Fourth quarter 2025 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 Andrew Tutt, SVP, Investor Relations and Capital Markets. Thanks, Mariana.

Hello, and thank you for joining ExlService Holdings, Inc.'s fourth quarter and full year 2025 financial results conference call. My name is Andrew Tutt, and I am the new SVP of Investor Relations and Capital Markets for ExlService Holdings, Inc. On the call with me today are Rohit Kapoor, Chairman and Chief Executive Officer, and Vivek Jettley, President and Head of Insurance, Healthcare and Life Sciences. Maurizio Nicolelli, Chief Financial Officer, will not be on today's call as he is tending to a family matter. We hope you have 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 on our Investor Relations website. As a reminder, some of the matters we will 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 yesterday's press release, and those discussed in the company's periodic reports and other documents filed with the SEC from time to time. ExlService Holdings, Inc. assumes no obligation to update the information presented on this conference call today. During our call, we may reference certain non-GAAP financial measures we believe provide useful information for investors. Reconciliations of these measures to GAAP can be found in our press release, slide deck, and investor fact sheet. With that, I will turn the call over to Rohit.

Thank you, Andrew, and good morning, everyone. Welcome to ExlService Holdings, Inc.'s fourth quarter and full year 2025 earnings call. I am pleased to be with you this morning to share our financial results. We delivered another strong quarter, exceeding expectations for both revenue and EPS for Q4 and the full year. This reflects sustained double-digit growth momentum and strong execution of our data and AI strategy. For the full year 2025, revenue increased 14% to nearly $2,100,000,000 and adjusted EPS grew 18% year over year to $1.95 per share. These results reflect strong market demand for our data and AI services and solutions and reinforce client confidence in ExlService Holdings, Inc. as the partner of choice to embed AI directly into mission-critical workflows. In the fourth quarter, revenue reached $543,000,000, representing 13% year-over-year organic growth. Our dollar volume of wins in the quarter was more than double that of any other quarter in 2025. While Q4 is seasonally strong from a client activity perspective, we saw accelerated decision-making to advance transformation initiatives planned for 2026. Increasingly, clients are selecting ExlService Holdings, Inc. as an outcome-focused partner that can modernize data foundations and operationalize AI end to end at scale. Our revenue is split across two categories: data and AI led, and digital operations. Our data and AI led revenue includes data analytics, AI solutions and services, and it also includes data and AI led operations. In the quarter, our data and AI led revenue grew 21% year over year and now represents 57% of total revenue. Digital operations represents 43% of our business and grew 4% year over year. As previously shared, our digital operations revenue excludes data and AI led operations revenue. In order to provide greater transparency, we have enhanced our investor fact sheet with a total operations view. The total operations revenue includes data and AI led operations and digital operations revenue. In Q4, total operations grew 11% year over year and 14% for the full year. Our deep domain expertise and proven ability to embed AI in the workflow continues to be a strategic advantage as clients modernize operations using an integrated approach to data, AI, and human-in-the-loop solutions. I will now walk through our fourth quarter performance across each of our four operating segments along with key wins. First, Insurance. The Insurance segment grew 7% year over year and 3% sequentially. Insurance is our largest vertical, representing a third of our revenue, and we see good momentum in the growth rate going forward. Insurance carriers are accelerating adoption of AI-powered solutions to drive growth, optimize costs, and improve customer experience. A notable Q4 win was with a large North American insurance carrier that selected ExlService Holdings, Inc. as its enterprise transformation data and AI partner. As part of this multi-year initiative, we will deploy