Data analytics and digital solutions company ExlService Holdings (NASDAQ:EXLS) reported revenue ahead of Wall Street’s expectations in Q3 2026, with sales up 19.7% year on year to $634 million. The company’s full-year revenue guidance of $2.44 billion at the midpoint came in 1% above analysts’ estimates. Its non-GAAP profit of $0.62 per share was 11% above analysts’ consensus estimates.
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EXL (EXLS) Q3 2026 highlights:
- Revenue $634 million vs S&P analysts’ estimates of $614.5 million (19.7% year-on-year growth, 3.2% beat)
- Adjusted EPS $0.62 vs S&P analysts’ estimates of $0.56 (11% beat)
- Adjusted EBITDA $135 million vs analyst estimates of $126 million (21.3% margin, 7.2% beat)
- Revenue guidance The company lifted its revenue guidance for the full year to $2.44 billion at the midpoint from $2.40 billion, a 1.4% increase
- Adjusted EPS guidance Management raised its full-year adjusted EPS guidance to $2.35 at the midpoint, a 3.5% increase
- Operating margin 14%, in line with the same quarter last year
- Market capitalization $6.14 billion
StockStory’s take
EXL’s third quarter performance showcased robust momentum across its core business lines, as management highlighted broad-based growth in data and AI-driven solutions. CEO Rohit Kapoor credited the acceleration to strong client demand for AI implementation expertise and deep domain knowledge, particularly as enterprises sought partners to help solve complex workflow challenges. The quarter also saw a deliberate migration of clients from traditional operations to AI-enhanced offerings, with Kapoor noting, “Our deep understanding of client workflows and domain context, combined with our competencies in data and AI engineering, is creating a tailwind as we help clients solve the acute challenge of making AI work effectively in the enterprise.”
Looking ahead, EXL’s raised guidance is underpinned by its expanding data and AI-led business, further integration of the iMerit acquisition, and a healthy deal pipeline. Management’s focus is on scaling agentic AI solutions and broadening market reach, especially in international growth markets and payment integrity. Kapoor explained, “With iMerit, EXL now operates across the full AI stack, building the data foundation, training and fine-tuning models, and embedding AI into the workflows that we run for our clients.” The company anticipates continued investment in AI capabilities while maintaining stable margins despite evolving cost structures.
Key insights from management’s remarks
Management pointed to the rise of agentic AI adoption, strong segment growth, and new business wins as primary drivers of third quarter outperformance.
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Agentic AI adoption accelerating: EXL’s agentic AI solutions, which automate complex decision-making by simulating human agents, have moved from pilot projects to scaled enterprise deployments. Management emphasized that these offerings are now a key differentiator, allowing clients to boost operational efficiency and unlock business value across finance, life/annuity, and healthcare.
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iMerit acquisition integration: The acquisition of iMerit, a provider of model training and AI validation services, expands EXL’s capabilities across the full AI stack. Initial integration has provided $15.3 million in revenue over two months, with early commercial activity in both enterprise clients and frontier AI labs. The new iMerit Scholars platform, connecting 30,000+ vetted experts globally, is positioned to support fine-tuning and validation of AI models for EXL’s clients.
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Deliberate shift in operations mix: EXL continued the planned transition of clients from traditional digital operations to data and AI-led engagements. While digital operations revenue declined, management explained that embedding AI into workflows increases engagement value and deepens client relationships, supporting higher-value recurring growth.
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Payment integrity momentum: The Health & Life Sciences segment maintained strong growth, driven by EXL’s leadership in payment integrity—services that help healthcare clients detect and prevent fraudulent or erroneous payments. The company’s AI-powered approach allows for pre-payment review of all claims, expanding the addressable market and improving outcomes for clients.
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International growth investments: EXL’s International Growth Markets segment accelerated to 21% year-over-year growth, with targeted investments and new client wins. Management stated that international expansion—including potential acquisitions—remains a key strategic priority to diversify and grow the business.
Drivers of future performance
Management expects continued double-digit growth, led by data and AI adoption, expanded international presence, and strategic investments in technology and talent.
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Scaling AI-led solutions: EXL is investing in broadening its agentic AI offerings and embedding them across industries. Management believes this positions the company to capture rising enterprise demand for workflow automation and improved decision-making, though the evolving commercial terms with clients could create some margin uncertainty.
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International expansion and M&A: Further growth is anticipated from international markets, where EXL sees significant untapped potential. Management is actively considering acquisitions to accelerate market entry and secure additional talent and capabilities, particularly outside the U.S.
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Margin stabilization amid investments: While the company expects continued leverage on employee costs, investments in technology, infrastructure, and integration of acquisitions like iMerit may offset some of these gains. Management is focused on maintaining operating margins as the expense mix shifts toward AI-related costs, infrastructure, and new service lines.
Catalysts in upcoming quarters
In future quarters, the StockStory team will watch (1) the pace at which EXL’s agentic AI solutions are adopted and generate incremental revenue, (2) the successful integration and client impact of the iMerit acquisition and launch of the Scholars platform, and (3) expansion in international growth markets and new vertical wins. Continued momentum in payment integrity and evolving margin dynamics due to technology investments will also be closely monitored.
EXL currently trades at $39.45, down from $40.93 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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