Third Quarter 2026
Filed Oct 27, 20262026 Third Quarter Revenue of $634.0 Million, up 19.7% year-over-year; Q3 Adjusted Diluted EPS (Non-GAAP) of $0.62, up 28.5% from $0.48 in Q3 of 2025
Revenue increased 19.7% year-over-year and 6.6% sequentially, adjusted diluted EPS increased 28.5% year-over-year, every segment grew more than 15% organically according to management, and the company raised its full-year revenue and adjusted diluted EPS outlook. GAAP and adjusted operating income margins were below both the prior-year and prior-quarter levels.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenue, three months ended September 30, 2026GAAP | $634M | 6.6% sequentially, both on a reported basis and on a constant currency basis | 19.7% on a reported basis; 19.9% on a constant currency basis |
| Revenue, nine months ended September 30, 2026GAAP | $1.80B | – | – |
| Cost of revenues, three months ended September 30, 2026GAAP | $392.8M | – | – |
| Cost of revenues, nine months ended September 30, 2026GAAP | $1.11B | – | – |
| Gross profit, three months ended September 30, 2026GAAP | $241.1M | – | – |
| Gross profit, nine months ended September 30, 2026GAAP | $689.2M | – | – |
| Total revenue gross margin, three months ended September 30, 2026GAAP | 38.0% | – | – |
| General and administrative expenses, three months ended September 30, 2026GAAP | $79.87M | – | – |
| General and administrative expenses, nine months ended September 30, 2026GAAP | $223.4M | – | – |
| Selling and marketing expenses, three months ended September 30, 2026GAAP | $53.54M | – | – |
| Selling and marketing expenses, nine months ended September 30, 2026GAAP | $150.4M | – | – |
| Depreciation and amortization expense, three months ended September 30, 2026GAAP | $18.86M | – | – |
| Depreciation and amortization expense, nine months ended September 30, 2026GAAP | $47.47M | – | – |
| Total operating expenses, three months ended September 30, 2026GAAP | $152.3M | – | – |
| Total operating expenses, nine months ended September 30, 2026GAAP | $421.2M | – | – |
| Income from operations, three months ended September 30, 2026GAAP | $88.86M | – | – |
| Income from operations, nine months ended September 30, 2026GAAP | $268.0M | – | – |
| Operating income margin, three months ended September 30, 2026GAAP | 14.0% | – | – |
| Foreign exchange gain/(loss), net, three months ended September 30, 2026GAAP | $1.50M | – | – |
| Interest expense, three months ended September 30, 2026GAAP | −$6.34M | – | – |
| Income tax expense, three months ended September 30, 2026GAAP | $17.94M | – | – |
| Net income, three months ended September 30, 2026GAAP | $68.77M | – | – |
| Net income, nine months ended September 30, 2026GAAP | $200.4M | – | – |
| Diluted earnings per share, three months ended September 30, 2026GAAP | $0.45 | – | 25.3% |
| Diluted earnings per share, nine months ended September 30, 2026GAAP | $1.30 | – | – |
| Adjusted operating income, three months ended September 30, 2026non-GAAP | $122.5M | – | – |
| Adjusted operating income margin as a % of revenue, three months ended September 30, 2026non-GAAP | 19.3% | – | – |
| Adjusted EBITDA, three months ended September 30, 2026non-GAAP | $135.0M | – | – |
| Adjusted EBITDA margin as a % of revenue, three months ended September 30, 2026non-GAAP | 21.3% | – | – |
| Adjusted net income, three months ended September 30, 2026non-GAAP | $94.59M | – | – |
| Adjusted diluted earnings per share, three months ended September 30, 2026non-GAAP | $0.62 | – | 28.5% |
| Insurance revenue, three months ended September 30, 2026other | $208.5M | – | – |
| Insurance revenue gross margin, three months ended September 30, 2026other | 36.2% | – | – |
| Healthcare and Life Sciences revenue, three months ended September 30, 2026other | $160.4M | – | – |
| Healthcare and Life Sciences revenue gross margin, three months ended September 30, 2026other | 45.2% | – | – |
| Banking, Capital Markets and Diversified Industries revenue, three months ended September 30, 2026other | $153.5M | – | – |
