ExlService Holdings, Inc.

Hello, and welcome to the EXL Service Holdings Inc. 4th Quarter 2024 Year-End Earnings Conference Call. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I will now turn the call over to John Christoph, Vice President of Investor Relations.

Thanks, Jennifer. Hello, and thank you for joining EXL's fourth quarter and year-end 2024 financial results conference call. On the call with me today are Rohit Kapoor, Chairman and Chief Executive Officer, and Maurizio Nicolelli, Chief Financial Officer. We hope you've had an opportunity to review the fourth quarter earnings press release we issued yesterday afternoon. We have also posted a slide deck and investor fact sheet to the investor relations section of our website. As a reminder, some of the matters we'll discuss this morning are forward-looking. Please keep in mind that these forward-looking statements are subject to known and 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 SEC from time to time. EXL assumes no obligation to update the information presented on this conference call today. During our call, 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, slide deck, and investor fact sheet. With that, I'll turn the call over to Rohit.

Thanks, John. Good morning, everyone. Welcome to EXL's fourth quarter 2024 earnings call. I'm pleased to be with you this morning reviewing our strong financial results. In the fourth quarter, we generated revenue of $481 million, an increase of 16% year over year. And we grew fourth quarter adjusted EPS by 26% to 44 cents per share. we were able to maintain a strong growth momentum across both our analytics and digital operations and solutions businesses during the quarter as we continue to successfully execute on our data and AI strategy. In analytics, we delivered revenue of $208 million for the quarter, up 2% sequentially and 14% year over year. This acceleration of growth was driven by an improvement in the analytics services growth rate, continued strong performance in healthcare payment services, and the contribution from the ITI data acquisition. Our analytics business benefits from client focus on data modernization and AI adoption across the enterprise. These trends will continue to drive demand for our services. In our digital operations and solutions business during the fourth quarter, we delivered strong growth as we leveraged our domain data and AI capabilities to win new clients and expand our business with existing clients. We grew revenue 2% sequentially and 18% year over year to $274 million. This is the result of strong growth across all three industry verticals that make up our digital operations business. We remain bullish on our digital operations business as clients continue to focus on re-imagining their operating model to drive greater efficiency, better customer experience, and accelerated business growth. To accelerate the execution of our data and AI strategy, capture a greater share of the growing AI market, and drive EXL's long-term growth, we have changed our operating model. The new model is comprised of industry market units focused on delivering higher value to clients, leveraging our full suite of capabilities. and strategic growth units focused on rapidly advancing our operational analytics, data engineering, and AI capabilities specific to our chosen industries. This new operating model allows us to deepen our industry expertise and brings us closer to our clients. This enables us to anticipate and solve their challenges with greater agility and bring to bear the full suite of Excel's capabilities. It will foster collaboration, enable more efficient resource utilization, allow for scalable infrastructure deployment, and enhance adaptability to rapidly changing market needs. This will allow EXL to swiftly develop and deploy innovative data and AI solutions at scale and across multiple clients simultaneously. Concurrent with the operating model change, we will be moving into new financial reporting segments beginning in the first quarter of 2025. These segments are aligned with our industry market units. They are insurance, healthcare and life sciences, banking capital markets and diversified industries, and international growth markets. Our data, AI, and analytics capabilities are driving all of our solutions and are embedded across business lines. As such, our analytics revenue will now be included in the financial reporting for each segment. In order to provide greater transparency, we will report overall data and AI revenue alongside our new segments beginning with the first quarter of 2025. This shift will provide a more comprehensive representation of the performance and quality of our business as we continue executing on our data and AI growth strategy. It is an exciting time for EXL as we accelerate our AI journey. A journey that is not only redefining our company, but also reshaping the way our clients and their industries operate globally. we made a strategic pivot towards a data and AI growth strategy built on decades of deep domain