EXLS 10-K & 10-Q changes, risk factors and insider trading

Our success depends in part on the demand for our services and solutions, which could be negatively affected by a number ofseveral factors that may be outside of our control, including, for example, economic and political volatility or changed market conditions. OurAs a global data and artificial intelligence company, our ability to maintain and grow demand for our services and solutions requires that we continue to develop and implement offerings that keep pace with changes in the industry and anticipate and respond to rapidly evolving technology and our clients’ evolving needs in areas such as advanced AI, including generative AI, agentic AI, digital transformation and solutions, advanced analytics, cloud based solutions, data management, robotics and process automation, and data engineering, among others. We may not be successful in addressing these changes on a timely basis, or at all, or successfully marketing any changes that we implement. In addition, products or technologies developed by others may render our services uncompetitive or obsolete. If we do not sufficiently invest in new and rapidly evolving technologies, including advanced AI and automation, adapt to industry developments, evolve and expand our business at sufficient speed and scale and successfully drive innovation, our ability to develop and maintain a competitive advantage, our growth strategy and our results of operations could be adversely affected. If we are successful in responding to these developments, as we expand our services and solutions into these new areas, we may be exposed to operational, legal, regulatory, ethical, technological and other risks specific to such new areas, which may negatively affect our reputation and demand for our services and solutions.

Technological developments may materially affect the cost and use of technology by our clients and, in the case of cloud and as-a-service solutions, could affect the nature of how we generate revenue. Some of these technological developments have reduced and replaced some of our historical services and solutions and may continue to do so in the future, particularly with respect to the use of AI technology. This has caused, and may in the future cause, clients to delay or stop using some of our existing services as they evaluate and pivot to newer technologies, including our own data and AI-led solutions.solutions and services. Such technological developments and spending delays can negatively impact our results of operations, if our existing services are displaced by such newer technologies and we are unable to similarly pivot to offering services and solutions that incorporate such technologies or if we are unable to introduce new pricing or commercial models that reflect the value of these technological developments or if the pace and level of spending on new technologies, and integration of the new technologies into our services, are not sufficient to make up for any shortfall, or if our existing services are otherwise displaced by such technologies.shortfall. Developments in the industries we serve, which mayare belikely to remain rapid, also could shift demand to new services and solutions. If, as a result of new technologies or developments in the industries we serve, our clients demand new services and solutions, we may be less competitive in these new areas or need to make significant investment to meet that demand. Our growth strategy focuses on responding to these types of developments by driving innovation that will enable us to expand our business into new growth areas.

AI technologies, including cutting-edge technologies like agentic AI and generative AI, are complex and are rapidly evolving, and we face significant competition, including from our own clients, who may potentially develop their own internal AI technology, or acquire such technology from third parties, which in each case, can lead to reduced demand for our services and solutions. As these technologies evolve, some services and tasks currently performed by our employees may be replaced by automation and AI technologies.

In addition, the domestic and international legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain including in the areas of intellectual property, cybersecurity, and privacy and data protection. Several jurisdictions where we operate are applying, or considering laws and regulations related to intellectual property, cybersecurity, export controls, privacy, data security and protection to AI and automated decision-making. Broader frameworks such as the EU AI Act, are also coming into force. Compliance with new or changing laws, regulations, industry standards or ethical requirements and expectations relating to AIAI, the eventual scope and extent of which are currently unknown and which may vary across jurisdictions may impose significant operational costs. Our use of, and/or reliance on, AI, or our clients’ use of AI that does not comply with the use restrictions in our agreements or unauthorized modification thereof, could give rise to legal or regulatory action or increased scrutiny or liability and may damage our reputation or otherwise materially harm our business.

Client demand may be impacted by the selling cycle and terms of our client contracts.contracts, including for our AI-related offerings.

Client demand may be impacted by the selling cycle and terms of our client contracts. Consistent with industry practice, most of our client contracts may be terminated by our clients without cause and do not commit our clients to provide us with a specific volume of business. Any failure to meet a client’s expectations or a change in a client’s strategic direction could result in the cancellation or non-renewal of a contract or a decrease in the scope of services and solutions that we are able to provide to such client. Companies in the industries we serve sometimes seek to achieve economies of scale and other synergies by combining with or acquiring other companies. We may lose work from such clients or lose the opportunity to gain additional work due to our clients’ mergers or consolidations. We may not be able to cover our costs or replace the associated revenues from such lost services or solutions, which could impact our results of operations in subsequent periods.

The termsterm of our project-based engagements generally dodoes not exceed one year and may not produce ongoing or recurring business for us once the project is completed, and these contracts typically permit a client to terminate the agreement with shorter term notice. The majorityMost of our digital operations solutions and solutionsservices contracts haveare longerlong terms,term, typically ranging from three to five years, and generally require a longer termination notice period for termination and may include an early termination fee to be paid to us, but thiswhich might not be sufficient to cover our costs or make up for the loss of revenues and profit upon termination of the contract. In addition, the selling cycle for such contracts, which generally ranges from six to eighteen months, and the implementation and initial transformation processes, which could take up to an additional six to twelve months, are subject to many risks and delays over which we have little or no control, including our clients’ decisions to choose alternatives to our services and solutions (such as other providers or in-house offshore resources) and the timing of our clients’ budget cycles and approval processes, or subsequent changes in technology and offerings, could result in changed demand. OurIn clientsparticular, the sales cycle for our AI-related services and future clientssolutions may not be willinglonger and more uncertain than for our other offerings. Clients may require extended proof-of-concept phases, pilot programs, internal governance and compliance reviews, and additional negotiations regarding data usage, privacy, intellectual property ownership, and model performance before deciding to proceed with, expand, or ablerenew toAI-related investengagements. theAs a result, we may devote significant time and resources necessary to implementpursuing AI-related and other opportunities without realizing corresponding revenues on a timely basis, or at all, and any delay, reduction or cancellation of such projects could adversely affect our services,revenues and weresults mayof fail to close sales with potential clients to which we have devoted significant time and resources.operations.

