WNS Announces Fiscal 2023 Second 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 second quarter ended September 30, 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 second quarter was $307.1 million, representing an increase of 12.2% versus Q2 of last year and an increase of 4.0% from the previous quarter. Revenue less repair payments* in the second quarter was $289.3 million, an increase of 13.7% year-over-year and 5.3% sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal second quarter was up 20.4% versus Q2 of last year and 8.2% sequentially. Year-over-year, fiscal Q2 revenue improved as a result of our new client additions, the expansion of existing relationships, our acquisition of Vuram, and increased travel volume which more than offset currency movements net of hedging. Sequentially, growth driven by broad-based revenue momentum, our acquisition of Vuram, and increased travel volume was partially offset by currency movements net of hedging.

Profit in the fiscal second quarter was $33.2 million, as compared to $32.1 million in Q2 of last year and $33.1 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 amortization of intangibles associated with our acquisition of Vuram. Sequentially, Q2 profit increased as a result of revenue growth, reduced share-based compensation expense, and a lower effective tax rate. These benefits were partially offset by increased amortization of intangibles associated with our acquisition of Vuram, wage increases, increased return-to-office costs, higher SG&A expenses driven by compensation costs and the timing of investments, and additional interest expense.

Adjusted net income (ANI)* in Q2 was $46.6 million, as compared to $43.1 million in Q2 of last year and $45.9 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 costs and associated tax impacts, which are excluded from ANI*.

From a balance sheet perspective, WNS ended Q2 with $265.3 million in cash and investments and $79.5 million in debt. In the second quarter, the company generated $34.5 million in cash from operations and incurred $7.9 million in capital expenditures. In addition, the company paid net $144.2 million towards our acquisition of Vuram, repaid $31.7 million of short-term debt, and took out an $80.0 million term loan for general corporate purposes. WNS also repurchased 358,382 ADSs at an average price of $77.78 per ADS, which impacted Q2 cash by $30.4 million. Second quarter days sales outstanding were 30 days, as compared to 31 days reported in Q2 of last year and 29 days in the previous quarter.

“Our second quarter financial results continue to demonstrate the strength and resiliency in our business model in the midst of a challenging macro environment,” said Keshav Murugesh, WNS’ Chief Executive Officer. “Our ability to deliver technology-led transformation and to help our clients improve their competitive positioning while reducing cost is generating strong, broad-based demand with both new and existing customers. WNS intends to continue investing in enhancing our capabilities, including digital and analytics, to ensure we meet the expanding requirements of the BPM market.”

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 $1,110 million and $1,150 million, up from $1,026.8 million in fiscal 2022. Guidance includes 9 months of revenue from Vuram and assumes an average GBP to USD exchange rate of 1.12 for the remainder of fiscal 2023.·       ANI* is expected to range between $186 million and $196 million versus $174.8 million in fiscal 2022. Guidance assumes an average USD to INR exchange rate of 82.0 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 ADS to be in the range of $3.68 to $3.87 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 8% to 12%, or 14% to 18% on a constant currency* basis. This includes approximately 2% inorganic growth related to our acquisition of Vuram. We currently have 98% visibility to the midpoint of the range, consistent with October guidance in previous years. For the year, we expect capital expenditures of up to $40 million.”

Conference Call

WNS will host a conference call on October 20, 2022, 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 September 30, 2022, WNS had 57,503 professionals across 60 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.