WNS Announces Fiscal 2019 Second Quarter Earnings, Revises Full Year Guidance

Business Wire India

WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of global Business Process Management (BPM) services, today announced results for the fiscal 2019 second quarter ended September 30, 2018.  

  Reconciliations of the non-GAAP financial measures discussed below to our GAAP operating results are included at the end of this release. See also “About non-GAAP Financial Measures.”   Revenue in the second quarter was $199.1 million, representing a 6.8% increase versus Q2 of last year and a 0.3% decrease from the previous quarter. Revenue less repair payments* in the second quarter was $195.5 million, an increase of 7.2% year-over-year and a 0.3% decline sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal second quarter grew 11.0% versus Q2 of last year and 3.4% sequentially. Year-over-year, fiscal Q2 revenue improvement was driven by healthy organic growth across key verticals, services, and geographies, which more than offset headwinds from currency movements and hedging losses. Sequentially, organic revenue growth was more than offset by currency movements and hedging losses.   Operating margin in the second quarter was 14.5%, as compared to 10.8% in Q2 of last year and 12.6% in the previous quarter. On a year-over-year basis, margin improvement was the result of increased productivity, lower share-based compensation expense, operating leverage on higher volumes, and currency movements net of hedging. These benefits more than offset the impact of our annual wage increases and lower seat utilization. Sequentially, margins improved due to increased productivity, favorable currency movements net of hedging, and operating leverage on higher volume. These benefits more than offset the impact of our annual wage increases.   Second quarter adjusted operating margin* was 21.0%, versus 18.5% in Q2 of last year and 18.8% last quarter. On a year-over-year basis, adjusted operating margin* improved due to increased productivity, operating leverage on higher volumes, and currency movements net of hedging. These benefits were partially offset by the impact of our annual wage increases and lower seat utilization. Sequentially, adjusted operating margin* improved due to increased productivity, favorable currency movements net of hedging, and operating leverage on higher volume. These benefits more than offset the impact of our annual wage increases.   Profit in the fiscal second quarter was $24.8 million, as compared to $18.9 million in Q2 of last year and $22.4 million in the previous quarter. Adjusted net income (ANI)* in Q2 was $33.7 million, up $6.0 million as compared to Q2 of last year and up $2.9 million from the previous quarter.    From a balance sheet perspective, WNS ended Q2 with $158.1 million in cash and investments and $75.3 million of debt. In the second quarter, the company generated $30.6 million in cash from operations, and incurred $10.7 million in capital expenditures. In the second quarter, WNS repurchased 649,700 ADSs at an average price of $50.73 per ADS. Share repurchases impacted Q2 cash by $33.3 million, and the company also made scheduled debt payments of $14.1 million. Days sales outstanding were 35 days, as compared to 30 days reported in Q2 of last year and 31 days in the previous quarter.   “WNS’s second quarter financial performance continued to demonstrate our solid business momentum and differentiated positioning in the BPM marketplace. In the fiscal second quarter, the company grew revenue less repair payments* 7% year-over-year, or 11% on an organic, constant currency* basis. We were also able to expand our margins during the quarter and deliver a 23% increase in adjusted diluted earnings* per ADS versus the same quarter of last year,” said Keshav Murugesh, WNS’s Chief Executive Officer. “WNS remains committed to helping our clients outperform in their respective industries through co-creation, and to delivering enhanced value to all our key stakeholders.”    

WNS is updating guidance for the fiscal year ending March 31, 2019 as follows:

• Revenue less repair payments* is expected to be between $775 million and $801 million, up from $741.0 million in fiscal 2018. This assumes an average GBP to USD exchange rate of 1.31 for the remainder of fiscal 2019.
• ANI* is expected to range between $127 million and $135 million versus $118.4 million in fiscal 2018. This assumes an average USD to INR exchange rate of 74.0 for the remainder of fiscal 2019.
• Based on a diluted share count of 52.4 million shares, the company expects adjusted diluted earnings* per ADS to be in the range of $2.42 to $2.58 versus $2.24 in fiscal 2018.

“The company has updated our forecast for fiscal 2019 based on current visibility levels and exchange rates,” said Sanjay Puria, WNS’s Chief Financial Officer. “Our guidance for the year reflects growth in revenue less repair payments* of 5% to 8%, or 8% to 12% on a constant currency* basis. We currently have 98% visibility to the midpoint of the range.”

WNS will host a conference call on October 25, 2018 at 8:00 am (Eastern) to discuss the company's quarterly results.  To participate in the call, please use the following details: +1-888-656-9018; international dial-in +1-503-343-6030; participant passcode 3582659. A replay will be available for one week following the call at +1-855-859-2056; international dial-in +1-404-537-3406; passcode 3582659, as well as on the WNS website, www.wns.com, beginning two hours after the end of the call.

WNS (Holdings) Limited (NYSE: WNS), is a leading global business process management company. WNS offers business value to 350+ global clients by combining operational excellence with deep domain expertise in key industry verticals including Travel, Insurance, Banking and Financial Services, Manufacturing, Retail and Consumer Packaged Goods, Shipping and Logistics, Healthcare and Utilities. WNS delivers an entire spectrum of business process management services such as finance and accounting, customer interaction services, technology solutions, research and analytics and industry specific back office and front office processes. As of September 30, 2018, WNS had 38,516 professionals across 57 delivery centers worldwide including China, Costa Rica, India, Philippines, Poland, Romania, South Africa, Sri Lanka, Turkey, United Kingdom and the United States. For more information, visit www.wns.com. 

This release contains forward-looking statements, as defined in the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations and assumptions about our Company and our industry. Generally, these forward-looking statements may be identified by the use of terminology such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “seek,” “should” and similar expressions. These statements include, among other things, the discussions of our strategic initiatives and the expected resulting benefits, our growth opportunities, industry environment, expectations concerning our future financial performance and growth potential, including our fiscal 2019 guidance, future profitability, and expected foreign currency exchange rates. Forward-looking statements inherently involve 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 worldwide economic and business conditions; political or economic instability in the jurisdictions where we have operations; our dependence on a limited number of clients in a limited number of industries; regulatory, legislative and judicial developments; increasing competition in the BPM industry; technological innovation; telecommunications or technology disruptions; our ability to attract and retain clients; our liability arising from fraud or unauthorized disclosure of sensitive or confidential client and customer data; negative public reaction in the US or the UK to offshore outsourcing; our ability to expand our business or effectively manage growth; our ability to hire and retain enough sufficiently trained employees to support our operations; the effects of our different pricing strategies or those of our competitors; our ability to successfully consummate, integrate and achieve accretive benefits from our strategic acquisitions, and to successfully grow our revenue and expand our service offerings and market share; and future regulatory actions and conditions in our operating areas. These and other factors are more fully discussed in our most recent annual report on Form 20-F and subsequent reports on Form 6-K filed with or furnished to the US Securities and Exchange Commission (SEC) which are available at www.sec.gov. We caution you not to place undue reliance on any forward-looking statements. Except as required by law, we do not undertake to update any forward-looking statements to reflect future events or circumstances.   References to “$” and “USD” refer to the United States dollars, the legal currency of the United States; references to “GBP” refer to the British pound, the legal currency of Britain; and references to “INR” refer to Indian Rupees, the legal currency of India. References to GAAP refers to International Financial Reporting Standards, as issued by the International Accounting Standards Board (IFRS).  

Source: Businesswire