Our success depends heavily on attracting, hiring, and retaining employees skilled in emergingcutting-edge areas,technologies, particularly artificial intelligence (AI), machine learning, data science, and digital transformation. These fields are not only highly competitive but also rapidly evolving, making the recruitment and retention of top talent especially challenging. The shortage of AI and data experts in the global marketmarket, which may be further affected by changes in the U.S. immigration laws and policies limiting the availability of H-1B or other visas, exacerbates this issue, impacting our ability to deliver on client commitments and innovate effectively. High turnover among skilled professionals in AI and data science could lead to disruptions in project continuity, increased recruitment costs, and strain our human resources. Additionally, retaining employees with leadership capabilities who can guidelead strategic AIdata and dataAI initiatives is critical for achieving long-term organizational goals. Failing to secure such talent wouldcould create risks of revenue losses, reduced market competitiveness, and missed opportunities in key geographies.

If we are unable to investhire, in reskillingreskill and upskillingupskill our employees in the areas and skills that strategically important tobusiness our business,areas our ability to effectively lead our current projects and develop new business could be jeopardized, and our business, results of operations and financial condition could be adversely affected.

Our future success also depends substantially on the continued services and performance of the members of our management team and other key employees in leadership positions that possess technical and business capabilities, including industry expertise, and are difficult to replace. Specifically, the loss of the services of our Chairmankey andmembers Chiefof Executiveour Officersenior leadership team could seriously impair our ability to continue to manage and expand our business. Although we have entered into employment and non-competition agreements with all of our executive officers, certain terms of those agreements may not be enforceable, particularly in light of recent regulatory scrutiny from the U.S. Federal Trade Commission and others, and in any event these agreements do not ensure the continued service of these executive officers. We currently do not maintain “key person” insurance covering any member of our management team. The loss of any of our key management personnel, particularly to competitors, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our profitability is, in part, a result of the efficiency with which we utilize our assets, in particular our people and our operations centers, and the price we can charge for our services. Our asset utilization levels are affected by a number ofseveral factors, including our ability to transition employees from completed projects to new assignments, attract, train and retain employees, forecast demand for our services (including potential client terminations or reductions in required resources) and maintain an appropriate headcount in each of our locations, as well as our need to dedicate resources for employee training and development, other typically non-chargeable activities and optimizing our operational infrastructure. If we fail to estimate accurately the resources and time required for a contract, or manage our asset utilization levels, future attrition rates, potential productivity benefits over time, future wage inflation rates or currency exchange rates (or fail to accurately hedge our currency exchange rate exposure) or if we fail to complete our contractual obligations within the contracted timeframe, our revenues, cash flows and profitability may be negatively affected.

In many of our digital operations solutions and solutionsservices contracts we commit to long-term and otheralternative pricing structuresstructures, (suchrather asthan full-timeannual equivalent-basedor pricing,hourly fixed-pricebilling arrangements, transaction-based and outcome-based pricing)rates, with our clients and therefore may bear the risk of cost overruns, completion delays, resource requirements, wage inflation and adverse movements in exchange rates in connection with these contracts. Industry pricing models are evolving, and clients increasingly request alternative pricing models, rather than annual or hourly billing rates. If we make inaccurate assumptions for contracts with such alternative pricing models including pricing for our digital capabilities and complex transformation services or are unable to offer competitive pricing, our profitability may be negatively affected.

We are typically required to process, and sometimes collect and/or store sensitive data, including data regulated by the U.S. Health Insurance Portability and Accountability Act of 1996, as amended (HIPAA), of our clients’ customers in connection with our services, including names, addresses, social security numbers, personal health information, credit card account numbers, checking and savings account numbers and payment history records, such as account closures and returned checks. In addition, we collect and store data regarding our employees. In the United States, several states have enacted or are considering enacting privacy regulations, including, the California Consumer Privacy Act. In addition, there are privacy and data localization regulations in other jurisdictions, such as the General Data Protection Regulation in the European Union, the International Data Transfer Agreement in the United Kingdom and the Digital Personal Data Protection Act, 2023 in India. These privacy regulations impose privacy and data security compliance obligations and significant penalties for noncompliance. Other countries have enacted or are considering enacting data localization laws that require certain data to stay within their borders. We may also face audits or investigations by one or more domestic or foreign government agencies or our clients pursuant to our contractual obligations relating to our compliance with these regulations. Complying with changing regulatory requirements requires us to incur substantial costs, exposes us to potential regulatory action or litigation, and may require changes to our business practices in certain jurisdictions. As a result, we are subject to various data protection and privacy laws in the countries where we operate, and the failure to comply with such laws could result in significant fines and penalties. In addition, we may not be able to limit our liability to our clients with respect to breaches of our obligation to keep the information we receive from them confidential.

