Exlservice Holdings Inc

NASDAQ:EXLS

Earnings Call Transcript 2018-Q2

[Operator]

Good day, ladies and gentlemen, and welcome to the ExlService Holdings' Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, today's conference is being recorded.

I would now like to introduce your host for today's call, Steven Barlow. You may begin.

[Steven Barlow, ExlService Holdings, Inc.]

Thank you, Tuwanda. Hello and thanks to everyone for joining EXL's second quarter 2018 financial results conference call. I'm Steve Barlow, EXL's Vice President of Investor Relations. With us today in New York is Rohit Kapoor, our Vice Chairman and Chief Executive Officer; and Vishal Chhibbar, our Chief Financial Officer. We hope that you've had an opportunity to review the two press releases we issued this morning, the first was our second earnings release and the second was the announcement of our global rollout of digital Know Your Customer solution in collaboration with HSBC. We have also updated our Investor Fact Sheet in the Investor Relations section EXL's website.

As you know, some of the matters we'll discuss in this call 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 Securities and Exchange Commission from time to time. EXL assumes no obligation to update the information presented on this conference call.

During our call today, 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 on our press release as well as the Investor Fact Sheet.

Now, I'll turn the call over to Rohit Kapoor, EXL's Chief Executive Officer. Rohit?

[Rohit Kapoor, ExlService Holdings, Inc.]

Thank you, Steve. Good morning, everyone, and welcome to our second quarter 2018 earnings call. We had a strong second quarter and maintained our trajectory of double-digit quarterly growth demonstrated throughout the past year. In the second quarter, we reported revenues of $210.1 million which represents 11.1% year-on-year growth on a reported basis and an adjusted EPS of $0.67.

We continue to expand existing client relationships through transformative solutions that leverage our digital capabilities. In the second quarter, revenue from existing clients grew in the high-single digits with new clients acquired in 2017 and 2018 contributing the remainder.

Our Analytics business had another outstanding quarter growing 15.6% with $59.6 million in revenues and Operations Management grew 9.5% to $150.5 million in revenues. We've seen tremendous success in our Insurance business which grew 11.5% in the second quarter and Finance & Accounting which grew 15% year-on-year.

Our investments in digital capabilities have allowed EXL to play a greater role in transforming client operations. This strategy is generating positive results across all parts of our business. As we look towards the latter half of this year and into 2019, I would like to focus today on three areas. One, our success in closing large transformative deals; two, growth in consulting, accelerated by our digital capabilities; and three, the development of our own intellectual property to create new scalable digital solutions. In our approach on large deals, we are able to win highly competitive pursuits by communicating a strong value proposition of domain expertise, analytics leadership, and transformative digital solutions.

We have won in the market because of our ability to orchestrate domain and data expertise, business process excellence and apply digital technologies in a highly impactful way. For example, in the second quarter, we successfully competed against several large global service providers to win a transformative F&A engagement from a leading property and casualty insurer.

The company wanted a sustainable, long-term partnership that will deliver business outcomes on a global scale. They required a partner to support enterprise-wide transformation as well as one who could deliver best-in-class analytics and insights.

In Healthcare, we renewed our contract with the large strategic (00:05:26) client for five years by demonstrating our well-established capabilities in complex clinical operations and our ability to add value to their business through analytics and robotics. We also won a new health plan client that serves active and retired military personnel. The deciding factor in this win was our multi-chronic care management capability acquired through Health Integrated.

In our Travel, Transportation & Logistics business, we won an engagement with the less-than-truckload or LTL subsidiary of a large public company by bundling our new freight billing-as-a-service offering along with our revenue lift platform. Freight billing-as-a-service is a strong example of how we applied digital intelligence to generate superior business outcomes. Our LTL expertise gives us the context to significantly improve accuracy in a highly automated fashion. We orchestrate advanced automation and machine learning technologies to extract the necessary information then the solution identifies bills of lading that need additional data inputs which are managed by our expert team.

For this client, we combined freight billing-as-a-service along with revenue lift which uses advanced analytics to identify missed accessorial charges, bundling boat services into a single transaction based pricing arrangement makes the invoicing process frictionless, and improves customer experience. This will allow us to build market share with a highly differentiated solution within a fragmented market place.