expertise, mastery of data, and proven capabilities in leveraging AI. As we execute this strategy, we achieved several significant milestones in 2024. With the acquisition of ITI data, we enhanced our data management and engineering capabilities to enable CIOs and CDOs to drive data and platform modernization mandates. We scaled our existing proprietary AI solutions, such as Extractor, Paymentor, Smart Agent Assist, Code Harbor, and Digital Finance Suite, and we filed several new patents. We also launched our domain-specific insurance large language model, which leverages proprietary data and over 15 years of claim processing experience. To continue innovating and leading in the AI space, we have expanded our partnerships with Nvidia, Databricks, AWS, Microsoft, and Google with a focus on leveraging their scalable and secure infrastructure, a genetic AI development toolkit, and engineering innovation. Let me share with you a few examples illustrating the depth and breadth of our AI implementations and the broad customer base and industry set in which we are deploying AI. We built and deployed an enterprise gen AI platform for a leading healthcare services client. We have thus far implemented four use cases on this GenAI platform, resulting in $10 million of operational savings. We will continue to leverage this platform to deploy more use cases with this client going forward. We implemented our domain-specific LLM for a large US insurance company to automate their claims adjudication process and provide improved negotiations and resolutions for insurance casualty claims. This has facilitated better decision-making, improved indemnity, and lowered the cost of claim handling and settlement time. We have launched an agentic AI deployment for one of the largest UK utility providers, increasing customer operations efficiency by 45% while improving resiliency and customer experience. We have deployed an agentic AI solution for a large consumer products company with multiple agents across their source to contract and invoice to pay cycles. This has resulted in a 75% reduction in manual effort while improving adherence to quality and compliance standards. Data and AI are at the core of our business and accounted for 53% of our revenue in 2024, making EXL a more strategic partner for our clients. This is facilitating more complex engagements and leading to more integrated deals, resulting in a stickier business with higher growth potential. Looking towards 2025, we expect AI adoption to increase significantly. While much of the AI conversation has focused on the supply side of AI, eXcel is uniquely positioned to capitalize on the growing demand for data and AI services. First, we possess a comprehensive suite of AI assets, including our own IP with over 100 pre-built accelerators. Second, We offer an open cloud agnostic modular architecture that enables us to work across various legacy tech stacks and data streams and access third party assets. And finally, we have extensive data management capabilities and decades of experience in domain-specific workflow complexities leading to larger integrated deals that create substantial value for clients. This fusion of domain, data, and AI expertise is our core competitive differentiator, which is why we are so excited about this opportunity. Yesterday, we announced eXcelerate.ai, our agentic AI platform, which enables clients to reimagine their workflows by embedding eXcel or third-party AI agents into their business operations. The platform leads to greater efficiency, increased accuracy, and scalability across operations, resulting in substantial return on investment. E-Accelerate.ai is an open and modular orchestration platform allowing for fast implementation in all client environments. It includes more than 10 industry-specific Excel-built AI agents already in use across insurance, healthcare, retail, utilities, and financial services. EXL's deep domain expertise, AI capabilities, and strong partner ecosystem allow us to collaborate closely with our clients to reimagine their workflows at speed. We received feedback in our most recent investor survey that it would be helpful for us to communicate more details about our AI solutions, including specific use cases. I'd like to call your attention to two upcoming events, which may be helpful. We will be hosting our annual AI in Action virtual event on March 5th, where we will feature clients discussing their shift to scalable AI, as well as conducting demos of our AI solutions. Details are available on our website. We will also be holding an investor strategy update on May 6th in New York, where we will be providing a deeper dive on the progression of our data and AI strategy and discuss our new operating model and reporting segments. Details will be announced soon. We encourage you to attend both events. Thank you all for your time and continued support. We look forward to working together to shape the future of data and AI. With that, I will turn the call over to Maurizio to discuss our financial results in more detail.