Although we devote substantial resources to protect our information assets and our clients’ confidential information, any network infrastructure is to some extent vulnerable due to rapidly evolving cyberattacks, employee error, malfeasance, or a combination of the foregoing. The remote work solutions that we employ in our hybrid working model may also be limited in their ability to replicate the operational oversight and security controls of our office environments and may pose a higher risk of operational and information security failures. Outside parties may attempt to fraudulently induce employees,employees or clients to disclose sensitive information in order to gain access to our data or our clients’ data. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of our security occurs (or a breach of a client’s security that can be attributed to our fault or is perceived to be our fault), the market perception of the effectiveness of our security measures could be harmed and we could lose clients.

Our clients, suppliers, subcontractors, and other third parties with whom we do business, including in particular cloud service providers and software vendors, generally face similar cybersecurity threats, and we must rely on the safeguards adopted by these third parties. If these third parties do not have adequate safeguards or their safeguards fail, it may result in a security breach of our systems and technology infrastructure, or our solutions, or those of our clients. Security breaches or any negative impact resulting from such incursions into our systems and technology infrastructure and those of our clients, partners and suppliers, may expose us to a risk of loss of sensitive information, lawsuits from our employees, clients or their customers for breaching contractual confidentiality provisions or privacy laws, or investigations and penalties from regulators or criminal prosecution, remediation costs, increased costs for security measures, loss of revenue, damage to our reputation, and potential liability.

Further, growth in state-sponsored cyber activity, and the risk that these cyberattacks could spread globally, showcases the increasing sophistication of cyber threats and could dramatically expand the global threat landscape. If a material security breach or incident occurs with respect to a cloud services provider, our clients and potential clients may lose trust in cloud solutions generally, and with respect to security in particular. This could adversely impact our ability to retain existing clients or attract new clients, which, in turn, could have a serious impact on our reputation. Although we have not experienced a material incident to date, there can be no assurance that these measures will prevent or limit the impact of a future incident. We may incur significant costs in protecting against or remediating cyberattacks/other cyber incidents, settling data breach claims or paying associated penalties.

The services we provide are often critical to our clients’ businesses, and any failure to provide those services could result in a reduction in our revenues or a claim for substantial damages against us, regardless of whether we areor a third party vendor or partner is responsible for that failure.

We depend on certain significant vendors and partners for software, technology and data communications, including high-quality datasets, related equipment and its maintenance, and third party components that we use to deliver our services, including cloud services. Our offshore operations centers require us to maintain active voice and data communications among our operations centers, our technology and data hubs and our clients’ offices. Although we maintain our facilities and communications links with business continuity and disaster recovery plans, disruptions could result from, among other things, technical breakdowns, computer glitches and viruses and weather conditions. Any performance failure or discontinuation on the part of our vendors or partners, or the discontinuance by such vendors or partners of services that we rely on them to perform, could delay our performance, or require us to engagefind alternative third parties to perform the services at our costalternatives or to perform the services ourselves, any of which could result in a negative impact on our reputation, a loss of revenue or adversely impact our cash flows and profitability.

We also may fail to obtain the right to use third-party data or our use of third-party data may be limited in a manner that could impede our development of solutions, including solutions using AI technologies, or our provision of services that rely on such data. If we arecannot unsuccessfulobtain inor negotiatingcomply for suchwith third-party data use rights, or if we are found to have used such data in a manner inconsistent with our rights and limitations, we may need to stop providing certain of our solutions or services, we may be unable to compete with our peers, or we might incur other financial, legal and/or reputational consequences.

Our most significant costs are the salaries and related benefits of our operations staff and other employees. For example, wage costs in India, the Philippines and South Africa have historically been significantly lower than wage costs in the United States, the United Kingdom and Europe for comparably skilled professionals, and having a significant number of our employees in those lower wage costs countries has been one of our competitive advantages. However, because of increased demand for competitive services from such countries and increased competition for skilled employees, wages for comparably skilled employees are increasing at a faster rate than in the United States, the United Kingdom and Europe. This may reduce our competitive advantage. We also may need to increase the levels of employee compensation more rapidly than in the past to remain competitive in attractingattract and retainingretain the quality and number of employees that our business requires. Wages are generally higher for employees performing AI, analyticsdata and digital transformationAI-led services than for employees performing digital operations and solutions.services. As the scale of such services increases, wages as a percentage of revenues may increase. In addition, changes to the labor laws in the countries where we operate may also lead to a substantial increase in our wage costs. For example, the Government of India recently consolidated multiple existing labor legislations into a unified framework comprising four labor codes collectively referred to as the new “Labor Codes”. Certain aspects of the Labor Codes rely on the future issuance of rules and regulations. The issuance of rules and regulations as well as the outcome of certain clarifications could increase new employment obligations, create operational, compliance and administrative burdens and impact our compensation and benefit expenses prospectively in India. To the extent that we are not able tocannot control such costs by our efforts to addadding capacity in lower wage costs countries or sharesharing such wage increases with our clients, wage increases may reduce our margins and cash flows.flows may be impacted.

