ExlService Holdings, Inc.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

ExlService Holdings, Inc. (“ExlService Holdings”) is organized as a corporation under the laws of the State of Delaware. ExlService Holdings, together with its subsidiaries and affiliates (collectively, the “Company”), is a global data and artificial intelligence (“AI”) company that offers services and solutions to reinvent client business models, drive better outcomes and unlock growth with speed. The Company harnesses the power of data, AI, and deep industry knowledge to transform businesses, including the world’s leading corporations in industries including insurance, healthcare and life sciences, banking and capital markets, retail, communications and media, and energy and infrastructure, among others.

The Company’s clients are located principally in the United States of America (“U.S.”) and the United Kingdom (“U.K.”).

2. Summary of Significant Accounting Policies

(a)Basis of Preparation and Principles of Consolidation

The unaudited consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

The unaudited consolidated financial statements reflect all adjustments (of a normal and recurring nature) that management considers necessary for a fair presentation of such statements for the interim periods presented. The unaudited consolidated statements of income for the interim periods presented are not necessarily indicative of the results for the full year or for any subsequent period.

The accompanying unaudited consolidated financial statements include the financial statements of ExlService Holdings and all of its subsidiaries. The standalone financial statements of subsidiaries are fully consolidated on a line-by-line basis. All intercompany balances and transactions are eliminated in consolidation. The Company’s investments in equity affiliates are recorded using equity method of accounting.

(b)Use of Estimates

The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities included in the unaudited consolidated financial statements. Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from those estimates. The significant estimates that affect the unaudited consolidated financial statements include, but are not limited to, estimates of the fair value of the identifiable intangible assets and contingent consideration, purchase price allocation, including revenue projections and the discount rate applied within the discounted cash flow model for business acquisitions, credit risk of customers, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, variable consideration in a customer contract, expected recoverability from customers with contingent fee arrangements, estimated costs to complete fixed price contracts, assets and obligations related to employee benefit plans, deferred tax valuation allowances, income-tax uncertainties and other contingencies, valuation of derivative financial instruments and stock-based awards, and useful life of long-lived assets and other intangible assets. The significant assumptions underneath these estimates include, but are not limited to assumptions to calculate stock-based compensation expense, determine pattern of generation of economic benefits to calculate depreciation and amortization for long-lived assets and other intangible assets, and recoverability of long-lived assets, goodwill and other intangible assets.

(c)Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement - Reporting Comprehensive Income (“ASC Topic 220”): Expense Disaggregation Disclosures. This ASU improves disclosures relating to the disaggregation of income statement expenses, requires additional disclosures about the nature of expenses in commonly presented financial statement captions on an annual and interim basis for all public business entities. The ASU will be effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40). This ASU enhances the guidance for internal-use software development costs by removing references to project stages and simplifying the criteria for when capitalization of software development costs shall begin. The ASU will be effective for annual reporting periods beginning after December 15, 2027, including interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-10, Government Grants (“ASC Topic 832”): Accounting for Government Grants Received by Business Entities. This ASU provides authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants for business entities, creating a framework that previously did not exist under U.S. GAAP. The ASU will be effective for annual reporting periods beginning after December 15, 2028, including interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (“ASC Topic 270”): Narrow-Scope Improvements. This ASU provides a comprehensive list of interim disclosures that are required by U.S. GAAP and incorporates disclosure principle of material events or changes occurred since the prior year-end. The ASU will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

(d)Recently Adopted and Applicable Accounting Pronouncements

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (“ASC Topic 326”): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU provides a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC Topic 606. The ASU is effective for annual reporting periods beginning after December 15, 2025, including interim periods within those years, with early adoption permitted. The Company has adopted this ASU beginning January 1, 2026. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and disclosures.

3. Segment Information

The Company is a provider of data and AI-led solutions and services and digital operations solutions and services in an integrated manner for clients across industry verticals.

The Company’s operating model is comprised of Industry Market Units (“IMUs”) to focus on delivering higher value to clients leveraging full suite of capabilities and Strategic Growth Units to focus on rapidly advancing the capabilities specific to various industries and client needs. The Company manages and reports financial information through itsfour reportable segments that are aligned to its IMUs: Insurance, Healthcare and Life Sciences, Banking, Capital Markets and Diversified Industries, and International Growth Markets, which reflects the manner in which the Company’s Chief Operating Decision Maker (“CODM”) reviews financial information and makes operating decisions.

The Company’s Chief Executive Officer has been identified as the CODM. The CODM generally reviews and uses financial information such as revenues, cost of revenues, and gross profit predominantly in the annual budgeting and forecasting process to allocate an overall budget, measure segment performance, and evaluate pricing strategy. The CODM considers budget-to-actuals variances on a quarterly basis for making decisions about the allocation of operating and capital resources to each segment.