agentic AI directly into operational workflows, build a comprehensive data strategy powered by exldata.ai, and deliver end-to-end customer experience transformation. Second, Healthcare and Life Sciences. This segment represented approximately a quarter of Q4 revenue and was once again our fastest growing segment with 26% year-over-year growth. This growth was broad-based and was driven by strong demand for data and AI solutions, continued growth in payment services, data analytics, and expanded digital operations across both new and existing clients. Our solutions are well positioned to help healthcare organizations manage rising costs, navigate regulatory complexity, and improve outcomes. One of our largest wins in Q4 was with a top five healthcare payer. This client has been with ExlService Holdings, Inc. for many years, already embracing our technology platform and AI-powered payment integrity analytics. In a significant expansion of that relationship, the client selected ExlService Holdings, Inc.'s AI-powered payment integrity solution to reengineer its clinical auditing processes to improve yield, productivity, and operational alignment. Third, our Banking, Capital Markets and Diversified Industries segment grew 11% year over year, representing nearly a quarter of Q4 revenue. Clients in this segment are turning to ExlService Holdings, Inc. to deliver measurable business outcomes by applying data and AI across the value chain in areas such as credit risk, fraud, collections, and customer experience. In Q4, we renewed and expanded our multi-year engagement with a leading financial services company with an expanded scope of AI services that spans risk strategy, regulatory modeling, forecasting, collections, and fraud. In addition, ExlService Holdings, Inc. will design and deliver the company's first-ever governance framework for generative AI models, setting a new benchmark for responsible AI adoption within a global financial institution. And fourth, our International Growth Market segment grew 8% year over year in Q4, representing 17% of our total revenue. International markets are an important driver of our long-term growth and global expansion strategy. During the quarter, we won several new deals across insurance, banking and capital markets, and energy in this segment. Next, I would like to highlight the market opportunity we see in AI and our strategy for growth. Enterprises are under intense pressure to extract real value from AI and are challenged to successfully apply it across the enterprise. The gap between AI's technical promise and real-world impact is significant. This gap is where ExlService Holdings, Inc. stands out. Through our mastery of domain processes, understanding of complex regulatory environments, and expertise in data and AI, we are seen as a trusted partner that orchestrates enterprise workflows and makes AI real. Let me share how we are executing on this strategy across three areas. First, deepening our data, AI and services capabilities. Second, expanding our partner ecosystem, and third, developing AI talent at scale. 2025 was a milestone year advancing our data and AI capabilities. We drove rapid innovation with new agentic industry solutions, embedded AI directly into our core platforms, and grew our AI services capabilities. Launched in Q4, exldata.ai, our agentic data solutions suite, is resonating very strongly in the market. Clients recognize that an AI-led enterprise starts with getting the data foundation right. We help clients move from data to context to AI by governing and managing enterprise data, capturing business context, and then activating AI use cases on top of that foundation. One recent exldata.ai win was with a leading consumer lending fintech where ExlService Holdings, Inc. modernized the full technology stack from legacy on-prem systems to a cloud-native platform and operationalized the new solution in just four months. Another win was with a large healthcare payer where exldata.ai is being used to create a centralized, governed contract repository spanning structured and unstructured data. This enables stronger alignment between contract terms and claims adjudication, reducing manual effort, minimizing payment discrepancies, and improving speed and accuracy. Importantly, this is broadly applicable well beyond healthcare, anywhere where contracts and policies drive downstream