Exlservice (EXLS) Stifel 2024 Cross Sector Insight Conference summary

Business overview and segment performance

• Revenue is split 55% digital operations and 45% data analytics, with four main segments: insurance, healthcare, emerging, and data analytics.

• Total revenue reached $1.8 billion, doubling over four years, with adjusted margins around 19%.

• Organic top-line growth is guided at 10%-12% for the year, with EPS growth at or above revenue growth.

• Digital operations perform better in slow macro environments, while data analytics excel in strong economies.

• Payment integrity and data management within analytics are growing in the mid-teens, while marketing analytics and bank-related services have slowed.

Cyclical headwinds and growth outlook

• Data analytics growth slowed from over 30% in 2022 to 5%-6% in Q1, with a trough expected in marketing analytics and insurance.

• Payment integrity and data management are benefiting from new clients and increased claims volume.

• Marketing analytics and bank-related analytics are at or near their bottom, with a potential turnaround expected in late 2024 or early 2025.

• Sequential quarterly growth is projected for analytics, improving year-over-year growth as 2024 progresses.

• Insurance remains a headwind for the rest of the year, while healthcare faces pricing pressure and commoditization.

Drivers of large deals and client expansion

• Larger deals are driven by domain expertise, data, and AI capabilities, leading to higher revenue per client.

• Revenue per client increased from $8 million in 2020 to $14 million in 2023.

• Over half of revenue is now data and AI-driven, with this share expected to grow.

• Most annual growth comes from existing clients, while new clients set up future growth.