Our success depends in part on certain methodologies, practices, tools and technical expertise we utilize in providing our services and solutions. Our intellectual property consists of proprietary and licensed platforms, software, data, datasets, methodologies, models, know-how, names, designs, domains, user interfaces, applications and operating procedures, among other materials. We consider many of our business processes and implementation methodologies to be trade secrets or proprietary know-how and confidential information. We seek to protect our intellectual property through a combination of patent, trademark, copyright and trade secret laws, as well as through confidentiality procedures and contractual provisions. In addition, we monitor infringing or potentially infringing activities by third parties on our IP portfolio through cybersecurity “watchdog” technologies and take action to enforce offensiveinfringing action when necessary to protect our intellectual property. Clients and business partners typically agree in writing to confidential treatment of our intellectual property and information. Our employees and independent contractors are required to sign work-for-hire and confidentiality covenants as a condition to their employment and engagement, respectively. We also have policies requiring our employees, independent contractors, and associates to respect the intellectual property rights of others, including obtaining appropriate licenses when using, selling or distributing third party materials. However, these measures may not prevent misappropriation or infringement of our intellectual property and a resulting loss of competitive advantage. Additionally, we may not be successful in obtaining or maintaining patents, trademarks or other intellectual property rights protections for which we have applied or may in the future apply.

We may be unable to protect our intellectual property and proprietary technology effectively, which may allow competitors to duplicate our technology and solution offerings and may adversely affect our ability to compete with them. To the extent that we do not protect our intellectual property effectively through contractual provisions, confidentiality procedures, patents, trade secret laws or other means including those set forth above, other parties, including former employees, with knowledge of our intellectual property may leave and seek to exploit our intellectual property for their own or others’ advantage. We may not be able to detect unauthorized use and steps we take to enforce our rights may not always be successful. Infringement by others of our intellectual property, including the costs of enforcing our intellectual property rights, may have a material adverse effect on our business, results of operations, financial condition and cash flows.

In addition, competitors or others may allege that our systems, processes, marketing, data usage or technologies infringe on their intellectual property rights, including patents. Non-practicing entities may also bring baseless, but nonetheless costly to defend, infringement claims. We could be required to indemnify our clients if they are sued by a third party for intellectual property infringement arising from materials that we have provided to the clients in connection with our services and solutions. We may not be successful in defending against such intellectual property claims or in obtaining licenses or an agreement to resolve any intellectual property disputes. Given the complex, rapidly changingcomplex and competitive technological and business environment in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, any future infringement claim against us or our clients may cause us to alter our business practices, lose significant revenue, incur significant license, royalty or technology development expenses, or pay significant monetary damages or legal feesfees, andwhich costs.may be significant to us. Any such claim for intellectual property infringement may have a material adverse effect on our business, results of operations, financial condition and cash flows.

We have earned and believe that we will continue to earn in the near or foreseeable future a substantial portion of our total revenues from a limited number of large clients that are primarily located in the United States. Any change in demand fromfrom, or loss of, any of our large clients for any reason could have a material adverse effect on our reputation, business, results of operations, financial condition and cash flows. Moreover, the loss of a major client could also impact our reputation in the market, making it more difficult to attract and retain clients more generally.

Global macroeconomic and geopolitical conditions affect us, our clients’ businesses and the markets they serve. Volatile, negative and uncertain economic and geopolitical conditions have in the past undermined and could in the futurecan undermine business confidence in the markets in which we operate, which are increasingly interdependent, causingand cause our clients to reduce or defer their spending on new initiatives and technologies, and negatively affecting our business.

Our inability to manage our rapid infrastructure and personnel growth across countries could adversely affect our business operations.operations, including losing key talent to competitors.

We have operations centers across India, the United States, the Philippines, South Africa, Colombia, Bulgaria, Romania, the United Kingdom, the Czech Republic, Mexico and the Republic of Ireland. Our headcount has increased significantly over the past several years. We expect to develop and improve our internal systems in the locations in which we operate in order to address the anticipated continued growth of our business. We continue to look for operations centers at locations outside of our current operating geographies. We have also made changes to our operating model driven by delivery of aA significant portion of our services fromis delivered through a hybrid working model, which has led to contraction of our operations centers. Changes in our operatingdelivery model or other changes to our infrastructure facilities or how we are organized, as the needs and size of our business change, limit our ability to forecast the need to hire additional skilled employees as and when they are required to meet the ongoing needs of our clients, and we may not be able to develop and improve our internal systems. We may fail to attract and retain enough sufficiently trained employees to support our operations or professionals with sufficient leadership capabilities. We may not be able to maintain our culture and effectively communicate our core values, policies and procedures, strategies and goals, particularly given our world-wide operations, rate of new hires, and significant percentage of ourremote employees who have the option to work remotely.employees. We needcontinue to introduce reskilling and upskilling programs tailored to AIAI, data and datadigital roles to ensure that employees remain agile and capable of executing complex projects. Training initiatives that focusemphasize on AI modelawareness, development,hands-on deployment,experimentation, and maintenancedata-driven problem solving skills, along with specialized tracks focused on AI and data engineering, cloud engineering, and solution architecture, not only improve employee capabilities but also position us as a forward-thinking organization. Without these investments, we risk losing key talent to competitors, jeopardizing our ability to innovate and grow. We also need to manage cultural differences among our employee populations and varying legal and regulatory regimes across jurisdictions, and that may create a risk for employment claims. Our inability to execute our growth strategy, to ensuremaintain theadequate continued adequacy of our current systemssystems, or to manage our talent and expansion effectively could have a material adverse effect on our business, results of operations, financial condition and cash flows.

As part of our business strategy, we intend to continue to selectively consider acquisitions or investments, some of which may be material. Through the acquisitions we pursue, we may seek opportunities to expand the scope of our existing services, add new clients or enter new geographic markets. There can be no assurance that we will successfully identify suitable candidates in the future for strategic transactions at acceptable prices, have sufficient capital resources to finance potential acquisitions or be able to consummate any desired transactions. Our failure to identify suitable candidates or close transactions with potential acquisition targets for whichafter we have invested significant time and resources could have a material adverse effect on our financial condition and cash flows.