operational decisions, from supplier and pricing agreements to customer and partner terms. In addition to building innovative new data and AI solutions like exldata.ai, we continue embedding AI into our core platforms. In Q4, we introduced a new set of AI agents on our industry-leading life and annuities platform, enabling insurers to automate complex tasks such as product setup, correspondence, and data mapping, and launch innovative new products in weeks instead of months. Finally, we are seeing accelerating demand for AI services. This represents a large addressable market and an important growth engine for ExlService Holdings, Inc. AI integration is a fundamentally new technology challenge, particularly for complex, data-intensive industries. Our data and analytics capabilities and our investments in AI give us a clear advantage for winning AI services contracts. We support clients across the full AI lifecycle from AI strategy and adoption to models orchestration and making data AI ready. Our partner ecosystem is a critical enabler of scale. In 2025, we accelerated co-innovation with AWS, Databricks, Google, Microsoft, NVIDIA, and Genesys. This included partnering with NVIDIA on its new AI blueprint for fraud detection, integrating our AI capabilities for CX into Genesys, and completing the migration of our life and annuities platform to AWS. Co-selling momentum has increased with 16 ExlService Holdings, Inc. solutions now on marketplaces with AWS, Microsoft, Databricks, and Genesys. For example, we collaborated with AWS to deploy agentic AI for Sonos' IT service management workflows, aiming to create a new benchmark for efficiency, operational intelligence, and risk mitigation. These efforts earned industry recognition, including becoming a globally managed Google Cloud strategic services partner and being named AWS's 2025 AIML Market Disruptor of the Year. Finally, our growth strategy is powered by our talent. We are building an AI-native workforce with deep expertise across engineering, generative AI, and 10 new U.S. patents awarded over the past twelve months. Innovation is central to the ExlService Holdings, Inc. culture. We continue to invest in training, certifications, and tools such as our AI playground, enabling colleagues to explore, experiment, and build with agentic technologies. Our second annual Idea Tank competition generated more than 11,000 employee-submitted ideas, a seven-fold increase from last year. From these, 200 ideas were shortlisted for dual development on our sandbox, with winning ideas receiving development resources to launch new capabilities. In summary, while AI is reshaping the services industry, we view it as a clear opportunity for ExlService Holdings, Inc. Our integrated approach to AI is creating better business outcomes and growth for our clients, thereby resulting in new revenue streams for ExlService Holdings, Inc. AI is driving revenue expansion for our clients and has become a growth engine for ExlService Holdings, Inc. ExlService Holdings, Inc. enters 2026 with strong momentum and clear strategic focus. Our data and AI pivot is well underway, representing 57% of our revenue. Demand for our data and AI led services and solutions remains robust, and we continue to strengthen our competitive position through investments in capabilities, partnerships, and talent. Our client base is diverse, our pipeline is strong, and we have high renewal rates. More than 75% of our revenue is recurring or annuity-like. This provides revenue stability and predictability. We have excellent visibility into 2026. Turning to our outlook for 2026, we expect revenue to be in the range of $2,275,000,000 to $2,315,000,000, representing 9% to 11% in constant currency organic growth. Adjusted diluted EPS is expected to be in the range of $2.14 to $2.19, representing a 10% to 12% increase over 2025. I want to thank our clients for their trust, our partners for their collaboration, our employees for their continued innovation and commitment, and our shareholders for their ongoing support of ExlService Holdings, Inc.'s vision. Lastly, I would like to call your attention to two upcoming events. We look forward to hosting our annual AI in Action virtual event on March 11, followed by our investor strategy update on May 13, in New York. With that, I will turn it over to Vivek, who is stepping in for Maurizio.

