WNS Announces Fiscal 2025 Second Quarter Earnings, Revises Full Year Guidance
17.10.2024 - 12:35:45
Business Wire IndiaWNS (Holdings) Limited (WNS) (NYSE: WNS), a digital-led business transformation and services partner, today announced results for the fiscal 2025 second quarter ended September 30, 2024.
As announced previously, beginning the first quarter of fiscal 2025, WNS transitioned from reporting to the SEC on the forms available to foreign private issuers and preparing its financial statements in accordance with IFRS to voluntarily reporting on US domestic issuer forms and preparing its financial statements in accordance with US GAAP. On July 9, 2024, WNS furnished a report on Form 8-K with the SEC containing a supplementary financial information package comprising its unaudited quarterly financial results for each of the quarters in fiscal 2024 and for full year fiscal 2024 and 2023 prepared in accordance with US GAAP. The supplementary financial information package sets forth the key impact on our quarterly financial statements for each of the quarters in fiscal 2024 and for full year fiscal 2024 and 2023 as a result of our transition to US GAAP. The comparative financial information in this release for the previous fiscal periods are also under US GAAP.
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 $322.6 million, representing a 3.4% decrease versus Q2 of last year and a decrease of 0.2% from the previous quarter. Revenue less repair payments* in the second quarter was $310.7 million, decreasing 4.4% year-over-year and 0.6% sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal second quarter was down 5.2% versus Q2 of last year and down 1.5% sequentially. Year-over-year, Q2 revenue reductions were driven by the loss of a large Healthcare client, lower volumes in the online travel segment, the offshore delivery transition of a large internet customer, and reductions in discretionary project work. These headwinds were partially offset by new client additions, the expansion of existing relationships, and favorable currency movements. Sequentially, the large Healthcare client loss, online travel volume reductions, and ongoing project weakness more than offset stable demand for business transformation and cost-reduction-focused initiatives and favorable currency movements.
Profit in the fiscal second quarter was $41.8 million, as compared to $59.4 million in Q2 of last year and $28.9 million in the previous quarter. Year-over-year, profit decreased as a result of expense provision reversals reported in Q2 of last year, including contingent consideration relating to our acquisition of Vuram and SG&A expenses for performance incentives and bad debt. Profit also reduced year-over-year as a result of lower revenue, reduced operating leverage, increased investments in sales and infrastructure, and an increase in net interest expense. These headwinds were partially offset by reductions in share-based compensation expense and amortization of intangibles, a reversal of contingent consideration for our acquisition of OptiBuy, a one-time tax benefit primarily from the reversal of a deferred tax liability on intangibles, and favorable currency movements. Sequentially, Q2 profit increased as a result of the one-time tax benefit, the reversal of contingent consideration for our OptiBuy acquisition, lower share-based compensation expense, and favorable currency movements. These benefits were partially offset by lower revenue and an increase in net interest expense.
Adjusted net income (ANI)* in Q2 was $51.5 million, as compared to $54.4 million in Q2 of last year and $44.0 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, impairment of intangible assets, costs associated with ADS program termination and transition to voluntarily reporting on US domestic issuer forms, acquisition-related items, and associated tax impacts which are excluded from ANI*.
From a balance sheet perspective, WNS ended Q2 with $221.5 million in cash and investments and $262.8 million in debt. In the quarter, the company generated $43.6 million in cash from operations, incurred $12.7 million in capital expenditures, and repaid $43.0 million in debt. WNS also repurchased 1,156,269 ordinary shares at an average price of $56.61, impacting Q2 cash by $71.7 million. Second quarter days sales outstanding were 38 days, as compared to 35 days reported in Q2 of last year and 36 days in the previous quarter.
“Second quarter revenue and margin were largely in line with company expectations, while EPS came in above forecast as a result of a one-time tax benefit. Demand for digitally-led business transformation and cost reduction remains robust, while challenges persist in our online travel volumes and project-based revenues,” said Keshav Murugesh, WNS’ Chief Executive Officer. “While our large deal pipeline continues to build to record levels, the conversion of these opportunities and associated revenue ramps remain less visible. As a result, we have removed the revenue contribution from large deals from our fiscal 2025 guidance. We are focused on closing these sizeable opportunities in the second half of fiscal 2025 to help position the company for revenue acceleration in fiscal 2026. In addition, we remain committed to investing ahead of the curve in domain expertise, data and analytics, and technology-enabled offerings leveraging AI and GenAI to ensure our ability to deliver long-term sustainable value to our stakeholders.”
Fiscal 2025 Guidance
WNS is updating guidance for the fiscal year ending March 31, 2025, as follows:
“The company has updated our forecast for fiscal 2025 based on current visibility levels and exchange rates,” said Arijit Sen, WNS’ Chief Financial Officer. “Our guidance for the full year reflects revenue less repair payments* of -3% to +1% on a reported* basis, and -4% to 0% on a constant currency* basis as compared to fiscal 2024. For the year, we continue to expect capital expenditures of up to $65 million.”
