ExlService Holdings, Inc. Net Income jumped on 16.0% and Revenue surged on 15.8%
02/28/2019 • About ExlService Holdings, Inc. (
$EXLS) • By InTwits
ExlService Holdings, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- ExlService Holdings, Inc. is a growth stock: 2018 revenue growth was 15.8%, 5 year revenue CAGR was 13.0% at 2018 ROIC 6.4%
- ExlService Holdings, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.5%. At the same time it's a lot of higher than industry average of 13.3%.
- CAPEX is quite volatile: $9m in 2018, $3m in 2017, $1m in 2016, $1m in 2015, $1m in 2014
- The company has potentially unprofitable business model: ROIC is 6.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 15.8%. Revenue growth showed acceleration in 18Q4 - it increased 18.7% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.3 pp from 24.7% to 22.4% in FY2018.
Gross Margin decreased slightly on 1.3 pp from 35.0% to 33.8% in 2018. SG&A as a % of Revenue showed almost no change in 2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018.
Net Income margin showed almost no change in 2018. The efficient tax rate was 5.7% in 2018 while the average for the last five years was 26.6%.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 4.6% in 2018. CAPEX/Revenue increased slightly on 0.51 pp from 4.1% in 2015 to 4.6% in 2018. It's average CAPEX/Revenue for the last three years was 4.3%.
Accounts receivable as a % of Revenue increased slightly on 0.85 pp from 17.8% to 18.7% in 2018. Accounts payable as a % of Revenue showed almost no change in 2018.
ExlService Holdings, Inc. has spent
$232m on M&A in 2018 which accounts for 26.3% of revenue.
Return on investment
The company operates at low ROIC (6.4%) and ROE (9.3%). ROIC decreased on 5.6 pp from 11.9% to 6.4% in 2018. ROE increased slightly on 0.68 pp from 8.6% to 9.3% in 2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.9x and Debt / EBITDA is 2.9x. Net Debt / EBITDA jumped on 2.1x from -0.2x to 1.9x in 2018. Debt jumped on 365% while cash surged on 10.5%. Net Debt/EBITDA stuck to a growing trend at 0.9x per annum in 2014-2018.
ExlService Holdings, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 6.9x. ExlService Holdings, Inc. has no short term refinancing risk: cash is higher than short term debt (443.0%).
Average interest expence paid by the company was 2.5% in 2018.
Valuation and dividends
The company's trades at EV/EBITDA 22.1x and P/E 35.0x.
Management team
The company's CEO is Rohit Kapoor. Rohit Kapoor is a founder and has 11 years tenure with the company. CEO total compensation was
$5,105,509 in 2018 which included
$720,000 salary. ExlService Holdings, Inc.'s CFO is Vishal Chhibbar. Vishal Chhibbar has 10 years tenure at the company.
At the end of financial year the company had 3.3% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 29,100 employees. The number of employees increased on 4.7%. Average revenue per employee in 2018 was
$30,347 and it jumped on 10.7%.
Financial and operational results
FY ended 12/31/2018