Thank you, Rohit. And thank you everyone for joining us this morning. I will provide insights into our financial performance for the fourth quarter and for the full year 2025, followed by our outlook for 2026. We continued our growth momentum in the fourth quarter, with revenue of $542,600,000, up 12.7% year over year on a reported and 12.6% on an organic constant currency basis. This increase was driven by double-digit growth in our data and AI led services, which grew 20.7% year over year on a constant currency basis. Our adjusted EPS was $0.50, a year-over-year increase of 15%. All revenue growth percentages mentioned hereafter are on a constant currency basis. Now turning to the fourth quarter revenue by segments. The Insurance segment grew 7.2% year over year and 2.9% sequentially, with revenue of $185,800,000. This growth was primarily driven by expansion in existing client relationships. The Insurance vertical, which includes revenue from International Growth Markets, grew 6.7% year over year, with revenue of $215,200,000. The Healthcare and Life Sciences segment reported revenue of $142,200,000, representing growth of 26.2% year over year and 5.1% sequentially. The year-over-year growth was broad-based, driven by higher volumes in our Payment Services business and expansion in existing client relationships. The Healthcare and Life Sciences vertical, including revenue from International Growth Markets, grew 26.1% year over year, with revenue of $142,500,000. In the Banking, Capital Markets, and Diversified Industries segment, we reported revenue of $122,600,000, representing growth of 10.8% year over year and sequentially 1.3%. This growth was driven by the expansion of existing client relationships primarily in Banking and Capital Markets, and new client wins. The Banking, Capital Markets, and Diversified Industries vertical, including revenue from International Growth Markets, grew 10.6% year over year, with revenue of $185,000,000. In the International Growth Markets segment, we generated revenue of $92,000,000, up 8.1% year over year. This growth was primarily driven by higher volumes with existing clients in Banking and Capital Markets and new client wins. SG&A expenses as a percentage of revenue increased by 130 basis points year over year to 21.2%, driven by investments in sales and marketing. As expected, our adjusted operating margin for the quarter was 18.8%. This was flat year over year. Our adjusted EPS for the quarter was $0.50, up 15% year over year on a reported basis. Turning to our full-year performance. Our revenue for the period was $2,090,000,000, up 13.6% year over year on a reported and constant currency basis. This increase was driven by double-digit growth in our data and AI led, which grew 18% year over year on a constant currency basis. The adjusted operating margin for the period was 19.5%, up 10 basis points year over year. Our effective tax rate for the year was 21.6%, down 70 basis points year over year, driven by higher profitability in lower tax jurisdictions. Our adjusted EPS for the year was $1.95, up 18% year over year. Our balance sheet remains strong. Our cash, including short- and long-term investments as of December 31, was $331,000,000, and our revolver debt was $299,000,000 for a net cash position of $32,000,000. We generated cash flow from operations of $31,000,000 in 2025, up 30.6% year over year. This improvement was primarily driven by higher profitability and better working capital management. During the year, we spent $53,000,000 on capital expenditures, and repurchased approximately 7,500,000 shares at an average cost of $42.30 per share, for a total of $317,000,000. Now turning to our outlook for 2026. Supported by strong momentum, our current visibility, and a robust pipeline, we expect 2026 revenue to be in the range of $2,275,000,000 to $2,315,000,000. This represents a year-over-year growth of 9% to 11% on a reported and constant currency basis. In November, the Government of India consolidated existing legislations into a unified framework referred to as the New Labor Code. However, the changes did not have a material impact on the income statement for the quarter. They resulted in a one-time increase of $10,300,000 in our defined benefit liability in the balance sheet, with a corresponding increase in accumulated other comprehensive income. We expect a prospective increase in employee costs for the year, resulting in an approximately $0.02 to $0.03 dilution to adjusted EPS, which is incorporated in our guidance. We expect a foreign exchange gain of approximately $2,000,000, net interest expense of approximately $1,000,000, and our full-year effective tax rate to be in the range of 21% to 22%. We expect capital expenditures to be in the range of $50,000,000 to $55,000,000. Our Board of Directors authorized a $500,000,000 common stock repurchase program effective February 28, 2026, for a two-year period. This is in line with our capital allocation strategy. This new authorization of $500,000,000 represents confidence in our ability to continue our growth trajectory and generate significant free cash flow. We anticipate our adjusted EPS to be in the range of $2.14 to $2.19, representing year-over-year growth of 10% to 12%. This includes a 100-basis-point impact due to the implementation of the Indian Labor Code. To conclude, we delivered industry-leading financial performance in 2025, demonstrating our strong competitive position in embedding AI across client businesses. Our leading indicators remain positive, and our robust pipeline visibility positions us for a strong start to 2026. 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 one moment to allow the queue to form. Our first question comes from Puneet Jain at JPMorgan. Your line is open. You may unmute and ask your question.

