WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of
global Business Process Management (BPM) services, today announced
results for the fiscal 2018 second quarter ended September 30,
2017.
Highlights – Fiscal 2018 Second Quarter:
GAAP
Financials
- Revenue of $186.5 million, up 24.6% from $149.8 million in
Q2 of last year and up 3.6% from $180.1 million last
quarter
- Profit of $18.9 million, compared to $12.6 million in Q2 of
last year and $16.7 million last quarter
- Diluted earnings per ADS of $0.36, compared to $0.24 in Q2
of last year and $0.32 last quarter
Non-GAAP
Financial Measures*
- Revenue less repair payments of $182.3 million, up 26.9%
from $143.7 million in Q2 of last year and up 4.0% from $175.3
million last quarter
- Adjusted Net Income (ANI) of $27.7 million, compared to
$22.0 million in Q2 of last year and $23.6 million last
quarter
- Adjusted diluted earnings per ADS of $0.53, compared to
$0.42 in Q2 of last year and $0.45 last quarter
Other
Metrics
- Added 7 new clients in the quarter, expanded 8 existing
relationships
- Days sales outstanding (DSO) at 30 days
- Global headcount of 35,121 as of September 30,
2017†
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 $186.5 million, representing a
24.6% increase versus Q2 of last year and a 3.6% increase from the
previous quarter. Revenue less repair payments* in the second
quarter was $182.3 million, an increase of 26.9% year-over-year and
4.0% sequentially. Excluding exchange rate impacts, constant
currency revenue less repair payments* in the fiscal second quarter
grew 25.3% versus Q2 of last year and 3.0% sequentially.
Year-over-year, fiscal Q2 revenue growth was driven by our
acquisitions of HealthHelp and Denali, which closed in March 2017
and January 2017 respectively, healthy organic revenue growth
across key verticals and services, and favorability from currency
and hedging. Sequentially, revenue growth was the result of solid
performance with both new and existing clients, and favorable
currency movements net of hedging.
Operating margin in the second quarter was 10.8%, as compared to
10.2% in Q2 of last year and 11.0% in the previous quarter. On a
year-over-year basis, margin improvement was driven by a step-down
in amortization of intangible asset expense, hedging gains net of
currency movements, improved seat utilization, and increased
operating leverage from higher volumes. These benefits more than
offset headwinds from higher share-based compensation expense, the
impact of our annual wage increases, and lower productivity.
Sequentially, margins decreased due to higher share-based
compensation expense. This headwind was largely offset by improved
productivity, currency movements net of hedging, and higher Q2
volume.
Second quarter adjusted operating margin* was 18.5%, versus
19.8% in Q2 of last year and 17.1% last quarter. On a
year-over-year basis, adjusted operating margin* reduced primarily
due to the impact of our annual wage increases and lower
productivity. These reductions were partially offset by hedging
gains net of currency movements, improved seat utilization, and
increased operating leverage from higher volumes. Sequentially,
adjusted operating margin* increased as a result of improved
productivity, currency movements net of hedging, and operating
leverage on higher volumes.
Profit in the fiscal second quarter was $18.9 million, as
compared to $12.6 million in Q2 of last year and $16.7 million in
the previous quarter. Adjusted net income (ANI)* in Q2 was $27.7
million, up $5.7 million as compared to Q2 of last year and up $4.1
million from the previous quarter. In addition to the explanations
discussed above, fiscal second quarter profit and adjusted net
income* increased by $1.7 million sequentially as a result of a
non-recurring tax benefit in Q2 resulting from a corporate legal
entity restructuring.
From a balance sheet perspective, WNS ended Q2 with $183.8
million in cash and investments and $103.0 million of debt. In the
second quarter, the company generated $44.0 million in cash from
operations, and had $11.5 million in capital expenditures. WNS
repurchased 879,539 ADSs, impacting cash by $30.0 million dollars,
and made scheduled debt payments of $14.1 million. Days sales
outstanding were 30 days, the same as reported in Q2 of last year
and in the previous quarter.
