EXL's AI Inflection: iMerit Acquisition and 30% Data/AI Growth
The services firm's data and AI-led revenue accelerates, and the iMerit deal deepens its AI capabilities.
EXLS · Earnings Call · 2026-07-28
A Transformational Deal
EXL has long positioned itself as a data and AI-led services company, but the second quarter of 2026 marked a clear inflection. The company announced the acquisition of iMerit, a leader in AI model training and reinforcement learning, and reported that its data and AI-led revenue grew 30% year-over-year—now representing 61% of total revenue. CEO Rohit Kapoor described the deal as "a transformational pivot for EXL." “We view this deal as a transformational pivot for EXL.” — Rohit Kapoor, Chairman and Chief Executive Officer · 2026-07-28 The acquisition expands EXL's addressable market into high-growth AI tech sectors and brings relationships with leading foundation model companies. The pivot is reflected in the company's language. Executives now speak of "AI enablement," "data management," and "token optimization" as core offerings. One standout capability: token optimization, where EXL helps clients reduce token consumption by up to 80%, directly impacting the cost and reliability of AI systems. “We are able to reduce client token consumption by as much as 80%, helping them conserve spend and make their AI systems dramatically more efficient without compromising quality or latency.” — Rohit Kapoor, Chairman and Chief Executive Officer · 2026-07-28 This is not just a cost-saving tool; it positions EXL as an essential partner in making AI scalable in the enterprise.Accelerating Demand for AI Services
The demand environment has shifted from pilots to production. As Rohit Kapoor noted, "clients are moving away from pilots and they want to go into production." “...clients are moving away from pilots and they want to go into production.” — Rohit Kapoor, Chairman and Chief Executive Officer · 2026-07-28 This theme was already emerging in prior quarters; on the April call, Kapoor said, "We are seeing clients switching over from AI pilots and AI POCs to AI in production." “We are seeing clients switching over from AI pilots and AI POCs to AI in production.” — Rohit Kapoor, Chairman and Chief Executive Officer · 2026-04-29 And in February, he noted "a greater propensity from enterprise clients to adopt and leverage AI." “We are seeing a greater propensity from enterprise clients to adopt and leverage AI.” — Rohit Kapoor, Chairman · 2026-02-25 This accelerating adoption is broad-based across segments. Healthcare and Life Sciences grew 22%, Insurance 15%, and Banking and Diversified Industries 11%. The data management and AI services lines are growing particularly fast, though the company notes that the data and AI-led operations are becoming the primary growth engine.International Growth Markets: A New Front
International Growth Markets grew 15% year-over-year, an acceleration from the prior quarter, and the company is investing heavily in this segment. The appointment of Bhupender Singh as President and Head of International Growth Markets signals the ambition. Kapoor highlighted the opportunity: "International represents one of our largest long-term growth opportunities." The International Growth Markets are still underpenetrated, but the new leadership is focused on cross-selling to U.S. clients and building local capabilities. The company's stock has responded positively to these developments, with the recent 90-day price action up about 28%, reflecting investor enthusiasm for the AI story and the strategic pivot.Financial Momentum and Outlook
EXL raised its full-year revenue guidance to $2.39–$2.415 billion (14-16% growth) and adjusted EPS to $2.25–$2.29 (16-18% growth). The guidance includes approximately $28–32 million from iMerit for the remaining five months. The company also reiterated its commitment to investing in front-end sales and AI capabilities, which may slightly compress margins in the second half. Financially, the company remains solid. Revenue has compounded at a double-digit rate over the past decade, and the latest quarter's 16% growth continues that trajectory. The balance sheet is underleveraged, with net debt of $97 million as of June 30, providing flexibility for further acquisitions and buybacks.The iMerit acquisition and the accelerating data and AI-led growth suggest that EXL is not just riding the AI wave—it is positioning itself to be a critical enabler for enterprises navigating the AI transition. The company's focus on AI enablement and its deep domain expertise in regulated industries like insurance and healthcare give it a unique vantage point. As competitors focus on infrastructure and models, EXL is winning on the application layer—where business outcomes are most tangible. The second quarter's results and the strategic moves around iMerit and international growth make it clear that EXL is at an inflection point, and the market is taking notice.As AI adoption expands, the value of our operations relationships deepens, enabling us to identify new use cases, accelerate deployment and drive sustained transformation. This creates a mutually reinforcing cycle that delivers greater value to clients while supporting durable recurring growth for EXL.