Yeah. Hi. Thanks for taking my question. So I wanted to ask about all the recent news flow around agentic solutions. Like, Rohit, you also talked about how you are seeing the accelerated decision-making at your clients. Could that accelerated decision-making be a result of all that news flow which might be causing more urgency on clients to act and to move forward with AI? Or if not that, what would you attribute that accelerated decision-making to?

Sure, Puneet. So we saw accelerated decision-making in the fourth quarter. And frankly, the client conversations in 2026 continue to be very active. I think what we are seeing is a greater propensity from enterprise clients to adopt and leverage AI. And I think that fits in really well with ExlService Holdings, Inc.'s capabilities and our engagements with our clients. As you know, in 2025, most of the engagements ended up being proof of concepts, and there was not really an enterprise and a scaled-up adoption of AI. That seems to be changing at this point of time. There is also a change in terms of shifting the focus from a cost takeout to growth. And I think using AI for growth allows companies to be a lot more competitive and to be able to build up their businesses. So frankly, from our perspective, the environment has become a lot more active, and it allows us to engage with our clients even more strategically to help them in these implementations and to help them in the adoption of AI.

Got it. Got it. No, that is very helpful. And thanks for sharing disclosures around data and AI led within operations. Could you share, when a traditional operations management client decides to implement AI in their processes, what happens to the overall revenue, including the typical range of efficiency gains that you pass on to the client, and incremental work that might come your way in form of maybe data services, or managing additional workflows, or servicing more processes to that client? What happens when an operations management client decides to implement AI with ExlService Holdings, Inc.?

Sure. So, first of all, we have now disclosed our total operations revenue and shared with you the growth of total operations that we are seeing quarter on quarter with our clients, and we think that growth is very positive and very supportive of the total company's growth rate. There are a few points that I would like to highlight for you and everybody else around operations management. Number one, the penetration rate of outsourcing of operations management by clients in general continues to remain low at about 15% to 20%. So what that means is that there is a lot more that clients can outsource, and particularly with the engagement of AI and technology coming in, a number of more complex processes and more intertwined processes can now be outsourced, and that creates a huge amount of opportunity for us. The second part of this is that as AI and intelligence is being put into the operations, what clients are looking for is a trusted AI-enabled operator of their business. And ExlService Holdings, Inc. is uniquely positioned to serve as a trusted AI operator for our clients and therefore, their confidence in entrusting us with more work is being reflected in our revenues and in our financial statement. The AI certainly is able to provide productivity benefits associated with the use of that technology in operations, and the question really is, can a partner make that productivity benefit real for the clients and result in tangible business outcomes being delivered to the client and get them the ROI. ExlService Holdings, Inc. has been in the fortunate position of actually executing to that and making good on that promise, which clients themselves on their own struggle, and other providers have struggled as well. We understand the domain. We understand the data. We have expertise in applying AI into the workflow. And therefore, our ability to deliver value to the customer and real tangible outcomes is what is creating ExlService Holdings, Inc. to be able to grow at a much more differentiated pace than all of our other peers and competition. I hope that helps you.

Yes, it does. Thank you. And I totally appreciate that the AI within operations is growing at 40% to 50%, much faster than the overall industry and ExlService Holdings, Inc. overall. So appreciate it. Thank you.

Thanks, Puneet. Our next question comes from Bryan Bergin at TD Cowen. Please go ahead with your question.

Hi, guys. Good morning. Thank you. I wanted to ask on the 2026 growth guides, and really I am just trying to reconcile 2026 versus what you did in 2025. You know, you are obviously bringing more AI IP to the market. I hear strength of the AI-related services and the strong pipeline. You guys are growing well ahead of comps. But you are guiding annual growth two points lower than you initially did last year. I am trying to reconcile that. What would you say is the biggest difference now versus one year ago? Is it parts of the client budgets or programs that are just seeing some more pronounced pause or pressure because of the AI initiatives? Is it potentially factoring some added uncertainty in the forecast? Just help us reconcile that, please.

Sure, Bryan. Let me clarify for you. In 2025, when we gave guidance, that included inorganic growth. We had done an acquisition for ITI Group, and our guidance included inorganic growth. From our perspective, the guidance that we are giving you today for 2026 is exactly the same as the guidance that we gave to you in 2025 on an organic constant currency basis. Now, in terms of our visibility and our backlog associated with this, the visibility is about the same as what we had last year. The backlog is actually a little bit stronger. What I will tell you is a difference for 2026 revenue guidance is we are exiting 2025 very strong, and you can see that being reflected in a slight uptick in our growth rate. We have also shared with you that we had client wins in Q4 which are more than twice the pace at which we signed up clients in all of 2025. So, frankly, our expectation is that we are going to have a much stronger start to the year in 2026 than we had in 2025. And so we feel very good about our guidance. And we feel very good about the visibility associated with our guidance.

