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Follow on Google News | EXL Reports 2008 First Quarter ResultsEXL's first quarter revenues and operating margin driven by accelerating growth
The Company's highlights for the first quarter of 2008 include: •Revenues for the quarter were $50.9 million compared to $39.9 million in the quarter ended March 31, 2007, an increase of 27.8%. •Gross margin for the quarter was 36.5% compared to 38.6% in the quarter ended March 31, 2007. •Operating margin for the quarter was 9.9% compared to 12.4% in the quarter ended March 31, 2007; adjusted operating margin for the quarter, excluding the impact of stock-based compensation expense and amortization of intangibles, was 12.2% compared to 15.9% in the quarter ended March 31, 2007. •Net income to common stockholders for the quarter was $6.8 million compared to $5.4 million in the quarter ended March 31, 2007. •Diluted earnings per share to common stockholders was $0.23 for the quarter compared to $0.19 in the quarter ended March 31, 2007. Reconciliations of adjusted financial measures to GAAP are included at the end of this release. Vikram Talwar, Executive Chairman of EXL, commented: "By focusing on providing transformational outsourcing solutions to our clients, maintaining our leading client satisfaction scores and high-quality global delivery, and continually expanding our service capabilities, EXL has delivered on its expectations for the first quarter of 2008. The recently announced senior management changes at EXL should position the leadership team to deliver continued growth of our business." Rohit Kapoor, President and CEO of EXL, commented: "The first quarter of 2008 saw many exciting developments for EXL. We completed preparations for the launch of our new Philippine operations center with a major U.S. insurance provider and added key management talent to the organization. I am particularly enthusiastic about the strong demand in our transformation services business despite the difficult economic environment and the positive reception we are receiving from clients for our integrated transformation and outsourcing solutions." Matt Appel, CFO of EXL, commented: "EXL's first quarter results reflected 1% revenue growth as compared to the fourth quarter of 2007 and stable operating margins as reflected in our guidance for 2008. Our first quarter revenues and operating margin were driven by accelerating growth in our transformation services business and flat revenues in our outsourcing business attributable to the 3% depreciation of the British Pound as compared to the fourth quarter of 2007. As a result of our first quarter results and visibility to the rest of 2008, we are maintaining our calendar year 2008 revenue guidance at $205 to $210 million, adjusted operating margin guidance at 12% and earnings per share guidance at $0.80 to $0.85 per diluted share." Financial Highlights -- First Quarter 2008 •Revenues for the quarter ended March 31, 2008 increased 27.8% to $50.9 million from $39.9 million in the quarter ended March 31, 2007. First quarter revenues grew by 1.1% as compared to the quarter ended December 31, 2007 due partially to strong sequential growth of 9.5% in transformation services revenues offset by the adverse impact of depreciation of the British Pound on outsourcing revenues. Outsourcing revenues for the first quarter of 2008 of $41.7 million reflects growth of 27.3% as compared to the first quarter of 2007. Research and analytics revenues for the first quarter of 2008 of $5.0 million grew 17.3% as compared to the first quarter of 2007. Advisory services revenues of $4.3 million for the first quarter of 2008 reflects growth of 48.9% as compared to the first quarter of 2007. •Gross margin for the quarter ended March 31, 2008 was 36.5% compared to 38.6% for the quarter ended March 31, 2007 and 39.3% for the quarter ended December 31, 2007. First quarter 2008 gross margin decreased as compared to the previous quarter due to the impact of exchange rate fluctuations. •Operating margin for the quarter ended March 31, 2008 was 9.9%, compared to 12.4% for the quarter ended March 31, 2007 and 9.9% for the quarter ended December 31, 2007. Adjusted operating margin, excluding the impact of stock-based compensation expense and amortization of intangibles, for the quarter ended March 31, 2008 was 12.2% compared to 15.9% for the quarter ended March 31, 2007 and 12.8% for the quarter ended December 31, 2007. First quarter 2008 operating margin was negatively impacted as compared to the quarter ended December 31, 2007 by unfavorable exchange rate fluctuations as well as start-up costs attributable to our new Philippine operations center. •Net income to common stockholders for the quarter ended March 31, 2008 was $6.8 million compared to $5.4 million for the quarter ended March 31, 2007 and $9.8 million for the quarter ended December 31, 2007. Net income for the first quarter of 2008 was negatively impacted as compared to the quarter ended December 31, 2007 by a reduction in interest income due to lower market interest rates, lower gains from foreign exchange hedge contracts and a higher effective tax rate (8.0% as compared to -11.3%). •Revenues generated from our largest client represented 23.5% of total revenues for the quarter ended March 31, 2008 as compared to 27.7% for the quarter ended March 31, 2007. Revenues generated from our three largest clients represented 52.2% of total revenues for the quarter ended March 31, 2008 as compared to 58.9% for the quarter ended March 31, 2007. Business Highlights -- First Quarter 2008 •Announced key management appointments and organization changes including the appointment of Vikram Talwar as Executive Chairman, Rohit Kapoor as President and CEO, and Pavan Bagai as Chief Operating Officer. •Appointed Rembert de Villa as Head of Transformation Services. Rembert joins EXL with over 23 years of global management consulting leadership experience, primarily in the financial services industry. •Substantially completed build-out of our Philippines operations center and commenced operations in April 2008 with a major U.S. insurance provider. •Transformation Services revenues grew 9.5% as compared to the previous quarter based on the commencement of new work with existing Outsourcing Services customers and the initiation of five new customer relationships. •Outsourcing Services migrated 20 new processes for nine clients during the quarter; this revenue growth was offset by a decrease in revenues due to the impact of foreign currency fluctuations and a decrease in revenues from our second largest customer. As of March 31, 2008, EXL had a headcount of approximately 10,500 individuals (including personnel managed under structured client service agreements) representing an increase of approximately 500 from the fourth quarter of 2007. The attrition rate for billable employees during the first quarter was 32% as compared to 44% for the first quarter of 2007 and 30% for the fourth quarter of 2007. 2008 Outlook -Based on current visibility, the Company is providing the following guidance based on current exchange rates: Calendar year 2008 guidance remains unchanged at: Revenues of $205 to $210 million. Adjusted operating margin, excluding the impact of stock-based compensation expense and amortization of intangibles, of 12%. GAAP EPS of $0.80 to $0.85 per diluted share. Second quarter of 2008 expectation that operating margin will be negatively impacted by the cost of annual salary increments and costs associated with the opening of our Philippines operations center. # # # About ExlService Holdings, Inc. - EXLService(Nasdaq- End
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