EXLS · 10-Q · 2026Q1 · Full report

Operating Expense Trends

ExlService Holdings, Inc. · 2026-04-28 · Importance 42 · Surprise 40

SG&A increased $15.0 million (13.4%) year-over-year for Q1 2026 and SG&A as a percent of revenues rose slightly to 20.4% from 20.2%. The increase was primarily due to higher employee-related costs of $11.8 million from higher headcount and wage inflation, increased investments in digital and generative AI capabilities of $1.9 million, and higher sales, marketing and other operating costs of $1.3 million. Depreciation and amortization increased modestly (3.3%) driven by investments in infrastructure and digital capabilities. Management attributes the higher operating expense base to growth investments and labor cost inflation, which will be a driver of margin dynamics going forward.

Key facts

• SG&A expenses for the three months ended March 31, 2026: $130.3 million, up $15.4 million or 13.4% from $114.9 million for the three months ended March 31, 2025.
• Increase in SG&A of $15.0 million was primarily due to increases in employee-related costs of $11.8 million, increased investments in digital and generative AI capabilities of $1.9 million, and higher sales and marketing and other operating costs of $1.3 million.
• SG&A expenses as a percentage of net revenues increased from 20.2% for the three months ended March 31, 2025 to 20.4% for the three months ended March 31, 2026.
• Other income, net for the three months ended March 31, 2026: $2.5 million, down $2.2 million or 49.2% from $4.7 million for the three months ended March 31, 2025.
• Depreciation and amortization expense for the three months ended March 31, 2026: $14.0 million, up $0.4 million or 3.3% from $13.6 million for the three months ended March 31, 2025.
• SG&A increase included higher sales and marketing and other operating costs of $1.3 million for the three months ended March 31, 2026 versus the three months ended March 31, 2025.

Impact estimates