SEC Filings

6-K
WNS (HOLDINGS) LTD filed this Form 6-K on 01/31/2019
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Table of Contents

The increase in cost of revenue was primarily due to higher employee cost on account of higher headcount and wage inflation; higher repair payments; higher depreciation costs; higher other costs primarily due to an increase in subcontracting costs; higher facilities costs on account of the expansion of existing facilities in Bangalore, and Nasik, India and China and the addition of new facilities in India at Pune and Vizag, the Philippines, and Spain. These increases were partially offset by lower legal and professional costs, and lower travel costs. Further, the depreciation of the Indian rupee, the South African rand, and Philippine peso against the US dollar by an average of 11.3%, 4.8%, and 4.5%, respectively, for the three months ended December 31, 2018 as compared to the respective average exchange rates for the three months ended December 31, 2017 resulted in a decrease of approximately $6.8 million in the cost of revenue.

Gross Profit

The following table sets forth our gross profit for the periods indicated:

 

     Three months ended December 31,        
     2018     2017     Change  
     (US dollars in millions)  

Gross profit

   $ 74.5     $ 64.1     $ 10.4  

As a percentage of revenue

     37.3     34.0  

As a percentage of revenue less repair payments (non-GAAP)

     38.1     34.6  

Gross profit as a percentage of revenue and revenue less repair payments (non-GAAP) increased primarily due to higher revenues, and lower cost of revenue as a percentage of revenue and revenue less repair payments (non-GAAP) as discussed above, partially offset by a decrease in hedging gain on our revenue and revenue less repair payments (non-GAAP) by $1.8 million to a gain of $0.1 (including a loss of $0.03 million reported in revenue and revenue less repair payments (non-GAAP) due to the adoption of IFRS 9, previously reported in foreign exchange loss / (gains), net) million for the three months ended December 31, 2018 from a gain of $1.9 million for the three months ended December 31, 2017. Cost of revenue as a percentage of revenue and revenue less repair payments (non-GAAP) was also lower due to the depreciation of the Indian rupee, the South African rand, and Philippine peso against the US dollar by an average of 11.3%, 4.8%, and 4.5%, respectively, for the three months ended December 31, 2018 as compared to the respective average exchange rates for the three months ended December 31, 2017.

Our built up seats increased by 8.6% from 29,583 as at December 31, 2017 to 32,137 as at December 31, 2018, during which we expanded seating capacities in our existing delivery centers in Bangalore, and Nasik, India and China and added new facilities in Pune, Vizag India, the Philippines and Spain. This was part of our strategy to expand our delivery capabilities. Our total headcount increased by 9.1% from 35,657 as at December 31, 2017 to 38,892 as at December 31, 2018, resulting in a decrease in our seat utilization rate from 1.22 for the three months ended December 31, 2017 to 1.21 for the three months ended December 31, 2018. This 0.01 decrease in seat utilization resulted in a decrease in our gross profit as a percentage of revenue and revenue less repair payments (non-GAAP) by approximately 0.1% in the three months ended December 31, 2018.

Selling and Marketing Expenses

The following table sets forth the composition of our selling and marketing expenses for the periods indicated:

 

     Three months ended December 31,        
     2018     2017     Change  
     (US dollars in millions)  

Employee costs

   $ 8.3     $ 7.7     $ 0.7  

Other costs

     2.6       2.9       (0.3
  

 

 

   

 

 

   

 

 

 

Total selling and marketing expenses

   $ 10.9     $ 10.6     $ 0.3  
  

 

 

   

 

 

   

 

 

 

As a percentage of revenue

     5.5     5.6  

As a percentage of revenue less repair payments (non-GAAP)

     5.6     5.7  

The increase in selling and marketing expenses was primarily due to an increase in employee costs as a result of an increase in sales headcount, wage inflation and higher share-based compensation expense, partially offset by a decrease in other costs as a result of lower legal and professional costs. This increase was further offset by a depreciation of the pound sterling and the Indian rupee against the US dollar by an average of 2.9% and 11.3%, respectively, for the three months ended December 31, 2018 as compared to the respective average exchange rates for the three months ended December 31, 2017 which resulted in a decrease of approximately of $0.2 million of selling and marketing expenses.

 

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