WNS Announces Fiscal 2024 Third Quarter Earnings, Revises Full Year Guidance
18.01.2024 - 12:35:57
Business Wire India
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 third quarter was $326.2 million, representing a 6.3% increase versus Q3 of last year and a 2.3% decrease from the previous quarter. Revenue less repair payments* in the third quarter was $315.9 million, an increase of 7.8% year-over-year and 2.8% decline sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal third quarter was up 5.9% versus Q3 of last year and down 2.3% sequentially. Year-over-year, Q3 revenue improved as a result of new client additions, the expansion of existing relationships, fiscal 2023 acquisitions, and favorable currency movements. These benefits were partially offset by the ramp-down of a large HealthCare process, the offshore delivery transition of a large internet client, and volume reductions with certain clients. Sequentially, headwinds from the offshore delivery transition of a large internet client, volume reductions with certain clients, and unfavorable currency movements more than offset growth driven by demand for cost-reduction focused initiatives.
Profit in the fiscal third quarter was $39.6 million, as compared to $34.7 million in Q3 of last year and $57.8 million in the previous quarter. Year-over-year, profit increased as a result of revenue growth, improved productivity, a one-time tax benefit of $9.5 million resulting from the reversal of a deferred tax liability on intangibles, and favorable impacts from currency movements. These benefits were partially offset by increases in wages, return-to-office costs, amortization of intangibles, and net interest expense. Sequentially, Q3 profit decreased as a result of Q2 benefits received from the reversal of a provision for contingent acquisition consideration, higher SG&A expenses driven by Q2 provision reversals for performance incentives and bad debt, and lower revenue. These headwinds were partially offset by the $9.5 million one-time tax benefit and lower net interest expense.
Adjusted net income (ANI)* in Q3 was $58.2 million, as compared to $50.6 million in Q3 of last year and $54.1 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 Q3 with $260.4 million in cash and investments and $177.4 million in debt. In Q3, the company generated $73.7 million in cash from operations, incurred $10.3 million in capital expenditures, and repaid $20.2 million in debt. WNS also repurchased 1,000,000 ADSs at an average price of $58.13, impacting Q3 cash by $58.1 million. Third quarter days sales outstanding were 35 days, as compared to 34 days reported in Q3 of last year and 35 days in the previous quarter.
“In the fiscal third quarter, WNS’ grew our year-over-year constant currency revenue less repair payments* by 6% and expanded adjusted diluted earnings per share* by 18%,” said Keshav Murugesh, WNS’ Chief Executive Officer. “Despite the weak macro, the company continues to expect solid financial performance in fiscal 2024 with the midpoint of our guidance reflecting double-digit top line* growth and industry-leading adjusted operating margin*. WNS is aggressively investing for the future and is making steady progress in our ability to design, build, and run solutions leveraging cutting-edge technologies including AI and Generative AI. We remain committed to driving strong operational and financial execution, and generating long-term, sustainable business value for all of our stakeholders.”
WNS Adds New York, London Global Headquarters
WNS formally announced today that the company has added global headquarters locations in both New York and London. The addition of these headquarters to the Mumbai location supports the company’s decentralization of senior leadership and decision-making as highlighted by our organizational structure change announced in April, 2023. These new headquarters also reflect the evolution of the company over the past 25 years including the geographic diversification of the company’s revenue mix and delivery footprint.
Fiscal 2024 Guidance
WNS is updating guidance for the fiscal year ending March 31, 2024, as follows:
WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, amounts in millions, except share and per share data)
WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of global Business Process Management (BPM) solutions, today announced results for the fiscal 2024 third quarter ended December 31, 2023.
| Highlights – Fiscal 2024 Third Quarter: |
|
GAAP Financials
Non-GAAP Financial Measures*
Other Metrics
|
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 third quarter was $326.2 million, representing a 6.3% increase versus Q3 of last year and a 2.3% decrease from the previous quarter. Revenue less repair payments* in the third quarter was $315.9 million, an increase of 7.8% year-over-year and 2.8% decline sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal third quarter was up 5.9% versus Q3 of last year and down 2.3% sequentially. Year-over-year, Q3 revenue improved as a result of new client additions, the expansion of existing relationships, fiscal 2023 acquisitions, and favorable currency movements. These benefits were partially offset by the ramp-down of a large HealthCare process, the offshore delivery transition of a large internet client, and volume reductions with certain clients. Sequentially, headwinds from the offshore delivery transition of a large internet client, volume reductions with certain clients, and unfavorable currency movements more than offset growth driven by demand for cost-reduction focused initiatives.
