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ExlService Holdings Inc (EXLS) Q1 2019 Earnings Call Transcript

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ExlService Holdings Inc  (NASDAQ: EXLS)
Q1 2019 Earnings Call
April 30, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2019 ExlService Holdings Inc 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 call may be recorded.

I would now like to introduce your host for today's conference Steve Barlow. Sir, you may begin.

Steven N. Barlow -- Vice President, Investor Relations

Thank you, Lauren. Good morning, and thanks to everyone for joining EXL's first quarter 2019 financial results conference call. I'm Steve Barlow, EXL's Vice President of Investor Relations. With me 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've had an opportunity to review our Q1 2019 earnings release we issued this morning. We've also updated our investor fact sheet on 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 forth 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 call. During our call today, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. Reconciliation of these measures to GAAP can be found in 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?

Rohit Kapoor -- Vice Chairman and Chief Executive Officer

Thank you, Steve. Good morning, everyone, and welcome to our first quarter 2019 earnings call. In the first quarter, we reported revenues of $239.6 million, which represents a 15.8% increase year-on-year. Adjusted EPS for the quarter was $0.71. Our core business excluding Health Integrated, is strong and grew by 9.8% on an organic constant currency basis. This is our highest growth rate in the past 11 quarters. Excluding Health Integrated, we achieved an adjusted EPS of $0.79. Analytics had an outstanding quarter. Revenues increased 52.3% year-on-year to $87 million, organically, Analytics grew 19.7% year-on-year, compared to 15.8% in 2018. Our operations management business reported a $152.6 million in revenues, up 1.8% year-on-year and 3.9% on an organic constant currency basis. Excluding Health Integrated, operations management grew by 5.8%. We had strong performance in Insurance and Finance and Accounting, both of which grew by double digits.

Today, I would like to discuss two of our key growth engines; Insurance and Analytics. Separately, I will also provide a brief update on Health Integrated and our progress on SCIO. Our Insurance business has been a cornerstone of our growth since inception and represents 42% of our total revenues. In the first quarter, our Insurance vertical grew by 13%. We continue to expand relationships with existing clients, at the same time have built a strong new client pipeline in Insurance. In the past three years, the number of clients contributing more than $10 million in annual revenues within the Insurance vertical has doubled. Our new client pipeline is the strongest in the past seven quarters across multiple service lines and across all of our geographies.

The growth within Insurance has been as a result of increasing market demand combined with EXL's global leadership positioning in this industry. Our leadership position is founded on our deep domain expertise and capabilities that span across the end-to-end Insurance value chain. EXL serves clients across property and casualty, life and annuities, retirement, reinsurance and broker segments. Our more than 11,000 insurance professionals include specialists, Insurance, Finance and Accounting experts, Insurance Analytics professionals and actuaries. Together they bring data and technology expertise, implementation rigor and operational excellence to differ tangible outcomes at scale across more than 600 complex processes. Our solutions are further strengthened by a suite of proprietary technology enabled platforms that offer us greater visibility into client processes. This enables us to partner with clients to solve specific business challenges that are complex.

Our market reputation and the wide range of capabilities in Insurance operations gives us the opportunity to continuously expand our business. A perfect example is in Finance and Accounting, where we see strong traction as a result of our value proposition in Insurance specific Finance and Accounting processes and technology enabled solutions. Today, we deliver Finance and Accounting services to 12 of our top 20 Insurance clients.

Our integrated digital capabilities in insurance are one of the most advanced in the industry. For example, we support end-to-end customer acquisitions for our clients by helping them design targeted digital marketing campaigns, driven digital customer journeys and couple of this with automated underwriting engines. We also improved the quality, speed and cost of business processes in areas like policy administration and claims. So technology-led BPaas solutions, advanced automation, Analytics and AI.

We are consistently recognized by industry analysts as market leaders. Firms such as Everest Group rank us in the top right hand quadrant for our operations management capabilities in Property and Casualty as well as Life and Annuities Insurance. In its most recent peak metrics support Everest Group cited on revenue growth, our geographic reach of our clients, our solutions across the insurance value chain and our digital capabilities as reasons for our leadership ranking. Overall, I remain excited about the prospects of our Insurance business.