The acquisition of I Merit Inc. (“iMerit”) is included in the Healthcare and Life Sciences, Banking, Capital Markets and Diversified Industries, and International Growth Markets reportable segments. Refer to Note 10 - Business Combinations, Goodwill and Other Intangible Assets to the unaudited consolidated financial statements for further details.

Revenues, net and cost of revenues for the three months ended September 30, 2026 and 2025, respectively, for each of the reportable segments, are as follows:

Revenues and cost of revenues for the nine months ended September 30, 2026 and 2025, respectively, for each of the reportable segments, are as follows:

Revenues, net by service type, were as follows:

(1) Data and AI-led revenue is derived from the Company’s Data Management, Analytics, AI services and solutions businesses. It includes revenue from fully integrated business operations like payment integrity services and platform-based solutions and services, which combine operations, technology, data, analytics, and AI. It also includes revenue from operations that embed data and AI within clients’ operational workflows.

(2) Digital operations revenue is derived from managed services that blend Company’s deep domain expertise with industry-specific solutions and services to operate clients’ business functions with enhanced productivity, greater speed and improved accuracy. These digital operations deployments form the foundation for future client transformation opportunities to infuse AI into client workflows and unlock even greater value.

Allfour reportable segments of the Company include revenues from both data and AI-led solutions and services and digital operations solutions and services.

The Company attributes revenues based on geographical markets where the customer operations being served by it are located.

Revenues, net by industry verticals, were as follows:

Long-lived assets by geographic area, which consist of property and equipment, net and operating lease ROU assets were as follows:

4. Revenues, net and Accounts Receivable, net

Refer to Note 3 - Segment Information to the unaudited consolidated financial statements for revenues disaggregated by reportable segments, service type, geography and industry verticals.

Contract balances

The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers:

Accounts receivable includes $188,494 and $141,653 as of September 30, 2026 and December 31, 2025, respectively, representing unbilled receivables. The Company has accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers and considers no performance risk associated with its unbilled receivables. Contract assets as of September 30, 2026 and December 31, 2025, include receivables of $34,611 and $24,849, respectively, from payment integrity services. There are no performance risks associated with these contract assets.

There wereno significant cumulative catch-up impact or impairment related to contract assets as of September 30, 2026 and December 31, 2025.

Revenue recognized during the three and nine months ended September 30, 2026 and 2025, which was included in the contract liabilities balance at the beginning of the respective periods:

Contract acquisition and fulfillment costs

The following table provides details of the Company’s contract acquisition and fulfillment costs:

There wasno significant impairment for contract acquisition and contract fulfillment costs as of September 30, 2026 and December 31, 2025.

Allowance for expected credit losses

The following table provides information about accounts receivable, net of allowance for expected credit losses:

The movement in “Allowance for expected credit losses” was as follows:

Customer and credit risk concentration

No single customer accounted for more than 10% of the Company's revenues, net during the three and nine months ended September 30, 2026 and 2025. The Company’s management believes that the loss of any of its top ten clients could have a material adverse effect on its financial performance.

To reduce credit risk, the Company conducts ongoing credit evaluations of its customers. No customer accounted for more than 10% of accounts receivable, net, as of September 30, 2026 and December 31, 2025.

5. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

On March 16, 2026, the Company entered into a fixed dollar accelerated share repurchase transaction pursuant to a confirmation (“2026 ASR Agreement”) with Morgan Stanley & Co. LLC (“Morgan Stanley”). During the nine months ended September 30, 2026, the Company recorded the initial delivery and final settlement of shares in treasury stock, which resulted in an immediate reduction of its outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share.

Refer to Note 19 - Capital Structure to the unaudited consolidated financial statements for further details.

6. Other Income, net

Other income, net consists of the following:

(1) Refer to Note 16 - Fair Value Measurements to the unaudited consolidated financial statements for further details.

7. Cash, Cash Equivalents and Restricted Cash

For the purposes of unaudited consolidated statements of cash flows, cash, cash equivalents and restricted cash consist of the following:

(1) Restricted cash (current) primarily represents funds held on behalf of customers in dedicated bank accounts. The corresponding liability against the same is included under “Accrued expenses and other current liabilities.” Restricted cash also includes funds held as collateral in a dedicated bank account for irrevocable letters of credit issued in favor of third parties for facility leases.

(2) Restricted cash (non-current) represents deposits with banks against bank guarantees issued through banks in favor of relevant statutory authorities for equipment imports, deposits for obtaining indirect tax registrations and for demands against pending income tax and value added tax (“VAT”) assessments. Due to the associated restrictions, these deposits with banks are anticipated to mature one year after the balance sheet date.

8. Investments

Investments consist of the following:

(1) Refer to Note 16 - Fair Value Measurements to the unaudited consolidated financial statements for further details.

9. Property and Equipment, net

Property and equipment consist of the following:

During the three and nine months ended September 30, 2026, there were no material changes in estimated useful lives of property and equipment during the ordinary course of operations.