“WNS continues to perform well in a healthy business
environment, posting revenue less repair payments* in fiscal Q2 of
$182.3 million. Growth was once again broad-based across key
verticals and services, and represents a year-over-year constant
currency* increase of more than 25%,” said Keshav Murugesh, WNS’s
Chief Executive Officer. “We believe that the company has
positioned itself well in the BPM space, with a strategy centered
on deep domain expertise and complemented by strong capabilities in
the areas of automation, analytics, and end-to-end digital
solutions. WNS continues to receive positive feedback on our
approach from clients, prospects, and influencers, and we remain
focused on delivering enhanced business value for all of our key
stakeholders.”
Fiscal 2018 Guidance
WNS is updating guidance for the fiscal year ending March 31,
2018 as follows:
- Revenue less repair payments* is
expected to be between $705 million and $727 million, up from
$578.4 million in fiscal 2017. This assumes an average GBP to USD
exchange rate of 1.31 for the remainder of fiscal 2018.
- ANI* is expected to range between $101
million and $108 million versus $92.2 million in fiscal 2017. This
assumes an average USD to INR exchange rate of 65.0 for the
remainder of fiscal 2018.
- Based on a diluted share count of 52.3
million shares, the company expects adjusted diluted earnings* per
ADS to be in the range of $1.93 to $2.06 versus $1.74 in fiscal
2017.
“The company has updated our forecast for fiscal 2018 based on
current visibility levels and exchange rates,” said Sanjay Puria,
WNS’s Chief Financial Officer. “Our revised guidance for the year
reflects growth in revenue less repair payments* of 22% to 26%, or
21% to 24% on a constant currency* basis. We currently have 98%
visibility to the midpoint of the range.”
Conference Call
WNS will host a conference call on October 27, 2017 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 92434435. A replay will be available for one week
following the call at +1-855-859-2056; international dial-in
+1-404-537-3406; passcode 92434435, as well as on the WNS website,
www.wns.com, beginning two hours after the end of the call.
About WNS
WNS (Holdings) Limited (NYSE: WNS), is a leading global business
process management company. WNS offers business value to 300+
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, 2017, WNS had 35,121 professionals across 52 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.
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, 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 2018
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).
* 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.
† Includes 1,282 apprentices employed under the India government
scheme, National Employability Enhancement Mission, pursuant to
which apprentices undergo a three to 24 month apprenticeship to
enhance their employability. There is no guarantee of employment
with WNS following the completion of the apprenticeship. Our
previously reported global headcount does not include
apprentices.
WNS (HOLDINGS) LIMITED CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (Unaudited, amounts in
millions, except share and per share data) Three
months ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
Revenue $ 186.5 $ 149.8 $ 180.1 Cost of revenue 125.5
99.7 124.7 Gross profit 61.0 50.1 55.4
Operating expenses: Selling and marketing expenses 10.3 8.0 9.0
General and administrative expenses 31.3 22.1 27.5 Foreign exchange
loss / (gain), net (4.4 ) (2.5 ) (4.8 ) Amortization of intangible
assets 3.7 7.2 3.9
Operating profit 20.1 15.3 19.8
Other income, net (2.4 ) (2.1 ) (2.8 ) Finance expense
1.0 0.0 1.1 Profit before
income taxes 21.4 17.3 21.4 Provision for income taxes 2.5
4.7 4.7 Profit $ 18.9 $
12.6 $ 16.7 Earnings per share of ordinary
share Basic $ 0.37 $ 0.25 $ 0.33 Diluted $
0.36 $ 0.24 $ 0.32
WNS (HOLDINGS) LIMITED CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION (Unaudited, amounts in
millions, except share and per share data)
As at Sep 30,2017
As at Mar 31,2017
ASSETS Current assets: Cash and cash equivalents $ 103.0 $
69.8 Investments 80.4 112.0 Trade receivables, net 66.2 60.4
Unbilled revenue 54.0 48.9 Funds held for clients 9.5 9.1
Derivative assets 17.3 35.4 Prepayments and other current assets
26.7 27.4 Total current assets
357.1 363.1 Non-current assets:
Goodwill 134.1 134.0 Intangible assets 92.1 96.6 Property and
equipment 58.6 54.8 Derivative assets 2.7 6.6 Investments 0.4 0.4
Deferred tax assets 22.5 16.7 Other non-current assets 36.3