Thank you, Rohit, and thanks everyone for joining us this morning. I will provide insights into our financial performance for the fourth quarter and full year 2024. followed by our outlook for 2025. We continued our growth momentum in the fourth quarter with revenue of $481.4 million, up 16.3% year-over-year on reported and constant currency basis. Sequentially, we grew 2.4% on a constant currency basis. Adjusted EPS was 44 cents, a year-over-year increase of 26.1%. All revenue growth percentages mentioned hereafter are on a constant currency basis. Revenue from our digital operations and solutions businesses, as defined by three reportable segments, excluding analytics, was $273.7 million, representing year-over-year growth of 18.1%. Sequentially, we grew 2.7%. In the insurance segment, we generated revenue of $162 million, an increase of 16.6% year-over-year and 3.2% sequentially. This growth was driven by the expansion of existing client relationships and new client wins. The insurance vertical consisting of both our digital operations and solutions and analytics businesses grew 15.8% year-over-year with revenue of 201.5 million. In the emerging segment, we reported revenue of 80.2 million, a growth of 19.7% year-over-year and 1.2% sequentially. This growth was driven by the expansion of existing client relationships and new client wins. The emerging vertical consisting of both our digital operations and solutions and analytics businesses grew 16.6% year over year with revenue of $170.1 million. The healthcare segment reported revenue of 31.6 million, representing growth of 21.6% year-over-year and 3.5% sequentially. The year-over-year growth was driven by higher volumes and expansion in existing client relationships. The healthcare vertical consisting of our digital operations and solutions and analytics businesses grew 17% year-over-year with a revenue of $109.7 million. In the analytics segment, we generated revenue of $207.7 million, up 14.2% year-over-year. Growth in analytics was driven by higher volumes in payment services, expansion of existing client relationships, and new client wins in analytics services. SG&A expenses as a percentage of revenue were down 70 basis points year-over-year to 19.9%, driven by operating leverage and partially offset by investments in AI, digital solutions, front-end sales, and marketing. Our adjusted operating margin for the quarter was 18.8%, up 100 basis points year-over-year, driven by improved gross margin and SG&A operating leverage. Our adjusted EPS for the quarter was 44 cents, up 26.1% year-over-year on a reported basis. Turning to our full-year 2024 performance, Our revenue for the period was $1.838 billion, up 12.7% year over year. Revenue from our digital operations and solutions businesses was $1.042 billion, an increase of 15.5% year-over-year. Our insurance, emerging, and healthcare segments generated year-over-year growth of 15.9%, 17.1%, and 9.8%, respectively. Our analytics business generated revenue of $796.2 million, up 9.1% year-over-year. Adjusted operating margin for the year was 19.4%, up 10 basis points year-over-year. Our effective tax rate for the year was 22.3%, down 90 basis points year-over-year, driven by higher profits in lower tax jurisdictions. Our adjusted EPS for the year was $1.65, up 15.4% year-over-year on reported basis. Our balance sheet remains strong. Our cash, including short and long-term investments, as of December 31st, was $350 million, and our revolver debt was $288 million for a net cash position of $62 million. We generated cash flow from operations of $269 million in 2024, up 27% year-over-year, driven by improved profitability and working capital management. During the year, we spent $46 million on capital expenditures and $196.5 million on repurchasing 6.3 million shares at an average price of $31.30. Now, moving on to our outlook for 2025. Based on our growth momentum, current visibility and strong pipeline, we anticipate 2025 revenue to be in the range of 2.025 billion to 2.06 billion. This represents year-over-year growth of 10% to 12% on a reported basis and 11% to 13% on a constant currency basis with a forecasted foreign exchange headwind of $10 million. We expect a foreign exchange gain of approximately $1 million, net interest expense of approximately $1 million, and our full-year effective tax rate to be in the range of 22% to 23%. We anticipate our adjusted EPS to be in the range of $1.83 to $1.89, representing year-over-year growth of 11% to 14%. We expect capital expenditures to be in the range of $50 to $55 million. To conclude, we are proud of our industry-leading financial performance we delivered in 2024, which demonstrates our unique competitive position. Our leading indicators remain positive, setting us up for a solid start to 2025. With that, Rohit and I would be happy to take your questions.

Thank you. At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk and then you will hear your name called. Please accept, unmute your audio and ask your question. As a reminder, we are allowing analysts one question and one related follow up today. We will wait a moment to allow the queue to form. Our first question will be from Brian Bergen with TD Cohen. Please unmute your line and ask your question.

Hi all. Good morning. Thank you. Wanted to ask on the 2025 growth outlook. So Marzia, I heard the last comment you made there as far as forward indicators, but I'm curious, can you comment on just how client spending sentiment progressed through 4Q and whether you've seen really any changes year to date through February, just amid the pickup in macro volatility?