The depreciation and amortization expense, excluding amortization of acquisition-related intangibles, recognized in the unaudited consolidated statements of income was as follows:

Internally developed software costs included in property and equipment were as follows:

The amortization expense on internally developed software recognized in the unaudited consolidated statements of income was as follows:

During the three and nine months ended September 30, 2026 and 2025, there wereno indicators of impairment related to capitalized software.

10. Business Combinations, Goodwill and Other Intangible Assets

I Merit Inc.

On July 31, 2026, the Company, through its wholly owned subsidiary Clairvoyant AI, Inc., completed the acquisition of I Merit Inc., a Delaware Corporation (“iMerit”), pursuant to a securities purchase agreement dated June 22, 2026 (the "Purchase Agreement"). The Company purchased 100% of the issued and outstanding equity securities in iMerit.

iMerit is a recognized leader in AI model training, evaluation and reinforcement learning. It is focused on helping its clients train large language and multimodal models to improve accuracy, precision, and effectiveness. The acquisition strengthens the Company's ability to help enterprises achieve measurable outcomes from AI, builds partnerships with leading foundation model builders and expands its reach into high-growth AI tech sectors.

The base purchase consideration payable at the closing was $170,000, excluding cash and cash equivalents acquired, debt and other estimated post-closing adjustments. The Purchase Agreement allows the sellers the ability to earn up to $125,000 of contingent consideration, based on the achievement of certain performance goals by iMerit during the two years ending June 30, 2028. The Purchase Agreement also allows for deferred consideration of $15,000, payable six months following the closing date. A portion of the purchase consideration otherwise payable was placed into escrow as security for the post-closing working capital adjustments and the indemnification obligations under the Purchase Agreement. To finance the acquisition, the Company utilized available cash on hand and borrowing from its credit facility.

The total purchase consideration consisted of the following:

Contingent consideration and deferred consideration are presented under “Accrued expenses and other current liabilities” and “Other non-current liabilities,” as applicable, in the consolidated balance sheets, and are initially classified as non-cash investing activities under ASC Topic 230, Statement of Cash Flows.

The fair value of assets acquired and liabilities assumed from the acquisition of iMerit is based on a preliminary valuation and, as such, the Company's estimates and assumptions are subject to change within the measurement period. The Company is in the process of finalizing the adjustments related to debt, working capital position, tax and other post-closing adjustments, which, when determined, may result in the recognition of additional assets or liabilities as of the acquisition date, and shall, accordingly, lead to the finalization of the purchase consideration. The measurement period will not exceed one year from the acquisition date.

The Company’s preliminary purchase price allocation to net tangible and intangible assets of iMerit as of July 31, 2026 is as follows:

(1) Includes property and equipment, net, operating lease right-of-use assets, other current assets, and other assets.

(2) Includes accounts payable, current and non-current portion of operating lease liabilities, and other non-current liabilities.

The fair value of customer-related intangible assets was determined using the multi-period excess earnings method, while the fair value of developed technology was determined using the replacement cost method. These intangible assets are amortized on a straight-line basis, which approximates the economic pattern of benefits, over the estimated weighted average useful lives of 7 years for customer-related intangible assets and 3 years for developed technology assets.

As of the acquisition date, the Company recognized an indemnification asset of $12,069 related to potential pre-closing income tax and indirect tax obligations, including estimated interest and penalties, as covered under the terms of the Purchase

Agreement. The indemnification asset is presented under “Other assets” and the $12,069 related tax obligations under "Other non-current liabilities" in the consolidated balance sheets.

The goodwill recognized represents the acquired capabilities, operating synergies and other benefits expected to result from combining the acquired operations with the Company’s existing operations. Goodwill is not deductible for income tax purposes. In connection with the acquisition, goodwill has been allocated to the Company’s Healthcare and Life Sciences, Banking, Capital Markets and Diversified Industries, and International Growth Markets reportable segments based on the Company’s assessment of the nature of services rendered by iMerit and allocated to each segment using a relative fair value method.

Acquisition-related costs are expensed as incurred and are included in “General and administrative expenses” in the unaudited consolidated statements of income. The Company recognized acquisition-related costs of $869 and $2,763 during the three and nine months ended September 30, 2026, respectively.

The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s unaudited consolidated financial statements with effect from the date of the acquisition. The acquisition did not materially impact the Company's financial position, results of operations or cash flows, and therefore, the Company has not provided unaudited supplemental pro forma results.

Goodwill

The following table sets forth details of changes in goodwill by reportable segment of the Company:

During the three and nine months ended September 30, 2026 and 2025, the Company performed an assessment to determine whether events or circumstances exist that may lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Based on such assessment, the Company concluded that there wasno impairment on goodwill as of September 30, 2026 and 2025.

Other Intangible Assets

Information regarding the Company’s intangible assets is set forth below:

The amortization expense recognized in the unaudited consolidated statements of income was as follows:

During the three and nine months ended September 30, 2026 and 2025, there wereno indicators of impairment related to intangible assets.

