WNS announces fiscal 2019 Q4 and annual earnings

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WNS, a leading provider of global Business Process Management (BPM) services, today announced results for the fiscal 2019 fourth quarter and full year ended March 31, 2019.

Highlights – Fiscal 2019 Fourth Quarter

GAAP Financials

• Revenue of $210.5 million, up 3.8% from $202.7 million in Q4 of last year and up 5.4% from $199.7 million last quarter
• Profit of $29.7 million, compared to $24.5 million in Q4 of last year and $28.6 million last quarter
• Diluted earnings per ADS of $0.57, compared to $0.47 in Q4 of last year and $0.55 last quarter

Non-GAAP Financial Measure*

• Revenue less repair payments of $206.6 million, up 4.2% from $198.2 million in Q4 of last year and up 5.5% from $195.9 million last quarter
• Adjusted Net Income (ANI) of $37.8 million, compared to $33.0 million in Q4 of last year and $38.0 million last quarter
• Adjusted diluted earnings per ADS of $0.73, compared to $0.63 in Q4 of last year and $0.73 last quarter

Other Metrics

• Added 8 new clients in the quarter, expanded 24 existing relationships
• Days sales outstanding (DSO) at 30 days

Global headcount of 39,898 as of March 31, 2019

 

Highlights – Fiscal 2019 Full Year

GAAP Financials

• Revenue of $809.1 million, up 6.8% from $758.0 million in fiscal 2018
• Profit of $105.4 million, compared to $86.4 million in fiscal 2018
• Diluted earnings per ADS of $2.02, compared to $1.63 in fiscal 2018

Non-GAAP Financial Measures*

• Revenue less repair payments of $794.0 million, up 7.1% from $741.0 million in fiscal 2018
• Adjusted Net Income (ANI) of $140.4 million, compared to $118.4 million in fiscal 2018

Adjusted diluted earnings per ADS of $2.69, compared to $2.24 in fiscal 2018

Revenue in the fourth quarter was $210.5 million, representing a 3.8% increase versus Q4 of last year and a 5.4% increase from the previous quarter. Revenue less repair payments* in the fourth quarter was $206.6 million, an increase of 4.2% year-over-year and a 5.5% increase sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal fourth quarter grew 9.1% versus Q4 of last year and 5.0% sequentially. Year-over-year, fiscal Q4 revenue improvement was driven by healthy organic growth across key verticals, services, and geographies, which more than offset headwinds from currency movements and hedging losses. Sequentially, revenue growth was the result of broad-based revenue strength and favorability from currency and hedging.

Operating margin in the fourth quarter was 15.3%, as compared to 14.5% in Q4 of last year and 16.7% in the previous quarter. On a year-over-year basis, margin improvement was the result of favorable currency movements net of hedging, operating leverage on higher volumes, and increased productivity. These benefits more than offset the impact of our annual wage increases. Sequentially, margins reduced due to currency movements and hedging and lower productivity associated with Q4 hiring. These headwinds more than offset lower share-based compensation expense and operating leverage on higher volumes.

Fourth quarter adjusted operating margin* was 20.8%, versus 20.4% in Q4 of last year and 23.0% last quarter. Explanations for the adjusted operating margin* movements on a year-over-year and sequential basis are the same as described for GAAP operating margins above, with the exception of share-based compensation.

Profit in the fiscal fourth quarter was $29.7 million, as compared to $24.5 million in Q4 of last year and $28.6 million in the previous quarter. Adjusted net income (ANI)* in Q4 was $37.8 million, up $4.9 million as compared to Q4 of last year and down $0.1 million from the previous quarter. In addition to the operating margin favorability noted previously, year-over-year profit and ANI* were further increased by a lower effective tax rate, higher interest income, and lower debt expense. Sequentially, profit increased as a lower effective tax rate, higher interest income, and lower debt expense more than offset the impact of lower operating margin. ANI* declined sequentially, as the favorable quarter-over-quarter impact of lower share-based compensation expense is excluded from the ANI* calculation.

From a balance sheet perspective, WNS ended Q4 with $235.8 million in cash and investments and $61.4 million of debt. In the fourth quarter, the company generated $44.9 million in cash from operations, and incurred $7.7 million in capital expenditures. Fourth quarter days sales outstanding were 30 days, as compared to 30 days reported in Q4 of last year and 32 days in the previous quarter.

“In the fiscal fourth quarter, WNS once again delivered solid operational and financial performance. Q4 revenue less repair payments* grew 4% year-over-year, or 9% on a constant currency* basis, and we added 8 new logos during the quarter. Our full year results demonstrate WNS’s differentiated positioning in the BPM marketplace and our ability to execute. For fiscal 2019, WNS grew organic, constant currency* revenue by 10%, delivered adjusted operating margin of 21%, grew adjusted diluted earnings* per ADS by 20% to $2.69, and increased our net cash position by $42.3 million,” said Keshav Murugesh, WNS’s Chief Executive Officer. “As we enter fiscal 2020, the BPM marketplace remains healthy with business disruption driving transformational opportunities. We believe WNS’s deep domain expertise, combined with our capabilities across technology and automation, analytics, and process, uniquely positions us to help clients better compete. We remain focused on investing for the future, and to “co-create” with our clients to deliver long-term sustainable business value for all of our key stakeholders”.