The second area, I would like to discuss is Analytics, which now represents 36% of EXL's total revenues. Our Analytics business continues to deliver strong performance and has grown across industries and geographies. In 2018, we further strengthened our Healthcare Analytics practice through the acquisition of SCIO. In the past, we have discussed our deliberate strategy of organic and inorganic investments to build advanced capabilities across the full analytics stack from data and data management to advanced analytics and AI. This has

allowed us to build a differentiated leadership position in the Analytics market.

As our clients visage toward the adoption of Advanced Analytics and AI, embrace enterprisewide digital transformation and migrates to a modern data architecture, they are discovering the biggest impediments to their change agendas remains the absence of clean and complete data. We are able to help our clients unlock these new value pools through our enterprise data management services and data enabled solutions. These capabilities are resonating very well in the marketplace. Our enterprise data management services help clients with high quality, well governed enterprise data assets for easy consumption by the entire organisation. We combine our advanced data management methodologies, technology expertise, our understanding of our clients businesses to create new enterprise data assets, which can then be utilized to deliver targeted business outcomes. For example, we are helping a UK insurer build the enabling data assets required to support our digital omni-channel experience for end customers. By transforming their legacy customer data silos into a modern cloud-based environment, they will be able to achieve a consistent customer view across the organization.

Our data enabled solutions provide end-to-end data and Analytics capabilities as a one-stop shop. They are able to integrate external data streams with our own data and use proprietary advanced analytics algorithms to deliver superior insights. This helps our clients realize outcomes for specific use cases without having to acquire external data invest in the infrastructure to maintain it and higher analytics talent to build predictive models. For example, we are helping a US insurer deliver end-to-end customer acquisition capabilities. We leveraged proprietary and third-party data assets that include more than 6,000 risk credit and demographic vehicles, as well as combined scores on online and offline behavior. We combine analytics, marketing, technology and operations to execute cost effective, new business, cross-sell and up-sell strategies. We have successfully expanded this across clients in healthcare and financial services as well. Data will continue to sit at the center of clients digital transformation agenda and we are uniquely positioned to capitalize on this market trend.

Next I want to discuss Health Integrated. Notwithstanding the strategic rationale at the time of investment, this particular asset fails to deliver the expected results, which is why we have decided to wind down the business. Our goal is to exit the business with professionalism and in a responsible manner. We are moving expeditiously to limit the impact of the exit and refocus our energies on more strategic portions of the business.

I would now like to provide an update on the integration of SCIO, which is nearly complete. We remain excited about the client base and the leadership team we gained with the SCIO acquisition. The SCIO leadership has been fully integrated into the broader EXL team and some have taken on a larger role within our organization. We have aligned the front-end sales force of SCIO with EXL to streamline our go-to-market strategy across the entire healthcare value chain. We expect this unified go-to-market approach to generate a strong pipeline among large payers and create new cross-sell opportunities and care management. We are also on pace to integrate the full business under a common operating ecosystem. SCIO has been accretive to adjusted EPS every quarter and the strategic rationale of the acquisition is playing out well.

Finally, I will end with a few comments on our pipeline. We continue to have a favorable demand environment in operations management and analytics. In operations management, the pipeline is particularly strong among existing clients with opportunities to expand into new areas of their business and cross-sell new service lines. In Analytics, we continue to see robust demand among new prospects for our full analytics stack. We are also seeing an increased adoption of our new and advanced offerings such as our data products, data management services, and our AI and machine learning solutions. In closing, I look forward to 2019 being another successful year for EXL.

With that, I will turn the call over to Vishal.

Thank you, Rohit, and thanks everyone for joining us this morning. I would like to start by providing insight into our financial performance for the first quarter 2019, followed by updated guidance. We had a strong quarter with revenues of $239.6 million, up 17.5% year-over-year on a constant currency basis and adjusted EPS of $0.71, up 9.2% year-over-year. As you are aware, we are winding down that Health Integrated business. My discussion on the financial results encompassing revenues and expenses will be excluding the impact of Health Integrated in order to underscore the performance of the core business. I will discuss Health Integrated separately later in my remarks. All revenue growth numbers mentioned hereafter are on a constant currency basis.

We have a great start to the year with revenues of $235.7 million, excluding Health Integrated, up 19.3% year-over-year and 9.8% or -- year -- on an organic basis. This is the highest organic growth rate, since Q2 of 2016. Sequentially we grew revenues at 1.8%.

