Good day, ladies and gentlemen and welcome to the ExlService Holdings' Fourth Quarter 2014 Earnings Conference 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. [Operator Instructions]. As a reminder this conference maybe recorded. I would now like to turn the call over to your host Steve Barlow. Please go ahead.

Thank you, Stephanie. Hello and thanks to everyone for joining EXL's Fourth Quarter and Full Year 2014 Financial Results Conference Call. I'm Steve Barlow, EXL's Vice President of Investor Relations. With us here today in New York are Rohit Kapoor, our Vice Chairman and Chief Executive Officer and Vishal Chhibbar, our Chief Financial Officer. We hope that you had an opportunity to review the three press releases we issued this morning, the quarterly and annual financial results, the release about our acquisition of RPM Direct, and the release on our share repurchase program. We've also updated our investor fact sheet in the Investor Relations section of 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 forward 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 those measures to GAAP can be found on our press release, as well as the investor fact sheet. Now I'll turn over the call to Rohit Kapoor, EXL's Chief Executive Officer. Rohit?

Thank you, Steve. Good morning everyone and welcome to our fourth quarter 2014 earnings call. The agenda for this morning’s call is as follows; first, I will provide you with the highlights of 2014, and comment on our strong finish to the year. I will then spend some time talking about the three major strategic pivots that we have made at the start of 2014 and how that has helped us win and get recognition in the marketplace. We will also discuss the acquisition of RPM Direct a major analytics player that was announced this morning and how this will help us achieve our vision of being the leader in analytics. After that I will talk briefly about our demand environment and then close my prepared remarks with listing out our key priorities for 2015. Then I will turn the call over to Vishal for a more detailed financial discussion including insights into our annual guidance for 2015. Following that we would be happy to take your questions. EXL ended 2014 on an extremely strong note. In the fourth quarter, our revenues excluding disentanglement cost were a record $143.8 million increasing 15.5% year-over-year and 8.9% sequentially. As a result of our strong revenue growth we delivered adjusted diluted EPS for the fourth quarter of $0.48. Both our revenues and our earnings were well above the high end of our guidance range. We ended 2014, with revenues excluding disentanglement cost of $525.6 million. On an annual basis we grew 9.8% while our core organic growth rate excluding client transitions at constant currency for 2014 was 12.4%. These numbers underscore the strong growth characteristics of EXL. And I would like to offer my sincere thanks to all of EXL’s 23,000 employees for their hard work, collaboration, and passion that ensured our success.…

Thank you Rohit and thanks everyone for joining us this morning. I would like to start off by providing insight into EXL’s revenues and financial performance in the fourth quarter. I will then do a similar review of our annual performance. Unless otherwise stated all the numbers mentioned are excluding disentanglement cost for our transitioning clients. Revenue in the fourth quarter was a record $143.8 million, an increase of 15.5% year-over-year and 8.9% sequentially. Excluding transitioning clients and acquisition, on a constant currency basis organic growth was 12% year-over-year and 3.3% sequentially. We are pleased with the double-digit organic revenue growth momentum that carried through the end of the year. You will notice in today's earnings release that we have changed our segment names. We’re now labeling our reporting segments, operations management and analytics and business transformation, previously outsourcing and transformation respectively. We believe these names better describe the nature of our engagements with our clients. The business composition of each reporting segment remains unchanged and as such these segments are fully compatible with their prior periods. Driving a strong performance in the fourth quarter was higher revenues than expected in our operations management segment. Operations management revenues of 111.6 million including 12 million from acquisition of Overland, an increase of 10.8% year-over-year and 10.8% sequentially. Operations management revenues excluding transitioning clients, acquisitions, and on a constant currency basis increased 7.4% year-over-year and 4.2% sequentially. Growth was primarily driven by clients in utilities, healthcare, travel, transportation and logistics as well as our BPaaS and traditional solutions for the insurance industry. Fourth quarter analytics and business transformation revenues of $32.2 million grew 35.7% year-over-year and 2.8% sequentially. Analytics revenues on a constant currency basis increased 37.8% year-over-year and 7% sequentially. Fourth quarter gross margin was 36.5% up 80 basis points sequentially.…

Thank you. [Operator Instructions]. Our first question comes from Edward Caso with Wells Fargo Securities, your line is open.

Good morning and congratulations. I had a question on your investments on the ops management side and what pace you are adopting automation and what the cost of that is and whether that is an offensive or defensive move on your part? Thank you.

