ExlService Holdings, Inc. Net Income surged on 32.2% and EBITDA Margin increased on 3.9 pp from 15.7% to 19.6%
02/25/2021 • About ExlService Holdings, Inc. (
$EXLS) • By InTwits
ExlService Holdings, Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- ExlService Holdings, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.3%. At the same time it's in pair with industry average of 3.7%
- CAPEX is quite volatile: $25m in 2020, $11m in 2019, $12m in 2018, $14m in 2017, $19m in 2016
- The company has business model with average profitability: ROIC is 10.6%
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 decreased on 3.3%. Annual revenue decline showed slowdown in 20Q4 - revenue decreased on 3.1%. During the last 5 years Revenue growth topped in 2018 at 15.8% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.9 pp from 15.7% to 19.6% in 2020.
Gross Margin increased slightly on 1.0 pp from 33.9% to 34.9% in 2020. SG&A as a % of Revenue decreased slightly on 1.9 pp from 20.0% to 18.2% in 2020. During the last 5 years SG&A as a % of Revenue topped in 2017 at 20.5% and was declining since that time.
Net Income margin increased on 2.5 pp from 6.8% to 9.3% in 2020. During 2016-2020 Net Income margin bottomed in 2017 at 6.4% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In 2020 the company had CAPEX/Revenue of 4.4%. The company's CAPEX/Revenue showed almost no change from 2017 to 2020. Average CAPEX/Revenue for the last three years was 4.3%.
Return on investment
The company operates at good ROE (12.9%) while ROIC is low (10.6%). ROIC increased on 2.7 pp from 7.9% to 10.6% in 2020. ROE increased on 2.4 pp from 10.5% to 12.9% in 2020. During 2016-2020 ROE bottomed in 2017 at 8.6% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.6x and Debt / EBITDA is 1.8x. Net Debt / EBITDA dropped on 0.8x from 1.4x to 0.6x in 2020. Debt decreased slightly on 1.1% while cash jumped on 83.4%. During the last 5 years Net Debt/EBITDA topped in 2018 at 1.9x and was declining since that time.
ExlService Holdings, Inc. has no short term refinancing risk: cash is higher than short term debt (495.3%).
Valuation and dividends
ExlService Holdings, Inc.'s trades at EV/EBITDA 15.8x and P/E 31.9x.
Management team
Rohit Kapoor is a the company's CEO. Rohit Kapoor has spent 12 years with the company. ExlService Holdings, Inc.'s CFO is Maurizio Nicolelli. Maurizio Nicolelli has 1 year tenure at the company.
Financial and operational results
FY ended 12/31/2020
ExlService Holdings, Inc. ($EXLS) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 686.0 | 762.3 | 883.1 | 991.3 | 958.4 | -3.3% |
| Gross Profit | 238.0 | 267.2 | 298.3 | 335.9 | 334.5 | -0.4% |
| SG&A | 139.2 | 155.9 | 179.8 | 198.8 | 174.0 | -12.4% |
| EBITDA | 98.8 | 111.7 | 98.5 | 155.8 | 187.7 | 20.4% |
| EBIT | 64.2 | 72.7 | 49.8 | | | |