Hi, Brian. This is Rohit. So for us, the demand environment continues to be strong. We saw that in the fourth quarter of the year. And we continue to see that, you know, leading into the first quarter of this year as well. The big shift towards AI and some of the IT spending shifting towards data and AI, that continues to play out. I think clients are looking to embed AI into the workflow and that plays to our strengths and our capabilities. And so we see good demand signals on that. The pipeline for us continues to kind of develop well. So all in all, I think it's good progression. For 2024, you will have seen that we continue to drive strong growth rate in our business, and our analytics business also picked up through the year. So we feel we are in a good position from a demand environment standpoint and from an execution standpoint.

Okay. Okay, that's clear. On my follow-up here, so I want to dig into the operating model change. So kind of a bit of a combo question, but can you give – What's really changing on the ground and maybe is there any relevant leadership and sales structure changes? You've obviously been executing well on the existing structure. So I'm just curious what guardrails are in place to just avoid any potential early friction of a change in the model and understanding the reporting structure will change going forward. Can you just unpack how 25 growth may be expected? You've talked in the past about obviously digital ops and analytics. Is there any way you can share how you maybe expect the growth in the data and AI portion of the business to grow in 25 relative to what may have been the remaining digital ops across the various market units?

Sure. So first off, you know, we're all aware of the rapidly changing market environment with technological change coming in at a very, very fast pace. What we wanted to do is to be a lot closer to our clients so that we could listen to some of their priorities and their objectives, and also be able to come up with ideas and ways in which we can improve operational efficiency, drive faster business growth, and improve the customer experience. So that's the fundamental reason for us making a change to our operating model. Our operating model allows us to do two things. Number one, be much closer to our customers and be able to get much more engaged with them and have much deeper relationships with them. Offer them the full suite of EXL capabilities. And the second part of it is it allows us to be able to develop and deploy new capabilities at a much faster pace. So those are the fundamental drivers of the change in operating model. The leadership impact is not very significant. We basically have reallocated the portfolios amongst our existing leadership talent. And we are fortunate that we've got a good bench of leaders that are able to take up this new operating model in their stride. From a client perspective, there's not much change because the client executives and the account managers and the service delivery leaders essentially remain the same. However, the groupings are going to be a lot different. And finally, in terms of performance, the growth and the guidance of our business. We're going to share more details of that at our investor day when we meet on May 6th. And we will talk a little bit more in detail about the new segment reporting, as well as how we are running and managing the business. And so we hope to provide you with additional color at that point in time.

Okay, understood. Thank you.

Our next question comes from Surinder Thind with Jefferies LLC. Please unmute your line and ask your question.

Thank you. Rowith, I'd like to start with a higher level, more strategic question. It sounds like from the commentary... that perhaps there's a bit more emphasis on the development of IP in this part of the technology cycle. Is that a fair comment at this point relative to maybe how business was conducted, let's say, pre-pandemic or during the earlier days of the rise of cloud? It just seems that there's a lot more emphasis there and that that's the point of differentiation here.

Sananda, you're absolutely right. I think with all of these changes taking place, we think innovation is going to have a much more strategic importance. The development of IP is going to be critical. The access to data assets becomes a very, very strong value enabler. So there is a big shift that's taking place out there, and we want to position ourselves to be able to develop our own IP, take it out to market, and be able to implement it into the workflow so that our clients can benefit from it. There is a fundamental shift that's also taking place, which is the IT spend is shifting over to AI and it's shifting over to AI enablement into the workflow. And so we want to be able to participate in that broader TAM, which we weren't addressing previously, and position ourselves on that. But you're absolutely right. I think that the development of IP, the innovation engine, these are all going to become critical attributes of successful and sustainable growth-oriented companies.

That's helpful. And then as a related follow-up, One of the challenges from an industry perspective has been just a client's readiness from an infrastructure perspective, that there's a lot of heavy lifting to do before they can maybe fully benefit from some of the AI solutions that are being developed. It sounds like you guys are maybe not seeing the same. Is it more like point solutions that you guys are implementing into workflows at this point? Or how should we think about that part of the overall spend of what you're seeing clients that's allowing you to do maybe a bit more AI work than perhaps what may be going on at competitors?

