WNS Announces Fiscal 2023 Third Quarter Earnings, Revises Full Year Guidance

WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of global Business Process Management (BPM) solutions, today announced results for the fiscal 2023 third quarter ended December 31, 2022.

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 $306.9 million, representing an increase of 8.0% versus Q3 of last year and a decrease of 0.1% from the previous quarter. Revenue less repair payments* in the third quarter was $292.9 million, an increase of 12.2% year-over-year and 1.3% sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal third quarter was up 19.0% versus Q3 of last year and 2.3% sequentially. Year-over-year, fiscal Q3 revenue improved as a result of our new client additions, the expansion of existing relationships, our acquisitions of Vuram, OptiBuy, and The Smart Cube, and increased travel volume which more than offset currency movements and hedging losses. Sequentially, growth driven by broad-based revenue momentum and our acquisitions of OptiBuy and The Smart Cube was partially offset by currency movements and hedging losses, and travel seasonality.

Profit in the fiscal third quarter was $34.7 million, as compared to $34.3 million in Q3 of last year and $33.2 million in the previous quarter. Year-over-year, profit increased as a result of revenue growth, improved productivity, favorable currency movements net of hedging, and a lower effective tax rate. These benefits more than offset the impact of wage increases, increased return-to-office costs, higher share-based compensation expense, and increased costs associated with our acquisitions of Vuram, OptiBuy, and The Smart Cube including amortization of intangibles, interest expense, and other acquisition-related expenses. Sequentially, Q3 profit increased as a result of improved productivity and reduced share-based compensation expense. These benefits were partially offset by unfavorable currency movements net of hedging, and increased costs associated with our acquisitions of OptiBuy and The Smart Cube including amortization of intangibles, interest expense, and other acquisition-related expenses.

Adjusted net income (ANI)* in Q3 was $50.6 million, as compared to $44.4 million in Q3 of last year and $47.2 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 expenses, and associated tax impacts which are excluded from ANI*. The acquisition-related expenses have been excluded from ANI* definition effective Q2 of this year.

From a balance sheet perspective, WNS ended Q3 with $249.8 million in cash and investments and $179.4 million in debt. In the third quarter, the company generated $70.3 million in cash from operations, took out a $100.9 million term loan for our acquisition of The Smart Cube, incurred $11.4 million in capital expenditures, and paid net $168.7 million towards acquisitions. Third quarter days sales outstanding were 34 days, as compared to 30 days reported in Q3 of last year and 30 days in the previous quarter.

“In the third quarter, WNS continued to make progress on our key strategic investment programs while delivering solid top line growth and industry-leading margins,” said Keshav Murugesh, WNS’ Chief Executive Officer. “Our acquisitions this quarter will enable WNS to enhance our positioning in the procurement and analytics space, and create end-to-end solutions for our clients which combine state-of-the art technology with best-in-class talent. Despite the weak macro environment, demand for BPM services is robust and we believe WNS remains well-positioned to capitalize on the market opportunity and create sustainable value for all of our key stakeholders.”

Fiscal 2023 Guidance

WNS is updating guidance for the fiscal year ending March 31, 2023, as follows:

• Revenue less repair payments* is expected to be between $1,146 million and $1,158 million, up from $1,026.8 million in fiscal 2022. Guidance includes 9 months of revenue from Vuram and 3.5 months of revenue from OptiBuy and The Smart Cube, and assumes an average GBP to USD exchange rate of 1.21 for the remainder of fiscal 2023.· ANI* is expected to range between $193 million and $197 million versus $174.8 million in fiscal 2022. Guidance assumes an average USD to INR exchange rate of 82.5 for the remainder of fiscal 2023.·       Based on a diluted share count of 50.6 million shares, the company expects fiscal 2023 adjusted diluted earnings per share* to be in the range of $3.82 to $3.89 versus $3.41 in fiscal 2022.

“The company has updated our forecast for fiscal 2023 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 12% to 13%, or 17% to 19% on a constant currency* basis. This includes approximately 3% inorganic growth related to our acquisitions of Vuram, OptiBuy and The Smart Cube. We currently have over 99% visibility to the midpoint of the range, consistent with January guidance in previous years. For the year, we expect capital expenditures of up to $42 million.”

Conference Call

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

About WNS

WNS (Holdings) Limited (NYSE: WNS) is a leading Business Process Management (BPM) company. WNS combines deep industry knowledge with technology, analytics, and process expertise to co-create innovative, digitally led transformational solutions with over 400 clients across various industries. WNS delivers an entire spectrum of BPM solutions including industry-specific offerings, customer experience services, finance and accounting, human resources, procurement, and research and analytics to re-imagine the digital future of businesses. As of December 31, 2022, WNS had 57,994 professionals across 64 delivery centers worldwide including facilities in Canada, China, Costa Rica, India, the Philippines, Poland, Romania, South Africa, Spain, Sri Lanka, Turkey, the United Kingdom, and the United States. For more information, visit www.wns.com.

 WNS (HOLDINGS) LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, amounts in millions, except share and per share data)

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