Okay. That is good to hear. If we go a layer deeper here, can you give us a sense on how you are thinking about data and AI led growth potential versus digital ops, and any important considerations as you move through the year, a standpoint of growth as you go through the quarters? Thank you.

Yes, absolutely. You know, as you know, our data and AI led business is 57% of our portfolio, and it is likely to grow much faster than the corporate average. Our digital operations business continues to grow, and we continue to see demand for that from our clients. It is going to grow at a pace which is lower than the corporate average. And, you know, I think the portfolio mix that we have is actually really, really foundationally strong because it allows us to be able to learn from the operations business, build new AI services and solutions for our clients, and be able to accelerate the growth rate of our data and AI led business. We are seeing a tremendous amount of strength on data management, we are seeing a tremendous amount of strength on AI services, we are seeing our analytics business be the leading edge to get converted into AI services. So frankly, the engagement with clients is very, very good. And we are very actively engaged in conversations with them as to how they can deploy AI.

Thanks, Bryan. Operator, next question.

Our next question comes from David Grossman at Stifel Europe. Please go ahead with your question.

Thank you. Good morning. So, Rohit, I think you already gave some pretty good color on visibility and growth in 2026. I am just curious, how should we think about the cadence of growth over the course of the year? Do you expect it to be relatively even throughout the four quarters, or are there some things that we should be attentive to that may skew one quarter over another?

Sure, David. So at this point of time, clearly, the visibility into 2026 is much better than the, you know, 2026, just because of the timing perspective. And what we have already shared is that we are going to be starting out strong. You can see what our growth rate was in 2025. We think 2025 is going to be a good growth rate for us. So, frankly, with the current guidance, the way it kind of sets up, we are going to start off strong, and we are going to wait and see how the visibility develops in the second half of the year. And based on that, we will update our guidance accordingly.

Got it. And you mentioned some of the things that differentiate you versus some of the IT services companies, as well as other peers in the space and why you are growing faster. I am just curious. You mentioned that you had a large win with an existing client, one of the top five payers in the U.S. for payment integrity during the quarter. So if I got that right, payment integrity is actually one of the areas that people thought would be most vulnerable to some of the innovations coming with AI. So can you just give us any insight into that process, what they were thinking, why they re-upped with you and expanded scope given some of the newer technologies that are out there?

Thanks, David. This is Vivek. I will take that question. So as you can see, Healthcare was a very strong growth driver for us all the way through 2025 and including in the fourth quarter. And now what distinguishes Healthcare for us is that we are seeing broad-based growth in Healthcare across our multiple offerings. So if I were to call it out, there are really three pillars for growth in Healthcare right now, one of which is our AI led operations, the other is the work that we do in AI services and analytics, and the third one is payment integrity. Now we have got good visibility for all three, and we expect to see growth for all three as we go through the year. Your point about the cost pressures for payers and what does that mean for payers actually points to a tailwind for payment integrity. Because what happens is right now as the payers start facing more costs on their medical loss ratios as well as on their admin costs, they are going to be forced to become more efficient and manage those costs in a better way, and ExlService Holdings, Inc.'s payment integrity offerings is one of those things that they will turn to in order to optimize that. Our win in Q4 is actually an illustration of that because it is someone who is looking to say, look, I want to use the AI, bring it into what I am doing with my payments and try and optimize my overall cost base. And we see that trend continuing.

Right. I guess the question, Vivek, is, is there any consideration at the payers, who have got fairly substantial IT budgets and operations, to try to start doing this themselves, given the availability of some of the newer technology? And if not, are there subjugating items to them doing that?