| Banking, Capital Markets and Diversified Industries revenue gross margin, three months ended September 30, 2026other | 34.4% | – | – |
| International Growth Markets revenue, three months ended September 30, 2026other | $111.6M | – | – |
| International Growth Markets revenue gross margin, three months ended September 30, 2026other | 36.2% | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| InsuranceManagement stated that every segment of the business grew more than 15% organically. | $208.5M | – | – |
| Healthcare and Life SciencesManagement stated that every segment of the business grew more than 15% organically. | $160.4M | – | – |
| Banking, Capital Markets and Diversified IndustriesManagement stated that every segment of the business grew more than 15% organically. | $153.5M | – | – |
| International Growth MarketsManagement stated that every segment of the business grew more than 15% organically. | $111.6M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Full year 2026 outlook
- Revenue$2.430 billion to $2.440 billion
- NoteRevenue representing an increase of 16% to 17% on a reported basis, and 15% on an organic constant currency basis from 2025.
- NoteAdjusted diluted earnings per share of $2.34 to $2.36, representing an increase of 20% to 21% from 2025.
- NoteGuidance is based on a U.S. dollar to Indian rupee exchange rate of 95, U.K. pound sterling to U.S. dollar exchange rate of 1.33, U.S. dollar to the Philippine peso exchange rate of 63 and all other currencies at current exchange rates.
What drove it
- Data and AI-led revenue, almost two-thirds of the business, grew 36% on a reported basis and 31% organically.
- Every segment of the business grew more than 15% organically, according to management.
- EXL completed the acquisition of iMerit, establishing a Model Training Solutions practice.
- The company won 14 new clients in the third quarter of 2026.
Concerns
- GAAP operating income margin was 14.0%, compared with 14.4% for the third quarter of 2025 and 14.7% for the second quarter of 2026.
- Adjusted operating income margin was 19.3%, compared with 19.4% for the third quarter of 2025 and 19.7% for the second quarter of 2026.
- Banking, Capital Markets and Diversified Industries revenue gross margin was 34.4%, compared with 38.3% for the third quarter of 2025 and 34.8% for the second quarter of 2026.
- Management identified risks including integration of the iMerit acquisition, maintaining and growing client demand, AI technology risks, selling cycles, hiring and retaining trained employees, cost management, and international operations.
What to watch
- Delivery against full-year 2026 revenue guidance of $2.430 billion to $2.440 billion and adjusted diluted EPS guidance of $2.34 to $2.36.
- Whether operating income margin and adjusted operating income margin recover from third-quarter levels of 14.0% and 19.3%, respectively.
- Integration of iMerit and development of the Model Training Solutions practice.
- Data and AI-led revenue growth and the contribution from the business that management described as almost two-thirds of revenue.
- Utilization of the new $1 billion senior secured credit facility.
Balance sheet and cash flow
- Cash and cash equivalents as of September 30, 2026: $154,066 (in thousands); December 31, 2025: $146,326 (in thousands).
- Short-term investments as of September 30, 2026: $178,612 (in thousands); December 31, 2025: $182,041 (in thousands).
- Accounts receivable, net as of September 30, 2026: $457,287 (in thousands); December 31, 2025: $343,105 (in thousands).
- Total assets as of September 30, 2026: $2,073,409 (in thousands); December 31, 2025: $1,702,235 (in thousands).
- Current portion of long-term borrowings as of September 30, 2026: $9,703 (in thousands); December 31, 2025: $4,886 (in thousands).
- Long-term borrowings, less current portion as of September 30, 2026: $501,346 (in thousands); December 31, 2025: $293,712 (in thousands).
- Total liabilities as of September 30, 2026: $1,145,321 (in thousands); December 31, 2025: $789,530 (in thousands).