Acquisitions, including completed acquisitions, involve a number ofseveral risks, including diversion of management’s attention, ability to finance the acquisition on attractive terms, failure to retain key personnel or valuable clients, legal liabilities and the need to amortize acquired intangible assets or recognize any impairment on goodwill and intangible assets, any of which could have a material adverse effect on our business, results of operations, financial condition and cash flows. Future acquisitions may also result in the incurrence of indebtedness or the issuance of additional equity securities.

We could also experience financial or other setbacks if transactions encounter unanticipated problems, including problems related to execution, integration or underperformance relative to prior expectations,underperformance, or problems with theacquired intellectual property that we may acquire.property. Our management may not be able to successfully integrate any acquired business into our operations or maintain our standards, controls and policies, which could have a material adverse effect on our business, results of operations and financial condition. Consequently, any acquisition we complete may not result in long-term benefits to us or we may not be able to further develop the acquired business in the manner we anticipated.

Most of our agreements with clients contain service level and performance requirements, including requirements relating to the quality of our services. Failure to consistently meet the service level and performance requirements offor aour clientclients, or errors made by our employees in the course of delivering services to our clientsclients, could disrupt the client’s business and result in a reduction in revenues or a claim for damages against us.

We face competition globally from other providers and from our clients, who may build global capability centers to performprovide data and AI-led solutions and services and digital operations and solutions and analytics services themselves, either in-house or other arrangements.

The market for our services is highly competitive, and we expect competition to intensify and increase in the future as more companies enter the market. We face competition globally from other providers.providers Weincluding believepure-play thatAI thesolutions principaland platform vendors with niche offerings for very specific industry challenges. Key competitive factors in our markets are breadth and depth ofinclude process expertise, offerings,AI knowledgeand ofgenerative industriesAI served,solutions, industry knowledge, service quality, compliance rigor, global delivery capabilities, pricing, and sales and client management capabilities. Further, a client may choose to use its own internal resources rather than engage an outside firm to perform the types of services we provide, including by creating in-house global capability centers.

These competitors may include entrants from the communications,leading softwaremanagement consulting firms, IT services, industry-specific digital operations solutions and dataservices networkingproviders, industriesanalytics/AI services providers or entrants in geographic locations with lower costs than those in which we operate. SomeWithin ofconsulting, theseplayers existingwho have focused traditionally on advisory are now bringing industry AI solutions to their clients and potentialembedding AI solutions into workflows. Some competitors may have greater financial, personnel and other resources, a broader range of offerings, greater technological expertise, more recognizable brand names and more established relationships in industries that we currently serve or may serve in the future.serve. In addition, some of our competitors may enter into strategic relationships or mergers or acquisitions with larger, more established companies in order to increase their ability to address client needs, or enter into similar arrangements with potential clients. The trend in multi-vendor relationships has been growing, which could reduce our revenues to the extent that we are required to modify the terms of our relationship with clients or that clients obtain services from other vendors. Increased competition, our inability to compete successfully against competitors, pricing pressures or loss of market share could impact our business, results of operations, financial condition and cash flows.

Our operations centers and our data and voice communications, particularly in India, the Philippines and South Africa, may be damaged or disrupted as a result of natural disasters such as earthquakes, floods, volcano eruptions, heavy rains, drought, extreme heat, epidemics or pandemics, tsunamis and cyclones, technical disruptions such as electricity or infrastructure breakdowns, including damage to telecommunications cables, computer glitches and electronic viruses or man-made events such as political unrest, terrorist attacks, military confrontations, other acts of violence or war, protests, riots and labor unrest. Such events may lead to the disruption of employees, business operations, information systems and telecommunication services or our supply chain for sustained periods. They also may make it difficult or impossible for employees to reach our business locations and for us to deliver our solutions and services.

Our risk management, business continuity and disaster recovery plans may not be effective at preventingprevent or mitigatingmitigate the effects of such disruptions, particularly in the case of a catastrophic event. Damage or destruction that interrupts our provision of services could adversely affect our reputation, our relationships with and liability to our clients, our leadership team’s ability to administer and supervise our business or it may cause us to incur substantial additional expenditure to repair or replace damaged equipment or operations centers. While we currently have commercial liability insurance, our insurance coverage may not be sufficient to cover any such liability or other related costs. Furthermore, we may be unable to secure such insurance coverage at premiums acceptable to us in the future or at all. Prolonged disruption of our services would also entitle our clients to terminate their contracts with us. Any of the above factors may adversely affect our business, results of operations, financial condition and cash flows.

The transfer pricing regulations in the countries we operate in require that controlled intercompany transactions be at arm’s-length. Accordingly, we determine and document pricing for controlled intercompany transactions based on an economic analysis as prescribed in the respective regulations. The tax authorities have jurisdiction to review our transfer pricing. If our transfer pricing assessment is challengedchallenged, bytax the authorities, theyauthorities could assess additional tax, interest and penalties, thereby impacting our profitability and cash flows.

We are subject to taxes in the countries we operate in. Our future tax liabilities could be adversely affected by any new unfavorable tax legislative changes in the countries we operate in. We currently benefit from corporate tax holidays in our qualified Philippines Economic Zone Authority operations centers in the Philippines.centers. Our ability to utilize these tax holidays could be adversely affected by any new unfavorable tax legislative changes. We continuouslyhave monitorestablished suchour changesheadquarters tofor assessinternational business in Dublin, Ireland, and quantifyqualify for a reduced tax rate. Any change in our qualification for the potentialreduced impactsrate oncould adversely affect our consolidatedoverall financialtax statements.liabilities.

