WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of
global Business Process Management (BPM) services, today announced
results for the fiscal 2019 first quarter ended June 30, 2018.
Highlights – Fiscal 2019 First Quarter:
GAAP
Financials
•
Revenue of $199.8 million, up 10.9%
from $180.1 million in Q1 of last year and down 1.4% from $202.7
million last quarter
•
Profit of $22.4 million, compared to
$16.7 million in Q1 of last year and $24.5 million last
quarter
•
Diluted earnings per ADS of $0.42,
compared to $0.32 in Q1 of last year and $0.47 last quarter
Non-GAAP
Financial Measures*
•
Revenue less repair payments of $196.0
million, up 11.8% from $175.3 million in Q1 of last year and down
1.1% from $198.2 million last quarter
•
Adjusted Net Income (ANI) of $30.9
million, compared to $23.6 million in Q1 of last year and $33.0
million last quarter
•
Adjusted diluted earnings per ADS of
$0.59, compared to $0.45 in Q1 of last year and $0.63 last
quarter
Other
Metrics
•
Added 6 new clients in the quarter,
expanded 16 existing relationships
•
Days sales outstanding (DSO) at 31
days
•
Global headcount of 38,227 as of June
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 first quarter was $199.8 million, representing a
10.9% increase versus Q1 of last year and a 1.4% decrease from the
previous quarter. Revenue less repair payments* in the first
quarter was $196.0 million, an increase of 11.8% year-over-year and
a 1.1% decline sequentially. Excluding exchange rate impacts,
constant currency revenue less repair payments* in the fiscal first
quarter grew 10.3% versus Q1 of last year and 0.6% sequentially.
Year-over-year, fiscal Q1 revenue improvement was driven by healthy
organic growth across key verticals, services, and geographies, and
favorability from currency net of hedging. Sequentially, organic
revenue growth was more than offset by contractual productivity
commitments for clients and currency movements net of hedging.
Operating margin in the first quarter was 12.6%, as compared to
11.0% in Q1 of last year and 14.5% in the previous quarter. On a
year-over-year basis, margin improvement was the result of
increased productivity, 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 reduced due to the impact of our annual wage
increases, advance hiring and infrastructure buildout for project
ramps, and higher share-based compensation expense. These headwinds
more than offset favorable currency movements net of hedging.
First quarter adjusted operating margin* was 18.8%, versus 17.1%
in Q1 of last year and 20.4% 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* reduced due to the impact
of our annual wage increases, and advance hiring and infrastructure
buildout for project ramps. These headwinds more than offset
favorable currency movements net of hedging.
Profit in the fiscal first quarter was $22.4 million, as
compared to $16.7 million in Q1 of last year and $24.5 million in
the previous quarter. Adjusted net income (ANI)* in Q1 was $30.9
million, up $7.3 million as compared to Q1 of last year and down
$2.1 million from the previous quarter. In addition to the
explanations discussed above, fiscal first quarter profit and
adjusted net income* improved by $0.9 million resulting from a
one-time tax reversal.
From a balance sheet perspective, WNS ended Q1 with $193.3
million in cash and investments and $89.2 million of debt. In the
first quarter, the company generated $14.7 million in cash from
operations, had $9.2 million in capital expenditures, and
repurchased 450,300 ADSs at an average price of $51.82 per ADS,
impacting Q1 cash by $23.0 million dollars. Days sales outstanding
were 31 days, as compared to 30 days reported in Q1 of last year
and 30 days in the previous quarter.
“In the fiscal first quarter, WNS continued to generate solid
financial performance, growing revenue less repair payments* 12%
year-over-year. Excluding the impact of currency movements and
hedging, year-over-year first quarter top line improved by more
than 10% on a constant currency* basis – all of which was organic,”
said Keshav Murugesh, WNS’s Chief Executive Officer. “We are
increasingly deploying technology and automation in our solutions,
and working to attract, retain and retrain our resources for the
changing BPM landscape. WNS remains focused on leveraging deep
domain expertise, technology and automation, advanced analytics,
and a customer-centric approach to enable our clients’
success.”