In our Life & Annuities business, we won a deal from the retirement services division of a U.S.-based insurance and asset management company. This division needed to improve their processes and significantly enhance customer experience while reducing overall operational costs. We started with an initial consulting engagement to map out a transformation blueprint for this division that included robotics, process improvements, and leveraging of a global delivery model. We then translated that consulting engagement into a large transformative operations management deal. This win showcases our industry expertise, digital capabilities, and our ability to generate pull-through revenue from consulting.

Our Consulting business has been on a positive trajectory, and now represents more than 5% of our quarterly revenue. We have invested significantly in digital talent and digital capabilities to make our consulting offerings more relevant to our clients. One area of significant traction has been around robotic process automation where we blueprint, implement, manage and execute automation initiatives of our clients often as part of larger digital transformation agendas. Automation is a major area of focus in our industry and across all our clients' businesses. I'm happy to announce that EXL was recently named as a leader in NelsonHall's 2018 Vendor Evaluation & Assessment Tool for business process transformation through robotic process automation and artificial intelligence.

Our consultants are also applying digital intelligence in the area of finance transformation. One example is a solution we call Cash Apps which helps clients clear out unapplied cash. Companies have unapplied cash when payments are received but not applied to a specific invoice, which impacts customer experience, corporate balance sheets, and cash flow.

Our finance expertise gives us the context to resolve these payments by orchestrating analytics to match and prioritize customer segments, we leverage human intervention to reach out to the right customers and finally, our robotics capabilities allow us to update the ledger entry efficiently. We are able to clear a disproportionate amount of unapplied cash and be reimbursed in an outcome-based pricing arrangement.

The last area of our business that I want to discuss today is our continued focus on innovation by developing analytics IP into digital solutions. Our Analytics business is fast becoming increasingly recognized in the market for our ability to innovate, as well as to generate sizeable business outcomes.

As you know, we are an industry leader in risk analytics. In the second quarter, we signed an extension and expansion with a global bank client to provide fraud and risk analytics for their U.S. credit card division. We will support that end-to-end analytics needs across risk policy and strategy, model development, regulatory analytics, reporting and risk infrastructure.

Because of our track record of consistently exceeding client expectations and recognition of our strength in the area of risk, we capitalize on an opportunity to grow this relationship with the client. We are also leveraging our domain expertise in areas such as risk and compliance to develop new scalable industry solutions that serve as growth engines for our Analytics business.

I am excited to announce that we have launched a Digital KYC solution with HSBC, a leading global financial services firm. Processes associated with Know Your Customer or KYC regulations are inefficient and cumbersome, they carry risk and can sometimes greatly increase turnaround times. Thereby negatively impacting customer service.

After working for over two years with HSBC, EXL created a digital KYC solution that orchestrates advanced automation, AI and analytics to significantly reduce manual effort, increase accuracy and lower cost associated with KYC compliance. Together, we are partnering on a global rollout to market the product across the industry.

We are excited about the market opportunity in KYC. Financial services firms spend on an average $48 million annually on people and solutions associated with KYC compliance, according to a study last year by Thomson Reuters. 10% of the market is spending at least $100 million annually and some of the largest financial services firm spend $0.5 billion on KYC compliance each year.

The market opportunity for this solution is huge. The second recent example supports compliance with the new current expected credit losses standard or CECL. Under this rule, banks and lenders must consider risk related to the entire duration of the loan when calculating loan loss reserves.

Doing so requires significantly more data and a deeper level of modeling, analysis, and reporting. TransUnion has chosen EXL as a partner to build a CECL calculator, a turnkey solution to help lenders comply with the new rule which becomes effective in 2020.

We are leveraging our domain expertise and analytics capabilities to build rigorous CECL models on the large customer credit base provided by TransUnion. This solution, we believe, will be very helpful for credit unions, small lenders, and banks who are unable to invest internally to build such a solution in-house.

These industry solutions demonstrate our proven expertise and industry-leading analytics strength to build and deploy complex models to solve industry problems, our strong client relationships, and our ability to co-create new solutions in a highly collaborative manner.

Finally, I'd like to close with a brief comment on our pipeline. We are seeing strong activity across all business lines and geographies including Australia, South Africa, and the UK. We remain excited about the opportunities for our Analytics business, and we are strengthening our pipeline with digital solutions such as KYC and CECL.

In operations management, we are further differentiating ourselves with our strategy of digital intelligence and the development of digital solutions such as freight billing-as-a-service and our digital customer acquisition engine in insurance.