We currently operate in the Philippines and Ireland where we will be subject to a minimum tax rate pursuant to the Pillar Two Framework prescribed by Organization for Economic Co-operation and Development (“OECD”). The OECD continues to release additional guidance on the Pillar Two Framework, with implementation generally effective for 2024. We do not anticipate any significant Pillar Two Framework impacts, but will continue to evaluate any changes and potential impact on our consolidated financial statements.

We report our operating results in U.S. dollars, yetbut a portion of our revenues and expenses are denominated in currencies other than the U.S. dollar. Accordingly, we must translate such revenues and expenses, as well as corresponding assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period, as applicable. As a result, fluctuations in foreign currency exchange rates can adversely affect our results of operations. The exchange rates among the Indian rupee, the Philippine peso, the U.K pound sterling, the South African rand and other currencies in which we incur costs or earn revenues and the U.S. dollar have changed substantially in recent years and may fluctuateadversely substantiallyaffect inour theresults future.of operations. See Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk.” Additionally, because a majority of our employees are based in India, Philippines and South Africa and paid in Indian rupee or Philippine peso or South African rand, while our revenues are primarily reportedearned in U.S. dollars and U.K. pound sterling, our employee costs as a percentage of revenues may increase or decrease significantly if the exchange rates among the Indian rupee, the Philippine peso, the U.K pound sterling, the South African rand and the U.S. dollar fluctuate significantly.

Although we take steps to hedge a substantial portion of our foreign currency exposures, there is no assurance that our hedging strategy will be successful or that the hedging markets will have sufficient liquidity or depth to allow us to implement our hedging strategy in a cost-effective manner.cost-effective. Any failure by our hedging counterparties to meet their contractual obligations could materially and adversely affect our profitability, business, results of operations, financial condition and cash flows.

The ability of some of our executives and employees based in India and other foreign locations to work with and meet clients in the United States and other countriesabroad depends on their ability to obtainobtaining the necessary visas and work permits. In recent years, immigration authorities, in the United States as well as other countries where our clients are based, have increased the level of scrutiny inand otherwise limited the granting of such visas and work permits, which may be affected by changes in legislation and enforcement due to political and other factors which may be difficult to predict. The ability to move our employees around the world as necessary to meet client demands is important to our business. If wevisa areregulation unableprevents tous efficientlyfrom deployeffectively talentdeploying talent, including because of increased regulation of immigration or work visas, including limitations placed on the number of visas granted, limitations on the type of work performed or location in which the work can be performed, and new or higher minimum salary requirements, it could be more difficult to staff our employees on client engagements and could increase our costs and have an adverse effect on our net income and cash flows.

•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, 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 contractscontracts, including for our AI-related offerings;

•our ability to hireattract and retain enough sufficiently trained employees to support our operations or any changes in the senior management team;

•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;

•our ability to manage rapid infrastructure and personnel growth across countriescountries, including losing key talent to competitors;

•increasing competition in our industryindustry, including from other providers and from internal resources of our clients;

•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 the rising inflation, high interest rates and economic recessionary trends on currency exchange rates;

•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.swaps; and

•negative public reaction in the U.S.United States or elsewhere to offshore outsourcing;outsourcing.

We are a global data and artificial intelligence (“AI”) company that offers services and solutions to reinvent our 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,healthcare and life sciences, banking and capital markets, retail, communications and media, and energy and infrastructure, among others.

OurOne 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), is a key asset.. 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.

In the first quarter of 2025, we began to implementimplemented operational and structural changes to accelerate the execution of our data and AI strategy, capture a greater share of the growing AI marketstrategy and drivealign with how our long-termmanagement growth.reviews financial information and makes operating decisions. The new operating model is comprised of Industry Market Units (“IMUs”) to focus on delivering higher value to clients leveraging our full suite of capabilities; and Strategic Growth Units to focus on rapidly advancing our operational, analytics, data engineering, and AI capabilities specific to variousour industrieschosen industries. Our IMUs focus on managing customer relationships and delivering the “One EXL” value proposition to clients, maintaining a unified go-to-market approach and be integrally responsible for growth, profitability and client needs. This will enable us to further embed analytics throughout each of our IMUs, enhance our client relationships, deepen investments in data and AI capabilities, develop industry-specific AI solutions, form partnerships, access new client buying centers, enable expansion of our addressable markets across industries and geographies, and provide more professional development opportunities for our employees.satisfaction.

OurAccordingly, our new reportable segments, aligned to our IMUs, effective for the first quarter of 2025 will beare as follows:

The primary changes in our new reportable segments reflect 1) the integration of our former Analytics reportable segment as a core capability within each of our IMUs, ensuring alignment with the specialized needs of our clients across IMUs, 2) the reorganization of our former Emerging Business reportable segment into a Banking, Capital Markets and Diversified Industries reportable segment, excluding Life Sciences, which is now a part of formerthe new Healthcare and Life Sciences reportable segment, and including data and analytics services, and 3) the formation of International Growth Markets as a separate business unitIMU to represent all our serviceservices and solutions offerings to clients in the United Kingdom, Europe, Middle EastEast, Asia-Pacific and Asia-PacificSouth Africa geographies across all industry verticals. The International Growth Markets businessIMU unitis will helphelping strategically expand our footprint in markets outside of AmericasNorth America and drive focus on offerings and expansion in those markets in new and existing clients.

