Business process automation leader Exela (XELA) has been expanding its digital capabilities by deploying new solutions for several small and large businesses. However, unless the company can make its core business more sustainable, improve its financials and deliver substantially more profits, will the stock be able to maintain its momentum? Let’s find out.Exela Technologies (NASDAQ:XELA) is a global leader in digital business process services and data-driven business innovations. The company operates through Information & Transaction Processing Solutions (ITPS), Healthcare Solutions (HS), and Legal & Loss Prevention Services (LLPS) segments. Over the past year, the stock has surged 59.3%, driven primarily by increased adoption of the company’s Digital Assets Group solutions by small and medium businesses (SMBs) amid remote working trends. XELA’s newly introduced Robotic Process Automation (RPA) platform, as well as its Digital Mailroom platform in the U.K., should help the company drive continued operational and business improvement.
However, XELA’s stock is down 14.9% over the past three months. Also, the stock is currently trading 76% below its 52-week high of $7.82, which it hit on March 10. Although the company’s gross margin and adjusted EBITDA margin improved year-over-year in its last reported quarter, it suffered a substantial net loss. Furthermore, XELA’s Information and Transaction Processing Solutions segment revenue declined 18.4% year-over-year to $231.9 million in the first quarter of 2021.
While the accelerating demand for its digital solutions and cloud hosted services could be a silver lining for the stock, XELA’s unstable financials and weak profitability could lead to bearish investor sentiment.