31.9 Total non-current assets 346.6
341.1
TOTAL ASSETS $
703.7 $ 704.1
LIABILITIES AND EQUITY Current liabilities: Trade payables $
15.8 $ 14.2 Provisions and accrued expenses 27.1 27.2 Derivative
liabilities 6.5 3.9 Pension and other employee obligations 49.2
52.9 Current portion of long term debt 27.7 27.6 Deferred revenue
5.5 5.5 Current taxes payable 2.1 1.3 Other liabilities 16.8
16.0 Total current liabilities 150.7
148.8 Non-current liabilities: Derivative
liabilities 2.0 0.8 Pension and other employee obligations 9.9 10.7
Long term debt 75.3 89.1 Deferred revenue 0.7 0.4 Other non-current
liabilities 17.4 18.5 Deferred tax liabilities 18.4
20.8 Total non-current liabilities 123.7
140.3
TOTAL LIABILITIES $ 274.4
$ 289.1 Shareholders' equity: Share capital (ordinary shares
$ 0.16 (10 pence) par value, authorized 60,000,000 shares; issued:
54,547,076 and 53,312,559 shares each as at September 30, 2017 and
March 31, 2017, respectively) 8.5 8.3 Share premium 356.5 338.3
Retained earnings 313.6 278.0 Other components of equity (123.3 )
(114.9 ) Total shareholders’ equity including shares held in
treasury 555.4 509.8
Less: 4,179,539 shares as at September 30,
2017 and 3,300,000 shares as at March 31, 2017, held in treasury,
at cost
(126.0 ) (94.7 ) Total shareholders’ equity $ 429.3
$ 415.1
TOTAL LIABILITIES AND EQUITY $
703.7 $ 704.1
About Non-GAAP Financial
Measures
The financial information in this release includes certain
non-GAAP financial measures that we believe more accurately reflect
our core operating performance. Reconciliations of these non-GAAP
financial measures to our GAAP operating results are included
below. A more detailed discussion of our GAAP results is contained
in “Part I –Item 5. Operating and Financial Review and Prospects”
in our annual report on Form 20-F filed with the SEC on June 29,
2017.
For financial statement reporting purposes, WNS has two
reportable segments: WNS Global BPM and WNS Auto Claims BPM.
Revenue less repair payments is a non-GAAP financial measure that
is calculated as (a) revenue less (b) in the auto claims business,
payments to repair centers for “fault” repair cases where WNS acts
as the principal in its dealings with the third party repair
centers and its clients. WNS believes that revenue less repair
payments for “fault” repairs reflects more accurately the value
addition of the business process management services that it
directly provides to its clients. For more details, please see the
discussion in “Part I – Item 5. Operating and Financial Review and
Prospects – Overview” in our annual report on Form 20-F filed with
the SEC on June 29, 2017.
Constant currency revenue less repair payments is a non-GAAP
financial measure. We present constant currency revenue less repair
payments so that revenue less repair payments may be viewed without
the impact of foreign currency exchange rate fluctuations, thereby
facilitating period-to-period comparisons of business performance.
Constant currency revenue less repair payments is presented by
recalculating prior period’s revenue less repair payments
denominated in currencies other than in US dollars using the
foreign exchange rate used for the latest period, without taking
into account the impact of hedging gains/losses. Our non-US dollar
denominated revenues include, but are not limited to, revenues
denominated in pound sterling, South African rand, Australian
dollar and Euro.
WNS also presents (1) adjusted operating margin, which refers to
adjusted operating profit (calculated as operating profit / (loss)
excluding share-based expense and amortization of intangible
assets) as a percentage of revenue less repair payments, and (2)
ANI, which is calculated as profit excluding share-based expense
and amortization of intangible assets and including the tax
effect thereon, and other non-GAAP financial measures included in
this release as supplemental measures of its performance. WNS
presents these non-GAAP financial measures because it believes they
assist investors in comparing its performance across reporting
periods on a consistent basis by excluding items that are
non-recurring in nature and those it believes are not indicative of
its core operating performance. In addition, it uses these non-GAAP
financial measures (i) as a factor in evaluating management’s
performance when determining incentive compensation and (ii) to
evaluate the effectiveness of its business strategies. These
non-GAAP financial measures are not meant to be considered in
isolation or as a substitute for WNS’s financial results prepared
in accordance with IFRS.