We provide data analyticsand AI-led solutions and services and digital operations solutions and solutionsservices 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 clients’ industry verticals and our capabilities such as digital operations and solutions and analytics.IMUs. Our sales and client management teams operate primarily from the United States, India, the United Kingdom, Ireland and Australia.

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 examplesan example of a non-linear pricing modelsmodel where clients linkour revenues from platforms and solutions and the services we provide toare compensated based on our clients’ usage or savings rather than the efforts deployedwe 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.

We serve clients mainly in the UnitedNorth StatesAmerica, and the United Kingdom,Kingdom & Europe, with these two regions generating 82.6%82.7% and 11.7%,14.7%, respectively, of our total revenues for fiscal 20242025 and 84.1%82.3% and 10.9%,14.8%, respectively, of our total revenues for fiscal 2023.2024.

For fiscal 20242025 and 2023,fiscal 2024, our total revenues from our top ten clients accounted for 33.2%34.0% and 34.0%33.2% 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.

•other costs which primarily include travel and costs relating to our direct mailmarketing operations.business.

We generally experience a higher cost of revenues as a percentage of revenues during the initial 12 to 18 months in aour long-term digital operations and solutions contractcontracts due to upfront investments in infrastructure, resource hiring and training during migration. The cost of revenues as a percentage of revenues improves as we scale up, achieve operational efficiencies and complete the migration.

Our revenues are primarily denominated in the U.S. dollar, however, a portion of our revenues are earned in the U.K. pound sterling representing 10.7%10.6% and 10.1%10.7% of our total revenues in fiscal 20242025 and 2023,fiscal 2024, respectively. We also incur a significant portion of our expenses in the Indian rupee, the Philippine peso, the South African rand and the U.K. pound sterling, representing 31.1%, 8.4%, 3.3% and 3.1%, respectively, of our total expenses in fiscal 2025, compared to 29.7%, 8.2%, 3.5% and 2.8%, respectively, of our total expenses in fiscal 2024, compared to 28.5%, 8.2%, 2.0% and 3.1%, respectively, of our total expenses in fiscal 2023.2024. The exchange rates among these currencies and the U.S. dollar have changed over the years and may fluctuate substantially in the future as well. The results of our operations could be substantially impacted as these currencies appreciate or depreciate against the U.S. dollar. See Part I, Item 1A, “Risk Factors” under “Risks Related to the International Nature of Our Business––Currency exchange rate fluctuations in the various currencies in which we do business, or the failure of our hedging strategies to mitigate such fluctuations, could have a material adverse effect on our results of operations,” as well as Note 2 - Summary of Significant Accounting Policies and Note 17 - Derivatives and Hedge Accounting to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data” and Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk-Components of Market Risk-Foreign Currency Risk.”

Interest expense primarily consistconsists of interest on our borrowings under our revolving credit facility, term loan facility and convertible senior notes,facility, finance leases and notional interest implicit in the purchase of property and equipment.

Other income/(expense), net primarily consists of gain/(loss) on sale and mark-to-market, dividend income and interest income on our short-term and long-term investments, cash equivalents, as applicable. Other income/(expense), net also consists of changes in fair value of contingent consideration related to business combinations, interest on refunds received from income tax authorities in India on completion of tax assessments, profit or loss on disposal of long-lived assets and components of net periodic benefit cost such as interest cost, expected return on plan assets andassets, amortization of actuarial gain/(loss) orand loss.prior period service costs.

In October 2021, the Organization for Economic Co-operation and Development (“OECD”) introduced the Pillar Two Framework imposing a global minimum tax rate of 15%. We have determined that the impact of the Pillar Two Framework did not have material impact on our consolidated financial statements.

Critical Accounting Policies and Estimates

•our ability to successfully consummate or integrate announced or future strategic acquisitionsacquisitions, including the impact from the impairment of goodwill and other intangible assets, if any;

For the three months ended MarchJune 31,30, 2026, we generated revenues of $570.4$594.8 million compared to revenues of $501.0$514.5 million for the three months ended MarchJune 31,30, 2025, an increase of $69.4$80.3 million, or 13.8%.15.6%. For the six months ended June 30, 2026, we generated revenues of $1,165.1 million compared to revenues of $1,015.5 million for the six months ended June 30, 2025, an increase of $149.6 million, or 14.7%.

We serve clients mainly in North America, and the United Kingdom & Europe, with these two regions generating 83.0%82.3% and 14.5%,15.0%, respectively, of our total revenues for the three months ended MarchJune 31,30, 20262026, and 82.9%82.2% and 15.1%, respectively, of our total revenues for the three months ended MarchJune 31,30, 2025. For the six months ended June 30, 2026, these two regions generated 82.6% and 14.8%, respectively, of our total revenues and 82.5% and 14.8%, respectively, of our total revenues for the six months ended June 30, 2025.

For the three months ended MarchJune 31,30, 2026 and 2025, our total revenues from our top ten clients accounted for 34.6%34.1% and 33.7%33.5% of our total revenues, respectively. For the six months ended June 30, 2026 and 2025, our total revenues from our top ten clients accounted for 34.3% and 33.6% 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.

There have been no significant changes in our critical accounting policies and estimates during the threesix months ended MarchJune 31,30, 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.

