ExlService Holdings, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the EXL Service Holdings Q4 and Full Year 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 in your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Mr. Stephen Barlow. Thank you. Please go ahead, sir.

Thank you, Jaramira. Good morning. Thanks to everyone for joining EXL's fourth quarter and fiscal 2020 financial results conference call. I'm Steve Barlow, EXL's Vice President of Investor Relations. On the call this morning are Rohit Kapoor, our Chief Executive Officer and Vice Chairman, and Maurizio Nicolelli, our Chief Financial Officer. We hope you've had an opportunity to review our Q4 2020 earnings release we issued this morning. We've also updated our investor fact sheet in the investor relations section of EXL's website. As you know, some of the matters we'll discuss in this call this morning are forward-looking. Please keep in mind that these forward-looking statements are subject to unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, general economic conditions, Those factors set forth in today's press release, discussed in the company's periodic reports and other documents filed with the Securities and Exchange Commission from time to time. EXL assumes no obligation to update the information presented on this conference call. During our call today, we may reference certain non-GAAP financial measures, which we believe provide useful information for investors. Reconciliation of these measures to GAAP can be found in our press release, as well as the investor fact sheet. Now we'll turn the call over to Roick. He excels Chief Executive Officer. Rohit?

Thank you, Steve. Good morning, everyone. Welcome to our 2020 year-end earnings call. As I look back at 2020, I am proud of how the year has shaped up despite the uncertainties that marked this unprecedented year. The efforts we put in place early, such as shifting our 30,000-plus global workforce to to a work-from-home business model, ensuring the health and safety of our employees and safeguarding the business continuity for our clients helped establish the momentum we would carry throughout the year. Ultimately, through a combination of human ingenuity, creativity, hard work, and true collaboration, we demonstrated agility and resilience in the face of crisis. The end results have been stronger client relationships, expanded capabilities, and a reaffirmation of our mission to work as one team to help our clients transform. Each person within EXL pulled the organization forward. The true character and culture of our organization stood out more than ever. Throughout 2020, each one of us demonstrated a sense of purpose, looking deeper, finding a better way, and making it happen. And we truly lived our core values of collaboration, innovation, excellence, integrity, and respect. For the fourth quarter 2020, we generated revenues of $249 million, which represents a 3.1% sequential increase on a constant currency basis. Adjusted EPS for the quarter grew by 9.6% sequentially to $1.14. This is our highest EPS earned in a quarter, representing 44.3% growth year over year. Our analytics business had an outstanding quarter with $98.1 million in revenue and which represents an 8.4% growth quarter over quarter. This strong performance was a result of multiple expansions within our strategic banking clients, growth from our payment integrity solutions in healthcare, and the increased demand for our data-led marketing solutions within our insurance clients. Our operations management business reported $150.9 million in revenue for the fourth quarter 2020, flat quarter over quarter. We continue to sign new business in operations management, and our pipeline remains strong. As the economy emerges from the impact of the pandemic, our clients are focused on delivering personalized customer experiences, optimizing costs, and supporting resilient operating models. As a result, our data-led value creation framework is resonating nicely in the marketplace. We are seeing growth across two dimensions. One, accelerated demand for our full suite of data and analytics capabilities, and two, leveraging AI-powered solutions on the cloud to embed intelligence in operations. The shift of consumers to digital channels, along with an uneven economic recovery, has accelerated the adoption of data-driven decisioning. Clients are partnering with us to lead their enterprise-wide data and analytics agendas and unlock new insights that create a competitive advantage. One great example is a new client relationship with a mid-sized U.S. mutual insurance carrier. Our client engaged us to significantly grow the number of new customers and reduce the acquisition cost per customer. We are leveraging our proprietary data assets, marketing analytics models, campaign analytics, technology, and operations to acquire new customers profitably and at scale. As a result, our relationship expanded meaningfully in the last six months, and we have more opportunities for further expansion. Our differentiated capabilities in data and analytics services are recognized by our customers and analysts alike. We were recently named a visionary in the 2021 Gartner Magic Quadrant for Data and