I'm also pleased to say that the SCIO integration is proceeding well. We are holding workshops with key clients and are looking to capitalize on the combined capabilities of our two firms. With the combination of our well-established clinical capabilities, our care management platform, CareRadius, the onshore behavioral health capability added through Health Integrated, and the robust analytics solutions from SCIO, we have one of the most comprehensive suite of offerings in the marketplace in healthcare.

Overall, we have had a strong first half this year which when combined with large client wins over the past few quarters, will create a solid foundation for next year. We continue to see robust market demand for transformative deals that leverage our expertise in domain, data, and digital technology.

With that, I will turn the call over to Vishal.

[Vishal Chhibbar, ExlService Holdings, Inc.]

Thank you, Rohit, and thanks everyone for joining us this morning. I would like to start by providing insight into our financial performance for the second quarter and first half of 2018, followed by updated guidance. We had a strong quarter with revenues of $210.1 million, up 11.1% year-over-year, or 11.3% on a constant currency basis. On an organic constant currency basis, our revenues grew 9.4% year-over-year, which is the second highest growth in the last eight quarters. Sequentially, our revenues grew 2.4% on an organic constant currency basis.

For the quarter, revenues from our Operations Management business, as defined by five reportable segments excluding Analytics, grew 9.5% year-over-year to $150.5 million or an increase of 7.2% on an organic constant currency basis. This is the highest organic growth rate in the last 10 quarters. This growth was primarily driven by our clients from Finance & Accounting and Insurance segments and revenues from Consulting which continued its strong momentum.

Finance & Accounting delivered double-digit growth of 15.1% year-over-year on a constant currency basis. This growth was driven by a ramp-up of large deal wins of 2016, 2017 and expansion in existing clients. This is the highest growth rate since 2014.

Insurance grew 11.5% year-over-year on a constant currency basis. This is the seventh consecutive quarters of double-digit growth. This growth was driven by a ramp-up of 2016 wins, and expansion in existing clients both in P&C and L&A sectors including BPaaS.

Healthcare grew 4.7% year-over-year on a constant currency basis driven by Health Integrated which contributed $3.5 million for the quarter. All other segments grew 8.6% year-over-year on a constant currency basis driven by double-digit growth in Consulting. Sequentially, Operations Management grew 1.4% on a constant currency basis.

Analytics continued its strong performance with revenues of $59.6 million, up 15.6% year-over-year, or 15.4% on a constant currency basis. This growth was driven by Healthcare, BFS and Insurance verticals. In addition to these verticals, other areas such as retail and media grew 20% year-over-year. Sequentially, Analytics grew 4.9% on a constant currency basis. This is the highest sequential growth in the last five quarters.

For the first half of 2018, our revenues grew 12.1% year-over-year to $417.1 million or 11.6% on a constant currency basis. On an organic constant currency basis, our revenues grew 8.9%, up 300 basis points from last year. This growth was driven by expansion of existing client relationships across our verticals, new strategic wins of 2017 and 2018. Operations Management revenue grew 10.6% and Analytics 16.1% on a year-over-year basis. Health Integrated contributed $9.9 million for the first half of the year.

We won 14 new clients in second quarter and 21 new clients in the first half of the year. These wins are broad-based across all our businesses, showing that diversity of our solutions are meeting the needs of the market.

Our revenue per employee is $31,019 per annum, up 8.2% year-over-year. This is the second highest growth since the last nine quarters, which demonstrates our continued focus on non-linear revenue growth. Gross margin for the quarter was 33.5%, up 20 basis points sequentially despite annual wage inflation impact of 60 basis points, Health Integrated dilution impact of 20 basis points, offset by improved utilization in Analytics and Consulting impact 100 basis points.

As I begin to talk about our expenses, I want to explain the implementation of a change in the definition of our non-GAAP financial measures. Effective quarter ended June 30, 2018, the company has excluded certain acquisition-related expenses such as external deal costs, external integration expenses, and incremental travel costs directly related to a successful acquisition from its non-GAAP financial measures, which includes adjusted operating margin, adjusted EBITDA and adjusted diluted EPS. The company's non-GAAP financial measures for Q1 2018 and all quarters of 2017 have been restated to reflect this change and are presented in our fact sheet. My comments hereafter on adjusted operating margin, adjusted EBITDA and adjusted diluted EPS will be based on this new definition.

