WNS Announces Fiscal 2024 Second Quarter Earnings, Revises Full Year Guidance

WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of global Business Process Management (BPM) solutions, today announced results for the fiscal 2024 second quarter ended September 30, 2023.

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 $333.9 million, representing an 8.7% increase versus Q2 of last year and a 2.3% increase from the previous quarter. Revenue less repair payments* in the second quarter was $325.0 million, an increase of 12.3% year-over-year and 2.4% sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal second quarter was up 11.0% versus Q2 of last year and 2.1% sequentially. Year-over-year, fiscal Q2 revenue improved as a result of new client additions, the expansion of existing relationships, fiscal 2023 acquisitions, and favorable currency movements which more than offset the ramp-down of a large HealthCare process and volume reductions with certain clients. Sequentially, growth driven by broad-based revenue momentum and favorable currency movements was partially offset by volume reductions with certain clients.

Profit in the fiscal second quarter was $57.8 million, as compared to $33.2 million in Q2 of last year and $30.1 million in the previous quarter. Year-over-year, profit increased as a result of the reversal of a provision for contingent acquisition consideration, revenue growth, improved productivity, lower SG&A expenses driven by provision reversals for performance incentives and bad debt, and favorable impacts from currency movements. These benefits were partially offset by increases in wages, return-to-office costs, amortization of intangibles, net interest expense, and the effective tax rate. Sequentially, Q2 profit increased as a result of the reversal of a provision for contingent acquisition consideration, revenue growth, lower share-based compensation expense, improved productivity, lower SG&A expenses driven by provision reversals for performance incentives and bad debt, and favorable impacts from currency movements. These benefits more than offset headwinds from increases in wages, return-to-office costs, and net interest expense including a Q1 benefit from interest income on tax refunds.

Adjusted net income (ANI)* in Q2 was $54.1 million, as compared to $47.2 million in Q2 of last year and $50.6 million in the previous quarter. Explanations for the ANI* movements on a year-over-year and sequential basis are the same as described for GAAP profit above with the exception of amortization of intangible expenses, share-based compensation expense, acquisition-related items, and associated tax impacts which are excluded from ANI*.

From a balance sheet perspective, WNS ended Q2 with $248.1 million in cash and investments and $164.1 million in debt. In Q2, the company generated $68.5 million in cash from operations, incurred $15.7 million in capital expenditures, and repaid $38.0 million in debt. Second quarter days sales outstanding were 35 days, as compared to 30 days reported in Q2 of last year and 34 days in the previous quarter.

“Despite the challenging macro environment, WNS delivered healthy financial results in the fiscal second quarter, growing year-over-year constant currency revenue less repair payments* by 11% and adjusted diluted earnings per share* by 16%,” said Keshav Murugesh, WNS’ Chief Executive Officer. “While we anticipate increased top line pressure in the second half of the fiscal year, the midpoint of our guidance continues to reflect double-digit top line growth and industry-leading adjusted operating margin* for fiscal 2024. In addition, we are making steady progress on our AI and Generative AI initiatives and continue to believe that these technologies represent more opportunity than risk to our business. WNS remains focused on investing for the future, driving strong operational and financial execution, and delivering long-term, sustainable business value for our stakeholders.”

Fiscal 2024 Guidance

WNS is updating guidance for the fiscal year ending March 31, 2024, as follows:

• Revenue less repair payments* is expected to be between $1,254 million and $1,300 million, up from $1,162.0 million in fiscal 2023. Guidance assumes an average GBP to USD exchange rate of 1.23 for the remainder of fiscal 2024.
• ANI* is expected to range between $201 million and $211 million versus $196.1 million in fiscal 2023. Guidance assumes an average USD to INR exchange rate of 83.0 for the remainder of fiscal 2024.
• Based on a diluted share count of 49.8 million shares, the company expects fiscal 2024 adjusted diluted earnings per share* to be in the range of $4.04 to $4.24 versus $3.86 in fiscal 2023.

“The company has updated our forecast for fiscal 2024 based on current visibility levels and exchange rates,” said Sanjay Puria, WNS’ Chief Financial Officer. “Our guidance for the full year reflects growth in revenue less repair payments* of 8% to 12% on both a reported and constant currency* basis. The revised guidance reflects reduced volume commitments from certain clients, lower project revenues, and a delay in the ramp of our large insurance captive. We currently have 97% visibility to the midpoint of the revenue range. For the year, we expect capital expenditures of up to $60 million.”

Conference Call

WNS will host a conference call on October 19, 2023, at 8:00 am (Eastern) to discuss the company's quarterly results. To access the call in “listen-only” mode, please join live via the company’s investor relations website at ir.wns.com. For call participants, please register using this online form to receive your dial-in number and unique PIN/passcode which can be used to access the call. A replay of the webcast will be archived on the company website at ir.wns.com.

About WNS

WNS (Holdings) Limited (NYSE: WNS) is a leading Business Process Management (BPM) company. WNS combines deep industry knowledge with technology, analytics, and process expertise to co-create innovative, digitally led transformational solutions with over 400 clients across various industries. WNS delivers an entire spectrum of BPM solutions including industry-specific offerings, customer experience services, finance and accounting, human resources, procurement, and research and analytics to re-imagine the digital future of businesses. As of September 30, 2023, WNS had 59,873 professionals across 67 delivery centers worldwide including facilities in Canada, China, Costa Rica, India, Malaysia, the Philippines, Poland, Romania, South Africa, Sri Lanka, Turkey, the United Kingdom, and the United States. For more information, visit www.wns.com.

Safe Harbor Statement

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, expressed or implied forward-looking statements relating to discussions of our strategic initiatives and the expected resulting benefits, our growth opportunities, industry environment, our expectations concerning our future financial performance and growth potential, including our fiscal 2024 guidance, future profitability, our expectations regarding the benefits from our acquisitions of Vuram, OptiBuy, and The Smart Cube (including their impacts on our results of operations), estimated capital expenditures, 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, our dependence on a limited number of clients in a limited number of industries; the impact of the ongoing COVID-19 pandemic on our and our clients’ business, financial condition, results of operations and cash flows; currency fluctuations; political or economic instability in the jurisdictions where we have operations; regulatory, legislative and judicial developments; increasing competition in the BPM industry; technological innovation; our liability arising from fraud or unauthorized disclosure of sensitive or confidential client and customer data; telecommunications or technology disruptions; our ability to attract and retain clients; negative public reaction in the US or the UK to offshore outsourcing; our ability to collect our receivables from, or bill our unbilled services to our clients; 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 (including Vuram, OptiBuy, and The Smart Cube), and to successfully grow our revenue and expand our service offerings and market share; future regulatory actions and conditions in our operating areas; and our ability to manage the impact of climate change on our business. 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).