Thanks Ed. So, the investments that we are making in operations management are around the business EXLerator Framework, BPaaS, as well as technology enabled products that we are launching there. This does include a fair amount of automation and elimination of manual work that we do. The business EXLerator Framework really integrates our strong operations expertise, our domain expertise, lean Six Sigma, benchmarking, analytics, and technology solutions. The BPaaS offering actually creates a flexible and a variable cost structure for our clients where they can pay by the drink and our technology enabled products allow us to be able to create non-linear revenue streams with our clients. We are also looking at a number of other ways of approaching automation including robotics as well as the introduction of a number of technology solutions. And we think that our play out here is a lot more offensive and it is structured at some of the processes that we handle that can provide incremental value and differentiation to our clients. We are confident about how these mechanisms are resonating in the marketplace and we think that this positions us strongly for the future.

Clearly you are focused on analytics and having success so far, can you talk a little bit about your large deal pursuit here and whether you are going after some of the larger competitors or you are still pursuing work maybe below the size of deals that say an Accenture might be pursuing?

So analytics clearly has been a strong success story for EXL and we have been able to add many new client relationships as well as expand our client relationships out here. Today we’ve got several deals which are $10 million plus on an annual basis and these are the large deals that we are working on with our clients creating centers of excellence on analytics. There are a number of large scale strategic deals that we are bidding on with clients, particularly as they look to build out a dual shores strategy of developing this capability and we find that the size and scale that EXL has along with the breadth of service offerings that we have in analytics, that’s resonating extremely well with the requirements from the marketplace. And we seem to be well positioned on some of these deals.

Okay, thank you.

Our next question comes from Ashwin Shirvaikar with Citibank. Your line is open.

Thank you. Good quarter and congratulations on the acquisition both of you. I guess my first question is with regards to the headwind of the $49 million that you mentioned. That number imply that the client that’s are being rolled off are sort of rolling off at maybe a slower than expected rate, I would have expected that number to be smaller at this stage?

So, Ashwin the number is actually a comparison between 2014 and 2015. We basically have both of our clients who have transitioned out completely by the end of 2014. So there is no revenue that we would expect from these transitioning clients in 2015 and that is why the number is what it is.

Oh, I see, I understand now. Okay.

So you see from the two transitioning clients and there is no other impact in that.

Okay, got it. So in the future we are not going to get the disentanglement cost and all that stuff, it’s all behind us?

Yes, our expectation is that the disentanglement costs are behind us.

Okay, that’s good. I guess on the analytic side, first of all quite impressive growth and the acquisition seems a good one. But can you talk maybe more about the cost and business model implications of creating all these centers of excellence and eventually as you look at your company, let's just say two to three years out, how big is analytics going to be, how big is transformation going to be versus the operations management side?

Sure, so we will talk a lot about this at our Investor Day but at a high level for us, analytics represents a very large and growing market space where there isn’t any clear leadership that’s been established by anybody. And therefore it’s a huge wide space where we think we’ve got a great shot of propelling ourselves into that leadership position. We think that the analytics growth rate can be sustained for several years and therefore this business can become fairly big and very large. What this business requires is a huge amount of investment in terms of developing proprietary tools and methodologies, investments in domain expertise, investments in talent across multiple geographies, and an ability to participate across the various segments of the analytics industry. We are consciously making those investments. We’ve also as you know, invested in a dedicated sales force for analytics alone and we’ve invested in strong leadership in this area. With the acquisition of RPM, we’ve actually made further investments in terms of diversifying our service offerings in the analytics space and have sort of doubled down in this playing field. So we think that’s the right strategy for us at this stage. Our margins in this business today are not at appropriate levels and we do think there is an opportunity for us to be able to bring up and drive up the margins in the future. Right now we are focusing on the growth and we think on a go forward basis we can get both growths as well as improved margins in this business.

Understood, and with regards to M&A. Obviously a big acquisition here, any thoughts or more color on the M&A pipeline as it stands today or are you going to take a bit of a breather between Overland and RPM and integrate them?

Well, I would address that question in two ways, number one is the capacity and the balance sheet strength of EXL remains strong. So our ability to continue to do acquisitions remains fundamentally strong and if we come across acquisitions which are attractive, we will consummate them and we have a very good pipeline of acquisitions in place. Having said that, with the fact that we have done three acquisitions over the last nine months or so, we are going to focus in on integrating these acquisitions in and making sure that the business models work in an integrated format. So our focus really for the next six months is going to be to consolidate and integrate in these acquisitions so that we can scale up these acquisitions along with the rest of our business.

Got it, thank you guys, see you next week.

Our next question comes from Anil Doradla with William Blair. Your line is open.

Hey guys, congrats from my side too. On the RPM side, it sounded in very simplistic terms that the area of expertise is centered around the proprietary database. So, how scalable is this business model across markets beyond insurance?