| Interest expence | 1.3 | 1.9 | 7.2 | | | |
| Tax | 22.2 | 36.1 | 3.4 | | | |
| Net Income | 61.7 | 48.9 | 56.7 | 67.7 | 89.5 | 32.2% |
| Stock Based Compensation | 15.4 | 23.0 | 23.9 | | | |
Balance Sheet
|
|---|
| Cash | 213.2 | 86.8 | 95.9 | 119.2 | 218.5 | 83.4% |
| Accounts Receivable | 113.1 | 135.7 | 164.8 | | | |
| Accounts Payable | 3.3 | 5.9 | 5.7 | | | |
| Short Term Debt | 10.2 | 10.6 | 21.6 | 65.3 | 44.1 | -32.4% |
| Long Term Debt | 35.3 | 50.7 | 263.6 | 269.3 | 286.8 | 6.5% |
Cash flow
|
|---|
| Capex | 25.9 | 35.2 | 40.4 | 40.1 | 42.2 | 5.2% |
| Acquisitions | 28.7 | 23.3 | 231.8 | | | |
Ratios
|
|---|
| Revenue growth | 9.1% | 11.1% | 15.8% | 12.3% | -3.3% | |
| EBITDA growth | -0.0% | 13.1% | -11.8% | 58.1% | 20.4% | |
|
|---|
| Gross Margin | 34.7% | 35.0% | 33.8% | 33.9% | 34.9% | 1.0% |
| EBITDA Margin | 14.4% | 14.7% | 11.2% | 15.7% | 19.6% | 3.9% |
| EBIT Margin | 9.4% | 9.5% | 5.6% | | |
| SG&A, % of revenue | 20.3% | 20.5% | 20.4% | 20.0% | 18.2% | -1.9% |
| SBC, % of revenue | 2.3% | 3.0% | 2.7% | | |
| Net Income Margin | 9.0% | 6.4% | 6.4% | 6.8% | 9.3% | 2.5% |
| CAPEX, % of revenue | 3.8% | 4.6% | 4.6% | 4.0% | 4.4% | 0.4% |
|
|---|
| ROIC | 11.8% | 11.9% | 6.4% | 7.9% | 10.6% | 2.7% |
| ROE | 12.4% | 8.6% | 9.3% | 10.5% | 12.9% | 2.4% |
| Net Debt/EBITDA | -1.7x | -0.2x | 1.9x | 1.4x | 0.6x | -0.8x |
| Interest expence / Average debt | 2.9% | 3.5% | 4.2% | | | |
People
|
|---|
| Insider ownership | 3.3% | 3.3% | 3.3% | | | |
| Employees | 26,000 | 27,800 | 29,100 | | | |
| Revenue/Employee, th. $ | 26 | 27 | 30 | | | |
ExlService Holdings, Inc. ($EXLS) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 246 | 222 | 241 | 249 | | 2.7% | -8.6% | -4.1% | -3.1% |
| EBITDA | 47 | 29 | 54 | 58 | | 24.5% | -12.6% | 26.7% | 36.4% |
| Net Income | 22 | 8 | 26 | 32 | | 52.5% | -32.9% | 38.7% | 50.9% |
Balance Sheet
|
|---|
| Cash | 225 | 164 | 206 | 219 | | 159.4% | 92.9% | 103.5% | 83.4% |
| Short Term Debt | 119 | 39 | 30 | 44 | | 174.1% | -12.3% | -33.3% | -32.4% |
| Long Term Debt | 329 | 306 | 306 | 287 | | -12.8% | -1.9% | 1.7% | 6.5% |
Ratios
|
|---|
| Gross Margin | 33.9% | 28.8% | 36.9% | 39.4% | | -0.5% | -4.5% | 3.5% | 4.9% |
| EBITDA Margin | 19.0% | 13.1% | 22.3% | 23.4% | | 3.3% | -0.6% | 5.4% | 6.8% |
| Net Income Margin | 9.1% | 3.8% | 11.0% | 12.9% | | 3.0% | -1.4% | 3.4% | 4.6% |
Peers in Data Processing & Outsourced Services
Below you can find ExlService Holdings, Inc. benchmarking vs. other companies in Data Processing & Outsourced Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Square, Inc. ($SQ) | - | 29.6% | 49.0% | 42.9% | 101.5% |
| Global Payments Inc. ($GPN) | - | 37.2% | -15.3% | 45.9% | 51.1% |
| Fiserv, Inc. ($FISV) | - | 3.5% | 2.2% | 74.9% | 45.8% |
| NIC Inc. ($EGOV) | - | 5.8% | 2.5% | 2.7% | 30.0% |
| StoneCo Ltd ($STNE) | - | 74.3% | 106.0% | 63.1% | 28.9% |
