ExlService Holdings Reports 15.6% Revenue Growth in Q2 2026, Acquires I Merit Inc.

ExlService Holdings, Inc. reported a significant increase in financial performance for the second quarter of 2026, with revenues reaching $594.8 million, a 15.6% increase from $514.5 million in the same period last year. For the first half of 2026, revenues totaled $1.165 billion, up 14.7% from $1.015 billion in the first half of 2025. The company's net income for the second quarter was $64.5 million, a slight decrease of 2.3% compared to $66.1 million in the prior year, while net income for the first half was $131.6 million, down 0.8% from $132.6 million.

The company experienced notable growth across its reportable segments, particularly in Healthcare and Life Sciences, which saw a revenue increase of 22.0%, driven by existing client expansion. The Insurance segment also performed well, with a 14.9% revenue increase. However, the Banking, Capital Markets, and Diversified Industries segment grew at a slower rate of 10.5%. The overall growth was attributed to both existing client expansion and new client acquisitions, although foreign exchange losses slightly impacted results.

In terms of operational developments, ExlService announced its acquisition of I Merit Inc. for $170 million, with potential additional cash incentives of up to $140 million based on performance milestones. This acquisition is expected to enhance ExlService's capabilities in AI model training and evaluation, further solidifying its position in the AI technology sector. The transaction is anticipated to close in the third quarter of 2026, subject to regulatory approvals.

The company reported an increase in operating expenses, which rose to $138.7 million in the second quarter, up from $113.0 million a year earlier. This increase was primarily due to higher employee-related costs and investments in digital capabilities. The gross profit margin improved slightly to 38.0% from 37.7% in the previous year, reflecting operational efficiencies despite rising costs. As of June 30, 2026, ExlService had a total employee headcount of approximately 40,000, reflecting its ongoing investment in talent to support growth.

Looking ahead, ExlService Holdings anticipates continued revenue growth driven by its strategic initiatives, including the integration of AI technologies into its service offerings. The company expects to leverage its global delivery network and expand its client base, particularly in high-growth markets. However, it remains cautious about potential challenges, including market conditions and the need to manage operational costs effectively.