Data analytics and digital solutions company ExlService Holdings (NASDAQ: EXLS) reported Q3 2026 results exceeding the market’s revenue expectations, with revenue up 19.7% year on year to $634 million. The company’s full-year revenue guidance of $2.44 billion at the midpoint came in 1% above analysts’ consensus estimates. Its non-GAAP profit of $0.62 per share was 11% above analysts’ consensus estimates.

For more on EXL, read the full research report for free.

Chairman and Chief Executive Officer Rohit Kapoor said, “We entered 2026 with strong momentum that has accelerated through the year, delivering third quarter revenue growth of 20% year-on-year and adjusted diluted EPS growth of 29% year-on-year. Every segment of our business grew more than 15% organically. Data and AI-led revenue, almost two-thirds of our business, grew 36% on a reported basis and 31% organically. These results reflect the strength of our data and AI strategy and our differentiated market position: deep domain expertise combined with data and AI capabilities that help clients make AI work effectively across the enterprise. Our business model affords us very good visibility into the balance of the year, and we look forward to a solid finish to 2026.”

Revenue growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $2.34 billion in revenue over the past 12 months, EXL is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the positive side, it can still achieve high growth rates because it’s working from a smaller revenue base.

EXL’s revenue grew at a strong 16.8% compounded annual growth rate over the last five years, showing that demand for its services was higher than for many business services companies.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. EXL’s annualized revenue growth of 15% over the last two years is below its five-year trend, but the results still suggest healthy demand.

This quarter, EXL reported year-on-year revenue growth of 19.7%, and its $634 million of revenue exceeded Wall Street’s consensus estimates by 3.2%.

Looking ahead, sell-side analysts expect revenue to grow 12.3% over the next 12 months, according to S&P, a slight deceleration versus the last two years. Still, this projection is noteworthy and indicates the market expects its products and services to perform well.

Adjusted operating margin

Adjusted operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D. It also removes various one-time costs to paint a better picture of normalized profits.

EXL has performed well over the last five years. It demonstrated high profitability for a business services company, with an average adjusted operating margin of 19.1%.

Looking at the trend in its profitability, EXL’s adjusted operating margin rose by 1.1 percentage points over the last five years, as its revenue growth gave it operating leverage.

In Q3, EXL generated an adjusted operating margin of 18%, down 1.3 percentage points year on year. This modest reduction indicates the company’s overall cost structure has been relatively stable.

Earnings per share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth. For example, a company could inflate its revenue through excessive spending on advertising and promotions.

EXL’s EPS grew at a 19.2% compounded annual growth rate over the last five years, higher than its 16.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

A closer look at EXL’s earnings helps explain the drivers of its performance. As mentioned earlier, EXL’s adjusted operating margin declined this quarter but expanded by 1.1 percentage points over the last five years. Its share count also shrank by 11.1%, and these factors together are positive signs for shareholders because improving profitability and share buybacks boost EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For EXL, its two-year annual EPS growth of 20.8% was higher than its five-year trend. That acceleration is a positive sign, especially given the already high growth rate.

In Q3, EXL reported adjusted EPS of $0.62, up from $0.48 in the same quarter last year. This comfortably topped analysts’ consensus estimates, a positive result for shareholders. Over the next 12 months, Wall Street expects EXL’s full-year EPS to grow 8.5% from $2.29 to $2.48, according to S&P.

Key takeaways from EXL’s Q3 results

EXL delivered a solid quarter, with EPS and revenue both topping analysts’ consensus estimates. Shares rose 2.1% to $41.78 immediately after the results.

EXL had a solid quarter, but one earnings result doesn’t necessarily make the stock a buy. The latest quarter matters, but longer-term business quality and valuation matter more when deciding whether to invest in this stock. For more on EXL, read the full research report here (it’s free).