So we are not seeing any of those trends right now. In fact, what we are seeing is that the payers are actively talking to us, and to other partners, in terms of looking at what is it that they need to do to refine their algorithms and what is it that they need to do to create more saves. So we are not seeing any initiatives at this point in trying to take it in-house.

So David, let me just add to Vivek's comment on that. Clients at this point of time are concerned with business outcomes. And if you can drive superior business outcomes than what they can get with other providers, or by their own internal teams, they are going to allocate the business to that provider that is delivering better business outcomes. You can see in the same example that we have quoted, this was a client that has capability, of course, of doing this work in house. They have been working with us for several years, but based on our capability which is demonstrated and proven, they decided to award us the single largest win for us and give us even more business because they want to get the better business outcome. And that is what is going to be, I think, quite different in this AI world where business outcomes will matter a lot more than a promise or any other statement, because everybody will be making statements and claims. It is which entity can actually deliver that business outcome, and that is what we are seeing is reflecting in our growth rate being much higher than others.

Great. Thank you very much.

Thanks, David. Our next question comes from Eleanor Dyke at William Blair. Please go ahead with your question.

Hi. Thank you. This is Ellie Dyke on for Margaret Nolan. I wanted to ask about the win in the fourth quarter with the large North American insurance carrier. Can you talk about the nuances of that process? Like, was it competitively bid? Was it new or existing? And what were the pricing dynamics there? Just wondering if you had any takeaways from the process about pricing or revenue cannibalization or accretion?

Sure. First of all, this was a brand new customer for us. This was a new client that we acquired. So there is no existing revenue and therefore no cannibalization. But what really stood out for us in this deal was that the client actually is engaging with us on a complete enterprise transformation. The work that we are taking on is a data and AI led transformation of their overall data infrastructure. We are using exldata.ai for that, and then using our AI capabilities and accelerate.ai capabilities to go in, transform what they are doing with their CX, transform what they are doing with their back office, and transform what they are doing in terms of the overall end-to-end process that they are running. The deal really stands out for us because what they have done is chosen us as the enterprise AI partner that is going to come in, do all of the transformation, and then pick up the operations and operate it in an AI plus a human manner, bringing in our outsourced capabilities. It is a really interesting deal for us. The other part of your question was in terms of pricing. And in this deal, what really stands out for me is the fact that ExlService Holdings, Inc. is able to start charging for our IP. So we built in a component here which is an explicit pricing for the capabilities that we are bringing in and deploying, and that is over and above what we have got in terms of time and material. And I imagine you are going to start seeing more deals of this type going forward.

Thank you. And then also, I was wondering, are you seeing a shift in client priorities between cost takeout mandates versus long-term digital transformation, including AI? And how can you pivot to capture either?

So I think AI right now actually works across the spectrum. Right? So you could actually walk into every functional group within a client and they are looking at saying, how can I deploy AI in a better way and bring that into my business? And what is it that I can do right now with agentic AI? So it is across the board. It is on the revenue line. It is on customer management. It is on cost. It is on audit and controls, what have you. So from our perspective, we have the capabilities right now within our verticals of talking to CXOs across those different areas and bringing to them the right AI-led value propositions. And that is, I think, what you are seeing a little bit in terms of the pipeline and in terms of the wins that we talked about. It is that value proposition kind of resonating in the marketplace.

Great. Thank you.

Thanks, Ellie. Our next question comes from Robbie Bamberger with Baird. Please go ahead with your question.

Yeah. Thanks for taking my question. So just thinking about types of employees being hired, how should we think about which employees are being hired? Are they higher revenue per employee AI-trained? And then maybe also the expected cadence of employee growth through 2026. Any color on that revenue per employee through the year as well?