Estimated future amortization expense related to finite-lived intangible assets as of September 30, 2026 was as follows:

11. Other Current Assets

Other current assets consist of the following:

12. Other Assets

Other assets consist of the following:

13. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

14. Other Non-Current Liabilities

Other non-current liabilities consist of the following:

15. Accumulated Other Comprehensive Income/(Loss)

The following table sets forth the changes in Accumulated other comprehensive income/(loss) (“AOCI”) during the nine months ended September 30, 2026 and 2025:

(1) Refer to Note 17 - Derivatives and Hedge Accounting and Note 20 - Employee Benefit Plans to the unaudited consolidated financial statements for reclassification to net income.

(2) These are income tax effects recognized on currency translation adjustments, cash flow hedges and retirement benefits. Refer to Note 22 - Income Taxes to the unaudited consolidated financial statements.

16. Fair Value Measurements

Assets and Liabilities Measured at Fair Value

The following table sets forth the Company’s assets and liabilities that were recognized at fair value:

(1) Represents money market funds and short-term investments which are carried at the fair value option under ASC Topic 825, Financial Instruments.

(2) Contingent consideration is presented under “Accrued expenses and other current liabilities” and “Other non-current liabilities,” as applicable, in the consolidated balance sheets.

Fair Value of Derivative Financial Instruments:

Fair values for derivative financial instruments are based on independent sources including highly rated financial institutions and are classified as Level 2. Refer to Note 17 - Derivatives and Hedge Accounting to the unaudited consolidated financial statements for further details.

Fair Value of Contingent Consideration:

The fair value measurement of contingent consideration is determined using Level 3 inputs. The Company’s contingent consideration represents a component of the total purchase consideration for business acquisitions. The measurement is calculated using unobservable inputs based on the Company’s own assessment of achievement of certain performance goals. The Company estimated the fair value of the contingent consideration based on the Monte Carlo simulation model.

The following table summarizes the changes in the fair value of contingent consideration:

During the three and nine months ended September 30, 2026 and 2025, there were no transfers among Level 1, Level 2 and Level 3.

Financial Instruments Not Carried at Fair Value:

The Company’s other financial instruments not carried at fair value consist primarily of cash and cash equivalents (except investments in money market funds, as disclosed above), short-term investments (except investments in mutual funds, as disclosed above), restricted cash, accounts receivable, net, long-term investments, accrued capital expenditures, accrued expenses, client liabilities and interest payable on borrowings for which fair values approximate their carrying amounts. The carrying value of the Company’s outstanding revolving credit facility and term loan facility approximates its fair value because the Company’s interest rate yield is near current market rates for comparable debt instruments.

17. Derivatives and Hedge Accounting

The Company uses derivative instruments to mitigate cash flow volatility from risk of fluctuations in foreign currency exchange rates and interest rates. The Company enters into foreign currency forward contracts to hedge cash flow risks from forecasted revenues and other transactions denominated in certain foreign currencies. These contracts qualify as cash flow hedges under ASC Topic 815, Derivatives and Hedging, and are with counterparties that are highly rated financial institutions.

The following table sets forth the aggregate notional amount of derivatives in cash flow hedging relationship:

The Company estimates that approximately $30,660 of derivative loss, net, excluding tax effects, included in AOCI, representing changes in the value of cash flow hedges based on exchange rates prevailing as of September 30, 2026, could be reclassified into earnings within the next twelve months. As of September 30, 2026, the maximum outstanding term of the cash flow hedges was approximately 33 months.

The Company also enters into foreign currency forward contracts to hedge its intercompany balances and other monetary assets and liabilities denominated in currencies other than functional currencies, against the risk of fluctuations in foreign currency exchange rates associated with remeasurement of such assets and liabilities to functional currency. These foreign currency forward contracts do not qualify as fair value hedges under ASC Topic 815, Derivatives and Hedging. Changes in the fair value of these financial instruments are recognized in the unaudited consolidated statements of income and are included in the foreign exchange gain/(loss), net line item.

The following table sets forth the aggregate notional principal amounts of outstanding foreign currency forward contracts for derivatives not designated as hedging instruments:

The following table sets forth the fair value of the foreign currency forward contracts and their location on the consolidated balance sheets:

The following table sets forth the effect of foreign currency forward contracts on AOCI and the unaudited consolidated statements of income:

The following table sets forth the location and amount of gain/(loss) recognized in unaudited consolidated statements of income for derivatives in cash flow hedging relationships and derivatives not designated as hedging instruments:

The following table sets forth the location and amount of gain/(loss) recognized in unaudited consolidated statements of income for derivatives in cash flow hedging relationships and derivatives not designated as hedging instruments:

18. Borrowings

The following table summarizes the Company’s debt position:

Unamortized debt issuance costs for the Company’s revolving credit facility of $2,317 and $507 as of September 30, 2026 and December 31, 2025, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.

