Following its better-than-expected quarterly result, BPO firm ExlService Holdings has beaten twice-its-size rival WNS (Holdings) in terms of market cap. Nasdaq listed EXL ended the trading session on Wednesday with a market cap of $688.5 million, just ahead of NYSE-listed WNS’ market cap of $684.03 million. For the quarter-ended December 2007, EXL reported revenues of $50.4 million while WNS closed the quarter with $115.6 million. “The stock price represents the fundamentals of the company—the quality of business and profitability,” said EXL president & COO Rohit Kapoor.
Both the BPO firms have seen their scrip prices recover after dipping in choppy US markets, especially after losing some of their clients to the subprime lending crisis in the US. WNS in August 2007 lost its client First Magnus after it filed for bankruptcy. The second-largest privately-held US mortgage firm was expected to account for about 5% of WNS’s revenue less repair payments for the period between July 1, 2007 and March 2008. Last year, EXL saw one of its clients, a non-prime mortgage lender that accounted for 2% of its revenue for the first half of 2007, reduce the volume of services provided to it by about 60%.
Early this year, IndyMac Bancorp, one of the largest independent mortgage lenders in the US, IndyMac Bancorp, announced it will cut down staff with its temporary and outsourcing vendors by 27%, mainly in India. While WNS handled analytics and research for IndyMac, EXL handled call centre work for the lender. In an SEC filing, EXL said that IndyMac accounted for about of its revenues in the year ended December 2007 but the move would not materially impact its revenues. While EXL’s margins went down in the quarter ended December 2007 due to the rising rupee, its growth beat estimates due to addition of new clients.
While analysts expected EXL to announce revenue of about $48 million and net profit of 22 cents per share, it declared revenue of $50.4 million and net of 33 cents a share. Its revenue for the year 2007 was $179.9 million, an increase of 47.7% over the prior year. WNS reported a quarterly revenue of $115.6 million and net income of $5.5 million. It announced a guidance of revenue less repair payments of $290-295 million for the fiscal year 2008.