Now moving to our SG&A expenses. SG&A increased by 60 basis points year-over-year to 20.4% of revenues. Excluding the impact of onetime acquisition-related costs as mentioned earlier, and Health Integrated expenses, SG&A expenses declined by 50 basis points year-over-year driven by operating leverage. Adjusted operating margin for the quarter was 13.6%, a decrease of 60 basis points year-over-year. Excluding the dilutive impact of Health Integrated, our adjusted operating margins were 15.5%, up 130 basis points year-over-year driven by operating leverage. Sequentially, excluding the impact of Health Integrated and our adjusted operating margin improvement, our adjusted operating margin improved by 100 basis points driven by gross margin improvements and operating leverage.

Our adjusted EBITDA for the quarter was $35.4 million compared to $33 million in Q2 2017, up 7.3% year-over-year. Excluding Health Integrated, our adjusted EBITDA was $38.7 million, up 17.3% year-over-year.

Our tax rate for the quarter was 27.5%, which includes the impact of discrete items namely excess tax benefit recognized on stock compensation. Excluding the discrete items, our normalized tax rate for the quarter was 29.1%. Our tax rate for the first half of the year excluding the impact of discrete items such as transition tax adjustment in Q1, an excess tax benefit recognized on stock compensation was 29.5%, which is in line with our expected range of 29% to 30%.

Our adjusted diluted EPS for the quarter was $0.67 versus $0.70 in Q2 2017. As you would recall, we had a onetime $0.09 tax benefit in Q2 2017. Excluding the onetime benefit, our adjusted diluted EPS was up 9.8% year-over-year.

Now, talking about other financial metrics. Our balance sheet as of June 30 had $233 million of cash and short-term investments, and borrowing of $68 million. We funded the SCIO acquisition with $233 million of debt and cash on hand. As on July 31, our total debt was $300 million excluding the revolver drawdown due to the SCIO acquisition. During the first half of the year, we spent $19.3 million on capital expenditures with an expectation of $35 million to $40 million capital expenditure for the year. We also repurchased 347,000 shares or $20.3 million under the share repurchase program.

Now, moving to our guidance for 2018. We are increasing our revenue guidance for the year to be in the range of $878 million to $892 million compared to our prior guidance of $835 million to $855 million. This increase in our guidance is driven by six months of revenue contribution from SCIO acquisition of $40 million to $42 million, reduced Health Integrated revenues to $17 million to $18 million compared to our prior guidance of $20 million to $22 million, FX headwind of $4 million from the prior guidance at current exchange rates, and in addition, owing to better visibility in our core business, we have increased our organic constant currency revenue growth to 8% to 10% compared to 7% to 9% in prior guidance. This guidance represents a year-over-year constant currency growth of 15% to 17%.

In terms of adjusted diluted EPS for 2018, our range remains the same at $2.70 to $2.80 despite higher dilutive impact of $0.16 to $0.18 for Health Integrated owing to low revenues than earlier projected.

In conclusion, we delivered a strong second quarter with revenues growth of 11.3% year-over-year on a constant currency basis, and achieved 9.8% adjusted diluted EPS growth, excluding the onetime tax impact. Our core business is performing very well and with improving growth trends and margin improvement. We're confident of our turnaround in HI of – in 2019. And with the acquisition of SCIO Healthcare Analytics, we're excited about our business growth in second half of 2018 and 2019.

And now, Rohit and I would be happy to take questions.

[Operator]

Our first question comes from the line Mayank Tandon from Needham & Company. Your line is open.

[Kyle Peterson, Needham & Co. LLC]

Hey. Good morning, guys. This actually Kyle Peterson on for Mayank. Just wanted to start on Healthcare. I guess the revenue growth looked a little below trend at least on the Operations Management side. And then, just with kind of the comments and update to guidance pertaining to Health Integrated revenue. Just kind of want to see what you guys are seeing there and what we should expect moving forward?

[Rohit Kapoor, ExlService Holdings, Inc.]

Sure, Kyle. So, as Vishal mentioned in his prepared remarks, for the Healthcare segment, we did have a decline in revenues within Health Integrated. This was pretty much expected as we had mentioned, but this was a business, when we had bought it, had a client transition that was underway and it is a business that we do need to restructure and we need to fix. All of the business of Health Integrated is under the Operations Management segment within Healthcare, and that's what caused the decline.