For the quarter, revenue from our Operations Management business as defined by 5 reportable segments, excluding Analytics was $148.7 million, up 5.8% year-over-year. This growth was primarily driven by client from Insurance and Finance and Accounting segments. Insurance grew 10% year-over-year. This growth was driven by ramp up of 2018 rents and expansion in existing clients. Finance and Accounting continues its the steady growth momentum of 10% year-over-year. This growth was driven by ramp-up of prior year rents and expansion in existing clients. This is the 5th consecutive quarter of double-digit growth of Finance and Accounting segment.

Analytics continued its strong performance with revenues of $87 million, up 53.1% year-over-year, including revenues of $19.1 million from SCIO Health Analytics. On an organic basis, Analytics grew 19.7% year-over-year. This broad-based growth was driven by expansion in existing client relationships resulting in strong growth in Insurance, Healthcare, Banking and Finance verticals. Sequentially Analytics grew 1.1%.

Gross margin for the quarter improved by 140 basis points year-over-year to 35.5% This margin expansion was driven by better product mix, improved productivity and utilization.

During the quarter, we increased our investment in front-end sales and digital capabilities, which increased our SG&A expenses to 20.7% of revenues. As a result, our adjusted operating margin for the quarter were flat at 14.5% year-over-year. Our adjusted EBITDA for the quarter was $41.9 million, compared to $35.5 million last year, which represents a growth of 18% year-over-year.

Our GAAP tax rate for the quarter was 22.1%. Excluding the impact of discrete item, namely an extra tax benefit recognized on stock compensation, our normalized tax rate for the quarter was 27.3%. We had $302.7 million of cash and short-term investments and borrowing of $320.6 million, resulting in net debt of $17.9 million as of March 31st.

For the quarter, we spent $10.9 million on capital expenditures and repurchased 240,000 shares for $14 million under the share repurchase program. Excluding Health Integrated, our adjusted EPS for the quarter was $0.79 versus $0.69 in Q1 of 2018, up 14.5% year-over-year.

Now I would like to discuss the performance of Health Integrated business. Health Integrated generated revenues of $3.9 million this quarter, compared to $6.4 million in Q1 2018. Health Integrated had a dilutive impact on 170 basis points on adjusted operating margin leading to an adjusted EPS loss of $0.08. In addition, we reported impairment charge of $1.2 million on fixed assets, which is excluded from adjusted EPS for this quarter.

For 2019, we now expect Health Integrated will generate revenues in the range of $10 million to $14 million, including the $3.9 million for Q1. Our previous guidance for Health Integrated was $16 million to $18 million. The negative impact of adjusted EPS due to loss of Health Integrated is expected to increase to $0.23 to $0.27, compared to a previous guidance of $0.16 to $0.20, an increase of $0.07 loss on the top end and the bottom end. This does not include any non-recurring winding down expenses, which will not have any impact on the adjusted EPS.

Structurally, the business has a higher fixed cost base on the regulatory and compliance requirement. In addition, we have normal operating cost to fulfill our contractual obligation as we transition. Therefore, the full quarter delivered services to our clients will not decrease a step with the decline in revenues as clients transition out during the year.

The revenue and adjusted EPS estimates mentioned earlier are based on current transition time lines, which may change over the course of winding down process. We are having ongoing discussions with our clients to finalize their respective timelines and once finalized, we may adjust the revenues and adjusted EPS estimates accordingly. In addition, until those plans are finalized, we are unable to estimate the winding down expenses to be incurred which will not have any impact on the adjusted EPS.

Now moving to our guidance for 2019. We are revising our revenue guidance to $969 million to $996 million from $975 million to $1 billion. This guidance represents a growth of 10% to 13% on a constant currency basis. This includes the $10 million to $14 million of Health Integrated revenues as mentioned earlier. Excluding Health Integrated there is no change in our core guidance. Our adjusted EPS guidance was revised to $2.83 to $2.98 from $2.90 to $3.05 to reflect the higher Health Integrated losses of $0.23 to $0.27 as mentioned earlier. Excluding Health Integrated, our adjusted EPS guidance of core business remains the same at $3.10 to $3.21.

In the second quarter, we expect marginal revenue growth on a constant currency basis owing to a decline in Health Integrated revenues from Q1 of 2019 to a range of $2.8 million to $3.4 million. Sequentially, we expect flattish adjusted EPS due to the impact of annual rate increases, in line by the way with our prior year trend and on adjusted EPS loss of $0.07 to $0.08 from Health Integrated.

