Earnings Per Share

12 Months Ended

Dec. 31, 2021

Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding, adjusted for outstanding shares that are subject to repurchase during each period. Diluted earnings per share is computed using the weighted average number of common shares plus the potentially dilutive effect of common stock equivalents (outstanding stock options, restricted stock and restricted stock units) issued and outstanding at the reporting date, and an assumed conversion premium of outstanding convertible notes, using the treasury stock method (as discussed further in the subsequent paragraph). Common stock equivalents and the conversion premium on outstanding convertible notes that are anti-dilutive are excluded from the computation of weighted average shares outstanding. The Company includes performance stock unit awards in dilutive potential common shares when they become contingently issuable and have a dilutive impact per authoritative guidance and excludes such awards when they are not contingently issuable.

Diluted weighted-average shares outstanding is affected by the treatment of the Company's 3.5% per annum Convertible Senior Notes due October 1, 2024 (the “Notes”). The Company had a choice to settle the Notes in cash, shares or any combination of the two. The Company intended and had the ability to settle the principal balance of the Notes in cash, and as such, the Company applied the treasury stock method. The dilution related to the conversion premium, if any, of the Notes is included in the calculation of diluted weighted-average shares outstanding for the portion of the period until actual settlement and to the extent the issuance is dilutive based on the average stock price during the reporting period being greater than the conversion price of $75. During the third quarter of 2021, the Company settled the Notes by electing a combination of cash and shares of the Company’s common stock and as such included the count of shares issued on settlement in the calculation of basic earnings per share for the portion of the period outstanding. Refer to Note 17 - Borrowings to the consolidated financial statements for further details.

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


	Year ended December 31,
	2021		2020		2019
Numerators:
Net income	$	114,758	$	89,476	$	67,659
Denominators:
Basic weighted average common shares outstanding	33,549,275		34,273,388		34,350,150
Dilutive effect of share based awards	408,693		254,717		382,533
Dilutive effect of conversion premium on the Notes	286,510		27,059		—
Diluted weighted average common shares outstanding	34,244,478		34,555,164		34,732,683
Earnings per share attributable to ExlService Holdings Inc. stockholders:
Basic	$	3.42	$	2.61	$	1.97
Diluted	$	3.35	$	2.59	$	1.95
Weighted average potentially dilutive shares considered anti-dilutive and not included in computing diluted earnings per share	10,705		289,061		106,375