Jim Cramer’s Fintech Favorite: Why ExlService (EXLS) is a Solid Bet Now

Jim Cramer, the outspoken host of CNBC’s Mad Money, rarely minces words. His recent endorsement of ExlService Holdings (NASDAQ: EXLS) in May 2025 underscores a growing confidence in the fintech sector—and a stock he believes is poised to deliver. “I actually like it… It’s one of the fintech stocks that’s been proving to be very solid,” Cramer declared, singling out EXLS as a standout amid a sea of mixed signals in the market.

The Case for EXLS: Strong Earnings and Cramer’s Logic

ExlService’s Q1 2025 earnings, reported on April 29, 2025, were a key catalyst for Cramer’s praise. The company beat expectations with revenue growth of 14% year-over-year and adjusted EBITDA margins expanding to 22.5%, signaling operational efficiency. These metrics align with Cramer’s focus on companies that deliver consistent execution, even in volatile markets.

Yet, the stock dipped 4.5% on the day of Cramer’s endorsement, closing at $46.31. This divergence between fundamentals and price action is critical. Cramer often advocates buying stocks when they’re temporarily undervalued—a strategy he calls “picking up diamonds in the rough.” The drop, likely driven by broader market jitters or profit-taking, presents an opportunity to accumulate shares at a discount.

Context Matters: EXLS vs. Cramer’s Contrasts

Cramer’s May 2025 segment contrasted EXLS with companies like Sunrun (RUN) and Tempus AI (TEM), which he viewed skeptically. While those stocks face regulatory hurdles or valuation concerns, EXLS benefits from a client-centric model and a diversified revenue stream. Over 60% of its revenue comes from fintech services, including compliance, risk management, and data analytics—areas where demand remains robust.

The Fintech Tailwind

Fintech adoption is accelerating globally, with the sector projected to grow at a 12% CAGR through 2028. EXLS’s focus on niche fintech solutions, such as AI-driven risk assessment tools for banks, positions it to capture this upside. Notably, the company’s Q1 2025 gross profit margins hit 45%, outpacing fintech peers like FIS (FIS) and ACI Worldwide (ACIW), which averaged 38%.

A Contrarian Play with Catalysts

Cramer’s endorsement isn’t just about earnings—it’s about momentum. EXLS has 8 consecutive quarters of revenue growth, and its backlog of client contracts exceeds $2.1 billion. This visibility reduces execution risk, a key concern for investors in volatile markets.

Critics might cite the stock’s post-endorsement dip as skepticism, but history shows Cramer’s picks often rebound. For instance, after his 2023 call on Snowflake (SNOW), the stock rallied 22% in the following quarter despite initial volatility.

Risks and Considerations

No investment is risk-free. EXLS faces macroeconomic headwinds, including potential interest rate hikes that could slow fintech spending. Additionally, competition in AI-driven solutions is intensifying. However, EXLS’s long-term client retention rate of 92% suggests it’s building durable partnerships, a moat against competitors.

Conclusion: A Fintech Gem at a Bargain Price

ExlService (EXLS) checks all the boxes for Cramer’s “solid stock” criteria: strong earnings, a niche advantage, and undervalued pricing post-endorsement. With a forward P/E ratio of 22x—lower than the fintech sector’s average of 28x—and a 5-year revenue CAGR of 18%, EXLS offers growth at a reasonable price.

Investors should monitor two catalysts:
1. Q2 2025 earnings (due July 2025), which could further validate its growth trajectory.
2. Sector momentum: If fintech adoption accelerates, EXLS’s backlog could translate into sustained revenue growth.

In Cramer’s own words, “This is the kind of stock you want to own when the market stabilizes.” With EXLS, the fundamentals are there—now it’s time to let the price catch up.

Final Take: EXLS is a fintech leader with execution to prove it. The dip after Cramer’s praise is a buying opportunity—one he’d likely urge investors to seize.