Analytics Service Providers. We have differentiated ourselves with a combination of deep expertise in our selected industry verticals and the scale we have been able to attain. Over the last six years, our analytics business has grown at a CAGR of 33%, with over 150 clients, and we have built a deep bench of 4,500-plus data scientists, analysts, and engineers. A second area I want to highlight is our AI-powered solutions on the cloud that are driving growth in our operations management business. Today, our operations management clients are looking for more than just automation and efficiency. They are focused on, one, fundamentally redesigning the process architecture to fully leverage AI and analytics. Two, automating decisioning and improving customer experience using domain-specific AI and analytic solutions. And three, harvesting untapped data within the legacy processes to derive deeper customer insights. With our strong understanding of client processes, we are leveraging the flexibility and the computing power of cloud to deploy AI solutions that can transform operations at speed. To strengthen our cloud competencies across people, process, and technology, we are investing in a cloud center of excellence. We are also expanding our partnership ecosystem to develop and go to market with these cloud-native AI solutions. With several solution pilots underway, We are co-innovating with our clients to solve strategic business problems. One such example is our relationship with a large global insurance broker where eXcel has become their AI transformation partner. We are deploying our proprietary data extraction solution, extractor.ai, to eliminate manual ingestion of text and images. Hosting the solution on cloud allows the client to leverage our AI accelerators and use the solution output without disrupting their existing operations. As a result, the clients can underwrite significant efficiency benefits at a rapid pace. Moreover, eXcel is driving the end-to-end implementation, including the integration with existing downstream business workflows enabling the client to safely and seamlessly scale AI solutions across the enterprise, thereby driving significant productivity benefits in the downstream operations that are manual effort intensive. Our solution also allows for the extraction of data that previously remained untapped and helps deliver deeper customer insights. Our operating model showed great resilience and stability amid the challenging circumstances of 2020. Two areas where we saw significant growth were our healthcare and our life insurance businesses. These businesses implemented highly complex and multi-geography engagements seamlessly in a virtual environment. In order to support our growth, we launched two new delivery centers in Colombia and in the Philippines. Going forward, we are well positioned for healthy growth across all our businesses. The demand for our data-led digital solutions is strong, as evidenced by our pipeline, which has expanded significantly compared to last year. Moreover, we have added 45 new logos in 2020, a notable increase from 28 in 2019. With strong momentum built in our large deals pipeline and by adding new marquee logos to our portfolio, we entered 2021 with great confidence. For 2021, our full year revenue guidance is in the range of $1.04 billion to $1.06 billion, representing a 9% to 11% increase year over year. This represents an accelerated growth of revenue for EXL, driven by an expanded demand for data-led solutions to solve high-value industry problems. We expect adjusted diluted EPS to be in the range of $3.90 to $4.05, representing a 10% to 15% increase over the prior year. This aligns with our focus on growing profits faster than revenue. We will continue to expand our margins by focusing on higher value business and improving productivity. However, we recognize that we are working through a period of heightened volatility that will continue to affect our clients and our own operations. The emergence of the new virus strains and the uneven vaccine rollout are creating uncertainties on the timeline for our larger scale return to office. When we do start that process, our new operating model is going to be a hybrid with some fraction of employees continuing to work from home. This requires us to invest in information and cybersecurity technologies and deploy virtual collaboration tools across the enterprise. We are also doubling down on talent acquisition to ensure that we have the right skill sets in place to keep growing our analytics business at double-digit growth rates. The explosion of demand in this market has made recruiting a challenge, but we continue to make strong progress. Last year caused its fair share of challenges, but it also opened up opportunities for companies to take a holistic look at strategic priorities. Clients have pulled forward their transformation agendas and are acting with urgency to be in sync with their customer base. They are embracing data-enabled insights to drive better decisions and embedding intelligence in operations to deliver superior outcomes. We will continue to be the indispensable partner for data-led businesses. With that, I will turn the call over to Mauricio.