Fiscal 2019 Guidance
WNS is updating guidance for the fiscal year ending March 31,
2019 as follows:
- Revenue less repair payments* is
expected to be between $777 million and $821 million, up from
$741.0 million in fiscal 2018. This assumes an average GBP to USD
exchange rate of 1.32 for the remainder of fiscal 2019.
- ANI* is expected to range between $118
million and $128 million versus $118.4 million in fiscal 2018. This
assumes an average USD to INR exchange rate of 68.5 for the
remainder of fiscal 2019.
- Based on a diluted share count of 52.8
million shares, the company expects adjusted diluted earnings* per
ADS to be in the range of $2.23 to $2.42 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 11%, or 7% to 13%
on a constant currency* basis. We currently have 95% visibility to
the midpoint of the range.”
Conference Call
WNS will host a conference call on July 19, 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 8939945. A replay will be available for one week following
the call at +1-855-859-2056; international dial-in +1-404-537-3406;
passcode 8939945, 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 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 June 30,
2018, WNS had 38,227 professionals across 55 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 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).
*
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.
WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited, amounts in millions, except
share and per share data)
Three months ended
Jun 30,2018
Jun 30,2017
Mar 31,2018
Revenue $ 199.8 $ 180.1
$ 202.7 Cost of revenue 132.9
124.7
128.4 Gross profit 66.9 55.4 74.3 Operating expenses:
Selling and marketing expenses 11.1 9.0 11.8 General and
administrative expenses 27.9 27.5 30.5 Foreign exchange loss /
(gain), net (1.3
)
(4.8 ) (1.4 ) Amortization of intangible assets 3.9
3.9
4.0 Operating profit 25.3
19.8 29.4
Other (income) / expenses, net (3.3 ) (2.8 ) (3.6 ) Finance
expense 0.8 1.1
1.1 Profit before income
taxes 27.8 21.4 31.8 Provision for income taxes 5.4
4.7
7.3 Profit $ 22.4
$ 16.7 $ 24.5 Earnings
per share of ordinary share Basic $ 0.44
$ 0.33 $ 0.49
Diluted $ 0.42 $ 0.32
$ 0.47
WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(Unaudited, amounts in millions, except
share and per share data)
As at Jun 30,2018
As at Mar 31,2018
ASSETS Current assets: Cash and cash equivalents $
66.1 $ 99.8 Investments 48.3 121.0 Trade receivables, net 72.2 71.4
Unbilled revenue 64.2 61.7 Funds held for clients 8.3 10.1
Derivative assets 5.7 11.7 Prepayments and other current assets
22.4 24.8 Total current assets 287.2 400.5 Non-current
assets: Goodwill 131.5 135.2 Intangible assets 85.5 89.7 Property
and equipment 59.8 60.6 Derivative assets 2.1 3.2 Investments 78.9
0.5 Deferred tax assets 25.5 27.4 Other non-current assets 50.3
42.4 Total non-current assets 433.5 359.0
TOTAL ASSETS
$ 720.7
$ 759.6
LIABILITIES AND EQUITY
Current liabilities: Trade payables $ 16.8 $ 19.7 Provisions and
accrued expenses 26.5 28.8 Derivative liabilities 11.3 6.5 Pension
and other employee obligations 43.4 64.6 Current portion of long
term debt 27.8 27.7 Contract liabilities 2.8 2.9 Current taxes
payable 1.9 1.3 Other liabilities 19.9 15.7 Total current
liabilities 150.5 167.3 Non-current liabilities: Derivative
liabilities 2.3 2.3 Pension and other employee obligations 9.9 9.6
Long term debt 61.5 61.4 Contract liabilities 0.5 0.6 Other
non-current liabilities 10.2 11.7 Deferred tax liabilities 11.7
11.8 Total non-current liabilities 96.1 97.3
TOTAL
LIABILITIES $ 246.6 $ 264.6 Shareholders' equity: Share capital
(ordinary shares $ 0.16 (10 pence) par value, authorized 60,000,000
shares; issued: 55,323,080 and 54,834,080 shares; each as at June
30, 2018 and March 31, 2018, respectively) 8.6 8.5 Share premium
380.2 371.8 Retained earnings 395.1 364.4 Other components of
equity (152.2 ) (115.5 ) Total shareholders’ equity including
shares held in treasury $ 631.7 $ 629.2 Less: 4,850,300 shares as
at June 30, 2018 and 4,400,000 shares as at March 31, 2018, held in
treasury, at cost (157.6 ) (134.2 ) Total shareholders’ equity $
474.1 $ 495.0
TOTAL LIABILITIES AND EQUITY $
720.7 $ 759.6
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 May 16,
2018.