We also had revenues from other clients where we've added on a new large client that we announced in the first quarter in Healthcare, and then in the second quarter we've announced the win of another client in Healthcare. So both of these give us confidence that we'll be able to build and grow our Healthcare business as we move forward towards the second half of 2018 and into 2019.

[Kyle Peterson, Needham & Co. LLC]

Okay. So, I guess just on Health Integrated, I guess, it's just a little more kind of restructuring with the client base in such than originally planned, nothing massively different.

[Rohit Kapoor, ExlService Holdings, Inc.]

That's correct. I think it's just taking us a little bit longer to restructure Health Integrated and to fix the business. However, some of the early signs that we are seeing in terms of the operating metrics that has been good. So, our service levels there in that business have stabilized. And therefore, customer satisfaction is coming back up and that will give the clients in that business to be able to be confident to place more business with us.

We also have the leadership and operating teams and the support infrastructure fully in place. We are deploying our CareRadius technology platform into the Health Integrated business, which we think will give us a tremendous advantage both in terms of better management and oversight of this business as well as better data and provide better outcomes. And also, our business development initiatives for this business are now kicking in.

And lastly, with the acquisition of SCIO, there is actually a very strong fit between some of the Analytics offerings in Care Management that SCIO has which we can combine with the operations management capabilities of Health Integrated and take that to market on a joint basis and provide incremental value to our clients.

[Kyle Peterson, Needham & Co. LLC]

All right. Great. Thank you. That's very helpful.

[Operator]

Thank you. Our next question comes from the line of Joseph Foresi with Cantor Fitzgerald. Your line is open.

[Drew Kootman, Cantor Fitzgerald Securities]

Hi. This is Drew Kootman on for Joe. Thanks for taking our question. Can you update us on the growth expectations for Analytics and Operations Management for the rest of the year and maybe medium term?

[Rohit Kapoor, ExlService Holdings, Inc.]

Sure. So, our Analytics business has been growing at 15% plus in the first half of the year. Our expectation is that it will continue to grow at a similar pace in the second half of the year and going forward into the medium term. That is a business that is a large market opportunity growing well in the mid-teens and our expectation is that that trend will continue.

In terms of the Operations Management business, we think the Operations Management business will grow at 7% to 9% per annum. And we currently are operating right within that bracket. And we think we'll continue to grow at that pace on a go-forward basis.

[Drew Kootman, Cantor Fitzgerald Securities]

Okay. And can you discuss your capital allocation plans moving forward?

[Vishal Chhibbar, ExlService Holdings, Inc.]

Yeah. So – hi, this is Vishal. So, our plan in terms of capital allocation, as you know, we have a $40 million share buyback program of which we have spent $20 million in the first half as I mentioned in my script. We will continue to – continue to spend that money in the second half on our share buyback program. We have levered our balance sheet to do the SCIO acquisition, so I think in terms of leverage, we will maintain that as we look forward to 2019. Bear in mind that we still have $233 million of cash. Some of that is in India and we are looking at ways to optimize that. And as we get that structure in place, we'll update you.

[Drew Kootman, Cantor Fitzgerald Securities]

Perfect. Thank you.

[Operator]

Thank you. Our next question comes from the line of Puneet Jain with JPMorgan. Your line is open.

[Puneet Jain, JPMorgan Securities LLC]

Yeah. Hi. Thanks for taking my question. Vishal, you might have mentioned it already, but what were implied margins for this year? And directionally, what do you expect for margins next year when acquisitions will become accretive on year-on-year basis?

[Vishal Chhibbar, ExlService Holdings, Inc.]

Yeah, Puneet. So, as we said, excluding Health Integrated, the margin for – the gross margin improved this quarter quarter-on-quarter. And also, our adjusted operating margins came at 15.5%, an improvement of 130 basis points.

In terms of our guidance, we had earlier said that our margins will improve. But because of higher losses from Health Integrated, we would – the company level will be flattish compared to prior years.

[Puneet Jain, JPMorgan Securities LLC]

Flattish...?

[Vishal Chhibbar, ExlService Holdings, Inc.]

But, as I've said that Health Integrated is something we think is a onetime impact this year. And next year by – mid next year, we would think that that will turnaround. So, we do expect the margin to improve on the basis of the core underlying margins, which are up 15.5%. And that improvement will happen in 2019.

