|WNS (HOLDINGS) LTD filed this Form 6-K on 07/19/2018|
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the quarter ended June 30, 2018
Commission File Number 00132945
WNS (HOLDINGS) LIMITED
(Translation of Registrants name into English)
Gate 4, Godrej & Boyce Complex
Pirojshanagar, Vikhroli (W)
Mumbai 400 079, India
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☑ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
TABLE OF CONTENTS
On July 19, 2018, WNS (Holdings) Limited issued an earnings release announcing its fiscal first quarter ended June 30, 2018 results and updated its guidance for fiscal 2019. A copy of the earnings release dated July 19, 2018 is attached hereto as Exhibit 99.1.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: July 19, 2018
WNS Announces Fiscal 2019 First Quarter Earnings, Revises Full Year Guidance
NEW YORK, NY and MUMBAI, INDIA, July 19, 2018 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.
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.
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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, WNSs 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:
The company has updated our forecast for fiscal 2019 based on current visibility levels and exchange rates, said Sanjay Puria, WNSs 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.
WNS will host a conference call on July 19, 2018 at 8:00 am (Eastern) to discuss the companys 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.
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.
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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).
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WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, amounts in millions, except share and per share data)
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WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, amounts in millions, except share and per share data)
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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 periods 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 managements 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 WNSs 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.
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Reconciliation of revenue (GAAP) to revenue less repair payments (non-GAAP) and constant currency revenue less repair payments (non-GAAP)
Reconciliation of cost of revenue (GAAP to non-GAAP)
Reconciliation of gross profit (GAAP to non-GAAP)
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Reconciliation of selling and marketing expenses (GAAP to non-GAAP)
Reconciliation of general and administrative expenses (GAAP to non-GAAP)
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Reconciliation of operating profit / (loss) (GAAP to non-GAAP)
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Reconciliation of profit / (loss) (GAAP) to ANI (non-GAAP)
(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 companys 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.
Reconciliation of basic income per ADS (GAAP to non-GAAP)
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Reconciliation of diluted income per ADS (GAAP to non-GAAP)
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