiaries repatriated $13.0 million to the United States.

Operating Activities: Net cash provided by operating activities was $208.8 million during the nine months ended September 30, 2026, compared to $233.3 million during the nine months ended September 30, 2025, reflecting higher working capital needs, partially offset by higher cash earnings. The major drivers contributing to the decrease of $24.5 million year-over-year included the following:

•Changes in accounts receivable, including advance billings, contributed lower cash flow of $54.6 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, driven by revenue growth and higher days sales outstanding. Our days sales outstanding were 67 days as of September 30, 2026, compared to 63 days as of September 30, 2025.

•Increase in cash earnings, including adjustments for non-cash and other items contributed higher cash flow of $27.4 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. These adjustments include unrealized foreign currency exchange (gain)/loss, net, fair value mark-to-market on investments, stock-based employee compensation, depreciation and amortization of long-lived assets and intangibles acquired in business combinations, among others.

•Changes in other assets, accounts payables including other liabilities contributed to a lower cash payout of $2.7 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

Investing Activities: Net cash used for investing activities was $198.7 million during the nine months ended September 30, 2026, compared to net cash used of $82.6 million for the nine months ended September 30, 2025. The increase of $116.1 million was primarily due to net cash used for business acquisition of $153.8 million, and higher cash paid for capital expenditures, including investments in infrastructure, technology assets and digital capabilities of $2.5 million, partially offset by lower purchases of investments of $40.2 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

Financing Activities: Net cash provided by financing activities was $1.9 million during the nine months ended September 30, 2026, compared to net cash used of $147.9 million during the nine months ended September 30, 2025. The increase of $149.8 million was primarily due to higher net proceeds from borrowings of $144.0 million, and lower purchases of treasury stock of $6.5 million under our share repurchase programs during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.

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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.

We incurred $44.1 million of capital expenditure during the nine months ended September 30, 2026. We expect to incur total capital expenditures of between $58.0 million and $62.0 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.

In connection with any tax assessment orders that have been issued, or may be issued against us or our subsidiaries, we may be required to deposit additional amounts with the relevant authorities with respect to such assessment orders. See Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” 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 twelve months. 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. We anticipate that we will continue to rely upon cash from operating activities to finance most of our above-mentioned requirements, although if we have significant growth through acquisitions, we may need to obtain additional financing.

In the ordinary course of business, we enter into contracts and commitments that obligate us to make payments in the future. These obligations include borrowings, including interest obligations, purchase commitments, operating and finance lease commitments, employee benefit payments under gratuity plans, payments for contingent consideration and uncertain tax positions. See Note 16 - Fair Value Measurements - Fair Value of Contingent Consideration, Note 18 - Borrowings, Note 20 - Employee Benefit Plans, Note 21 - Leases, Note 22 - Income Taxes and Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for further information on material cash requirements from known contractual and other obligations.

In the ordinary course of business, we provide standby letters of credit to third parties primarily for facility leases. As of September 30, 2026 and December 31, 2025, we had outstanding letters of credit of $1.1 million and $1.6 million respectively, that were not recognized in our consolidated balance sheets. These are unlikely to have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. We had no other off-balance sheet arrangements or obligations.

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Financing Arrangements

The following table summarizes our debt position:


	As of
	September 30, 2026						December 31, 2025
	(dollars in millions)
	Revolving credit facility		Term loan facility		Total		Revolving credit facility		Term loan facility		Total
Current portion of long-term borrowings	$	—	$	10.0	$	10.0	$	—	$	5.0	$	5.0
Unamortized debt issuance costs	—		(0.3)		(0.3)		—		(0.1)		(0.1)
Current portion of long-term borrowings	—		9.7		9.7		—		4.9		4.9

Long-term borrowings	115.0		387.5		502.5		205.0		88.8		293.8
Unamortized debt issuance costs	—		(1.2)		(1.2)		—		—		—
Long-term borrowings	115.0		386.3		501.3		205.0		88.8		293.8
Borrowings	$	115.0	$	396.0	$	511.0	$	205.0	$	93.7	$	298.7

As of September 30, 2026 and December 31, 2025, we were in compliance with the financial covenants under our respective credit agreements. See Note 18, “Borrowings,” to our unaudited consolidated financial statements.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, see Note 2 - Summary of Significant Accounting Policies - Recent Accounting Pronouncements to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements.”

