Exlservice Holdings Inc at Citi Global TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Yes. So maybe for those who are newer to the story, could you give us a short outlook picture on who EXL is? Who you compete with? What some of your competitive advantages in the market?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. And at your Investor Day this year, you kind of talked -- touched on the company evolution over the years, and you touched on data and AI there. But I guess, what are some lessons learned through other kind of evolution cycles of the company? And what are you doing now to position the company more towards kind of generative AI? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 7:50PM, EXLS.OQ - Exlservice Holdings Inc at Citi Global TMT Conference

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. And we'll get more into AI in a little bit. But I think one of them are unappreciated things from investors with EXL is you've been obviously one of the only IT BPO companies the past two years, that's consistently beat and raised every single quarter. So I guess what would you attribute this to -- I mean, it's a question for Maurizio too, is it more just sell execution? Is it you're setting the outlook in more of a prudent approach to set up these being raises?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Shifting gears towards demand broadly. How would you characterize the overall demand environment in your current pipeline in the state of that? And I guess, in the past two years and going forward, have you benefited from enterprises potentially focusing more on cost? With your core BPO offerings may be seeing some elevated demand?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Yes, sure. And you mentioned seeing larger deal sizes, you're seeing kind of normal kind of conversion cycles from pipeline to revenue. About ramp times are for contracts and projects ramping, how you would think? Or is there some kind of delayed decision-making there? And then also just touch on win rates, how those remain kind of consistent?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Win rates. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 7:50PM, EXLS.OQ - Exlservice Holdings Inc at Citi Global TMT Conference

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. Maybe jumping back into Gen AI for investors, again there may be newer. Can you talk through maybe some of your capabilities in AI, analytics, just data in general? And in terms of -- as you get more into those capabilities, does your kind of competitive landscape change a little bit? Like are you not competing as much against maybe core BPO companies and maybe moves up the stack a little bit?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : And you touched on some of the IP accelerators you've made -- invested in over years in terms of like co-conversion insurance, LLM. Is this an opportunity for you to differentiate more in the market? Is it something that -- especially on the kind of accelerator once conversion, or is that becoming more kind of table stakes, like investors are expecting this type of capability with kind of the vendors they're working with? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 7:50PM, EXLS.OQ - Exlservice Holdings Inc at Citi Global TMT Conference

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : And you mentioned you have some clients buying license code harbor. So I guess how are you charging for some of this IP? Is it an opportunity to maybe decouple revenue and headcount growth a little bit down the road?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. And focusing a little more on Gen AI, in particular, you mentioned this IP, but is there other capabilities in terms of Gen AI that you have beyond this? Maybe just talk through some use case examples where you've worked with clients on Gen AI, essentially solutions? And have you seen things moved beyond kind of more experimentation phases yet into more production phases?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : That's great. And I mentioned this on the last session, but investors were quick to put BPO in the loser bucket of Gen AI in early 2023. But everything you're saying, it seems like it's tenant expansion were net positive. But is there any -- there's the path, I guess, in the near term med-term long-term impact from Gen AI? Does that vary at all in terms of how you think of near term versus long term?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. And I guess one of the other kind of adjacent areas from AI as maybe clients might be more willing to accept more non-FTE kind of commercial models. So I guess could you give some color on where EXL is in terms of client adoption of non-FTE? And as clients views of, I guess, what is kind of normal kind of productivity giveback, has that changed at all as technologies like AI have become more upfront?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Yeah. I know clients have been hesitant to adopt non-FTE models throughout history because they want to keep the savings. But is there an opportunity longer term, do you think, to push more towards non-FTE? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 7:50PM, EXLS.OQ - Exlservice Holdings Inc at Citi Global TMT Conference