Credit Agreement

On August 18, 2026, the Company entered into a Revolving Credit and Term Loan Credit Agreement (the “2026 Credit Agreement”) with certain lenders and PNC Bank, National Association, as administrative agent. The 2026 Credit Agreement provides for (i) a $600,000 revolving credit facility (the “Revolving Credit Facility”), and (ii) a $400,000 term loan facility (the “Term Loan Facility,” and together with the Revolving Credit Facility, the “Credit Facilities”). Each of the Credit Facilities matures on August 18, 2031.

Subject to specified approvals and conditions, the 2026 Credit Agreement permits the Company to increase the aggregate revolving commitments and/or obtain incremental term loans, in an aggregate amount not to exceed the greater of $470,000 and 100% of the Company's EBITDA, less prior increases, plus additional amounts subject to compliance with certain leverage requirements.

Borrowings under the 2026 Credit Agreement bear interest, at the Company’s option, at (a) Term SOFR plus an applicable margin ranging from 1.00% to 1.75% per annum, (b) Daily Simple SOFR plus an applicable margin ranging from 1.00% to 1.75% per annum, or (c) the Alternate Base Rate plus an applicable margin ranging from 0.00% to 0.75% per annum. In each case, the applicable margin is determined based on the Company’s total net leverage ratio. The Company is also required to pay a commitment fee ranging from 0.125% to 0.25% per annum on the unused portion of the Revolving Credit Facility, based on the Company’s total net leverage ratio.

The Company used proceeds from the Credit Facilities to repay all outstanding obligations under its First Amendment to Amended and Restated Credit Agreement entered into in August 2024 (the “2024 Credit Agreement”) with Citibank, N.A., in an aggregate principal amount and accrued interest of $532,678. The 2024 Credit Agreement was terminated, and no early termination penalties or prepayment fees were paid in connection with the termination. The Company also expects to use the proceeds from the Credit Facilities for working capital, general corporate purposes, permitted acquisitions and share buybacks. The Term Loan Facility amortizes in quarterly installments through maturity, with the remaining outstanding balance due on August 18, 2031.

The obligations under the 2026 Credit Agreement are guaranteed by the Company's wholly owned material domestic subsidiaries and are secured by liens on substantially all of the assets of the Company and the guarantors and pledges of the equity interests in certain subsidiaries, in each case subject to certain exceptions and exclusions. The 2026 Credit Agreement contains customary affirmative and negative covenants, including, but not limited to, restrictions on the Company's ability to incur indebtedness, create liens, make certain investments, pay dividends and other distributions, enter into certain mergers, consolidations, liquidations or acquisitions, dispose of certain assets or subsidiaries, and requires the Company to maintain a minimum interest coverage ratio of 3.00 to 1.00 and a maximum total net leverage ratio of 3.50 to 1.00, in each case measured as of the last day of each fiscal quarter for the four consecutive fiscal quarters then ended. The maximum total net leverage ratio may be increased to 4.00 to 1.00 for four consecutive fiscal quarters following certain qualifying material acquisitions. The 2026 Credit Agreement also contains customary events of default.

The effective interest rates of the revolving credit facility and the term loan facility are as follows:

As of September 30, 2026 and December 31, 2025, the Company was in compliance with the financial covenants under the 2026 Credit Agreement and the 2024 Credit Agreement, respectively.

The maturity profile of the Company’s long-term borrowings, excluding debt issuance costs, outstanding as of September 30, 2026 was as follows:

Letters of Credit

In the ordinary course of business, the Company provides standby letters of credit to third parties primarily for facility leases. As of September 30, 2026 and December 31, 2025, the Company had outstanding letters of credit of $1,137 and $1,598, respectively, that were not recognized in the consolidated balance sheets.

19. Capital Structure

Common Stock

The Company hasone class of common stock outstanding.

Share Repurchases

The Company purchased shares of its common stock from certain employees in connection with withholding tax payments related to the vesting of restricted stock units and performance-based restricted stock units, as below:

(1) The weighted average purchase price per share is based on the closing price of the Company’s common stock on the Nasdaq Global Select Market on the trading day prior to the applicable vesting date of the restricted stock units.

On February 26, 2024, the Company’s board of directors authorized a $500,000 (excluding excise tax) common stock repurchase program beginning March 1, 2024 (the “2024 Repurchase Program”), which was terminated effective February 28, 2026.

On February 19, 2026, the Company’s board of directors authorized a $500,000 (excluding excise tax) common stock repurchase program effective February 28, 2026 (the “2026 Repurchase Program”), which replaced the 2024 repurchase program.