So we would break up the readiness of infrastructure at our client organizations into three parts. Number one is the shift to the cloud. Number two is the modernization of legacy technology platforms. And number three is the availability of data assets so that you can leverage AI in a much more meaningful way. We are now playing in all three of these stacks, helping our clients move their data to the cloud and therefore make it much more usable for AI. Number two, helping them modernize their legacy technology platforms. We've just announced Code Harbor, which is a code conversion capability leveraging AI that allows us to be able to change some of the legacy models and some of the software that was written into modern code. And then we are continuing to invest in our data management capabilities so that we can help our clients put their data estate in order, particularly around unstructured data, which has been the piece that has been missing and that requires a heavy lift. And I think all these three different elements allow our clients to be able to benefit from the use of technology and the use of AI going forward.

Thank you.

Our next question comes from Maggie Nolan with William Blair. Please unmute your line and ask your question.

Hi, thank you. I wanted to ask about, I think, Rohit, you referred to them as 100 data assets, including accelerators, or maybe correct me if I've misheard that. But I just wanted to try to get a sense for how widely used those are across your customer base. And in particular, if you've been able to apply them to some of your larger client relationships as well.

Sure. So Maggie, one of the big advantages that EXL had is that we invested in analytics way ahead of the curve. And we started to build a number of these accelerators using machine learning and using advanced analytics. So the 100 accelerators that we've got is actually a very modern tech stack that we've got. These are all, you know, these have all been deployed with clients. So they've all been tested out and they are, you know, applied in a practical workflow situation. And these are not, you know, new ideas that need to be experimented with. We find... that the ability to kind of leverage this across multiple clients gives us an ability to implement with speed and implement with certainty, which is why our execution on AI is at such high levels. I would say that In terms of the application of these 100 accelerators, the penetration of this is still very, very low. So it's still not applied across all of our clients. And there's a lot of opportunity for us to continue to embed this into client workflows. And with the new E-Accelerate AI platform that we just announced yesterday, we can actually leverage this in a much, much more agile, flexible, with speed and at scale. So that gives us a distinct advantage here.

Thank you. And then Maurizio, maybe for 2025, can you give us a sense for margin expectations for both at the gross margin and operating level and sort of the puts and takes that you're considering over the course of the year?

Sure, Maggie. When you kind of look at the progression of the year, in terms of gross margins, we have been doing well in terms of increasing our gross margins. I mean, if you look at 2023 versus 2024, we increased our gross margins by 30 basis points to 37.6%. Then if you look at Q4, it's even higher than that. But that's going to be critical for us going forward. As we do more and more investments in AI, we're going to need to really drive our gross margin and really get paid for that higher value of service that we're driving now going forward. And so what you will see in 2025 is that progression of us increasing our gross margins on an annual basis. It'll still be choppy between the quarters, but overall, annual comparison, you'll continue to see gross margins increase. We'll need to spend a bit more now on investments in R&D and development of our solutions. So the net of all that will continue to be similar to what you've seen in 2024 with that 10 to 20 basis point increase in our overall AOPM margin for the year.

Very clear. Thank you. And great to see the continued strong growth. Congrats.

Thank you.

Our next question comes from Puneet Jain with JP Morgan. Please unmute your line and ask your question.

Hey, thanks for taking my question. So, Rohit, when you bring these AI agents to a client, why can't they handle it themselves? Like we hear all the time, it's like that. IT clients, like they are investing a lot in their in-house operations. So why is it that they cannot implement some of these AI solutions themselves? Or maybe broadly, if you can talk about competitive dynamics when you deploy AI solutions at any of your clients.

Sure, Puneet. You know, from our lens, there are a couple of things which are really important for these AI agents to be effectively deployed in our client organizations. The number one issue is the adoption of these AI agents. And there are a couple of things that are necessary to ensure that you have high adoption. Number one is these AI agents need to be embedded into the workflows. They are actually quite useless on a standalone basis. And unless and until they become an integral part of the workflow, the efficacy and the usefulness of that AI agent is very low. Number two is AI agents necessarily need to be able to talk to the data assets and the data estate of our clients. And stitching that together is another thing which is really, really important to create value from these AI agents. and increase the adoption rate. And then finally, this has to be done in a hybrid environment, which the client has. So whether they use the cloud or whether they have an on-premise capability, it has to be kind of stitched in that hybrid environment. expertise is not only building the ai agent which has the functional capability but actually integrating that into the workflow and combining it with their data assets and therefore the adoption rate of these ai agents is much higher and that's something which our clients struggle with doing themselves that's something which they struggle with other you know partners that they work with We are in that sweet spot where we understand the domain, we understand the workflow, we've got mastery over helping our clients organize their data assets, and then we've got deep expertise in terms of being able to fine-tune those AI models and embed that AI model into the workflow. And that's what our clients really love about us, and that's why they're engaging with us.