The company is not able to provide our forward-looking GAAP
revenue, profit and earnings per ADS without unreasonable efforts
for a number of reasons, including our inability to predict with a
reasonable degree of certainty the payments to repair centers, our
future share-based compensation expense under IFRS 2 (Share Based
payments), amortization of intangibles associated with future
acquisitions and currency fluctuations. As a result, any attempt to
provide a reconciliation of the forward-looking GAAP financial
measures (revenue, profit, earnings per ADS) to our forward-looking
non-GAAP financial measures (revenue less repair payments* and
constant currency revenue less repair payments*, ANI* and Adjusted
diluted earnings* per ADS respectively) would imply a degree of
likelihood that we do not believe is reasonable.
Reconciliation of revenue (GAAP) to revenue less repair
payments (non-GAAP) and constant currency revenue less repair
payments (non-GAAP)
Three months ended
Three months endedSep 30, 2017
compared to
Sep 30,2017
Sep 30,2016
Jun 30,2017
Sep 30,2016
Jun 30,2017
(Amounts in millions) (% growth) Revenue (GAAP) $
186.5 $ 149.8 $ 180.1 24.6 % 3.6 % Less: Payments to repair centers
4.2 6.0 4.8 (30.6 %) (13.3 %) Revenue less repair payments
(Non-GAAP) $ 182.3 $ 143.7 $ 175.3 26.9 % 4.0 % Exchange rate
impact (2.6 ) (0.3 ) (0.8 )
Constant currency revenue less repair
payments (Non-GAAP)
$ 179.7 $ 143.4 $ 174.5 25.3 % 3.0 %
Reconciliation of cost of revenue (GAAP to non-GAAP)
Three months ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
(Amounts in millions) Cost of revenue (GAAP) $ 125.5 $ 99.7
$ 124.7 Less: Payments to repair centers 4.2 6.0 4.8 Less:
Share-based compensation expense 1.3 0.8 0.8
Adjusted cost of revenue (excluding
payment to repair centers and share-based compensation expense)
(Non-GAAP)
$ 120.1 $ 92.9 $ 119.1
Reconciliation of gross profit (GAAP to non-GAAP)
Three months ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
(Amounts in millions) Gross profit (GAAP) $ 61.0 $ 50.1 $
55.4 Add: Share-based compensation expense 1.3 0.8 0.8 Adjusted
gross profit (excluding share-based compensation expense)
(Non-GAAP) $ 62.3 $ 50.8 $ 56.2
Three months ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
Gross profit as a percentage of revenue (GAAP) 32.7 % 33.4 % 30.7 %
Adjusted gross profit (excluding share-based compensation expense)
as a percentage of revenue less repair payments (Non-GAAP) 34.2 %
35.4 % 32.0 %
Reconciliation of selling and marketing expenses (GAAP to
non-GAAP)
Three months ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
(Amounts in millions) Selling and marketing expenses (GAAP)
$ 10.3 $ 8.0 $ 9.0 Less: Share-based compensation expense 0.8 0.5
0.5
Adjusted selling and marketing expenses
(excluding share-based compensation expense) (Non-GAAP)
$ 9.5 $ 7.5 $ 8.5
Three months ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
Selling and marketing expenses as a percentage of revenue (GAAP)
5.5 % 5.4 % 5.0 %
Adjusted selling and marketing expenses
(excluding share-based compensation expense) as a percentage of
revenue less repair payments (Non-GAAP)
5.2 % 5.2 % 4.8 %
Reconciliation of general and administrative expenses (GAAP
to non-GAAP)
Three months ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
(Amounts in millions) General and administrative expenses
(GAAP) $ 31.3 $ 22.1 $ 27.5 Less: Share-based compensation expense
7.9 4.7 5.1
Adjusted general and administrative
expenses (excluding share-based compensation expense)
(Non-GAAP)
$ 23.4 $ 17.5 $ 22.4
Three months ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
General and administrative expenses as a percentage of revenue
(GAAP) 16.8 % 14.8 % 15.3 %
Adjusted general and administrative