On March 16, 2026, the Company entered into the 2026 ASR Agreement with Morgan Stanley to repurchase shares of its common stock for an aggregate purchase price of $125,000, as part of the Company’s 2026 Repurchase Program. Upon payment of the aggregate purchase price of $125,000, the Company received an initial delivery of 3,346,720 shares of its common stock at an initial price of $29.88 per share, representing 80% of the aggregate purchase price. The Company funded the repurchase with available cash on hand and borrowing from its revolving credit facility. The 2026 ASR Agreement was accounted for as a treasury stock transaction and forward stock purchase agreement indexed to the Company’s common stock. The forward stock purchase agreement was classified as an equity instrument under ASC Topic 815-40, Contracts in Entity's Own Equity, and deemed to have a fair value ofzero at the effective date. The prepayment of $25,000 was initially recorded in additional paid-in capital, which reflected the pending settlement of the 2026 ASR Agreement. Under the terms of the 2026 ASR Agreement, the ultimate number of shares of common stock that the Company repurchased was based on the average of the daily volume-weighted average prices of the common stock during the term of the 2026 ASR Agreement, less a discount and subject to adjustments pursuant to the terms and conditions of the 2026 ASR Agreement.

On May 13, 2026, upon final settlement of the 2026 ASR Agreement, the Company received 799,960 additional shares of its common stock based on a daily volume-weighted average price of $30.14 per share during the term of the 2026 ASR Agreement. The additional shares received were recorded as treasury stock at a fair market value of $27.16 per share.

Under the Company’s repurchase program, shares may be purchased by the Company from time to time from the open market and through private transactions, or otherwise, as determined by the Company’s management as market conditions warrant. Repurchases may be discontinued at any time by the management.

The Company purchased shares of its common stock, for a total consideration including commissions but excluding excise tax, under its repurchase programs, as below:

Repurchased shares have been recorded as treasury shares and will be held until the Company’s board of directors designates that these shares be retired or used for other purposes.

Pursuant to the Inflation Reduction Act, the Company is required to pay a 1% excise tax on the fair market value of each share of common stock repurchased, net of stock issuances. The Company recognized excise tax of $245 and $694, during the three months ended September 30, 2026 and 2025, respectively, and$1,388 and $665, during the nine months ended September 30, 2026 and 2025, respectively.

20. Employee Benefit Plans

The Company maintains a Gratuity Plan in India (the “India Plan”) and a retirement benefit plan in the Philippines (the “Philippines Plan”). The India Plan is partially funded whereas the Philippines Plan is unfunded. The Company expects to earn a return of approximately 7.5% per annum on the India Plan for the year ending on December 31, 2026.

During the year ended December 31, 2025, the implementation of the new Labor Codes in India resulted in the recognition of prior service cost in OCI. During March 2026, following the implementation of a revised salary structure, the Company performed an updated actuarial valuation and recognized additional prior service cost of $1,177 in OCI. The prior service cost recognized is being amortized over the estimated remaining service period of the defined benefit obligation.

Components of net periodic benefit costs recognized in unaudited consolidated statements of income and retirement benefits reclassified from AOCI, were as follows:

The Company maintains several 401(k) plans (the “401(k) Plans”) under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), covering all eligible employees, as defined in the Code as a defined contribution plan. The Company may make discretionary contributions of up to a maximum of 3.0% of employee compensation within certain limits.

The Company’s contributions to various defined contribution plans were as follows:

21. Leases

The Company conducts its operations using facilities leased under operating lease agreements that expire at various dates, with options to extend or terminate before expiration date. The Company finances its use of certain motor vehicles, leasehold improvements and other equipment under various lease arrangements provided by financial institutions. The lease agreements do not contain any covenants to impose any restrictions except for market-standard practice for similar lease arrangements.

The Company had performed an evaluation of its contracts with suppliers in accordance with ASC Topic 842, Leases, and had determined that, except for leases for office facilities, motor vehicles and other equipment as described above, none of the Company’s contracts contain a lease.

The components of lease cost, which are included in the Company’s unaudited consolidated statements of income, are as follows:

(1) Includes short-term leases, which are immaterial.

Supplemental cash flow and other information related to leases are as follows:

As part of the Company’s efforts to optimize its existing network of operations centers, the Company continued to evaluate its office facilities to determine where it can exit or consolidate its use of office space. The Company modified certain of its operating leases, resulting in an increase in lease liabilities by $4,797 and $5,766, during the nine months ended September 30, 2026 and 2025, respectively, with a corresponding adjustment to ROU assets.

As of September 30, 2026 and December 31, 2025, the Company did not have any significant leases that have not yet commenced but that create significant rights and obligations for the Company.

Maturities of lease liabilities as of September 30, 2026 were as follows:

22. Income Taxes

The Company determines the tax provision for interim periods using an estimate of its annual effective tax rate. Each quarter, the Company updates its estimate of annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment.