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our quantitative and qualitative disclosures about market risk from those disclosed in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), to allow timely decisions regarding required disclosure. In connection with the preparation of this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of the CEO and CFO, of the effectiveness and operation of our disclosure controls and procedures as of September 30, 2026. Based upon that evaluation, our CEO and CFO have concluded that the Company’s disclosure controls and procedures, as of September 30, 2026, were effective.

Changes in Internal Control over Financial Reporting

During the three months ended September 30, 2026, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In making its assessment of the changes in internal control over financial reporting during the three months ended September 30, 2026, our management excluded an evaluation of iMerit, including the disclosure controls and procedures of iMerit that are subsumed by internal control over financial reporting, which we acquired on July 31, 2026. See Note 10 - Business Combinations, Goodwill and Other Intangible Assets to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for details of our acquisition.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

In the course of our normal business activities, various lawsuits, claims and proceedings may be instituted or asserted against us. Although there can be no assurance, we believe that the disposition of matters currently instituted or asserted will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. See Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” for details regarding our tax proceedings.

ITEM 1A. Risk Factors

We have disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, a number of risks which may materially affect our business, financial condition or results of operations. You should carefully consider those risk factors and the other information set forth elsewhere in this Quarterly Report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us may also materially adversely affect our business, financial condition and/or results of operations.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

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None.

Use of Proceeds

None.

Purchases of Equity Securities by the Issuer

During the three months ended September 30, 2026, 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
July 1, 2026 through July 31, 2026	—	$	—	169,278	$	28.58	169,278	$	345,257,134
August 1, 2026 through August 31, 2026	—	$	—	253,207	$	36.42	253,207	$	336,034,851
September 1, 2026 through September 30, 2026	—	$	—	341,530	$	35.58	341,530	$	323,884,386
Total	—	$	—	764,015	$	34.31	764,015

On February 26, 2024, the Company’s board of directors authorized a $500 million (excluding excise tax) common stock repurchase program beginning March 1, 2024 (the “2024 Repurchase Program”), which was terminated effective February 28, 2026.

On February 19, 2026, the Company’s board of directors authorized a $500 million (excluding excise tax) common stock repurchase program effective February 28, 2026 (the “2026 Repurchase Program”), which replaced the 2024 Repurchase Program, and which will terminate on February 29, 2028 unless terminated earlier.

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. Repurchases may be discontinued at any time by management or our board of directors. Repurchased shares are recorded as treasury shares and are held until our board of directors designates that these shares be retired or used for other purposes.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

Rule 10b5-1 Trading Plans

During the three months ended September 30, 2026, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K, except as described below:

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Name and Title

Character of Trading Arrangement (1)

Date Adopted

Duration (2)

Aggregate Number of Shares of Common Stock to be Sold Pursuant to Trading Arrangement

Ajay Ayyappan,

Executive Vice President, General Counsel and Corporate Secretary

Rule 10b5-1
Trading Arrangement

August 28, 2026

March 5, 2027

37,971

(1) Except as indicated by footnote, each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended (the “Rule”).

(2) Except as indicated by footnote, each trading arrangement permits transactions through and including the earlier to occur of (a) the completion of all sales or (b) the date listed in the table. Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” only permits transactions upon expiration of the applicable mandatory cooling-off period under the Rule.

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INDEX TO EXHIBITS

ITEM 6. Exhibits

The following exhibits are being filed as part of this report or incorporated by reference as indicated therein:



3.1						Fourth Amended and Restated Certificate of Incorporation of the Company, as in effect as of the date hereof (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 25, 2024).

3.2						Sixth Amended and Restated By-laws of the Company, as in effect as of the date hereof (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K (File No. 1-33089) filed on June 21, 2023).

10.1						Revolving Credit and Term Loan Credit Agreement, dated as of August 18, 2026, among ExlService Holdings, Inc., as borrower, the other loan parties party thereto, the lenders party thereto, and PNC Bank, National Association, as administrative agent, swingline loan lender and issuing bank (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 1-33089) filed on August 18, 2026.

31.1						Certification of the Chief Executive Officer of ExlService Holdings, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of the Chief Financial Officer of ExlService Holdings, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2						Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101.INS						Inline XBRL Instance Document

101.SCH						Inline XBRL Taxonomy Extension Schema

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase

101.PRE						Inline XBRL Extension Presentation Linkbase

104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*This exhibit will not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: October 27, 2026	EXLSERVICE HOLDINGS, INC.

	By:	/S/ MAURIZIO NICOLELLI
		MAURIZIO NICOLELLI Chief Financial Officer (Duly Authorized Signatory, Principal Financial and Accounting Officer)