ExlService Holdings, Inc. ($EXLS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 499.3 | 628.5 | 686.0 | 762.3 | 883.1 | 15.8% |
| Gross Profit | 166.7 | 225.6 | 238.0 | 267.2 | 298.3 | 11.6% |
| SG&A | 104.7 | 126.8 | 139.2 | 155.9 | 179.8 | 15.3% |
| EBITDA | 62.1 | 98.8 | 98.8 | 111.7 | 98.5 | -11.8% |
| EBIT | 34.0 | 67.3 | 64.2 | 72.7 | 49.8 | -31.5% |
| Interest expence | 0.4 | 1.3 | 1.3 | 1.9 | 7.2 | 282.6% |
| Tax | 5.2 | 24.2 | 22.2 | 36.1 | 3.4 | -90.6% |
| Net Income | 32.4 | 51.6 | 61.7 | 48.9 | 56.7 | 16.0% |
| Stock Based Compensation | 9.8 | 14.6 | 15.4 | 23.0 | 23.9 | 3.7% |
Balance Sheet
|
|---|
| Cash | 176.5 | 205.3 | 213.2 | 86.8 | 95.9 | 10.5% |
| Accounts Receivable | 80.2 | 92.7 | 113.1 | 135.7 | 164.8 | 21.4% |
| Accounts Payable | 4.7 | 6.4 | 3.3 | 5.9 | 5.7 | -4.5% |
| Short Term Debt | 0.8 | 10.4 | 10.2 | 10.6 | 21.6 | 104.5% |
| Long Term Debt | 50.6 | 60.3 | 35.3 | 50.7 | 263.6 | 419.6% |
Cash flow
|
|---|
| Capex | 27.7 | 25.6 | 25.9 | 35.2 | 40.4 | 15.0% |
| Acquisitions | 58.2 | 44.3 | 28.7 | 23.3 | 231.8 | 895.0% |
Ratios
|
|---|
| Revenue growth | 4.4% | 25.9% | 9.1% | 11.1% | 15.8% | |
| EBITDA growth | -32.8% | 59.2% | -0.0% | 13.1% | -11.8% | |
|
|---|
| Gross Margin | 33.4% | 35.9% | 34.7% | 35.0% | 33.8% | -1.3% |
| EBITDA Margin | 12.4% | 15.7% | 14.4% | 14.7% | 11.2% | -3.5% |
| EBIT Margin | 6.8% | 10.7% | 9.4% | 9.5% | 5.6% | -3.9% |
| SG&A, % of revenue | 21.0% | 20.2% | 20.3% | 20.5% | 20.4% | -0.1% |
| SBC, % of revenue | 2.0% | 2.3% | 2.3% | 3.0% | 2.7% | -0.3% |
| Net Income Margin | 6.5% | 8.2% | 9.0% | 6.4% | 6.4% | 0.0% |
| CAPEX, % of revenue | 5.5% | 4.1% | 3.8% | 4.6% | 4.6% | -0.0% |
|
|---|
| ROIC | 8.3% | 13.8% | 11.8% | 11.9% | 6.4% | -5.6% |
| ROE | 8.3% | 11.7% | 12.4% | 8.6% | 9.3% | 0.7% |
| Net Debt/EBITDA | -2.0x | -1.4x | -1.7x | -0.2x | 1.9x | 2.1x |
| Interest expence / Average debt | 0.7% | 2.2% | 2.3% | 3.5% | 2.5% | -1.0% |
People
|
|---|
| Insider ownership | 3.3% | 3.3% | 3.3% | 3.3% | 3.3% | 0.0% |
| Employees | 22,800 | 24,100 | 26,000 | 27,800 | 29,100 | 4.7% |
| Revenue/Employee, th. $ | 22 | 26 | 26 | 27 | 30 | 10.7% |
ExlService Holdings, Inc. ($EXLS) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 207 | 210 | 231 | 235 | | 13.1% | 11.1% | 20.2% | 18.7% |
| EBITDA | 26 | 28 | 34 | 11 | | 1.9% | 7.6% | 10.1% | -57.5% |
| Net Income | 23 | 14 | 15 | 4 | | 37.9% | -29.0% | -27.7% | |
Balance Sheet
|
|---|
| Cash | 70 | 84 | 98 | 96 | | -23.7% | -6.0% | 11.4% | 10.5% |
| Short Term Debt | 1 | 11 | 13 | 22 | | -94.5% | 3.3% | 7,363.7% | 104.5% |
| Long Term Debt | 68 | 58 | 289 | 264 | | 91.7% | 63.1% | 536.8% | 419.6% |
Ratios
|
|---|
| Gross Margin | 33.3% | 33.5% | 34.2% | 34.0% | | -1.1% | -0.1% | -1.8% | -0.6% |
| EBITDA Margin | 12.5% | 13.2% | 14.6% | 4.8% | | -1.4% | -0.4% | -1.3% | -8.6% |
| Net Income Margin | 11.2% | 6.9% | 6.6% | 1.6% | | 2.0% | -3.9% | -4.4% | 6.4% |
Peers in Data Processing & Outsourced S
Below we provide ExlService Holdings, Inc. benchmarking against other companies in Data Processing & Outsourced S industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | | 167.8% |