Thanks Anil. We actually think that the capabilities that RPM has and the database that they have created is a tremendous asset that can be leveraged not only for insurance but for other industry verticals and not only for the U.S. market but for other geographies as well. So, our plan would be to take RPMs capabilities and its strong data asset and leverage that in the industry verticals of healthcare, leverage that in industry verticals of banking and financial services, utilities, travel, transportation, and logistics. And similarly we would expect to take RPMs capabilities from the U.S. and expand that into UK and to Europe. The data asset that RPM possesses is unique and it actually positions us with the unique capability of bringing analytical strength and prowess and combining that with the data asset and offering that to the client on a combined basis.

So, is this something Rohit, you think you could do this in the next 12 months, 24 months, or is it more of a longer term thing?

I think the sales cycle out here is likely to be much shorter than the operations management cycle but the adoption of it will certainly take time and we are going to be deliberate about this. So my sense is that this would play out over the next 24 to 36 months.

Great, now on the analytic side, I mean clearly you are emphasizing on this, your peers are emphasizing, I mean if you step back and look at the overall industry beyond EXLS, what do you think is the BPO growth rate now or what do you think would be kind of long-term BPO growth rate given the move towards these businesses?

I think if you breakout BPO and analytics, the BPO growth rate would be close to a double-digit growth rate. So it maybe high single-digits or close to a double-digit growth rate. And that's what things seem to be stabilizing around.

But, don’t you think there should be a pickup given that analytics would become more and more of a greater contributor not only to you but the rest of the industry?

Absolutely, so when you combine the analytics and BPO, I think the combined growth rate is going to be in the double-digit and so, you will see growth rates which are 10% to 12%.

Great, and finally Rohit, if I understand your language, you said you believed that there is not going to be any disentanglement cost in 2015. I mean is there still an element of uncertainty in there or you are pretty sure that there is no disentanglement cost in 2015?

I think on the disentanglement cost, we have shared the data with you as we have incurred those disentanglement cost. At this stage we do not expect there to be any further disentanglement fees going into 2015.

Okay, great. Congrats once again guys.

Our next question comes from SK Prasad Borra with Goldman Sachs your line is open.

Thanks for taking my questions. First probably on the demand environment, the commentary from ISO [ph] vendors and BPO vendors continues to be positive, is it general improvement in demand because of the macro or is it more vertical driven strength what you’re seeing in the market?

I think for us we’re seeing it in a two different ways, one is we’re seeing demand for services that were previously not traditionally outsourced. And particularly as clients think about more complex processes they are getting more comfortable around outsourcing some of the more complex processes. And the second is particularly as we have started to embed analytics into our operations, there seems to be a greater propensity to outsource processes around customer experience and customer acquisition, and therefore our ability to participate not only on the cost structure of our clients but also our ability to enhance their revenue, that’s become a lot more end to end capability offering that seems to be taking place. And so from our perspective those trends are playing well and we see more clients engaging in and we see EXL well positioned to take advantage of that.

Probably question around the analytic space, when you think about acquisitions in analytics and you have done now couple of decent size acquisitions, is the focus from your point is it more on the strength of the platform or are you primly acquiring them for clients?

We’ve actually looked at it from multiple dimensions. We’ve looked at it from a capability standpoint so it includes if somebody has a data asset and a technology platform in analytics that is proprietary, we think that is going to be extremely valuable going forward into the future. We also think that an assembled workforce of data scientists and analytics resources who got deep domain knowledge and subject matter expertise, that’s a great capability to acquire. And certainly expanding client relationships in this growing market is an advantage. So a number of elements that go into that mix. Of course it’s quite difficult to do acquisitions in analytics but I think we’ve been able to be patient about it and we’ve structured the deal in an appropriate way where it makes sense for everybody.

Okay, probably just a last one from my end, just for the gross margins for 2015, you’re saying you will see some headwinds, can you elaborate on that a bit more and heading into say 2016 should we expect that to improve?

Hi S.K., this is Vishal. As I said, the gross margins are getting impacted by the lower gross margin profile of the Overland Solutions which is a large revenue impact in -- full year impact in 2015. So on our core business we expect the gross margins will be improving 50 to 70 basis points but will get offset by a lower gross margin impact due to the Overland acquisitions by about 140 basis points. So net, net the gross margins will decline between 50 to 70 but that’s primarily driven by the impact of the acquisition of Overland though on the core business we would be expanding and growing our gross margins year-over-year.

And adding into 2016, you would say that --

Over 2016 and 2017, I mean over the long run we do expect the gross margins to pick up and adjusted floating [ph] margins also to pick up.

