WNS reports $24.8 million profit for Q2FY19

WNS

Revenue of $199.1 million, up 6.8% from $186.5 million in Q2 of last year and down 0.3% from $199.8 million last quarter

WNS (Holdings) Limited, a leading provider of global Business Process Management (BPM) services, today announced results for the fiscal 2019 second quarter ended September 30, 2018.

WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of global Business Process Management (BPM) services, today announced results for the fiscal 2019 second quarter ended September 30, 2018.

Highlights – Fiscal 2019 Second Quarter:

GAAP Financials

  • Revenue of $199.1 million, up 6.8% from $186.5 million in Q2 of last year and down 0.3% from $199.8 million last quarter
  • Profit of $24.8 million, compared to $18.9 million in Q2 of last year and $22.4 million last quarter
  • Diluted earnings per ADS of $0.48, compared to $0.36 in Q2 of last year and $0.42 last quarter

Non-GAAP Financial Measures*

  • Revenue less repair payments of $195.5 million, up 7.2% from $182.3 million in Q2 of last year and down 0.3% from $196.0 million last quarter
  • Adjusted Net Income (ANI) of $33.7 million, compared to $27.7 million in Q2 of last year and $30.9 million last quarter
  • Adjusted diluted earnings per ADS of $0.65, compared to $0.53 in Q2 of last year and $0.59 last quarter

Other Metrics

  • Added 7 new clients in the quarter, expanded 13 existing relationships
  • Days sales outstanding (DSO) at 35 days
  • Global headcount of 38,516 as of September 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 second quarter was $199.1 million, representing a 6.8% increase versus Q2 of last year and a 0.3% decrease from the previous quarter. Revenue less repair payments* in the second quarter was $195.5 million, an increase of 7.2% year-over-year and a 0.3% decline sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal second quarter grew 11.0% versus Q2 of last year and 3.4% sequentially. Year-over-year, fiscal Q2 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, organic revenue growth was more than offset by currency movements and hedging losses.

Operating margin in the second quarter was 14.5%, as compared to 10.8% in Q2 of last year and 12.6% in the previous quarter. On a year-over-year basis, margin improvement was the result of increased productivity, lower share-based compensation expense, 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 improved due to increased productivity, favorable currency movements net of hedging, and operating leverage on higher volume. These benefits more than offset the impact of our annual wage increases.

Second quarter adjusted operating margin* was 21.0%, versus 18.5% in Q2 of last year and 18.8% 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* improved due to increased productivity, favorable currency movements net of hedging, and operating leverage on higher volume. These benefits more than offset the impact of our annual wage increases.

Profit in the fiscal second quarter was $24.8 million, as compared to $18.9 million in Q2 of last year and $22.4 million in the previous quarter. Adjusted net income (ANI)* in Q2 was $33.7 million, up $6.0 million as compared to Q2 of last year and up $2.9 million from the previous quarter.

From a balance sheet perspective, WNS ended Q2 with $158.1 million in cash and investments and $75.3 million of debt. In the second quarter, the company generated $30.6 million in cash from operations, and incurred $10.7 million in capital expenditures. In the second quarter, WNS repurchased 649,700 ADSs at an average price of $50.73 per ADS. Share repurchases impacted Q2 cash by $33.3 million, and the company also made scheduled debt payments of $14.1 million. Days sales outstanding were 35 days, as compared to 30 days reported in Q2 of last year and 31 days in the previous quarter.

“WNS’s second quarter financial performance continued to demonstrate our solid business momentum and differentiated positioning in the BPM marketplace. In the fiscal second quarter, the company grew revenue less repair payments* 7% year-over-year, or 11% on an organic, constant currency* basis. We were also able to expand our margins during the quarter and deliver a 23% increase in adjusted diluted earnings* per ADS versus the same quarter of last year,” said Keshav Murugesh, WNS’s Chief Executive Officer. “WNS remains committed to helping our clients outperform in their respective industries through co-creation, and to delivering enhanced value to all our key stakeholders.”

Fiscal 2019 Guidance

WNS is updating guidance for the fiscal year ending March 31, 2019 as follows:

  • Revenue less repair payments* is expected to be between $775 million and $801 million, up from $741.0 million in fiscal 2018. This assumes an average GBP to USD exchange rate of 1.31 for the remainder of fiscal 2019.
  • ANI* is expected to range between $127 million and $135 million versus $118.4 million in fiscal 2018. This assumes an average USD to INR exchange rate of 74.0 for the remainder of fiscal 2019.
  • Based on a diluted share count of 52.4 million shares, the company expects adjusted diluted earnings* per ADS to be in the range of $2.42 to $2.58 versus $2.24 in fiscal 2018.

“The company has updated our forecast for fiscal 2019 based on current visibility levels and exchange rates,” said Sanjay Puria, WNS’s Chief Financial Officer. “Our guidance for the year reflects growth in revenue less repair payments* of 5% to 8%, or 8% to 12% on a constant currency* basis. We currently have 98% visibility to the midpoint of the range.”

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