[Puneet Jain, JPMorgan Securities LLC]

Got it. Got it. And how much business is driven by industry solutions on pro forma basis, and will that change anything in terms of spending patterns like maybe more R&D and higher incremental margins in the business?

[Vishal Chhibbar, ExlService Holdings, Inc.]

Puneet, as you know that we've already stepped up on our investments in terms of R&D, digital and robotics, which is around 3% to 4% of our revenues. Some of the solutions which Rohit mentioned which are great wins for us, which is a partnership with HSBC, the partnership of solution for – with TransUnion. As Rohit had mentioned, we have been working on this for the last few quarters and last few years. So, some of that expenditure is already in our numbers .So, we don't see high incremental increase in our numbers for R&D. We think it will be in the same range as we have in the prior years and this year.

[Puneet Jain, JPMorgan Securities LLC]

Got it. Thank you.

[Operator]

Thank you. Our next question comes from the line of Vincent Colicchio of Barrington. Your line is open.

[Vincent A. Colicchio, Barrington Research Associates, Inc.]

Yes .Rohit, you mentioned in your prepared remarks that you're doing some workshops with SCIO's clients, anything incremental you could provide there will be helpful.

[Rohit Kapoor, ExlService Holdings, Inc.]

Sure. So over the past few weeks, we've gone and met with several of SCIO's large strategic clients. First off, the relationships are impeccable and very strong, and we've got great teams in place serving these clients. Second, there is a tremendous opportunity for us to expand the range of services to these clients. So, we've got new service offerings that we can bring to bear with these clients. And typically this will revolve around better capabilities around data management that EXL has, being able to bring in the CareRadius technology platform, as well as to leverage a much broader global delivery footprint that EXL has.

And then finally, many of these clients are large payers/providers, and I think the combined organization will be able to serve them at much higher levels of volume and scale, and we'll be able to work with them with expanded service lines and offerings.

I think the effort out here is for us to go in with a few focused plays, and really make a sharp impact in these client relationships, and create a lot of differentiation. So, we are excited about that and we think that the initial opportunity assessment of this is very strong.

[Vincent A. Colicchio, Barrington Research Associates, Inc.]

Thanks for that. And in the UK, your mix declined a bit. Any impact from macro-related issues having an effect?

[Rohit Kapoor, ExlService Holdings, Inc.]

No. Actually, the UK market for us is – got a very strong pipeline. We've also had some good wins in the UK in the last couple of quarters, and despite some of the macroenvironment trends out there, as well as Brexit taking place, we are seeing good traction in the UK and the European market. So, we've expanded our footprint out there. We've added on more on-the-ground business development talent, and consulting talent, and analytics talent in the UK. We have expanded in our office in the UK, and we think that there will be greater opportunity for us to grow the business in UK and in Europe. So, we feel strong and positive about that geography.

[Vincent A. Colicchio, Barrington Research Associates, Inc.]

Okay. Thank you, gentlemen.

[Operator]

Our next questions comes from the line of Craig John (sic) [Craig Jones] (00:39:19) of Stifel. Your line is open.

[Craig Jones, Stifel, Nicolaus & Co., Inc.]

Hi. Thanks. Could you just detail where you expect stock comp and amortization in the third quarter?

[Rohit Kapoor, ExlService Holdings, Inc.]

Yes. Stock comp, our prior guidance was $25 million to $26 million. Current guidance is also $25 million to $26 million. Amortization of intangibles, our prior guidance was $15 million. With the acquisition of SCIO, we now expect that to be in the $22 million to $23 million range.

[Craig Jones, Stifel, Nicolaus & Co., Inc.]

Okay. Great. Thank you.

[Operator]

I'm showing no further questions at this time. I would now like to turn the call back over to Rohit for any further remarks.

[Rohit Kapoor, ExlService Holdings, Inc.]

Thank you. And thank you all for attending the second quarter earnings call. As we said, our core business is performing really well. We think that there are strong demand characteristics and EXL is very well-positioned to take advantage of this. There are some exciting new industry solutions that we have developed, and this will allow us to scale our business in a non-linear format and also be able to improve our margins. So, we think the future for us is very bright. And we think that we're going to continue to execute and build our company going forward.

We look forward to hosting our next quarter's earning call and sharing an update at that point of time. Thank you, all, for attending.

[Operator]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone, have a wonderful day.