With its Data and AI Strategy, ExlService Holdings (EXLS) Supports its Customers in Their Transformation in the Wake of the AI era. The Total Addressable Market is set to Triple.

Many companies are currently struggling to successfully expand their AI programs. Current developments are too complex and too fast. This is where consulting companies come into play. ExlService Holdings (EXLS) is a global company specializing in data analytics and digital solutions. EXL offers a wide range of services in the areas of strategy, consulting, digital transformation, technology and operations management. The company serves over 750 clients. These include 9 of the top 10 US insurers, 8 of the top 10 US banks and the top 3 sports leagues and retailers. The company also has a strong presence in the healthcare sector.

Leading company in analytics and AI services
EXL was recognized as a leader in the Everest Group Analytics and Artificial Intelligence (AI) Services Specialists PEAK Matrix® Assessment 2024. Out of 26 providers assessed that derive over 50% of their revenue from analytics and AI services, EXL was ranked as a leader based on its vision, strategy, innovation, investment and service scope. EXL helps companies overcome data-related challenges and skills shortages to successfully scale AI projects.

Superior AI offering creates significant value for customers
At the Investor Day in May, the management made it clear what the company's continued focus on data, analytics and artificial intelligence means for the company. The addressable market is set to triple as a result of the AI services. This should improve margin dynamics. The AI-based solutions developed and implemented by EXL, which combine data and AI with the company's extensive industry experience, offer customers clear competitive advantages. EXL's customers benefit significantly from the company's AI solutions. By using Gen AI-based solutions, customers have doubled their new business volume. The AI solutions have led to a double-digit increase in agent productivity. In addition, a leading retailer in the UK achieved an over 90% reduction in repeat customer calls. The solutions have reduced returns, optimized orders and refunds and improved the overall customer experience. These benefits result from the integration of advanced AI technologies that enable customers to optimize their business processes while increasing customer satisfaction.

Over $2 billion in the pipeline
The data & AI pipeline already amounts to over $2 billion. The generative AI & industry pipeline is over $150 million. EXL plans to leverage its data and AI strategy to maintain its growth momentum. Improved cross-selling recently increased revenue per customer. This development could accelerate in the AI era. The significant margin expansion (+340 basis points) and EPS growth (+27% CAGR) of the last three years could therefore continue.

ExlService Holdings (ISIN US3020811044): The company is a beneficiary of the megatrends of digitalization and artificial intelligence. We should therefore see an acceleration in overall sales growth with a simultaneous increase in margins. According to consensus, earnings per share should grow in the low to mid-teens. The forward P/E 2024 ratio is 18.7. The share can be described as an absolute quality and long-term stock and is now being accumulated under increased volume. It should be worth following in the medium term.

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