* 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 October 17, 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 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 digital-led business transformation and services partner. WNS combines deep domain expertise with talent, technology, and AI to co-create innovative solutions for over 600 clients across various industries. WNS delivers an entire spectrum of 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, 2024, WNS had 62,951 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 2025 guidance, 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; 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, and to successfully grow our revenue and expand our service offerings and market share; future regulatory actions and conditions in our operating areas; our ability to manage the impact of climate change on our business; and volatility of our share price. 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 and Form 8-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 or US GAAP refer to United States generally accepted accounting principles. References to IFRS refer to International Financial Reporting Standards, as issued by the International Accounting Standards Board.
GAAP Financials
Non-GAAP Financial Measures*
Other Metrics
|
As announced previously, beginning the first quarter of fiscal 2025, WNS transitioned from reporting to the SEC on the forms available to foreign private issuers and preparing its financial statements in accordance with IFRS to voluntarily reporting on US domestic issuer forms and preparing its financial statements in accordance with US GAAP. On July 9, 2024, WNS furnished a report on Form 8-K with the SEC containing a supplementary financial information package comprising its unaudited quarterly financial results for each of the quarters in fiscal 2024 and for full year fiscal 2024 and 2023 prepared in accordance with US GAAP. The supplementary financial information package sets forth the key impact on our quarterly financial statements for each of the quarters in fiscal 2024 and for full year fiscal 2024 and 2023 as a result of our transition to US GAAP. The comparative financial information in this release for the previous fiscal periods are also under US GAAP.
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 $322.6 million, representing a 3.4% decrease versus Q2 of last year and a decrease of 0.2% from the previous quarter. Revenue less repair payments* in the second quarter was $310.7 million, decreasing 4.4% year-over-year and 0.6% sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal second quarter was down 5.2% versus Q2 of last year and down 1.5% sequentially. Year-over-year, Q2 revenue reductions were driven by the loss of a large Healthcare client, lower volumes in the online travel segment, the offshore delivery transition of a large internet customer, and reductions in discretionary project work. These headwinds were partially offset by new client additions, the expansion of existing relationships, and favorable currency movements. Sequentially, the large Healthcare client loss, online travel volume reductions, and ongoing project weakness more than offset stable demand for business transformation and cost-reduction-focused initiatives and favorable currency movements.
Profit in the fiscal second quarter was $41.8 million, as compared to $59.4 million in Q2 of last year and $28.9 million in the previous quarter. Year-over-year, profit decreased as a result of expense provision reversals reported in Q2 of last year, including contingent consideration relating to our acquisition of Vuram and SG&A expenses for performance incentives and bad debt. Profit also reduced year-over-year as a result of lower revenue, reduced operating leverage, increased investments in sales and infrastructure, and an increase in net interest expense. These headwinds were partially offset by reductions in share-based compensation expense and amortization of intangibles, a reversal of contingent consideration for our acquisition of OptiBuy, a one-time tax benefit primarily from the reversal of a deferred tax liability on intangibles, and favorable currency movements. Sequentially, Q2 profit increased as a result of the one-time tax benefit, the reversal of contingent consideration for our OptiBuy acquisition, lower share-based compensation expense, and favorable currency movements. These benefits were partially offset by lower revenue and an increase in net interest expense.
Adjusted net income (ANI)* in Q2 was $51.5 million, as compared to $54.4 million in Q2 of last year and $44.0 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, impairment of intangible assets, costs associated with ADS program termination and transition to voluntarily reporting on US domestic issuer forms, acquisition-related items, and associated tax impacts which are excluded from ANI*.
From a balance sheet perspective, WNS ended Q2 with $221.5 million in cash and investments and $262.8 million in debt. In the quarter, the company generated $43.6 million in cash from operations, incurred $12.7 million in capital expenditures, and repaid $43.0 million in debt. WNS also repurchased 1,156,269 ordinary shares at an average price of $56.61, impacting Q2 cash by $71.7 million. Second quarter days sales outstanding were 38 days, as compared to 35 days reported in Q2 of last year and 36 days in the previous quarter.
“Second quarter revenue and margin were largely in line with company expectations, while EPS came in above forecast as a result of a one-time tax benefit. Demand for digitally-led business transformation and cost reduction remains robust, while challenges persist in our online travel volumes and project-based revenues,” said Keshav Murugesh, WNS’ Chief Executive Officer. “While our large deal pipeline continues to build to record levels, the conversion of these opportunities and associated revenue ramps remain less visible. As a result, we have removed the revenue contribution from large deals from our fiscal 2025 guidance. We are focused on closing these sizeable opportunities in the second half of fiscal 2025 to help position the company for revenue acceleration in fiscal 2026. In addition, we remain committed to investing ahead of the curve in domain expertise, data and analytics, and technology-enabled offerings leveraging AI and GenAI to ensure our ability to deliver long-term sustainable value to our stakeholders.”
