Nov. 6, 2009 (PR Newswire) -- NEW YORK, Nov. 6 /PRNewswire-FirstCall/ -- ExlService Holdings, Inc. (Nasdaq: EXLS), a leading provider of outsourcing and transformation services, today announced its financial results for the quarter ended September 30, 2009.

Rohit Kapoor, President and CEO, commented: "We experienced strong revenue growth this quarter and continued momentum in the market place. Our results reflect the investments and efforts that we have directed to execution and client centricity. In our outsourcing business, our team ensured a smooth ramp-up and efficient employee on-boarding for our recently acquired clients. In transformation services, we expanded our existing client relationships while increasing the annuity-based percentage of the business.

We are also pleased to announce a new eight-year agreement to service the back-office operations of American Express Business Travel and the associated acquisition of American Express' Global Travel Service Center operations in Gurgaon, India. We estimate achieving more than $160 million in revenues over the life of the contract. Through this transaction, we will deepen our relationship with one of our key clients as well as expand our capability set in analytics, exception processing, and transaction processing. This acquisition also adds an experienced management team and an additional delivery center to EXL. We expect the transaction to close first quarter next year."

Vishal Chhibbar, CFO, commented: "The investments we made in expanding our delivery infrastructure in the first half of this year are paying off. Sequential revenue growth was 13.7% quarter on quarter. We delivered outsourcing revenues of $37.7 million and transformation revenues of $10.5 million. We generated $9.7 million in operating cash flows and ended the quarter with a cash balance of $117.5 million versus $114.3 million last quarter. Adjusted operating margin for the quarter increased to 14.8% due to higher utilization of our physical infrastructure and people as well as strong execution across business lines. We are pleased to increase our calendar year 2009 guidance for revenue to $178.0 million - $180.0 million from $170.0 million - $175.0 million and our adjusted operating margin to 13.0% - 13.5% from 10.0% - 12.0%."

Financial Highlights

Financial highlights are based on continuing operations of the Company and exclude the sale of the Pune assets providing services to Aviva under the BOT arrangement, which is treated as a discontinued operation as of the third quarter of 2008. Reconciliations of adjusted financial measures to GAAP are included at the end of this release.

    --  Revenues for the quarter ended September 30, 2009 were $48.2 million
compared to $46.6 million for the quarter ended September 30, 2008 and
$42.4 million for the quarter ended June 30, 2009. Revenues attributable
to outsourcing services for the quarter ended September 30, 2009 were
$37.7 million compared to $34.5 million in the quarter ended September
30, 2008 and $34.5 million in the quarter ended June 30, 2009.
Transformation services revenues for the quarter ended September 30,
2009 were $10.5 million compared to $12.0 million in the quarter ended
September 30, 2008 and $7.9 million in the quarter ended June 30, 2009.

    --  Gross margin for the quarter ended September 30, 2009 was 40.2% compared
to 39.8% for the quarter ended September 30, 2008 and 39.1% for the
quarter ended June 30, 2009. Gross margin for outsourcing services was
41.0% for the quarter ended September 30, 2009 compared to 41.9% for the
quarter ended June 30, 2009. Transformation services gross margin was
37.5% for the quarter ended September 30, 2009 compared to 26.8% for the
quarter ended June 30, 2009.

    --  Operating margin for the quarter ended September 30, 2009 was 10.7%
compared to 11.3% for the quarter ended September 30, 2008 and 6.6% for
the quarter ended June 30, 2009; adjusted operating margin for the
quarter ended September 30, 2009, excluding the impact of stock-based
compensation expense and amortization of intangibles, was 14.8% compared
to 14.7% for the quarter ended September 30, 2008 and 11.3% for the
quarter ended June 30, 2009.

    --  Diluted earnings per share to common stockholders for the quarter ended
September 30, 2009 were $0.14 compared to $0.01 for the quarter ended
September 30, 2008 and $0.04 for the quarter ended June 30, 2009.

Business Announcements

    --  Signed eight-year agreement with American Express to provide business
process services in conjunction with the acquisition of American
Express' Global Travel Service Center operations in Gurgaon, India. The
purchase price for this transaction will be approximately $30.0 million
net of working capital adjustments at closing.

    --  Awarded a five-year outsourcing contract with a global P&C and
reinsurance company to provide business process services from both our
India facilities and our new Romanian facility currently in development.

    --  Increased annuity-based transformation revenues to comprise of
approximately one-third of total transformation.

    --  Reduced days sales outstanding in the third quarter of 2009 to 59 days
from 68 days in the second quarter of 2009 and 76 days in the third
quarter of 2008.

    --  Experienced quarterly attrition in the third quarter of 22.0% for
billable employees compared to 22.0% in the second quarter 2009 and
37.3% for the third quarter of 2008.

2009 Outlook

The Company is increasing its guidance for calendar year 2009:

    --  Revenues of $178.0 million to $180.0 million from $170.0 million to
$175.0 million.

    --  Adjusted operating margin, excluding the impact of stock-based
compensation expense and amortization of intangibles, of 13.0% and 13.5%
from 10.0% and 12.0%.

Conference Call

EXL will host a conference call on Friday, November 6, at 8:00 a.m. (ET) to discuss the company's quarterly results and operating performance. The conference call will be available live via the internet by accessing the investor relations section of EXL's website at www.exlservice.com, where the accompanying presentation and an investor factsheet can also be accessed.