In conclusion, the core underlying business excluding Health Integrated is performing well with revenue growth of 19.3% year-over-year and 9.8% year-over-year on an organic basis. Excluding Health Integrated, our adjusted EPS for the quarter was $0.79, up 14.5% year-over-year. We have high revenue visibility in our core business and are very positive to meet our profitability goals in 2019.

And now, Rohit and I will be happy to take questions.

Questions and Answers:

Vishal Chhibbar -- Executive Vice President and Chief Financial Officer

Thank you. (Operator Instructions) Our first question comes from Maggie Nolan with William Blair. Your line is open.

Maggie Nolan -- William Blair -- Analyst

Good morning. Question about Health Intergrated. Is there a further downside to that $10 million to $14 million contribution that you've outlined and the decrease that you've seen thus far? Was that really driven by your efforts thus far to wind down the business? I'm just trying to get a sense of how that wind down is progressing and what potential downside there could be to the guidance you've laid out?

Rohit Kapoor -- Vice Chairman and Chief Executive Officer

Thanks, Maggie. This is Rohit. So for us, the wind down of the Health Integrated business is taking place in a pretty disciplined and structured format. The revised guidance that we provided to you both on the top line and the bottom line is our best estimate at this point of time. As you can see in the comments provided by Vishal, we had $3.9 million of revenue from Health Integrated in the first quarter, and in the second quarter, we expect approximately $3.5 million of revenue from Health Integrated. So that's $7.4 million of revenue in the first half of the year. We expect this thing to wind down gradually in the second half of the year and our estimate is that we will come in at somewhere between $10 million to $14 million as we fully wind down this asset. The greater volatility is perhaps on the EPS side and there as we get to wind down the cost and we get more certainty on the costs, we will certainly provide that update to everybody as soon as we have more color on that.

Maggie Nolan -- William Blair -- Analyst

Okay. That's great detail. Thank you. And then I wanted to ask about the Analytics segment. You're obviously seeing great growth there. You saw an improvement in margins over the course of last year. And I'm wondering if that's something that we can kind of expect to see this year as well, especially as you look at the year-over-year basis, are we getting into kind of a trend where the increase in revenue and that strong growth is going to help expand the margin grow profile on a year-over-year basis?

Rohit Kapoor -- Vice Chairman and Chief Executive Officer

Yes, certainly. So in the first quarter of the year, our adjusted operating margin was 14.5% excluding Health Integrated. Our guidance basically called for our adjusted operating margin for the full year to be somewhere close to about 15% to 15.1% adjusted operating margin for the full year and therefore we would expect in the second half of the year, our adjusted operating margins to increase. And the increase is fundamentally going to come from an increased volume of revenue that we anticipate in the second half of the year and a stabilization of our efforts pertaining to Health Integrated.

Vishal Chhibbar -- Executive Vice President and Chief Financial Officer

So Maggie, also -- this is Vishal. Your point on Analytics margin improving in Q1, that is right. That is driven by better margin profile for the SCIO Analytic business and also we had better utilization and better productivity in our core Analytics business. And we do expect that will be a tailwind as we tried to -- as we get to our number for the year for adjusted operating margins on a total company level.

Maggie Nolan -- William Blair -- Analyst

Okay, thank you.

Operator

Our next question comes from Bryan Bergin with Cowen & Co. Your line is open.

Bryan Bergin -- Cowen & Co -- Analyst

Hi, good morning. Thank you. I wanted to ask on the SCIO contribution. I think, I heard $19.1 million. I'm curious if that performance was in line with your expectations, that was about $21 million last quarter, so I'm not sure, if there's any seasonality we need to be aware of that business?

Vishal Chhibbar -- Executive Vice President and Chief Financial Officer

Hi, Bryan. This is Vishal. Yeah, typically the first quarter is softer for SCIO when compared to Q4 and coming to Q1. Also bear in mind that in Q1 of last year they had adopted ASC 606, which had benefits which accrued for them in Q1, which is not a repeatable revenue benefit in this year.

Bryan Bergin -- Cowen & Co -- Analyst

Okay, thank you. And then just you talked a lot about data management solutions. Can you give us a sense of some potentially the scale of those solutions you developed? And how we should be thinking about those from a sense of profitability standpoint?