Sure. I think the first point I would like to make is that our employee headcount growth rate is much lower than the growth rate of our revenue, and we think that trend will continue. So we will see a differential between our revenue growth rate and our employee headcount growth rate. Second, in terms of the skill sets, our goal is to make sure that every single employee of ExlService Holdings, Inc. can be provided the opportunity to get trained, certified, and practically apply AI as confidently and as comfortably as one needs to be in this new age of AI. So that is something which we are investing a huge amount of effort and resources to be able to train and skill our employees to be proficient with AI and work with AI as an AI-enabled operator, as well as create new solutions leveraging AI. Lastly, we are hiring, of course, a lot of people, particularly around data management, around working with AI services, and creating a lot more of engineering talent that can deploy AI solutions in the enterprise. I will tell you this, that our data and AI led business today is constrained for growth due to talent. And that is something which we are working very actively on to make sure that we have adequate talent resources to be able to leverage the full potential of the data and AI piece.

Awesome. Just to add to Rohit's comments, I will just substantiate that with the data. So it is part of our fact sheet, but the headcount growth for the full year in 2025 was less than 10%. It was 9.8%. And you see that the revenue growth that we delivered against that was closer to 14%. So that is where we are creating that leverage in terms of revenue per headcount.

Yep. Super helpful. And just in terms of guidance, just wondering what operating and gross margins you have embedded in 2026 guidance? And maybe the cadence through the year as well and how that Indian labor code impacts margins throughout the year as well.

Sure. I mean, you had already heard from Maurizio about our viewpoint in terms of how to manage adjusted operating margin going forward. Our adjusted operating margin for Q4 was 18.8%, which was flat to what we were in 2024. This is something that we had already talked to you about, and this was because of investments in the front-end sales and support and in solutions and services. For the full year, our adjusted operating margin actually went up to 19.5%. Our expectation is that we are going to keep it flat for next year, and which includes the impact of what is going on with the new labor codes in India. So the number would have gone up were it not for the new labor code. But net of that, we are going to keep it flat.

Helpful. Thank you.

Our last question comes from Vincent at Barrington Research Associates. Please go ahead with your question.

Hello. I am sorry. Can you hear me now?

Yes.

Hey, Rohit. I am interested in an update on the competitive landscape on the AI side. Are you seeing any new competitors? And if so, is there any impact on your win rates?

Yes, Vincent. We are seeing new competitors come in. And that is something which we have been seeing for a while now. So it is no longer just the traditional services companies that we compete with. We are seeing some of the hyperscalers get in here. We are seeing some of the technology providers getting into the space. And there certainly are a number of other consulting firms who are trying to go into this space. So the set of competition has certainly changed, and it has changed for a while. Our advantage really is the fact that we have this integrated approach to helping our clients embed and use AI across the enterprise in a very disciplined way that delivers much better business outcomes. So our knowledge and domain expertise about the industry and our clients' business, our mastery of data and applying AI and ML techniques to the adoption of AI, and our understanding of the workflow, these all make it very, very easy for clients to adopt AI. Then finally, keep in mind that a large percentage of our client portfolio is in regulated industries. And our knowledge and understanding of regulations and the ability to keep our clients fully compliant with regulatory requirements, that is a big standout, and that is why they trust us for being that AI-enabled operator and the AI implementation partner for them. And so we stand out, though others are certainly coming into the space. And they are certainly coming at it from a standpoint of either having the technology or having the foundational model and trying to leverage that capability and bringing it to enterprise.

And could you update us on your acquisition priorities?

Sure. So one of the good things about ExlService Holdings, Inc. is that we have got a very strong balance sheet. And we have got a tremendous amount of capital available to do acquisitions. And at this point of time, some of the valuations and some of the assets are becoming quite attractive. And therefore, for us to be active in the M&A space, that is something that you should expect. The prioritization for us is going to be to continue to further our strategy around helping clients with AI. And so what that means is investing in capabilities around data, and making data ready for AI. What that means is having the engineering skill sets to apply AI to enterprise workflows. What that means is for us to be acquiring new capabilities that we can take to our clients. And then finally, geographic diversification. So those are some of the areas that are important priorities for us from an M&A perspective. And in this environment, I think the targets are becoming a lot more accessible, approachable, and hopefully affordable. So that is something which we are hoping that we can take advantage of.

Thank you, Rohit.

We have no further questions at this time. This concludes our call. Thank you, and have a good day.