WNS Announces Fiscal 2024 First 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 2024 first quarter ended June 30, 2023.

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 $326.5 million, representing a 10.5% increase versus Q1 of last year and a 3.7% increase from the previous quarter. Revenue less repair payments* in the first quarter was $317.5 million, an increase of 15.5% year-over-year and 4.1% sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal first quarter was up 17.5% versus Q1 of last year and 3.6% sequentially. Year-over-year, fiscal Q1 revenue improved as a result of our new client additions, the expansion of existing relationships, and our fiscal 2023 acquisitions, which more than offset the ramp-down of a large HealthCare process and unfavorable currency movements. Sequentially, growth driven by broad-based revenue momentum and favorable currency movements was partially offset by contractual productivity commitments to certain clients.

Profit in the fiscal first quarter was $30.1 million, as compared to $33.1 million in Q1 of last year and $36.4 million in the previous quarter. Year-over-year, profit decreased as a result of wage increases, increased return-to-office costs, higher share-based compensation expense, and increased costs associated with our acquisitions including amortization of intangibles, interest expense, and other acquisition-related expenses. These headwinds more than offset revenue growth and favorable impacts from currency movements. Sequentially, Q1 profit decreased as a result of wage increases, return-to-office costs, higher share-based compensation expense, and one-time benefits in Q4 from tax and interest income. These headwinds were partially offset by revenue growth and favorable currency impacts.

Adjusted net income (ANI)* in Q1 was $50.6 million, as compared to $45.9 million in Q1 of last year and $52.4 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*.

From a balance sheet perspective, WNS ended Q1 with $242.6 million in cash and investments and $206.2 million in debt. Included in this debt amount is $40.2 million borrowed for general corporate purposes against our line of credit during the quarter. In Q1, the company generated $19.5 million in cash from operations, incurred $17.8 million in capital expenditures, and repaid $10.6 million in long-term debt. WNS also repurchased 1,100,000 ADSs at an average price of $77.84, impacting Q1 cash by $85.6 million. First quarter days sales outstanding were 34 days, as compared to 29 days reported in Q1 of last year and 32 days in the previous quarter.

“In the fiscal first quarter, WNS continued to deliver healthy financial results and position our business for long-term success,” said Keshav Murugesh, WNS’ Chief Executive Officer. “Despite the challenging macro environment, WNS grew constant currency revenue less repair payments* by more than 17% and maintained our industry-leading adjusted operating margins*. Our updated guidance and visibility demonstrate the healthy and resilient nature of our business, and we believe WNS remains well-positioned to meet the evolving needs of our clients. This includes ongoing technology and automation advancements such as AI and Generative AI. The company remains focused on investing in domain, technology, and talent, driving strong operational and financial execution, and delivering long-term sustainable value for all of our stakeholders.”

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 $1,296 million and $1,354 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 $211 million and $223 million versus $196.1 million in fiscal 2023. Guidance assumes an average USD to INR exchange rate of 82.0 for the remainder of fiscal 2024.
• Based on a diluted share count of 50.1 million shares, the company expects fiscal 2024 adjusted diluted earnings per share* to be in the range of $4.21 to $4.45 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 12% to 17% on a reported basis, or 11% to 16% constant currency*. This includes an estimated 3% inorganic growth related to our fiscal 2023 acquisitions. We currently have 92% visibility to the midpoint of the revenue range. For the year, we expect capital expenditures of up to $60 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 July 20, 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 June 30, 2023, WNS had 59,871 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.