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

Three Months Ended MarchJune 31,30, 2026 compared to Three Months Ended MarchJune 31,30, 2025

Revenues for the three months ended MarchJune 31,30, 2026 were up by $69.4$80.3 million, or 13.8%,15.6%, compared to the three months ended MarchJune 31,30, 2025, driven by the expansion of business from our existing clients across all reportable segments by 11.8%13.3% and revenue from new clients wins by 2.0%2.6%, partially offset by a foreign exchange loss, net of hedging by 0.3% during the three months ended MarchJune 31,30, 2026.

Revenue growth in Insurance by 12.7%14.9% was driven by the expansion of business from our existing clients by 11.5%13.7% and new clients by 1.2% during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

Revenue growth in Healthcare and Life Sciences by 21.0%22.0% was driven by the expansion of business from our existing clients by 20.5%21.0% and new clients by 0.5%1.0% during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

Revenue growth in Banking, Capital Markets and Diversified Industries by 8.2%10.5% was driven by the expansion of business from our existing clients by 4.1%5.2% and new clients by 4.1%5.3% during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

Revenue growth in International Growth Markets of 13.4%14.7% was driven by the expansion of business from our existing clients by 8.0%,12.1%, new clients by 2.9%4.2%, andpartially offset by a foreign exchange gain,loss, net of hedging by 2.5%1.6% during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

Cost of Revenues and Gross Margin: The following table sets forth cost of revenues and gross margin of our reportable segments.segments:

Cost of revenues for the three months ended MarchJune 31,30, 2026 increased by $40.6$48.5 million, or 13.2%,15.2% compared to the three months ended MarchJune 31,30, 2025. The increase in cost of revenues was due to increases in employee-related costs of $35.5$44.9 million on account of higher headcount and wage inflation, and higher technology,technology costs of $8.4 million, facilities and other operating costs of $8.8$4.4 million, partially offset by a foreign exchange gain, net of hedging of $3.7$9.2 million. Our gross margin for the three months ended MarchJune 31,30, 2026 was 38.9%,38.0%, compared to 38.6%37.7% for the three months ended MarchJune 31,30, 2025, an increase of 30 basis points (“bps”), primarily driven by higher revenues and operational efficiencies, partially offset by lower volumes infrom certain existing clients during the three months ended March 31, 2026, compared to the three months ended March 31, 2025.clients.

The increase in cost of revenues in Healthcare and Life SciencesInsurance by $12.6$17.1 million for the three months ended MarchJune 31,30, 2026 was due to increases in employee-related costs of $9.3$15.6 million on account of higher headcount and wage inflation, higher technology costs of $1.6$2.5 million, and higher facilities and other operating costs of $2.7$1.3 million, partially offset by foreign exchange gain, net of hedging of $1.0$2.3 million. Gross margin in HealthcareInsurance and Life Sciences increaseddecreased by 14020 bps, primarily due to higherlower volumes infrom certain existing clients during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

The increase in cost of revenues in InternationalHealthcare Growthand MarketsLife Sciences by $9.7$10.8 million for the three months ended MarchJune 31,30, 2026 was due to increases in employee-related costs of $8.1$9.3 million on account of higher headcount and wage inflation, higher technology costs of $1.9 million, and higher technology, facilities and other operating costs of $2.2$1.7 million, partially offset by a foreign exchange gain, net of hedging of $0.6$2.1 million. Gross margin in InternationalHealthcare Growthand MarketsLife decreasedSciences increased by 250340 bps, primarily due to lowerhigher volumes infrom certain existing clients during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

The increase in SG&Acost expensesof revenues in International Growth Markets by $15.0$8.7 million duringfor the three months ended MarchJune 31,30, 2026, compared to the three months ended March 31, 20252026 was primarily due to increases in employee-related costs of $11.8$8.6 million on account of higher headcount and wage inflation, increased investments in digital and generative AI capabilities of $1.9 million, and higher salestechnology andcosts marketingof $2.2 million and other operating costs $0.4 million, partially offset by a foreign exchange gain, net of $1.3hedging of $2.5 million. Gross margin in International Growth Markets remained flat during the three months ended June 30, 2026, compared to the three months ended June 30, 2025.

DepreciationSelling, General and Amortization.Administrative Depreciation(“SG&A”) andExpenses. amortizationSG&A expenses as a percentage of net revenues decreasedincreased byfrom 0.2%19.2% during the three months ended MarchJune 31,30, 2026, compared2025 to 20.9% during the three months ended MarchJune 31,30, 2025.2026.

TheDepreciation increaseand inAmortization. depreciationDepreciation and amortization expenseexpenses as a percentage of net revenues decreased by 3.3%0.2% during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025 was primarily due to investments in infrastructure, technology assets and digital capabilities.2025.

Interest expense. The decreaseincrease in interestdepreciation and amortization expense by $0.1 million3.9% during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025 was primarily due to ainvestments lowerin averageinfrastructure, effectivetechnology interestassets rate.and digital capabilities.

Other income, net decreased by $2.2$5.6 million during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 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.expenses, net.

Income Tax Expense. The effective tax rate for the three months ended MarchJune 31,30, 2026 was 26.6%,23.1%, an increase from 16.9%21.9% for the three months ended MarchJune 31,30, 2025. We recorded income tax expense of $24.3$19.4 million and $13.5$18.6 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase in income tax expense was primarily as a result of an increase in non-deductible expenses and lower excess tax benefits related to stock-based compensation of $13.2 million and higher profit, partially offset by a decrease in non-deductible compensation expenses,compensation, as compared to the three months ended MarchJune 31,30, 2025.

Net Income. The increasedecrease in net income by 0.8%2.3% during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025 was attributable to the aforementioned factors.