Profit in the fiscal third quarter was $39.6 million, as compared to $34.7 million in Q3 of last year and $57.8 million in the previous quarter. Year-over-year, profit increased as a result of revenue growth, improved productivity, a one-time tax benefit of $9.5 million resulting from the reversal of a deferred tax liability on intangibles, and favorable impacts from currency movements. These benefits were partially offset by increases in wages, return-to-office costs, amortization of intangibles, and net interest expense. Sequentially, Q3 profit decreased as a result of Q2 benefits received from the reversal of a provision for contingent acquisition consideration, higher SG&A expenses driven by Q2 provision reversals for performance incentives and bad debt, and lower revenue. These headwinds were partially offset by the $9.5 million one-time tax benefit and lower net interest expense.
Adjusted net income (ANI)* in Q3 was $58.2 million, as compared to $50.6 million in Q3 of last year and $54.1 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 Q3 with $260.4 million in cash and investments and $177.4 million in debt. In Q3, the company generated $73.7 million in cash from operations, incurred $10.3 million in capital expenditures, and repaid $20.2 million in debt. WNS also repurchased 1,000,000 ADSs at an average price of $58.13, impacting Q3 cash by $58.1 million. Third quarter days sales outstanding were 35 days, as compared to 34 days reported in Q3 of last year and 35 days in the previous quarter.
“In the fiscal third quarter, WNS’ grew our year-over-year constant currency revenue less repair payments* by 6% and expanded adjusted diluted earnings per share* by 18%,” said Keshav Murugesh, WNS’ Chief Executive Officer. “Despite the weak macro, the company continues to expect solid financial performance in fiscal 2024 with the midpoint of our guidance reflecting double-digit top line* growth and industry-leading adjusted operating margin*. WNS is aggressively investing for the future and is making steady progress in our ability to design, build, and run solutions leveraging cutting-edge technologies including AI and Generative AI. We remain committed to driving strong operational and financial execution, and generating long-term, sustainable business value for all of our stakeholders.”
WNS Adds New York, London Global Headquarters
WNS formally announced today that the company has added global headquarters locations in both New York and London. The addition of these headquarters to the Mumbai location supports the company’s decentralization of senior leadership and decision-making as highlighted by our organizational structure change announced in April, 2023. These new headquarters also reflect the evolution of the company over the past 25 years including the geographic diversification of the company’s revenue mix and delivery footprint.
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 $1,270 million and $1,292 million, up from $1,162.0 million in fiscal 2023. Guidance assumes an average GBP to USD exchange rate of 1.27 for the remainder of fiscal 2024.
- ANI* is expected to range between $212 million and $218 million versus $196.1 million in fiscal 2023. Guidance assumes an average USD to INR exchange rate of 83.3 for the remainder of fiscal 2024.
- Based on a diluted share count of 49.6 million shares, the company expects fiscal 2024 adjusted diluted earnings per share* to be in the range of $4.27 to $4.39 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 9% to 11% on both a reported* and constant currency* basis. The guidance includes expected healthy demand for core process automation and cost-reduction based solutions, and ongoing softness in transaction volumes from certain clients and discretionary project-based revenues. We currently have over 99% visibility to the midpoint of the revenue range. For the year, we continue to expect capital expenditures of up to $60 million.”
WNS Board Approves ADS to Share Exchange, Reporting Change
The WNS Board has granted approval for the company to move forward with plans to terminate its ADS program, exchange outstanding ADSs for its ordinary shares, and apply for the ordinary shares to be listed on the NYSE. WNS intends to complete this exercise prior to the end of fiscal Q1’25. In addition, the Board has granted approval for the company to shift from reporting on the forms available to foreign private issuers (FPIs) and filing our financial statements with the SEC under IFRS to voluntarily file on US domestic issuer forms and file our financial statements under US GAAP. WNS intends to complete this change prior to the end of fiscal Q2’25. The company believes these actions are in the long-term best interest of all WNS stakeholders and will improve the company’s ability to compete for capital, reduce share price volatility, and enhance governance.