Got it. And that's very helpful. And then your new financial model, operating model, I think it makes sense to combine data, AI within analytics with those capabilities in digital operations. But how should we think about standalone analytics services like the marketing analytics you provided to financial services clients? So how are you going to ensure that there is enough accountability, like the visibility on some of those services and those services continue to grow at the same rate in new operating model?

Sure. So firstly, you're right. Our analytics business has really grown and become one of the largest analytics business that there is on a standalone basis. And I think last year it was close to about $800 million of revenue. And that is now tightly integrated in with each of the industry verticals where we serve our clients. And therefore, we're going to have it be part of the reporting segments and the industry market units that we have as we go to market. We are going to provide you with greater transparency on data and AI. And that's something which we will provide to you on a quarterly basis. As I said in my prepared remarks, our current penetration of data and AI at the end of 2024 stands at 53%. So that's something which we believe is one of the most mature levels of data and AI capabilities. And keep in mind, this data and AI metric that we are reporting out is standalone capability. And therefore, this is something which we will continue to report on a quarterly basis. We're going to unpack this for you in a much more meaningful way at our investor day on May 6th, so that you'll be able to track this and be able to get much more confidence in terms of the progression of the complexity of our business, as well as some of the forays that we are making into data and AI and how that is evolving as well.

Okay. Thank you.

Our next question comes from Jacob Haggerty with Baird. Please unmute your line and ask your question.

Hi, guys. Thanks for taking my question. Could you just go over really quick the Q4 and expected 2025 acquisition contribution? Could you quantify that for us, please?

So during the year, we purchased ITI back in the third quarter of 2024. And if you look at just the overall growth of the year, you know, overall, overall, we grew 12.7% on a reported basis. And on an organic basis, we grew 12.1%. So it's right around $9 million of contribution during the year.

Thank you. And then just wanted to touch on kind of the dynamics with the analytics businesses across the three verticals. So it looks like in emerging analytics, you had a nice acceleration, but deceleration and health and insurance, can you guys just kind of explain some of the dynamics that are happening there and if you expect it to continue in a similar manner into 2025?

Because if you look at just the year-over-year growth rate, just on a constant currency basis, if you look at healthcare merging and insurance, just the growth rates with analytics embedded, it's actually fairly consistent on a constant currency basis. The variation there is only between 13% and 15%. So there's some puts and takes here and there within each of the segments when we embed analytics, but it's still very consistent overall.

Yeah, I would just add that, you know, on a quarter-on-quarter basis, there would be variation and there is, you know, divergence between the three industry verticals. But on a year-on-year basis, actually the progression is pretty much at the same level.

As a reminder, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. Our next question comes from David Grossman with Stifle Europe. Please unmute your line and ask your question.

Good morning. Thank you. You know, Rohit, maybe you could go back to just the operating model change and maybe you could just go to a little more detail in terms of what were the fundamental business reasons? What were you seeing that really motivated you to make this change? Was it you know a need to you know kind of provide one point of contact and responsibility for really managing the relationship on an industry level and offering the entire service offering or is it something more than that sure david so you know if you take a look at our operating model previously uh we were structured by three uh industry verticals uh insurance