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 May 16, 2018.
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*, 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 endedJun 30, 2018
compared to
Jun 30,2018
Jun 30,2017
Mar 31,2018
Jun 30,2017
Mar 31,2018
(Amounts in millions) (% growth) Revenue (GAAP) $
199.8 $ 180.1 $ 202.7
10.9 % (1.4 ) % Less: Payments to repair centers 3.7 4.8 4.5
(22.8 ) % (16.7 ) % Revenue less repair payments (Non-GAAP) $ 196.0
$ 175.3 $ 198.2 11.8 % (1.1 ) % Exchange rate impact (0.8 ) 1.6
(4.1 ) Constant currency revenue less
repair payments (Non-GAAP)
$ 195.2 $ 176.9 $ 194.1 10.3 % 0.6 %
Reconciliation of cost of revenue (GAAP to non-GAAP)
Three months ended
Jun 30,2018
Jun 30,2017
Mar 31,2018
(Amounts in millions) Cost of revenue (GAAP) $ 132.9
$ 124.7
$ 128.4 Less: Payments to repair centers 3.7 4.8 4.5 Less:
Share-based compensation expense 1.0 0.8 0.8 Adjusted cost of
revenue (excluding payment to repair centers and share-based
compensation expense) (Non-GAAP) $ 128.1 $ 119.1 $ 123.2
Reconciliation of gross profit (GAAP to non-GAAP)
Three months ended
Jun 30,2018
Jun 30,2017
Mar 31,2018
(Amounts in millions) Gross profit (GAAP) $ 66.9
$ 55.4
$ 74.3 Add: Share-based compensation expense 1.0 0.8 0.8 Adjusted
gross profit (excluding share-based compensation expense)
(Non-GAAP) $ 67.9 $ 56.2 $ 75.1
Three months ended
Jun 30,2018
Jun 30,2017
Mar 31,2018
Gross profit as a percentage of revenue (GAAP) 33.5 %
30.7 % 36.7 %
Adjusted gross profit (excluding share-based compensation expense)
as a percentage of revenue less repair payments (Non-GAAP) 34.6 %
32.0 % 37.9 %
Reconciliation of selling and marketing expenses (GAAP to
non-GAAP)
Three months ended
Jun 30,2018
Jun 30,2017
Mar 31,2018
(Amounts in millions) Selling and marketing expenses (GAAP)
$ 11.1 $ 9.0 $ 11.8 Less: Share-based
compensation expense 0.7 0.5 0.6 Adjusted selling and marketing
expenses (excluding share-based compensation expense) (Non-GAAP) $
10.4 $ 8.5 $ 11.3
Three months
ended
Jun 30,2018
Jun 30,2017
Mar 31,2018
Selling and marketing expenses as a percentage of revenue (GAAP)
5.6 % 5.0 % 5.8 %
Adjusted selling and marketing expenses (excluding share-based
compensation expense) as a percentage of revenue less repair
payments (Non-GAAP) 5.3 % 4.8 % 5.7 %
Reconciliation of general and administrative expenses (GAAP
to non-GAAP)
Three months ended
Jun 30,2018
Jun 30,2017
Mar 31,2018
(Amounts in millions) General and administrative expenses
(GAAP) $ 27.9 $ 27.5 $ 30.5 Less:
Share-based compensation expense 5.9 5.1 5.8 Adjusted general and
administrative expenses (excluding share-based compensation
expense) (Non-GAAP) $ 22.0 $ 22.4 $ 24.8
Three months ended
Jun 30,2018
Jun 30,2017
Mar 31,2018
General and administrative expenses as a percentage of revenue
(GAAP) 14.0 % 15.3 %
15.1 % Adjusted general and administrative expenses
(excluding share-based compensation expense) as a percentage of