| |
|---|
| Median (39 companies) | 6.7% | 10.8% | 7.4% | 8.9% | -2.7% |
|---|
| ExlService Holdings, Inc. ($EXLS) | - | 11.1% | 15.8% | 12.3% | -3.3% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Verra Mobility Corp ($VRRM) | - | 97.4% | 97.5% | 95.7% | 91.5% |
| EVO Payments, Inc. ($EVOP) | - | - | - | 80.2% | 80.8% |
| StoneCo Ltd ($STNE) | 69.7% | 70.8% | 79.5% | 83.4% | 76.8% |
| WEX Inc. ($WEX) | 54.7% | 58.8% | 63.3% | 61.7% | 56.8% |
| Sabre Corporation ($SABR) | 32.2% | 30.1% | 27.8% | 56.6% | 56.6% |
| |
|---|
| Median (31 companies) | 39.5% | 39.5% | 41.0% | 41.7% | 36.7% |
|---|
| ExlService Holdings, Inc. ($EXLS) | 34.7% | 35.0% | 33.8% | 33.9% | 34.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Visa Inc. ($V) | 55.6% | 69.2% | 65.8% | 68.1% | 68.5% |
| Mastercard Incorporated ($MA) | 56.9% | 56.5% | 51.8% | 60.9% | 56.6% |
| FleetCor Technologies, Inc. ($FLT) | 52.0% | 50.8% | 55.9% | 57.6% | 52.2% |
| StoneCo Ltd ($STNE) | 31.4% | 26.0% | 53.0% | 62.4% | 52.1% |
| Black Knight, Inc. ($BKI) | 43.0% | 44.6% | 43.3% | 46.0% | 44.9% |
| |
|---|
| Median (38 companies) | 21.3% | 21.1% | 19.4% | 22.2% | 18.2% |
|---|
| ExlService Holdings, Inc. ($EXLS) | 14.4% | 14.7% | 11.2% | 15.7% | 19.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 6.4% | 4.3% | 1.4% | 5.8% | 22.3% |
| StoneCo Ltd ($STNE) | 7.2% | 18.4% | 8.9% | 12.9% | 11.2% |
| Cardtronics plc ($CATM) | 9.9% | 9.6% | 8.0% | 9.3% | 8.3% |
| Verra Mobility Corp ($VRRM) | - | 11.5% | 7.2% | 6.6% | 6.2% |
| Fiserv, Inc. ($FISV) | 5.3% | 5.0% | 6.2% | 7.1% | 6.1% |
| |
|---|
| Median (38 companies) | 3.2% | 2.9% | 3.0% | 3.0% | 3.0% |
|---|
| ExlService Holdings, Inc. ($EXLS) | 3.8% | 4.6% | 4.6% | 4.0% | 4.4% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mastercard Incorporated ($MA) | 57.5% | 60.6% | 64.7% | 72.7% | 47.6% |
| International Money Express, Inc. ($IMXI) | -1.3% | -1.4% | 12.1% | 36.0% | 31.4% |
| NIC Inc. ($EGOV) | 63.1% | 52.1% | 39.3% | 26.5% | 30.8% |
| Visa Inc. ($V) | 18.1% | 21.9% | 23.0% | 27.2% | 23.2% |
| Western Union Company (The) ($WU) | 10.7% | 11.9% | 27.8% | 21.5% | 22.1% |
| |
|---|
| Median (39 companies) | 11.1% | 10.6% | 12.1% | 8.3% | 5.5% |
|---|
| ExlService Holdings, Inc. ($EXLS) | 11.8% | 11.9% | 6.4% | 7.9% | 10.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| WEX Inc. ($WEX) | 6.7x | 4.4x | 3.1x | 3.4x | 12.1x |
| Exela Technologies Inc ($XELAU) | 8.1x | - | 9.7x | - | 10.7x |
| Alliance Data Systems Corporation ($ADS) | 10.7x | 10.1x | 9.0x | 11.7x | 9.2x |
| Verra Mobility Corp ($VRRM) | - | 10.7x | 6.9x | 3.5x | 4.7x |
| GreenSky, Inc. ($GSKY) | -1.5x | -1.5x | 0.5x | 1.5x | 4.6x |
| |
|---|
| Median (35 companies) | 1.6x | 2.3x | 2.2x | 2.3x | 2.1x |
|---|
| ExlService Holdings, Inc. ($EXLS) | -1.7x | -0.2x | 1.9x | 1.4x | 0.6x |