expenses (excluding share-based compensation expense) as a
percentage of revenue less repair payments (Non-GAAP)
12.8 % 12.1 % 12.8 %
Reconciliation of operating profit (GAAP to non-GAAP)
Three months ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
(Amounts in millions) Operating profit (GAAP) $ 20.1 $ 15.3
$ 19.8 Add: Share-based compensation expense 10.0 6.0 6.4 Add:
Amortization of intangible assets 3.7 7.2 3.9
Adjusted operating profit (excluding
share-based compensation expense and amortization of intangible
assets) (Non-GAAP)
$ 33.7 $ 28.4 $ 30.0
Three months ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
Operating profit as a percentage of revenue (GAAP) 10.8 % 10.2 %
11.0 %
Adjusted operating profit (excluding
share-based compensation expense and amortization of intangible
assets) as a percentage of revenue less repair payments
(Non-GAAP)
18.5 % 19.8 % 17.1 %
Reconciliation of profit (GAAP) to ANI (non-GAAP)
Three months ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
(Amounts in millions) Profit (GAAP) $ 18.9 $ 12.6 $ 16.7
Add: Share-based compensation expense 10.0 6.0 6.4 Add:
Amortization of intangible assets 3.7 7.2 3.9 Less: Tax impact on
share-based compensation expense(1) (3.0 ) (1.7 ) (2.1 ) Less: Tax
impact on amortization of intangible assets(1) (1.8 ) (2.0 ) (1.3 )
Adjusted Net Income (excluding share-based
compensation expense and amortization of intangible assets,
including tax effect thereon) (Non GAAP)
$ 27.7 $ 22.0 $ 23.6
(1) The company applies GAAP methodologies in computing the tax
impact on its non-GAAP ANI adjustments (including amortization of
intangible assets and share-based compensation expense). The
company’s non-GAAP tax expense is generally higher than its GAAP
tax expense if the income subject to taxes is higher considering
the effect of the items excluded from GAAP profit to arrive at
non-GAAP profit.
Three months ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
Profit as a percentage of revenue (GAAP) 10.1 % 8.4 % 9.3 %
Adjusted net income (excluding share-based
compensation expense and amortization of intangible assets
including tax effect thereon) as a percentage of revenue less
repair payments (Non-GAAP)
15.2 % 15.3 % 13.5 %
Reconciliation of basic income per ADS (GAAP to
non-GAAP)
Three month ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
Basic earnings per ADS (GAAP) $ 0.37 $ 0.25 $ 0.33 Add: Adjustments
for share-based compensation expense and amortization of intangible
assets 0.28 0.25 0.21 Less: Tax impact on amortization of
intangible assets and share-based compensation expense (0.10 )
(0.07 ) (0.07 ) Adjusted basic net income per ADS (excluding
share-based compensation expenses and amortization of intangible
assets, including tax effect thereon) (Non-GAAP) $ 0.55 $ 0.43 $
0.47
Reconciliation of diluted income per ADS (GAAP to
non-GAAP)
Three months ended
Sep 30,2017
Sep 30,2016
Jun 30,2017
Diluted earnings per ADS (GAAP) $ 0.36 $ 0.24 $ 0.32 Add:
Adjustments for share-based compensation expense and amortization
of intangible assets 0.26 0.25 0.19 Less: Tax impact on
amortization of intangible assets and share-based compensation
expense (0.09 ) (0.07 ) (0.06 ) Adjusted diluted net income per ADS
(excluding amortization of intangible assets and share-based
compensation expense, including tax effect thereon) (Non-GAAP) $
0.53 $ 0.42 $ 0.45
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version on businesswire.com: http://www.businesswire.com/news/home/20171027005254/en/
WNS (Holdings) LimitedInvestors:David
MackeyCorporate SVP–Finance & Head of Investor Relations+1
(201) 942-6261david.mackey@wns.comorMedia:Archana RaghuramGlobal
Head – Marketing & Communications+91 (22) 4095
2397archana.raghuram@wns.com ; pr@wns.com
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