Fiscal 2025 Guidance
WNS is updating guidance for the fiscal year ending March 31, 2025, as follows:
- Revenue less repair payments* is expected to be between $1,250 million and $1,296 million, as compared to $1,284.3 million in fiscal 2024. Guidance assumes an average GBP to USD exchange rate of 1.31 for the remainder of fiscal 2025.
- ANI* is expected to range between $190 million and $200 million versus $218.0 million in fiscal 2024. Guidance assumes an average USD to INR exchange rate of 83.5 for the remainder of fiscal 2025.
- Based on a diluted share count of 46.0 million shares, the company expects fiscal 2025 adjusted diluted earnings per share* to be in the range of $4.13 to $4.35 versus $4.42 in fiscal 2024.
“The company has updated our forecast for fiscal 2025 based on current visibility levels and exchange rates,” said Arijit Sen, WNS’ Chief Financial Officer. “Our guidance for the full year reflects revenue less repair payments* of -3% to +1% on a reported* basis, and -4% to 0% on a constant currency* basis as compared to fiscal 2024. For the year, we continue to expect capital expenditures of up to $65 million.”
* 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 October 17, 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 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 digital-led business transformation and services partner. WNS combines deep domain expertise with talent, technology, and AI to co-create innovative solutions for over 600 clients across various industries. WNS delivers an entire spectrum of 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, 2024, WNS had 62,951 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 2025 guidance, 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; 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, and to successfully grow our revenue and expand our service offerings and market share; future regulatory actions and conditions in our operating areas; our ability to manage the impact of climate change on our business; and volatility of our share price. 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 and Form 8-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 or US GAAP refer to United States generally accepted accounting principles. References to IFRS refer to International Financial Reporting Standards, as issued by the International Accounting Standards Board.
WNS (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, amounts in millions, except share and per share data)
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, amounts in millions, except share and per share data)
| Three months ended | |||||||||||||||
| Sep 30, 2024 |
Sep 30, 2023 |
Jun 30, 2024 |
|||||||||||||
| Revenue | $ | 322.6 | $ | 333.9 | $ | 323.1 | |||||||||
| Cost of revenue (1) | 207.3 | 213.3 | 209.4 | ||||||||||||
| Gross profit | 115.3 | 120.6 | 113.7 | ||||||||||||
| Operating expenses: | |||||||||||||||
|
Selling and marketing expenses
|
21.3 | 18.8 | 21.5 | ||||||||||||
|
General and administrative expenses
|
45.3 | 46.5 | 45.7 | ||||||||||||
|
Foreign exchange loss/ (gain), net
|
0.4 | (0.0) | 1.0 | ||||||||||||
|
Amortization of intangible assets
|
7.0 | 8.7 | 6.9 | ||||||||||||
| Operating income | 41.3 | 46.7 | 38.6 | ||||||||||||
| Other income, net | (8.6) | (25.6) | (3.9) | ||||||||||||
| Interest expense | 5.8 | 4.1 | 4.4 | ||||||||||||
| Income before income tax expense | 44.1 | 68.2 | 38.0 | ||||||||||||
| Income tax expenses | 2.3 | 8.8 | 9.1 | ||||||||||||
| Net income | $ | 41.8 | $ | 59.4 | $ | 28.9 | |||||||||
| Earnings per share | |||||||||||||||
|
Basic
|
$ | 0.96 | $ | 1.25 | $ | 0.64 | |||||||||
|
Diluted
|
$ | 0.92 | $ | 1.20 | $ | 0.61 | |||||||||
| Weighted average number of shares used in computing earnings per share | |||||||||||||||
|
Basic
|
43,457,284 | 47,413,342 | 45,443,899 | ||||||||||||
|
Diluted
|
45,416,308 | 49,650,152 | 47,425,017 | ||||||||||||
| (1) Exclusive of amortization expense | |||||||||||||||
WNS (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, amounts in millions, except share and per share data)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, amounts in millions, except share and per share data)
| As at Sep 30, 2024 | As at Mar 31, 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
|
Cash and cash equivalents
|
$ | 93.2 | $ | 87.4 | ||||
|
Investments
|
128.0 | 156.5 | ||||||
|
Accounts receivable, net
|
137.0 | 124.6 | ||||||
|
Unbilled revenue
|
104.8 | 107.8 | ||||||
|
Funds held for clients
|
6.8 | 6.9 | ||||||
|
Derivative assets
|
14.8 | 5.8 | ||||||
|
Contract assets
|
14.0 | 11.9 | ||||||
|
Prepaid expense and other current assets
|
&n
@ businesswireindia.com
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