PRESS RELEASE
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WNS Announces First Quarter Fiscal 2014 Earnings
Highlights –
GAAP Financials
-
Revenue of
$122.1 million , up 13.3% from$107.8 million in Q1 of last year and up 2.5% from$119.2 million last quarter -
Profit of
$6.7 million , compared to$2.8 million in Q1 of last year and$8.2 million last quarter -
Diluted earnings per ADS of
$0.13 , compared to$0.06 in Q1 of last year and$0.16 last quarter
Non-GAAP Financial Measures*
-
Revenue less repair payments of
$113.8 million , up 10.9% from$102.6 million in Q1 of last year and up 0.9% from$112.8 million last quarter -
Adjusted Net Income (ANI) of
$14.4 million , compared to$11.1 million in Q1 of last year and$15.8 million last quarter -
Adjusted diluted earnings per ADS of
$0.28 , compared to$0.22 in Q1 of last year and$0.30 last quarter
Other Metrics
- Added 6 new clients in the quarter, expanded 14 existing relationships
- Days sales outstanding (DSO) at 31 days
-
Global headcount of 26,178 as of
June 30, 2013
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 were
Adjusted operating margin* for the quarter was 13.9%, as compared to 13.2% in Q1 of last year, and 15.8% reported in the fourth quarter. On a year-over-year basis, operating margin improved as a result of depreciation in the Indian rupee against the US dollar, and operating leverage associated with higher revenue. Partially offsetting this favorability were investments in global infrastructure which reduced seat utilization, and the impact of our annual wage increases. The sequential reduction in adjusted operating margin* from Q4 to Q1 is largely seasonal in nature, driven by the timing of our annual wage increases.
Adjusted net income (ANI)* in the fiscal first quarter was
From a balance sheet perspective, WNS ended the fiscal first quarter
with
“Our first quarter revenue performance represented 10.9% year-over-year
growth, and excluding the impact of the depreciating British Pound,
12.6% growth on a constant currency* basis. We believe that as the year
progresses and revenues increase, the company will be able to leverage
the investments made over the past few years to drive expanding margins
and profits,” said
“We remain comfortable with the environment in which we are currently operating. Demand for BPO services is robust, and WNS’s differentiated capabilities are resonating well with both existing and prospective clients. The entire WNS team will continue to focus on creating increased business value for all of our key stakeholders, including clients, employees and shareholders.”
Fiscal 2014 Guidance
WNS has updated guidance for the fiscal year ending
-
Revenue less repair payments* is expected to be between
$462 million and $478 million , up from$436.1 million in fiscal 2013. This assumes an average GBP to USD exchange rate of 1.50 for the remainder of fiscal 2014. -
ANI* is expected to range between
$66 million and $70 million , up from$53.1 million in fiscal 2013. This assumes an average USD to INR exchange rate of 60.0 for the remainder of fiscal 2014.
“Consistent with the company’s guidance philosophy, our updated forecast
for fiscal 2014 is based on current visibility levels and exchange
rates. Guidance for the year reflects top line growth of 6% to 10%, with
95% visibility to the midpoint of the range. This guidance represents 8%
to 12% revenue growth on a constant currency* basis. Our ANI* guidance
reflects 24% to 32% year-over-year improvement. We are committed to
funding our strategic investment programs while driving metrics-based,
operational improvements across the organization. These programs are
critical to differentiating our services, growing revenue and expanding
profitability going forward,” said
Conference Call
WNS will host a conference call on
About WNS
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 2014
guidance and 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 Fusion’s volume of
business; our ability to successfully integrate Fusion’s business
operations with ours; our ability to successfully leverage Fusion’s
assets to grow our revenue, expand our service offerings and market
share and achieve accretive benefits from our acquisition of Fusion;
worldwide economic and business conditions; political or economic
instability in the jurisdictions where we have operations; regulatory,
legislative and judicial developments; our ability to attract and retain
clients; technological innovation; telecommunications or technology
disruptions; future regulatory actions and conditions in our operating
areas; our dependence on a limited number of clients in a limited number
of industries; our ability to expand our business or effectively manage
growth; our ability to hire and retain enough sufficiently trained
employees to support our operations; negative public reaction in the US
or the
References to “$” and “USD” refer to
* 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.