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : And that should be a benefit on margins?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. Kind of shifting gears, looking at analytics. I mean you talked through the four components of analytics, but is there any way you can kind of rank or tier them in terms of which ones you have the largest exposure to? And I guess which ones have been growing the fastest recently?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. And on the marketing analytics piece, I know there was more insurance headwinds, I think, in 2023 in terms of a couple of states pushing back in terms of allowing rate increases. Is it -- headwinds still primarily in insurance, and marketing analysts in general, what will it take for that trajectory to improve and accelerate?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Is there an opportunity to push that into additional verticals beyond insurance over time?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Okay. And on the data management side, you made an acquisition recently in ITI Data. Could you go over perhaps the strategic rationale of the acquisition opportunities it provides? Any potential synergies you see from it?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. And you mentioned analytics improving throughout 2024. But I guess, going forward, how do you -- do you expect it to continue to accelerate? I mean, I know '25 will have easier comps in the beginning of the year. But just in terms of thinking potential like medium term or forward growth rates for analytics, the opportunities there, particularly as some of the headwinds like within marketing analytics continue to stabilize going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 7:50PM, EXLS.OQ - Exlservice Holdings Inc at Citi Global TMT Conference

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Yes, for sure. Data is a very important building block of AI, to get their data stays in the right spot where they can get full benefits of Gen AI, so that makes sense to me. I guess kind of shifting gears to digital operations and solutions. I think that's been growing kind of faster than you would have expected in recent years? And how much of that would you attribute to the macro clients being cost focus versus investments or just improved execution there?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : So is there a good opportunity across, you mentioned digital and AI. Is there opportunity to cross-sell between analytics and digital operations and solutions, I guess? What percentage of clients are using services in both segments?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. And you touched -- Maurizio touched on analytics, going back towards that medium-term growth rate. Operations Solutions, you've been far outpacing the medium-term growth rate that you put out there. So do you think over time and maybe revert back to solar grates? Or do you think what we've been seeing, you're able to potentially sustain maybe not this level but maybe a little bit below going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 7:50PM, EXLS.OQ - Exlservice Holdings Inc at Citi Global TMT Conference

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : In that pipeline, are you taking share from the market or moving stuff that was maybe in-house with existing clients that you're taking more share from those work processes? Or is it potentially just TAM expansion in general?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : And are you seeing potentially first-time outsourcers getting more in the pipeline?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. Maybe shifting gears a little bit towards talent and delivery. Could you walk through some of the trends you've seen in terms of attrition and utilization? What you view our kind of manageable attrition levels for you?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. And earlier this year, you announced a workforce rationalization that was maybe oversized in terms of the amount of workforce that was being impacted -- the impact on the stock. But could you go through, I guess, what was the rationale from doing the workforce rationalization? Like what job roles were impacted the most? Was it more of a focus on shifting skill sets to where the market is going versus improving margins?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. And just in terms of go-forward delivery model, is there an opportunity to continue to have employees working remotely, working from home? And just in general, as we work through the kind of a virtual workforce, is an opportunity to have more of a distributed workforce model where maybe you're not you have small offices in large cities and employees can kind of commute to that?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : So it would like to potentially increase the potential talent pool where you go after in terms of -- as you move into let's say additional cities?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. I guess in terms of shifting gears, Maurizio, in terms of recent margin performance, what have been some of the puts and takes, drivers of performance. And going forward, what's the opportunity to maintain or expand -- continue to expand margins in the near term and long term as you deploy more AI as you deploy selling licenses potentially for IP is the opportunity to expand margins going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 7:50PM, EXLS.OQ - Exlservice Holdings Inc at Citi Global TMT Conference

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : And on investments, where are you making those incremental investments? Is it more just buying out your data and AI capabilities? Is it recruiting and hiring, I guess, where we make investments currently?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : Got it. And we're right up on time. So I guess just last question. Any final thoughts for investors, what should we expect for EXL over the next couple of quarters?

Question: Ryan Potter - Citigroup Global Markets, Inc. - Analyst : All right. Great. Thank you, guys. Appreciate it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 7:50PM, EXLS.OQ - Exlservice Holdings Inc at Citi Global TMT Conference