revenue less repair payments (Non-GAAP) 11.2 % 12.8 % 12.5 %
Reconciliation of operating profit / (loss) (GAAP to
non-GAAP)
Three months ended
Jun 30,2018
Jun 30,2017
Mar 31,2018
(Amounts in millions) Operating profit (GAAP) $ 25.3
$ 19.8
$ 29.4 Add: Share-based compensation expense 7.7 6.4 7.1 Add:
Amortization of intangible assets 3.9 3.9 4.0 Adjusted operating
profit (excluding share-based
compensation expense and amortization of
intangible assets)
(Non-GAAP)
$ 36.8 $ 30.0 $ 40.4
Three months
ended
Jun 30,2018
Jun 30,2017
Mar 31,2018
Operating profit as a percentage of revenue (GAAP) 12.6 %
11.0 % 14.5 % Adjusted
operating profit (excluding share-based compensation expense and
amortization of intangible assets) as a percentage
of revenue less repair payments
(Non-GAAP)
18.8 % 17.1 % 20.4 %
Reconciliation of profit / (loss) (GAAP) to ANI
(non-GAAP)
Three months ended
Jun 30,2018
Jun 30,2017
Mar 31,2018
(Amounts in millions) Profit (GAAP) $ 22.4 $
16.7
$ 24.5 Add: Share-based compensation expense 7.7 6.4 7.1 Add:
Amortization of intangible assets 3.9 3.9 4.0 Less: Tax impact on
share-based compensation expense(1) (2.2 ) (2.1 ) (1.3 ) Less: Tax
impact on amortization of intangible assets(1) (0.9 ) (1.3 ) (1.2 )
Adjusted Net Income (excluding share-based compensation expense and
amortization of intangible assets, including tax effect thereon)
(Non GAAP) $ 30.9 $ 23.6
$ 33.0
(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
Jun 30,2018
Jun 30,2017
Mar 31,2018
Profit as a percentage of revenue (GAAP) 11.2 %
9.3 % 12.1 % 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)
15.7 % 13.5 % 16.6 %
Reconciliation of basic income per ADS (GAAP to
non-GAAP)
Three months ended
Jun 30,2018
Jun 30,2017
Mar 31,2018
Basic earnings per ADS (GAAP) $ 0.44 $ 0.33
$ 0.49 Add: Adjustments for share-based compensation expense and
amortization of intangible assets 0.23 0.21 0.21 Less: Tax impact
on share-based compensation expense and amortization of intangible
assets 0.06 0.07 0.05 Adjusted basic net income per ADS (excluding
share-based compensation expenses and amortization of intangible
assets, including tax effect thereon) (Non-GAAP) $ 0.61 $ 0.47 $
0.65
Reconciliation of diluted income per ADS (GAAP to
non-GAAP)
Three months ended
Jun 30,2018
Jun 30,2017
Mar 31,2018
Diluted earnings per ADS (GAAP) $ 0.42 $ 0.32
$ 0.47 Add: Adjustments for share-based compensation expense and
amortization of intangible assets 0.23 0.19 0.21 Less: Tax impact
on share-based compensation expense and amortization of intangible
assets 0.06 0.06 0.05 Adjusted diluted net income per ADS
(excluding amortization of intangible assets and share-based
compensation expense, including tax effect thereon) (Non-GAAP) $
0.59 $ 0.45 $ 0.63
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180719005302/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
WNS (NYSE:WNS)
Historical Stock Chart
From Jun 2024 to Jul 2024
WNS (NYSE:WNS)
Historical Stock Chart
From Jul 2023 to Jul 2024