Data analytics and digital solutions company ExlService Holdings (NASDAQ: EXLS) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 14.7% year on year to $514.5 million. The company expects the full year’s revenue to be around $2.06 billion, close to analysts’ estimates. Its non-GAAP profit of $0.49 per share was 8.2% above analysts’ consensus estimates.

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Chairman and Chief Executive Officer Rohit Kapoor said, “I am pleased to report another strong quarter as we delivered revenue growth of 15% and increased our adjusted diluted EPS by 20%. Our sustained double-digit growth demonstrates the strength of our competitive position as a global data and AI company. EXL’s recognized leadership in embedding AI in the workflow is resonating strongly with our clients and fueling our growth.”

Company Overview

Originally founded as an outsourcing company in 1999 before evolving into a technology-focused enterprise, EXL (NASDAQ: EXLS) provides data analytics and AI-powered digital operations solutions that help businesses transform their operations and make better decisions.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $1.97 billion in revenue over the past 12 months, EXL is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.

As you can see below, EXL grew its sales at an incredible 15.1% compounded annual growth rate over the last five years. This is a great starting point for our analysis because it shows EXL’s demand was higher than many business services companies.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. EXL’s annualized revenue growth of 13% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, EXL reported year-on-year revenue growth of 14.7%, and its $514.5 million of revenue exceeded Wall Street’s estimates by 1.6%.

Looking ahead, sell-side analysts expect revenue to grow 10.1% over the next 12 months, a slight deceleration versus the last two years. Despite the slowdown, this projection is commendable and suggests the market is baking in success for its products and services.

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Operating Margin

EXL’s operating margin has been trending up over the last 12 months and averaged 14.4% over the last five years. On top of that, its profitability was top-notch for a business services business, showing it’s an well-run company that manages its expenses efficiently and benefits from immense operating leverage as it scales.

Looking at the trend in its profitability, EXL’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q2, EXL generated an operating margin profit margin of 15.8%, up 2.1 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

EXL’s EPS grew at an astounding 25.5% compounded annual growth rate over the last five years, higher than its 15.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For EXL, its two-year annual EPS growth of 17.9% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q2, EXL reported EPS at $0.49, up from $0.40 in the same quarter last year. This print beat analysts’ estimates by 8.2%. Over the next 12 months, Wall Street expects EXL’s full-year EPS of $1.85 to grow 6.7%.

Key Takeaways from EXL’s Q2 Results

We enjoyed seeing EXL beat analysts’ revenue, EPS, and EBITDA expectations this quarter. We were also happy it raised its full-year revenue and EPS guidance. Overall, this print had some key positives. The stock traded up 2.8% to $43.38 immediately after reporting.

EXL put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.