Rohit Kapoor -- Vice Chairman and Chief Executive Officer

Sure. So as you know, Bryan, the data management spec is a very large and wide space and this is a space where we're seeing a lot of activity at this point of time. The reason for the increased activity is as clients try and embrace digital transformation, as they try and leverage a lot more analytics and AI, and as they try and you know have more customized offerings for their end customers, the use of data is becoming more and more important and almost every single client and prospect in the marketplace today as of significant challenge on having data which is not clean, it is incomplete and can't connect well across the legacy enterprise platforms that these organizations have and therefore this data management capability is becoming more and more important. And what we are seeing is, we are winning deals in this area, which start off being much larger size deals than what we had done previously on just providing Analytics services around predictive modeling. So the size of the deals are much bigger. The market opportunity is a lot stronger and what's resonating is our understanding of the domain in these industry verticals and our functional knowledge of how to use and apply data and make that a lot more valuable for our clients. In terms of profitability of data management, that's not sure you know in line with the profitability of the rest of our business. As we leverage more of a global delivery platform for data management that will give us a lot more leverage in terms of the margins for data management and we've already built up a strong capability around this in India, and we hope to be able to leverage that cost structure as we move forward.

Bryan Bergin -- Cowen & Co -- Analyst

Okay, thank you.

Operator

Thank you. The next question comes from Joseph Foresi with Cantor Fitzgerald. Your line is open.

Joseph Foresi -- Cantor Fitzgerald -- Analyst

Hi. I was just curious on Health Integrated, when did you decide and why did you make the decision to completely exit the business. And maybe you could give us sort of a postmortem on what went wrong in the acquisition?

Rohit Kapoor -- Vice Chairman and Chief Executive Officer

Sure, Joe. So we put out a press release and an 8-K on April 4th, and that's the date when we took a decision to shut down the business. The reason why we decided to close down the business is, because this particular asset was not meeting our strategic rationale and the time it would take us to fix this business structurally would have been way too long and we didn't think that, that was the prudent thing to do. I guess going into the acquisition of this asset, we knew at the time of doing the diligence that there was actually a large client that was transitioning out and we were fully aware of some of the challenges that this particular asset would force for us. We did not recognize is that how much of the profitability this large client was masking and when that large client transition out. We were basically able to see the profitability of the underlying business that remained. I think that's something which we recognize and that's why we've decided to exit this business. For us the focus that we want to have going forward in healthcare is going to be a lot more applying data and analytics in the Healthcare segment and that's something which SCIO provides to us and we are going to be leveraging that capability a lot more strongly and therefore this felt much more prudent for us to be able to balance our efforts and focus on the areas that we were going to grow and strategically build upon and that's something which our clients were seeking.

Joseph Foresi -- Cantor Fitzgerald -- Analyst

Okay. And then on the margin side, it sounds like they're going to improve throughout the year and then move toward what you've given for guidance. Can you talk about what the cadence is for the next couple of quarters. Can you talk about the puts and takes. And it sounds like Health Integrated's sort of a variable on the margin side. Maybe you could talk about that as well. I just want to get a sense of how margins are going to progress throughout the year. What factors we should keep in, in mind and any particular variables that could swing it one way or another? Thanks.

Vishal Chhibbar -- Executive Vice President and Chief Financial Officer

Yeah. Hi, Joe. This is Vishal. So as I mentioned in my prepared remarks, we do expect a continued decline in the revenues for Health Integrated. As I said on the midpoint, we expect the revenues for Health Integrated to be around $12 million. We -- I already said in my prepared remarks that Q2 revenues will be between $2.8 million to $3.4 million. And we do expect that in Q3, Q4, that will have a further decline. The adjusted EPS accordingly will be in that range of $0.23 to $0.27 at the midpoint around $0.25 for the year. So -- we already had $0.08 of loss in Q1, and we do expect another $0.07 to $0.08 of loss in Q2. Excluding Health Integrated, we do expect that our core business -- this quarter, our adjusted operating margins were 14.5%, and we do expect that in the second quarter and also in the second half, we will have improved margins on adjusted level for -- our adjusted operating margins to be between the 15% to 15.2% level, so that 20 basis points of guidance we had given at the beginning of the year, we will deliver that improvement.

Joseph Foresi -- Cantor Fitzgerald -- Analyst

Thank you.

Operator

Thank you. (Operator Instructions) The next question comes from Puneet Jain with JP Morgan. Your line is open.

Puneet Jain -- JP Morgan -- Analyst

Hi. Thanks for taking my question. So -- glad to see wind down of Health Integrated. Can you also talk about, if we should consider anything in flow or earnings impact from that beyond this year?

