Data analytics and digital solutions company ExlService Holdings (NASDAQ: EXLS) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 12.7% year on year to $542.6 million. On the other hand, the company’s full-year revenue guidance of $2.3 billion at the midpoint came in 0.8% below analysts’ estimates. Its non-GAAP profit of $0.50 per share was 7.5% 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 12.7% and increased our adjusted diluted EPS by 15.0% year-over-year. Our sustained double-digit growth demonstrates the strength of our competitive position as a global data and AI company. EXL’s recognized industry expertise and leadership in embedding AI in our clients’ businesses are resonating strongly with the market and fueling our growth with new and existing clients. Our investments in building innovative data and AI services and solutions, growing our partner ecosystem, and cultivating AI-native talent are driving our growth momentum and creating differentiated outcomes for our clients.”

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

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $2.09 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’s 16.8% annualized revenue growth over the last five years was incredible. 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 13.1% 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 12.7%, and its $542.6 million of revenue exceeded Wall Street’s estimates by 1.7%.

Looking ahead, sell-side analysts expect revenue to grow 11% over the next 12 months, a slight deceleration versus the last two years. Still, this projection is noteworthy and indicates the market is forecasting success for its products and services.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

EXL has been an efficient company over the last five years. It was one of the more profitable businesses in the business services sector, boasting an average operating margin of 14.4%.

Analyzing the trend in its profitability, EXL’s operating margin rose by 1.1 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, EXL generated an operating margin profit margin of 14.4%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

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 22.6% compounded annual growth rate over the last five years, higher than its 16.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into EXL’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, EXL’s operating margin was flat this quarter but expanded by 1.1 percentage points over the last five years. On top of that, its share count shrank by 7.2%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

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 16.7% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q4, EXL reported adjusted EPS of $0.50, up from $0.44 in the same quarter last year. This print beat analysts’ estimates by 7.5%. Over the next 12 months, Wall Street expects EXL’s full-year EPS of $1.95 to grow 12.6%.

Key Takeaways from EXL’s Q4 Results

It was good to see EXL beat analysts’ EPS expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance slightly missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The market seemed to be hoping for more, and the stock traded down 2.8% to $27.94 immediately after reporting.

Should you buy the stock or not? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).