About Non-GAAP Financial Measures
The financial information in this release is focused on non-GAAP
financial measures as we believe that they reflect more accurately our
operating performance. Reconciliations of these non-GAAP financial
measures to our GAAP operating results are included below. A discussion
of our GAAP measures is contained in “Part I –Item 5. Operating and
Financial Review and Prospects” in our annual report on Form 20-F filed
with the
For financial statement reporting purposes, WNS has two reportable
segments: WNS Global BPO and WNS Auto Claims BPO. 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
(1) for “fault” repair cases where WNS acts as the principal in its
dealings with the third party repair centers and its clients and (2) for
“non-fault” repair cases with respect to one client to whom WNS provides
services similar to its “fault” repair cases. WNS believes that revenue
less repair payments for “fault” repairs reflects more accurately the
value addition of the business process outsourcing 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
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 calculated, for the indicated periods, by restating the prior period’s revenue less repair payments denominated in pound sterling or Euro, as applicable, using the foreign exchange rate used for the latest period.
WNS also presents (1) adjusted operating margin, which refers to adjusted operating profit (calculated as operating profit excluding amortization of intangible assets and share-based compensation expense) as a percentage of revenue less repair payments, and (2) ANI, which is calculated as profit excluding amortization of intangible assets and share-based compensation expense, and other non-GAAP measures included in this release as supplemental measures of its performance. WNS presents these non-GAAP measures because it believes they assist investors in comparing its performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance. In addition, it uses these non-GAAP measures (i) as a factor in evaluating management’s performance when determining incentive compensation and (ii) to evaluate the effectiveness of its business strategies. These non-GAAP measures are not meant to be considered in isolation or as a substitute for WNS’s financial results prepared in accordance with IFRS.
WNS (HOLDINGS) LIMITED | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(Unaudited, amounts in millions, except share and per share data) | |||||||||||||||
Three months ended | |||||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
|||||||||||||
Revenue | $ | 122.1 | $ | 107.8 | $ | 119.2 | |||||||||
Cost of revenue | 84.4 | 73.4 | 81.4 | ||||||||||||
Gross profit | 37.7 | 34.4 | 37.8 | ||||||||||||
Operating expenses: | |||||||||||||||
Selling and marketing expenses | 7.8 | 7.4 | 7.8 | ||||||||||||
General and administrative expenses | 15.0 | 12.6 | 14.2 | ||||||||||||
Foreign exchange loss / (gain), net | 0.5 | 2.4 | (1.1 | ) | |||||||||||
Amortization of intangible assets | 6.2 | 6.6 | 6.7 | ||||||||||||
Operating profit | 8.2 | 5.2 | 10.2 | ||||||||||||
Other income, net | (2.2 | ) | (1.0 | ) | (1.6 | ) | |||||||||
Finance expense | 0.8 | 1.0 | 0.9 | ||||||||||||
Profit before income taxes | 9.6 | 5.2 | 10.9 | ||||||||||||
Provision for income taxes | 2.8 | 2.4 | 2.8 | ||||||||||||
Profit | $ | 6.7 | $ | 2.8 | $ | 8.2 | |||||||||
Earnings per share of ordinary share | |||||||||||||||
Basic | $ | 0.13 | $ | 0.06 | $ | 0.16 | |||||||||
Diluted | $ | 0.13 | $ | 0.06 | $ | 0.16 | |||||||||
Growth of revenue (GAAP) and revenue less repair payments (non-GAAP) |
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Three months ended |
Three months ended |
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Jun 30, |
Jun 30, |
Mar 31, |
Jun 30, |
Mar 31, |
||||||||||||||||
(Amounts in millions) | (% growth) | |||||||||||||||||||
Revenue (GAAP) | $ | 122.1 | $ | 107.8 | $ | 119.2 |
|
13.3 | % | 2.5 | % | |||||||||
Less: Payments to repair centers | 8.4 | 5.2 | 6.5 | 60.9 | % | 29.7 | % | |||||||||||||
Revenue less repair payments (Non-GAAP) | $ | 113.8 | $ | 102.6 | $ | 112.8 | 10.9 | % | 0.9 | % | ||||||||||
Constant currency revenue less
repair payments (Non-GAAP) |
113.8 | 101.1 | 112.0 | 12.6 | % | 1.6 | % | |||||||||||||
Reconciliation of cost of revenue (GAAP to non-GAAP) |
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Three months ended | ||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