The effective tax rate for the three months ended September 30, 2026 was 20.7%, a decrease from 22.1% for the three months ended September 30, 2025. The Company recorded income tax expense of $17,939 and $16,456 for the three months ended September 30, 2026 and 2025, respectively. The increase in income tax expense for the three months ended September 30, 2026 was primarily a result of higher profit, compared to the three months ended September 30, 2025.

The effective tax rate for the nine months ended September 30, 2026 was 23.5%, an increase from 20.3% for the nine months ended September 30, 2025. The Company recorded income tax expense of $61,683 and $48,498 for the nine months ended September 30, 2026 and 2025, respectively. The increase in income tax expense for the nine months ended September 30, 2026 was primarily a result of higher profit and lower excess tax benefits related to stock-based compensation, partially offset by a decrease in non-deductible compensation expenses, compared to the nine months ended September 30, 2025.

Deferred income taxes recognized in OCI were as follows:

23. Stock-Based Compensation

Stock-based compensation expense by function, as below, are included in the unaudited consolidated statements of income:

(1) Includes $(55) and $64 during the three months ended September 30, 2026 and 2025, respectively, and $1,208 and $14,792 during the nine months ended September 30, 2026 and 2025, respectively, related to discrete benefits recognized in income tax expense in accordance with ASU No. 2016-09, Compensation - Stock Compensation.

As of September 30, 2026 and December 31, 2025, the Company had 3,058,467 and 5,919,466 shares, respectively, available for future grants under the 2025 Omnibus Incentive Plan (the “2025 Plan”).

Stock Options

Stock option activity under the Company’s stock-based compensation plans is shown below:

As of September 30, 2026, unrecognized compensation cost of $3,818 is expected to be expensed over a weighted average period of 0.8 years.

Share Matching Program

Under the Company’s 2018 Omnibus Incentive Plan (the “2018 Plan”), the Company established a share matching program (“SMP”) for executive officers and other specified employees. Under the SMP, the Company agreed to issue a number of restricted stock units equal to the number of newly acquired shares of the Company's common stock.

As of September 30, 2026 and December 31, 2025, restricted stock units vested for which the underlying common stock is yet to be issued arenil and 31,662, respectively.

Restricted Stock Units

Restricted stock unit activity under the Company’s stock-based compensation plans is shown below:

(1) As of September 30, 2026 and December 31, 2025 restricted stock units vested for which the underlying common stock is yet to be issued are 328,139 and 348,636, respectively.

As of September 30, 2026, unrecognized compensation cost of $87,921 is expected to be expensed over a weighted average period of 2.7 years.

Performance-Based Stock Awards

Under the Company’s equity incentive plans, the Company grants performance-based restricted stock units (“PRSUs”) to executive officers and other specified employees. The Company generally grants 40% of each award recipient’s equity grants in the form of PRSUs that cliff vest at the end of athree-year period based on an aggregated revenue target for athree-year period (“PU”). The remaining 60% of each award recipient’s equity grants are PRSUs that are based on market conditions, contingent on the Company’s meeting a total shareholder return relative to a group of peer companies specified under PRSU agreements, and are measured over athree-year performance period (“MU”).

PRSU activity under the Company’s stock plans is shown below:

As of September 30, 2026, unrecognized compensation cost of $58,553 is expected to be expensed over a weighted average period of 1.8 years.

Employee Stock Purchase Plan

On June 21, 2022, at the annual meeting of stockholders of the Company, the Company’s stockholders approved the ExlService Holdings, Inc. 2022 Employee Stock Purchase Plan (the “2022 ESPP”).

The 2022 ESPP allows eligible employees to purchase the Company’s shares of common stock through payroll deductions at a pre-specified discount to the lower of the closing price of the Company’s common shares on the date of offering or the last business day of each purchase interval. The dollar amount of shares of common stock that can be purchased under the 2022 ESPP must not exceed 15% of the participating employee’s compensation during the offering period, subject to a cap of $25 per employee per calendar year. The Company has reserved 4,000,000 shares of common stock for issuance under the 2022 ESPP.

The ninth offering period under the 2022 ESPP commenced on July 1, 2026 with a term ofsix months.

Activity under the Company’s 2022 ESPP is shown below:

24. Related Party Disclosures

The Company provides data and AI-led solutions and services to Corridor Platforms, Inc., which is an equity affiliate of the Company. The Company recognized revenues, net of $121 and $42, during the three months ended September 30, 2026 and 2025 respectively, and $302 and $126, during the nine months ended September 30, 2026 and 2025 respectively. The Company had outstanding accounts receivable, net of $128 and $28, related to this service contract as of September 30, 2026 and December 31, 2025, respectively.

25. Commitments and Contingencies

Capital Commitments

As of September 30, 2026 and December 31, 2025, the Company had committed to spend approximately $13,300 and $8,700, respectively, net of capital advances, under agreements to purchase property and equipment.