healthcare, and our emerging business unit, and one horizontal capability, which was analytics. So we had three industry verticals and one horizontal capability analytics. Now, we wanted to keep it that way because analytics was a business that we wanted to really develop and mature. We wanted to be able to monitor the not only the revenue progression, but also the margin progression of that business. And we wanted to ensure that it got the full attention of the team in terms of the development of that vertical. We now believe that the analytics business unit is a mature business unit. It's, like I said, $800 million of revenue, It's one of the largest and most powerful, you know, service offerings that we have in the marketplace. And it's embedded in every single thing that we do now with our clients across the board. And the cross penetration between digital operations clients and analytics, you know, had kind of increased quite significantly. Going forward, we felt it would be much better for us to be able to focus in on our clients and be much closer to them. We also wanted to make sure that the international markets are a space that we start to focus in on and start to give additional attention on. You would have seen that the international growth markets for us the penetration has increased for us over the last three years. I believe in 2022, international markets contributed about 14% of our revenue. We took it up to 16% in 23, and in 24, it has expanded to 18%. That is something which we are going to continue to drive going forward, and that becomes an important priority for us. So the new operating model that we now have has got insurance, it's got healthcare, it's got banking and capital markets and diversified industries together. And then it's got all of the international growth markets, you know, where we want to kind of pay special attention to. So this allows us to kind of manage the business in a way that we can be closer to our customers, give much more focus on it, and then every single client of ours can avail of all the service offerings that we've got in place. We believe there are two fundamental go-to-market motions that this will be particularly helpful in. Number one is it will help our ability to cross-sell, and we think that our cross-sell penetration is still very low, and therefore we can cross-sell services into the same client base. And number two is As integrated deals become much more important, and we are already seeing that trend, we can combine all of the capabilities of our domain operations, platforms, data management capabilities, AI services, analytics services, AI solutions, and bundle that together and be able to handle that for our clients. So these two go-to-market motions have become much more pronounced as we go forward in the new operating model.

Thanks for that. There was one other question. I think it may have come up in a previous question or it's you've talked about this historically is the the use of automation to convert or to migrate your customers' legacy applications to more modern code. And just using that capabilities backdrop, just wondering if you could update us on how GenAI is impacting your delivery of service beyond you know, kind of what you've already talked about historically and that code conversion, you know, how pervasive is that and what other use cases for, you know, AI are you seeing in the delivery of the service offering and what impact, you know, do you think that's going to have on your margins over time as well as your revenue growth?

Sure. So look, as we stated previously, there are three fundamental areas where we are leveraging GenAI. One is code conversion, and there we've got a capability called Code Harbor. The second is around customer service, the ability to be able to provide automated content and streamline and create greater efficiency in customer service. And the third is around data extraction and our ability to pull unstructured data and bring it into the workflow and create additional value. So I'll focus a little bit more on the Port Harbor solution that we have, which allows us to be able to use GenAI to modernize our client's legacy platforms and legacy code into modern day code. So think about it as a prime example is clients wanting to convert their SAS models into modern day Python or newer code that is much more flexible and much more functionally useful for them. In the past, that would have taken us a number of man months and years to be able to convert the SAS code into Python. Today, we are able to create a chunking of that code and break it into different elements. We are able to document, you know, what the code actually means. And then we are able to convert it, again, using GenAI, in a very efficient format. So what it does is it brings down the time and the cost of that code conversion very significantly. And therefore, our clients are embracing this and moving forward on this code conversion very, very rapidly. We've got a number of clients that have chosen to partner with us on this. And because we understand their business models, we're very familiar with this code conversion factory. We're able to kind of get them to the new code in a very, very quick timeframe. and help them modernize their platforms. So I hope that's helpful a little bit in terms of the understanding. We are going to be showcasing Code Harbor as part of our March 5th AI in Action webinar that we have. So that will provide additional color on that as well.

Yeah, but just from a financial perspective, Rohit, how should we think about these three elements and whether it's a headwind or a tailwind to revenue growth and margin?

Well, for us, it's actually turning out to be a tailwind because what we are finding is that we can work on a much bigger piece of opportunity at our clients. And therefore, the work is not limited to a process or a part of a process and a task. It actually is the full customer journey and a complete integrated deal. Number two, because we have this capability, we're getting access to a number of different initiatives at the client organization that typically we wouldn't have had in the past. And lastly, our buying centers have also expanded. And now the CIO and the CDO are engaged with us directly on this. Previously, we would have only worked with the COO. So it actually expands the time. It expands the size of the engagement. And it is a tailwind. And you can see that in the growth rate of our digital operations revenue growth, which is growing very nicely. And Q4, it grew at 18%. So that's been a very, very nice uptick for us.

All right, great. Thank you.

We have no further questions at this time. I will turn the call back to John Christoph for closing remarks.

Yes, I'd like to thank everyone for joining us this morning. And as always, for additional questions, please feel free to reach out to me directly. Thank you.