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(Amounts in millions) | ||||||||||||
Cost of revenue (GAAP) | $ | 84.4 | $ | 73.4 | $ | 81.4 | ||||||
Less: Payments to repair centers | 8.4 | 5.2 | 6.5 | |||||||||
Less: Share-based compensation expense | 0.3 | 0.4 | 0.3 | |||||||||
Adjusted cost of revenue (excluding payment to repair centers and share-based compensation expense) (Non-GAAP) | $ | 75.7 | $ | 67.8 | $ | 74.7 | ||||||
Reconciliation of gross profit (GAAP to non-GAAP) |
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Three months ended | |||||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
|||||||||||||
(Amounts in millions) | |||||||||||||||
Gross profit (GAAP) | $ | 37.7 | $ | 34.4 |
|
$ |
37.8 |
||||||||
Add: Share-based compensation expense | 0.3 | 0.4 | 0.3 | ||||||||||||
Adjusted gross profit (excluding share-based compensation expense) (Non-GAAP) | $ | 38.0 | $ | 34.8 |
|
$ |
38.1 |
||||||||
Three months ended | |||||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
|||||||||||||
Gross profit as a percentage of revenue (GAAP) | 30.9 | % | 31.9 | % | 31.7 | % | |||||||||
Adjusted gross profit (excluding share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 33.4 | % | 33.9 | % | 33.8 | % | |||||||||
Reconciliation of selling and marketing expenses (GAAP to non-GAAP) |
||||||||||||
Three months ended | ||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
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(Amounts in millions) | ||||||||||||
Selling and marketing expenses (GAAP) | $ | 7.8 | $ | 7.4 | $ | 7.8 | ||||||
Less: Share-based compensation expense | 0.1 | 0.1 | 0.1 | |||||||||
Adjusted selling and marketing expenses (excluding share-based compensation expense) (Non-GAAP) | $ | 7.8 | $ | 7.3 | $ | 7.7 | ||||||
Three months ended | ||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
||||||||||
Selling and marketing expenses as a percentage of revenue (GAAP) | 6.4% | 6.9% | 6.5% | |||||||||
Adjusted selling and marketing expenses (excluding share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 6.8% | 7.1% | 6.8% | |||||||||
Reconciliation of general and administrative expenses (GAAP to non-GAAP) |
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Three months ended | |||||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
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(Amounts in millions) | |||||||||||||||
General and administrative expenses (GAAP) | $ | 15.0 | $ | 12.6 | $ | 14.2 | |||||||||
Less: Share-based compensation expense | 1.1 | 1.1 | 0.6 | ||||||||||||
Adjusted general and administrative expenses (excluding share-based compensation expense) (Non-GAAP) | $ | 13.9 | $ | 11.5 | $ | 13.6 | |||||||||
Three months ended | |||||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
|||||||||||||
General and administrative expenses as a percentage of revenue (GAAP) | 12.3 | % | 11.7 | % | 11.9 | % | |||||||||
Adjusted general and administrative expenses (excluding share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 12.2 | % | 11.2 | % | 12.1 | % | |||||||||
Reconciliation of operating profit (GAAP to non-GAAP) |
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Three months ended | |||||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
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(Amounts in millions) | |||||||||||||||
Operating profit (GAAP) | $ | 8.2 | $ | 5.2 | $ | 10.2 | |||||||||
Add: Amortization of intangible assets | 6.2 | 6.6 | $ | 6.7 | |||||||||||
Add: Share-based compensation expense | 1.5 | 1.7 | 0.9 | ||||||||||||
Adjusted operating profit (excluding amortization of intangible assets and share-based compensation expense) (Non-GAAP) | $ | 15.9 | $ | 13.5 | $ | 17.9 | |||||||||
Three months ended | |||||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
|||||||||||||
Operating profit as a percentage of revenue (GAAP) | 6.7 | % | 4.9 | % | 8.6 | % | |||||||||
Adjusted operating profit (excluding amortization of intangible assets and share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 13.9 | % | 13.2 | % | 15.8 | % | |||||||||
Reconciliation of profit (GAAP to non-GAAP) |
|||||||||||||||
Three months ended | |||||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
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(Amounts in millions) | |||||||||||||||
Profit (GAAP) | $ | 6.7 | $ | 2.8 | $ | 8.2 | |||||||||
Add: Amortization of intangible assets | 6.2 | 6.6 | 6.7 | ||||||||||||
Add: Share-based compensation expense | 1.5 | 1.7 | 0.9 | ||||||||||||