Rohit Kapoor -- Vice Chairman and Chief Executive Officer

Hi, Puneet. So as I said in our prepared remarks, we are winding down the Health Integrated business, but they are going to do this in a professional and responsible manner. There are a number of clients that we do serve, and we want to make sure that the transition is as smooth as possible and causes as little disruption as possible for our clients. So we're going to work with our clients in an expeditious manner. I think there are a number of creative alternative arrangements that we are trying to explore with our clients and whether this includes alternated (ph) forms of servicing and supporting them from the sidelines, that's something which we're going to do. At this point of time, it is difficult for us to give a very clear and hard estimate as to when the timing of this wind down will be complete. And we think we'll be in a much better position to provide you with that input when we come back and report our Q2 numbers, and we'll be able to share with you at that point of time.

Puneet Jain -- JP Morgan -- Analyst

Got it. And can you also share outlook for travel, transportation and utilities verticals? It seems like they continue to remain weak in this quarter. Can you talk about what do you expect those verticals to do rest of the year?

Rohit Kapoor -- Vice Chairman and Chief Executive Officer

Yes. I think for us -- look the four verticals for us that are growing strongly and nicely are Insurance, the Analytics business, our Healthcare business, which we want to focus in on; our Finance and Accounting business. Those are businesses which are the larger pieces of our portfolio and where there is a tremendous amount of growth that's taking place. Our travel, transportation and logistics business as well as our utilities business are actually resonating very well in the limited areas in which we're playing out there. And what we're seeing is that there is an increased use of data analytics and some of our other service lines that we provide to these industry verticals. We've also been able to convert some of our service offerings and travel transportation and logistics toward industry solutions. So for example in travel, transportation and logistics, we provide freight billing as a service now, which is on a completely transaction-based pricing using advanced analytics and using our technology-enabled solutions. So I think those kinds of solutions are working out well, and we'd expect these to continue to perform as we go forward into this year and next year.

Puneet Jain -- JP Morgan -- Analyst

Understood. Thank you.

Operator

Thank you. Our next question comes from Vincent Colicchio with Barrington Research. Your line is open.

Vincent Colicchio -- Barrington Research -- Analyst

Yes. Rohit, the UK business was off a bit in the mix. Is there anything to see there from Brexit, or any other factor or just ebb and flow?

Rohit Kapoor -- Vice Chairman and Chief Executive Officer

Yeah. Hi, Vincent. No, as you know, our UK business contributes somewhere around 12% to 15% of our revenues. It's pretty stable for us. We're not really seeing any impact because of Brexit or any other reasons. We do see a fairly strong pipeline in UK, and we would endeavor to continue to grow and build our business in the UK. We are also seeing more traction as we mentioned earlier in Australia, and that part of the business also continues to grow. The place where we are adding on more capabilities on analytics and data management is the UK. And as that starts to gain traction, I think our presence out there will get expanded even further.

Vincent Colicchio -- Barrington Research -- Analyst

And on the Analytics side, has there been any change in your, say two-year to three-year growth expectation for the business?

Rohit Kapoor -- Vice Chairman and Chief Executive Officer

No. Our growth rate expectations for the Analytics business continues to be in the low to mid teens. And that's something which we'd expect this business to continue to grow for the next several years.

Vincent Colicchio -- Barrington Research -- Analyst

Okay, thank you.

Operator

Thank you. And I'm not showing any further questions at this time. I'd now like to turn the call back to our speakers for any closing remarks.

Rohit Kapoor -- Vice Chairman and Chief Executive Officer

Thank you, Lauren. Thanks everyone for attending our Q1 earnings call. We really appreciate you being here. As we mentioned, the key message that we'd like you to take back from this call is that our core business continues to perform well. As we manage the wind down of the Health Integrated business, we are confident that we'll be able to grow our core business in a much more significant and meaningful manner. We look forward to providing you an update on this in our Q2 call and look forward to a terrific 2019. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a wonderful day.

Duration: 41 minutes

Call participants:

Steven N. Barlow -- Vice President, Investor Relations

Rohit Kapoor -- Vice Chairman and Chief Executive Officer

Vishal Chhibbar -- Executive Vice President and Chief Financial Officer

Maggie Nolan -- William Blair -- Analyst

Bryan Bergin -- Cowen & Co -- Analyst

Joseph Foresi -- Cantor Fitzgerald -- Analyst

Puneet Jain -- JP Morgan -- Analyst

Vincent Colicchio -- Barrington Research -- Analyst

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