Dipti Gore
NEW YORK, NY and MUMBAI, INDIA, July 17, 2015 — WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of global Business Process Management (BPM) services, today announced results for the fiscal 2016 first quarter ended June 30, 2015.
Highlights – Fiscal 2016 First Quarter:
GAAP Financials
Non-GAAP Financial Measures[1]
Other Metrics · Added 6 new clients in the quarter, expanded 9 existing relationships · Days sales outstanding (DSO) at 28 days · Global headcount of 29,672 as of June 30, 2015
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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 less repair payments* in the fiscal first quarter was $126.5 million, representing a 3.6% increase versus the first quarter of last year and a 0.3% increase from the previous quarter. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal first quarter grew 9.5% versus Q1 of last year, and 0.6% sequentially. Year-over-year, fiscal Q1 revenue was adversely impacted by depreciation in the British Pound, Australian Dollar, South African Rand and Euro against the US Dollar. These headwinds were more than offset by revenue growth driven by both existing client expansions and the ramp in new account wins. Year-over-year, revenue improvement was paced by growth in emerging verticals, including Shipping and Logistics, Utilities, Retail/CPG and Healthcare, which all grew in excess of 15%. Sequentially, revenue less repair payments* improved despite headwinds from committed productivity improvements and currency movements net of hedging.
Adjusted operating margin* for the first quarter was 20.0%, as compared to 17.9% in Q1 of last year and 20.7% reported in the prior quarter. On a year-over-year basis, adjusted operating margin* improved as a result of currency movements net of hedging, improved seat utilization, and operating leverage associated with higher revenue. Partially offsetting this favorability was the impact of our annual wage increases. The sequential reduction in adjusted operating margin* was largely driven by currency, with the quarterly impact of wage increases being offset by lower SG&A and improved seat utilization.
Adjusted net income (ANI)* in the fiscal first quarter was $22.6 million, up $2.3 million as compared to Q1 of last year and down $0.2 million from the previous quarter. First quarter ANI* margin was 17.9%, as compared to 16.7% in Q1 of last year, and 18.2% reported last quarter.
From a balance sheet perspective, WNS ended Q1 with $135.2 million in cash and investments, and $8.2 million of gross debt. In the first quarter, the company generated $17.0 million in cash from operations, and had $8.6 million in capital expenditures. Days sales outstanding were 28 days, as compared to 32 days in Q1 of last year and 28 days reported in the previous quarter. During Q1, WNS also repurchased 770,000 ADS’s at an average price of $26.79 per ADS, totaling $20.7 million.
“We are pleased with our first quarter results, the company’s current business momentum, and the overall demand environment for BPM services,” said Keshav Murugesh, WNS’s Chief Executive Officer. “Our pipeline remains robust, and the company is focused on improving sales productivity to drive accelerated revenue growth. While WNS’s positioning in the marketplace is strong and differentiated, we will continue our investments in the areas of domain expertise, analytics, technology enablement and digitization in order to enhance existing capabilities and create new, innovative solutions. We believe these strategic objectives are aligned with the direction of the BPM market, and will enable WNS to produce superior results for our customers and shareholders.”
Fiscal 2016 Guidance
WNS has updated guidance for the fiscal year ending March 31, 2016 as follows:
Revenue less repair payments* is expected to be between $523 million and $549 million, up from $503.0 million in fiscal 2015. This assumes an average GBP to USD exchange rate of 1.55 for the remainder of fiscal 2016.· ANI* is expected to range between $90 million and $96 million versus $92.3 million in fiscal 2015. This assumes an average USD to INR exchange rate of 63.5 for the remainder of fiscal 2016.· Based on a diluted share count of 53.3 million shares, the company expects adjusted diluted earnings* per ADS to be in the range of $1.69 to $1.80.
“The company has updated our forecast for fiscal 2016 based on current visibility levels and exchange rates,” said Sanjay Puria, WNS’s Chief Financial Officer. “Our revised guidance for the year reflects top line growth of 4% to 9%, or 8% to 13% on a constant currency* basis. We currently have 95% visibility to the midpoint of the range. The increase in our guidance for adjusted net income* is the result of favorable currency movements and improved operational efficiency.”