Adjusted net income (excluding amortization of intangible assets and share-based compensation expense) (Non-GAAP) | $ | 14.4 | $ | 11.1 | $ | 15.8 | |||||||||
Three months ended | |||||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
|||||||||||||
Profit as a percentage of revenue (GAAP) | 5.5 | % | 2.6 | % | 6.9 | % | |||||||||
Adjusted net income (excluding amortization of intangible assets and share-based compensation expense) as a percentage of revenue less repair payments (Non-GAAP) | 12.7 | % | 10.8 | % | 14.0 | % | |||||||||
Reconciliation of basic income per ADS (GAAP to non-GAAP) |
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|
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Three months ended | ||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
||||||||||
Basic earnings per ADS (GAAP) | $ | 0.13 | $ | 0.06 | $ | 0.16 | ||||||
Add: Adjustments for amortization of intangible assets and share-based compensation expense | 0.15 | 0.16 | 0.15 | |||||||||
Adjusted basic net income per ADS (excluding amortization of intangible assets and share-based compensation expense) (Non-GAAP) | $ | 0.29 | $ | 0.22 | $ | 0.31 | ||||||
Reconciliation of diluted income per ADS (GAAP to non-GAAP) |
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Three months ended | |||||||||||||
Jun 30, |
Jun 30, |
Mar 31, |
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Diluted earnings per ADS (GAAP) | $ | 0.13 | $ | 0.06 | $ | 0.16 | |||||||
Add: Adjustments for amortization of intangible assets and share-based compensation expense. | 0.15 | 0.16 | 0.15 | ||||||||||
Adjusted diluted net income per ADS (excluding amortization of intangible assets and share-based compensation expense) (Non-GAAP) | $ | 0.28 | $ | 0.22 | $ | 0.30 | |||||||
WNS (HOLDINGS) LIMITED | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||||||
(Amounts in millions, except share and per share data) | ||||||||||
As at |
As at |
|||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 23.4 | $ | 27.9 | ||||||
Investments | 79.0 | 46.5 | ||||||||
Trade receivables, net | 57.6 | 64.4 | ||||||||
Unbilled revenue | 28.3 | 25.5 | ||||||||
Funds held for clients | 19.7 | 19.9 | ||||||||
Derivative assets | 4.2 | 7.6 | ||||||||
Prepayments and other current assets | 15.7 | 12.0 | ||||||||
Total current assets | 227.9 | 203.8 | ||||||||
Non-current assets: | ||||||||||
Goodwill | 83.1 | 87.1 | ||||||||
Intangible assets | 82.1 | 92.1 | ||||||||
Property and equipment, net | 46.2 | 48.4 | ||||||||
Derivative assets | 1.7 | 3.8 | ||||||||
Investments | 0.0 | 43.2 | ||||||||
Deferred tax assets | 42.2 | 41.6 | ||||||||
Other non-current assets | 16.1 | 14.8 | ||||||||
Total non-current assets | 271.3 | 331.1 | ||||||||
TOTAL ASSETS | $ | 499.2 | $ | 534.9 | ||||||
LIABILITIES AND EQUITY | ||||||||||
Current liabilities: | ||||||||||
Trade payables | $ | 27.7 | $ | 29.3 | ||||||
Provisions and accrued expenses | 27.6 | 26.7 | ||||||||
Derivative liabilities | 8.0 | 3.9 | ||||||||
Pension and other employee obligations | 24.2 | 32.7 | ||||||||
Short term line of credit | 53.3 | 54.9 | ||||||||
Current portion of long term debt | 7.8 | 7.7 | ||||||||
Deferred revenue | 5.6 | 6.5 | ||||||||
Current taxes payable | 5.6 | 5.2 | ||||||||
Other liabilities | 9.0 | 15.4 | ||||||||
Total current liabilities | 168.8 | 182.4 | ||||||||
Non-current liabilities: | ||||||||||
Derivative liabilities | 5.1 | 1.3 | ||||||||
Pension and other employee obligations | 4.7 | 5.6 | ||||||||
Long term debt | 33.1 | 33.7 | ||||||||
Deferred revenue | 3.0 | 3.3 | ||||||||
Other non-current liabilities | 3.5 | 4.4 | ||||||||
Deferred tax liabilities | 3.5 | 3.6 | ||||||||
Total non-current liabilities | 53.0 | 51.9 | ||||||||
TOTAL LIABILITIES | $ | 221.7 | $ | 234.3 | ||||||
Shareholders' equity: | ||||||||||
Share capital (ordinary shares $ 0.16 (10 pence) par value, authorized 60,000,000 shares; issued: 50,770,710 and 50,588,044 shares each as at June 30, 2013 and March 31, 2013, respectively) | 8.0 | 7.9 | ||||||||
Share premium | 271.0 | 269.3 | ||||||||
Retained earnings | 86.8 | 80.1 | ||||||||
Other components of equity | (88.3 | ) | (56.7 | ) | ||||||
Total shareholders' equity | 277.5 | 300.6 | ||||||||
TOTAL LIABILITIES AND EQUITY | $ | 499.2 | $ | 534.9 |
Source:
WNS (Holdings) Limited
Investors:
David
Mackey
Corporate SVP–Finance & Head of Investor Relations
+1
201 942 6261
ir@wns.com
or
Media:
Sumi
Gupta
Public Relations
+91 (22) 4095 2263
sumi.gupta@wns.com
; pr@wns.com