- Total stockholders’ equity as of September 30, 2026: $928,088 (in thousands); December 31, 2025: $912,705 (in thousands).
- EXL closed new $1 billion senior secured credit facility.
Analysis
EXL reported third-quarter revenue of $634.0 million, up 19.7% on a reported basis and 19.9% on a constant currency basis from the third quarter of 2025. Revenue also increased 6.6% sequentially on both bases. Management said every segment grew more than 15% organically and that data and AI-led revenue, almost two-thirds of the business, grew 36% on a reported basis and 31% organically. The company also won 14 new clients during the quarter.
All four reportable segments posted higher revenue than in both comparison periods shown. Insurance revenue was $208.5 million, Healthcare and Life Sciences revenue was $160.4 million, Banking, Capital Markets and Diversified Industries revenue was $153.5 million, and International Growth Markets revenue was $111.6 million. Healthcare and Life Sciences had the highest segment gross margin at 45.2%, while Banking, Capital Markets and Diversified Industries had a 34.4% gross margin, compared with 38.3% in the third quarter of 2025 and 34.8% in the second quarter of 2026.
Profitability grew in dollars but margins were lower. GAAP net income was $68,771 (in thousands), compared with $58,161 (in thousands) in the prior-year quarter, and GAAP diluted EPS was $0.45, up 25.3% from $0.36. Adjusted net income was $94,586 (in thousands), and adjusted diluted EPS was $0.62, up 28.5% from $0.48. GAAP operating income margin was 14.0%, below 14.4% a year ago and 14.7% in the preceding quarter. Adjusted operating income margin was 19.3%, compared with 19.4% and 19.7%, respectively.
The balance sheet showed $154,066 (in thousands) of cash and cash equivalents and $178,612 (in thousands) of short-term investments as of September 30, 2026. Long-term borrowings, less current portion, were $501,346 (in thousands), and the company closed a new $1 billion senior secured credit facility. EXL completed the iMerit acquisition during the quarter, establishing a Model Training Solutions practice.
Management raised full-year 2026 revenue guidance to $2.430 billion to $2.440 billion from prior guidance of $2.390 billion to $2.415 billion. The new range represents 16% to 17% reported growth and 15% organic constant-currency growth from 2025. It also raised adjusted diluted EPS guidance to $2.34 to $2.36 from $2.25 to $2.29, representing 20% to 21% growth from 2025. The filing does not provide GAAP EPS guidance or a GAAP reconciliation for the adjusted diluted EPS outlook.
Management, verbatim
We entered 2026 with strong momentum that has accelerated through the year, delivering third quarter revenue growth of 20% year-on-year and adjusted diluted EPS growth of 29% year-on-year. Every segment of our business grew more than 15% organically. Data and AI-led revenue, almost two-thirds of our business, grew 36% on a reported basis and 31% organically.
Rohit Kapoor, Chairman and Chief Executive Officer
Our strong third quarter performance gives us the confidence to raise our full-year outlook once again. We now expect full-year 2026 total revenue to be in the range of $2.430 billion to $2.440 billion, up from our prior guidance of $2.390 billion to $2.415 billion, reflecting 16% to 17% year-over-year growth on a reported basis and 15% on an organic constant currency basis. We now expect adjusted diluted earnings per share of $2.34 to $2.36, a 20% to 21% increase over 2025, up from our prior guidance of $2.25 to $2.29.
Maurizio Nicolelli, Chief Financial Officer
Not in the filing
stated, not guessed- Statement of cash flows, including operating cash flow and free cash flow.
- Share repurchases, dividends, and other quantified capital-return activity.
- GAAP diluted EPS guidance and a quantitative reconciliation of adjusted diluted EPS guidance to GAAP.
- Guidance for gross margin, operating expenses, and tax rate.
- Prior-release outlook section required for formal actual-versus-prior-guidance comparisons.
- Segment-specific reported year-over-year and sequential revenue growth rates.
- Quarterly GAAP tax rate.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.