On June 15, 2023, the Company, along with other limited partners, entered into a limited partnership agreement with the general partner, PNP Financial Services Fund GP I, LLC and initial limited partner and outgoing partner, to form a partnership with the name Plug and Play Financial Services Fund I, L.P. (the “Partnership”) for the primary purpose of making investments in growth-stage technology companies. The Company committed to make an aggregate investment of $4,000 in the Partnership. As of September 30, 2026, the Company has invested $3,000 in the Partnership and is committed to make further investments up to an amount of $1,000.

Other Commitments

Certain units of the Company’s Indian subsidiaries were established as 100% Export-Oriented units or under the Software Technology Parks of India or Special Economic Zone scheme promulgated by the Government of India. These units are exempt from customs, central excise duties, and levies on imported and indigenous capital goods, stores, and spares. The Company has undertaken to pay custom duties, service taxes, levies, and liquidated damages payable, if any, in respect of imported and indigenous capital goods, stores and spares consumed duty free, in the event that certain terms and conditions are not fulfilled. The Company believes, however, that these units have in the past satisfied, and will continue to satisfy, the required conditions.

The Company’s operations centers in the Philippines are registered as qualified Philippines Economic Zone Authority units, which provides the Company fiscal incentives on the import of capital goods and local purchase of services and materials. The Company is required to meet certain requirements to retain the incentives. The Company has complied, and intends to continue compliance, with the requirements to avail itself of the incentives.

Contingencies

The transfer pricing regulations in the countries where the Company operates require that controlled intercompany transactions be at arm’s-length. Accordingly, the Company determines and documents pricing for controlled intercompany transactions based on an economic analysis as prescribed in the respective regulations. The tax authorities have jurisdiction to review the Company’s transfer pricing. If the Company’s transfer pricing is challenged by the authorities, they could assess additional tax, interest and penalties, thereby impacting the Company’s profitability and cash flows.

The Company is currently involved in transfer pricing and related income tax disputes with Indian tax authorities. The aggregate amount demanded by Indian tax authorities (net of advance payments) as of September 30, 2026 and December 31, 2025 is $39,525 and $42,205, respectively. The Company has made payments and/or provided bank guarantees against these demands in the amounts of $7,428 and $7,684, as of September 30, 2026 and December 31, 2025, respectively. The Company believes that its positions will more likely than not be sustained upon final examination by the tax authorities, and accordingly has not accrued any liabilities with respect to these matters in its consolidated financial statements.

Pursuant to reviewing the Company’s annual VAT and service tax filings, the Indian tax authorities raised aggregate demands for tax years 2015 and 2017, in the amounts of $4,863 and $5,186, as of September 30, 2026 and December 31, 2025, respectively. The Company has made payments and/or provided bank guarantees against these demands in the amounts of $4,773 and $5,090, as of September 30, 2026 and December 31, 2025, respectively. The Company has filed appeals against these matters and believes that it is more likely than not that upon final examination its position will be sustained based on technical merits.

The Indian Goods and Services Tax (“GST”) authorities rejected the Company’s refund claims in the amounts of $5,119 and $5,494 as of September 30, 2026 and December 31, 2025, respectively. The Company has filed appeals against these matters and believes that it is more likely than not that upon final examination its position will be sustained based on its technical merits. Accordingly, no allowances were recorded against these GST receivables as of September 30, 2026 and December 31, 2025, respectively.

Some of the Company’s subsidiaries in India have undergone assessments with the statutory authority with respect to defined contribution plan. Except for some components of the assessments for which the Company has recognized a provision in the unaudited consolidated financial statements, the Company believes that the amount demanded by such authority is not a meaningful indicator of the potential liabilities of the Company, and that these matters are without merit. The Company is defending against the assessment orders and intwo cases, has instituted an appeal against the order before the relevant tribunal while also making a payment under protest of the amount demanded. As of the reporting date, the Company’s management does not believe that the ultimate assessments in any of these matters will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. The Company will continue to monitor and evaluate its position based on future events and developments on these matters.

From time to time, the Company, its subsidiaries, and/or their present officers or directors, may be or have been, named as a defendant in litigation matters, including employment-related claims. The plaintiffs in those cases seek damages, including, where applicable, compensatory damages, punitive damages and attorney’s fees. With respect to pending litigation matters as of the reporting date, the Company believes that the damages claimed are without merit, and the Company intends to vigorously defend them. The Company will continuously monitor developments on these matters to assess potential impacts to the financial statements.

The outcomes of legal actions are unpredictable and subject to significant uncertainties, and thus it is inherently difficult to determine the likelihood of the Company incurring a material loss or quantification of any such loss. With respect to certain pending litigation matters as of the reporting date, the Company has made provisions based on information currently available, including its evaluation of the facts underlying each matter and legal counsel’s advice on the estimated losses or range of reasonably possible losses. Based on the Company’s assessment, including the availability of insurance recoveries, the Company’s management does not believe that currently pending litigation, individually or in aggregate, will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. The Company will continuously monitor these matters to assess potential impacts to the financial statements.