| StoneCo Ltd ($STNE) | | | | 74.3% | 106.0% |
| PagSeguro Digital Ltd. ($PAGS) | | 107.1% | 68.7% | 121.7% | 71.8% |
| Payment Data Systems, Inc. ($PYDS) | | 7.4% | -16.0% | 20.7% | 71.7% |
| StarTek, Inc. ($SRT) | | 12.8% | 8.9% | -4.8% | 66.4% |
| |
|---|
| Median (55 companies) | | 7.0% | 7.6% | 10.8% | 7.4% |
|---|
| ExlService Holdings, Inc. ($EXLS) | | 25.9% | 9.1% | 11.1% | 15.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | 97.4% | 97.5% |
| Everi Holdings Inc. ($EVRI) | 25.8% | 38.3% | 36.1% | 34.5% | 79.9% |
| StoneCo Ltd ($STNE) | | | 69.7% | 70.8% | 79.5% |
| Paychex, Inc. ($PAYX) | 70.9% | 70.5% | 71.0% | 70.8% | 69.9% |
| Global Payments Inc. ($GPN) | 62.7% | 63.2% | 60.4% | 51.5% | 67.5% |
| |
|---|
| Median (44 companies) | 39.3% | 39.6% | 39.5% | 39.5% | 41.0% |
|---|
| ExlService Holdings, Inc. ($EXLS) | 33.4% | 35.9% | 34.7% | 35.0% | 33.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Visa Inc. ($V) | 64.0% | 68.9% | 55.6% | 69.2% | 65.8% |
| FleetCor Technologies, Inc. ($FLT) | 56.1% | 50.4% | 52.0% | 50.8% | 55.9% |
| StoneCo Ltd ($STNE) | | | 31.4% | 26.0% | 53.0% |
| Mastercard Incorporated ($MA) | 57.5% | 56.3% | 56.9% | 56.5% | 51.8% |
| Everi Holdings Inc. ($EVRI) | 9.6% | 14.7% | 3.0% | 20.4% | 45.2% |
| |
|---|
| Median (56 companies) | 20.6% | 21.2% | 21.3% | 21.1% | 19.4% |
|---|
| ExlService Holdings, Inc. ($EXLS) | 12.4% | 15.7% | 14.4% | 14.7% | 11.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crypto Co/The ($CRCW) | 0.0% | 0.0% | | 1,216.6% | 853.5% |
| Steel Connect, Inc. ($STCN) | 0.6% | 1.5% | 1.7% | 1.1% | 75.6% |
| Everi Holdings Inc. ($EVRI) | 3.0% | 9.3% | 9.4% | 9.9% | 21.9% |
| StoneCo Ltd ($STNE) | | | 7.2% | 18.4% | 8.9% |
| Cardtronics plc ($CATM) | 10.2% | 11.9% | 9.9% | 9.6% | 8.0% |
| |
|---|
| Median (56 companies) | 3.1% | 3.0% | 3.2% | 2.9% | 3.0% |
|---|
| ExlService Holdings, Inc. ($EXLS) | 5.5% | 4.1% | 3.8% | 4.6% | 4.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GreenSky, Inc. ($GSKY) | | | | 156.4% | 93.7% |
| Mastercard Incorporated ($MA) | 63.5% | 57.5% | 57.5% | 60.6% | 64.7% |
| Paychex, Inc. ($PAYX) | 54.5% | 58.7% | 61.9% | 63.9% | 64.5% |
| NIC Inc. ($EGOV) | 64.6% | 61.2% | 63.1% | 52.1% | 39.3% |
| Automatic Data Processing, Inc. ($ADP) | 23.9% | 28.9% | 37.9% | 36.6% | 37.5% |
| |
|---|
| Median (62 companies) | 14.1% | 12.8% | 11.1% | 10.6% | 12.1% |
|---|
| ExlService Holdings, Inc. ($EXLS) | 8.3% | 13.8% | 11.8% | 11.9% | 6.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StarTek, Inc. ($SRT) | -0.1x | | 2.2x | 2.3x | 18.4x |
| Square, Inc. ($SQ) | | | | | 13.3x |
| Steel Connect, Inc. ($STCN) | -12.5x | | | | 12.6x |
| Exela Technologies Inc ($XELAU) | | | 8.1x | | 9.7x |
| Alliance Data Systems Corporation ($ADS) | 9.3x | 9.1x | 10.7x | 10.1x | 9.0x |
| |
|---|
| Median (54 companies) | 0.6x | 0.7x | 1.6x | 2.3x | 2.2x |
|---|
| ExlService Holdings, Inc. ($EXLS) | -2.0x | -1.4x | -1.7x | -0.2x | 1.9x |