Okay, that’s clear, thank you.

Our next question comes from Joe Foresi with Janney. Your line is open.

Hi, thanks. This is Robert Simmons for Joe. Can you quantify how much of your business is now from digital world given the acquisitions?

Robert, we will be sharing the details of the RPM acquisition once the acquisition is closed and we will be updating our guidance at that point of time and we can provide you with more color at that stage.

But could you give it given also just the other ones you’ve actually closed though?

Basically is your question in how much of our revenues are at platform and driven? Or just what do you mean by digital, because I think what we are doing...

I mean Mac?

Mac, okay.

We actually do not break out our revenues on that basis. As you know most of our revenues are around operations management and analytics and business transformation. The analytics revenue certainly touches upon a number of different elements where clients are working on social, mobile, and on the cloud. But it cuts across a number of those streams and we don’t measure it in that manner.

Okay, great. Thanks.

Our next question comes from Vincent Krochio [ph] with Nobel. Your line is open.

Rohit, your first quarter tends to be seasonally weak, can you give us some help in terms of what should we expect the low sequential growth rate?

Yes Vincent, as Vishal mentioned in his prepared remarks we do expect there to be a $7 million headwind quarter-on-quarter in the first quarter of 2015 and therefore we would expect the first quarter to be weaker than the fourth quarter of 2014. And that could certainly impact our numbers on a go forward basis.

In terms of adding retail in capital markets as important areas to your analytics business, do you have a large pipeline or just in client asking for this, what does that look like any color will be helpful?

Sure, so these are new industry verticals for us and what we have done is that we have basically removed any constraints on the growth of the analytics business. And in 2014 we were particularly successful in entering the retail and the capital market spaces. We acquired several customers in each one of these industry verticals and now look to use that as a foundational basis for acquiring more customers and growing with the franchise that we have created. Our pipeline in these two segments is strong and our dedicated sales force for analytics consciously pursues multiple new industry verticals to enable us to grow at a much faster pace.

And are there any large contracts coming up for renewal in 2015 that we should be abreast of?

There is nothing which is particularly outside of normal. As you know our client concentration continues to get better and better and therefore the renewal of client contracts is not such a huge factor in terms of our going forward position.

Okay thank you.

[Operator Instructions]. Our next question comes from David Grossman with Stifel. Your line is open.

Thank you and good morning. Rohit, the sequential growth in outsourcing was fairly substantial on operations management and I think you made even references in your prepared remarks. However, could you give us a little more color on where the sequential growth of outperformance came from, was it existing customers that ran faster, was it certain things that didn’t go away that you anticipated would go away or what in fact were some of the details behind kind of the upside to your initial expectations for the fourth quarter?

So David I think it was strength across a number of different areas. So A, we did have our existing clients which ramped up in the fourth quarter of 2014. B, the OSI acquisition that we did is included as part of our operations management segment and that grew faster than expected even and so that contributed to the growth rate to our segment. And then C, we did add some new clients as well so it was actually a combination of existing clients, M&A, and new clients. And we are really pleased with the fact that the growth was very broad based.

You know I may have missed it, but could you say what OSI contributed in the quarter?

David, OSI contribution was about $12 million.

And what was the run rate when you bought it?

Run rate we expected the OSI to be around $60 million per annum.

So, $5 million per month run rate and OSI was part of EXL in the fourth quarter for 10 weeks and the exact contribution was $12.2 million.

Got it and then just one other question I had was on the stock repurchase, I think you mentioned in the press release that is offset [ph] solutions from RSU [ph] and just curious is the number -- there some incremental component from wage increases that are going towards RSUs, is this related to acquisitions or is there anything else we should glean from need to buy incremental shares back off -- solutions versus what you have done historically?

No, David. I think there is nothing unusual or anything that is different. I think it is just the fact that now that the company is of a certain size and scale and there is greater predictability in terms of our cash flow generating capabilities, we think it is the right strategy for us to be buying back some stock to offset the valuation. And this still gives us the flexibility to continue to do more acquisitions on a go forward basis.

Okay, very good. Thank you and congratulations.

Thanks David.

Our next question comes from Puneet Jain with JP Morgan. Your line is open.

Hi, Puneet is that you. Is that a question, we can't really hear you. Okay, operator are there any other questions on the line.

I am showing no further questions in queue at this time.

Well, thanks operator and thank you everyone for joining EXL's fourth quarter call. As we said earlier, we are going to host an Analyst Day on March 2nd in New York and we look forward to all of you participating in that and we would be sharing further details of our strategy as well as our goals on a go forward basis. Thank you so much.