* See “About Non-GAAP Financial Measures” and the reconciliations of the historical non-GAAP financial measures to our GAAP operating results at the end of this release.
Conference Call
WNS will host a conference call on January 18, 2024, 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 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 600 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 December 31, 2023, WNS had 60,652 professionals across 66 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, estimated capital expenditures, expected foreign currency exchange rates, and our plans to exchange outstanding ADSs for our ordinary shares and reporting change discussed above and the expected resulting benefits. 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).
WNS Board Approves ADS to Share Exchange, Reporting Change
The WNS Board has granted approval for the company to move forward with plans to terminate its ADS program, exchange outstanding ADSs for its ordinary shares, and apply for the ordinary shares to be listed on the NYSE. WNS intends to complete this exercise prior to the end of fiscal Q1’25. In addition, the Board has granted approval for the company to shift from reporting on the forms available to foreign private issuers (FPIs) and filing our financial statements with the SEC under IFRS to voluntarily file on US domestic issuer forms and file our financial statements under US GAAP. WNS intends to complete this change prior to the end of fiscal Q2’25. The company believes these actions are in the long-term best interest of all WNS stakeholders and will improve the company’s ability to compete for capital, reduce share price volatility, and enhance governance.
* See “About Non-GAAP Financial Measures” and the reconciliations of the historical non-GAAP financial measures to our GAAP operating results at the end of this release.
Conference Call
WNS will host a conference call on January 18, 2024, 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 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 600 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 December 31, 2023, WNS had 60,652 professionals across 66 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, estimated capital expenditures, expected foreign currency exchange rates, and our plans to exchange outstanding ADSs for our ordinary shares and reporting change discussed above and the expected resulting benefits. 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).
WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, amounts in millions, except share and per share data)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, amounts in millions, except share and per share data)
| Three months ended | |||||||||||||||
| Dec 31, 2023 |
Dec 31, 2022 |
Sep 30, 2023 |
|||||||||||||
| Revenue | $ | 326.2 | $ | 306.9 | $ | 333.9 | |||||||||
| Cost of revenue | 208.9 | 198.1 | 210.2 | ||||||||||||
| Gross profit | 117.3 | 108.9 | 123.7 | ||||||||||||
| Operating expenses: | |||||||||||||||
|
Selling and marketing expenses
|
20.3 | 16.2 | 18.8 | ||||||||||||
|
General and administrative expenses
|
45.6 | 42.2 | 46.5 | ||||||||||||
|
Foreign exchange (gain) / loss, net
|
0.5 | 0.1 | (0.0 | ) | |||||||||||
|
Amortization of intangible assets
|
8.6 | 6.5 | 8.7 | ||||||||||||
| Operating profit | 42.3 | 43.9 | 49.7 | ||||||||||||
| Other income, net | (4.1 | ) | (3.6 | ) | (25.6 | ) | |||||||||
| Finance expense | 7.1 | 5.0 | 7.5 | ||||||||||||
| Profit before income taxes | 39.3 | 42.6 | 67.9 | ||||||||||||
| Income tax expense | (0.4 | ) | 7.9 | 10.0 | |||||||||||
| Profit after tax | $ | 39.6 | $ | 34.7 | $ | 57.8 | |||||||||
| Earnings per share of ordinary share | |||||||||||||||
| Basic | $ | 0.84 | $ | 0.72 | $ | 1.22 | |||||||||
| Diluted | $ | 0.81 | $ | 0.69 | $ | 1.16 | |||||||||
WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, amounts in millions, except share and per share data)
| As at Dec 31, 2023 | As at Mar 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
|
Cash and cash equivalents
|
$ | 94.6 | $ | 127.9 | ||||
|
Investments
|
165.5 | 101.1 | ||||||
|
Trade receivables, net
|
127.8 | 113.1 | ||||||
|
Unbilled revenue
|
104.5 | 99.8 | ||||||
|
Funds held for clients
|
7.1 | 9.4 | ||||||
|
Derivative assets
|
9.0 | 6.4 | ||||||
|
Contract assets
|
15.0 | 12.6 | ||||||
