|Highlights – Fiscal 2022 First Quarter:|
Non-GAAP Financial Measures*
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 $253.2 million, representing a 21.9% increase versus Q1 of last year and a 3.8% increase from the previous quarter. Revenue less repair payments* in the first quarter was $236.3 million, an increase of 17.3% year-over-year and a 3.5% increase sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal first quarter was up 11.4% versus Q1 of last year and 3.0% sequentially. Year-over-year, fiscal Q1 revenue improved as a result of reduced COVID-19 headwinds, new client additions, the expansion of existing relationships, and currency movements net of hedging. Sequentially, revenue improvement was driven by broad-based revenue growth and currency movements net of hedging.
Profit in the fiscal first quarter was $26.8 million, as compared to $14.8 million in Q1 of last year and $27.5 million in the previous quarter. Year-over-year, profit increased as a result of easing pandemic-related pressures, revenue growth driven by new logos and client expansions, currency movements net of hedging, lower amortization of intangibles expense, interest income associated with a tax refund, and a non-recurring tax benefit on liquid mutual funds. These benefits more than offset the impact of wage increases, contractual productivity commitments, the reinstatement of our corporate leave policy, and higher share-based compensation expense. Sequentially, Q1 profit decreased as a result of wage increases, contractual productivity commitments, higher share-based compensation expense, employee hiring in advance of revenue, COVID-related business continuity costs, and the reinstatement of our corporate leave policy. These headwinds were partially offset by increased revenue, reduced SG&A driven by Q4 bonus and incentive amounts, higher interest income associated with a tax refund, a non-recurring tax benefit on liquid mutual funds, and currency movements net of hedging.
Adjusted net income (ANI)* in Q1 was $39.0 million, as compared to $26.1 million in Q1 of last year and $36.7 million in the previous quarter. Explanations for the ANI* movements on a year-over-year and sequential basis are the same as described for GAAP profit above with the exception of amortization of intangible expenses, share-based compensation costs and associated tax impacts, which are excluded from ANI*.
From a balance sheet perspective, WNS ended Q1 with $311.3 million in cash and investments and $16.8 million of debt. In the first quarter, the company generated $15.3 million in cash from operations and incurred $7.7 million in capital expenditures. WNS also repurchased 1,100,000 ADSs at an average price of $77.31 per ADS, which impacted Q1 cash by $85.0 million. First quarter days sales outstanding were 32 days, as compared to 39 days reported in Q1 of last year and 30 days in the previous quarter.
“We are pleased with our fiscal first quarter financial performance, as the company posted solid revenue growth and healthy margins. Despite challenges related to a spike of COVID-19 cases in India during the quarter, WNS was able to execute well in a difficult environment, protecting the health and safety of our employees and the mission-critical operations of our clients,” said Keshav Murugesh, WNS’s Chief Executive Officer. “The company continues to see significant opportunities to capitalize on an under-penetrated customer base, a strong new business pipeline, and a robust BPM market driven by demand for digital transformation and improved competitive positioning.”
The COVID-19 pandemic is having a significant impact on the global economy, our clients’ businesses, and on WNS’s operations, financials, and visibility. Revenue has been pressured by lower client volumes, delays in new business ramps, client concessions, and facility lockdowns which impact service delivery. WNS is actively working to manage our clients’ changing requirements, adapt our service delivery models, ensure data security, and manage costs. In the fiscal first quarter, the company delivered 99% of our clients’ requirements. Going forward, impacts to our financial performance will be a function of how long the COVID-19 pandemic lasts on a global basis, and how long it takes our clients’ businesses to stabilize and recover.
Fiscal 2022 Guidance
WNS is updating guidance for the fiscal year ending March 31, 2022 as follows:
- Revenue less repair payments* is expected to be between $961 million and $1,009 million, up from $868.7 million in fiscal 2021. Guidance assumes an average GBP to USD exchange rate of 1.38 for the remainder of fiscal 2022.
- ANI* is expected to range between $158 million and $168 million versus $141.7 million in fiscal 2021. Guidance assumes an average USD to INR exchange rate of 74.50 for the remainder of fiscal 2022.
- Based on a diluted share count of 51.2 million shares, the company expects fiscal 2022 adjusted diluted earnings* per ADS to be in the range of $3.09 to $3.28 versus $2.72 in fiscal 2021
WNS will host a conference call on July 15, 2021 at 8:00 am (Eastern) to discuss the company's quarterly results. To access the call in “listen-only” mode, please join live via the company’s investor relations website at ir.wns.com. For call participants, please use the following details: US dial-in +1-888-656-9018; international dial-in +1-503-343-6030; participant passcode 2904169. A replay will be available for one week following the call at +1-855-859-2056; international dial-in +1-404-537-3406; passcode 2904169, 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 Business Process Management (BPM) company. WNS combines deep industry knowledge with technology, analytics and process expertise to co-create innovative, digitally led transformational solutions with over 375 clients across various industries. WNS delivers an entire spectrum of BPM solutions including industry-specific offerings, customer experience services, finance and accounting, human resources, procurement, and research and analytics to re-imagine the digital future of businesses. As of June 30, 2021, WNS had 46,918 professionals across 57 delivery centers worldwide including facilities in Australia, China, Costa Rica, India, the Philippines, Poland, Romania, South Africa, Spain, Sri Lanka, Turkey, the United Kingdom, and the United States. For more information, visit www.wns.com.
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, express or implied forward-looking statements relating to our expectations regarding the impact of the COVID-19 pandemic on our business, our cost structure, 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 2022 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, our dependence on a limited number of clients in a limited number of industries; the impact of the COVID-19 pandemic on our and our clients’ business, financial condition, results of operations and cash flows; currency fluctuations; political or economic instability in the jurisdictions where we have operations; regulatory, legislative and judicial developments; increasing competition in the BPM industry; technological innovation; our liability arising from fraud or unauthorized disclosure of sensitive or confidential client and customer data; telecommunications or technology disruptions; our ability to attract and retain clients; negative public reaction in the US or the UK to offshore outsourcing; our ability to collect our receivables from, or bill our unbilled services to our clients; 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).
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, amounts in millions, except share and per share data)
|Three months ended|
|Cost of revenue||170.2||140.4||158.5|
Selling and marketing expenses
General and administrative expenses
Foreign exchange (gain) / loss, net
Amortization of intangible assets
|Other income, net||(4.0||)||(3.2||)||(3.6||)|
|Profit before income taxes||33.6||19.5||34.5|
|Income tax expense||6.9||4.6||7.0|
|Profit after tax||$||26.8||$||14.8||$||27.5|
|Earnings per share of ordinary share|
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, amounts in millions, except share and per share data)
|As at Jun 30, 2021||As at Mar 31, 2021|
Cash and cash equivalents
Trade receivables, net
Funds held for clients
Prepayments and other current assets
|Total current assets||433.5||509.9|