WNS Announces Fiscal 2023 Second Quarter Earnings, Revises Full Year Guidance
WNS (Holdings) Limited (NYSE: WNS) reported a robust second quarter for fiscal 2023, with revenue of $307.1 million, up 12.2% year-over-year and 4.0% sequentially. Profit increased to $33.2 million, while adjusted net income reached $46.6 million. Notably, the company added nine new clients and expanded 21 existing relationships. WNS updated its fiscal 2023 guidance, projecting revenue less repair payments between $1,110 million and $1,150 million, and adjusted diluted earnings per ADS in the range of $3.68 to $3.87.
- Revenue of $307.1 million, up 12.2% YoY and 4.0% QoQ.
- Adjusted net income of $46.6 million, compared to $43.1 million YoY.
- Added 9 new clients and expanded 21 existing relationships.
- Fiscal 2023 guidance increased to $1,110 million - $1,150 million revenue.
- Increased wage expenses and return-to-office costs.
Highlights – Fiscal 2023 Second Quarter: |
GAAP Financials
Non-GAAP Financial Measures*
Other Metrics
|
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
Profit in the fiscal second quarter was
Adjusted net income (ANI)* in Q2 was
From a balance sheet perspective, WNS ended Q2 with
“Our second quarter financial results continue to demonstrate the strength and resiliency in our business model in the midst of a challenging macro environment,” said
Fiscal 2023 Guidance
WNS is updating guidance for the fiscal year ending
-
Revenue less repair payments* is expected to be between
and$1,110 million , up from$1,150 million in fiscal 2022. Guidance includes 9 months of revenue from Vuram and assumes an average GBP to USD exchange rate of 1.12 for the remainder of fiscal 2023.$1,026.8 million -
ANI* is expected to range between
and$186 million versus$196 million in fiscal 2022. Guidance assumes an average USD to INR exchange rate of 82.0 for the remainder of fiscal 2023.$174.8 million -
Based on a diluted share count of 50.6 million shares, the company expects fiscal 2023 adjusted diluted earnings* per ADS to be in the range of
to$3.68 versus$3.87 in fiscal 2022.$3.41
“The company has updated our forecast for fiscal 2023 based on current visibility levels and exchange rates,” said
_____________________________________
* 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.
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, expressed or implied forward-looking statements relating to discussions of our strategic initiatives and the expected resulting benefits, our growth opportunities, industry environment, our expectations concerning our future financial performance and growth potential, including our fiscal 2023 guidance, future profitability, our expectations regarding the benefits from our acquisition of Vuram (including the impact of Vuram on our results of operations), 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 ongoing 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
References to “$” and “USD” refer to
|
||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||
(Unaudited, amounts in millions, except share and per share data) |
||||||||||||
|
Three months ended |
|||||||||||
|
2022 |
2021 |
2022 |
|||||||||
Revenue |
$ |
307.1 |
|
$ |
273.6 |
|
$ |
295.3 |
|
|||
Cost of revenue |
|
203.0 |
|
|
180.8 |
|
|
198.4 |
|
|||
Gross profit |
|
104.1 |
|
|
92.8 |
|
|
97.0 |
|
|||
Operating expenses: |
|
|
|
|||||||||
Selling and marketing expenses |
|
16.0 |
|
|
14.0 |
|
|
14.2 |
|
|||
General and administrative expenses |
|
43.1 |
|
|
36.2 |
|
|
40.4 |
|
|||
Foreign exchange (gain), net |
|
(1.6 |
) |
|
(1.4 |
) |
|
(1.9 |
) |
|||
Amortization of intangible assets |
|
5.3 |
|
|
2.8 |
|
|
3.0 |
|
|||
Operating profit |
|
41.3 |
|
|
41.3 |
|
|
41.3 |
|
|||
Other income, net |
|
(3.1 |
) |
|
(2.5 |
) |
|
(3.4 |
) |
|||
Finance expense |
|
4.0 |
|
|
3.4 |
|
|
3.2 |
|
|||
Profit before income taxes |
|
40.4 |
|
|
40.4 |
|
|
41.4 |
|
|||
Income tax expense |
|
7.2 |
|
|
8.2 |
|
|
8.4 |
|
|||
Profit after tax |
$ |
33.2 |
|
$ |
32.1 |
|
$ |
33.1 |
|
|||
|
|
|
|
|||||||||
Earnings per share of ordinary share |
|
|
|
|||||||||
Basic |
$ |
0.69 |
|
$ |
0.66 |
|
$ |
0.68 |
|
|||
Diluted |
$ |
0.66 |
|
$ |
0.64 |
|
$ |
0.65 |
|
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
||||||||
(Unaudited, amounts in millions, except share and per share data) |
||||||||
|
As at |
As at |
||||||
ASSETS |
|
|
||||||
Current assets: |
|
|
||||||
Cash and cash equivalents |
$ |
78.4 |
|
$ |
108.2 |
|
||
Investments |
|
112.2 |
|
|
211.4 |
|
||
Trade receivables, net |
|
103.4 |
|
|
100.5 |
|
||
Unbilled revenue |
|
95.1 |
|
|
87.0 |
|
||
Funds held for clients |
|
9.3 |
|
|
11.6 |
|
||
Derivative assets |
|
16.3 |
|
|
10.4 |
|
||
Contract assets |
|
9.7 |
|
|
10.2 |
|
||
Prepayments and other current assets |
|
33.0 |
|
|
28.8 |
|
||
Total current assets |
|
457.3 |
|
|
568.1 |
|
||
Non-current assets: |
|
|
||||||
|
|
225.3 |
|
|
123.5 |
|
||
Intangible assets |
|
114.0 |
|
|
65.4 |
|
||
Property and equipment |
|
44.2 |
|
|
49.3 |
|
||
Right-of-use assets |
|
156.0 |
|
|
142.6 |
|
||
Derivative assets |
|
6.0 |
|
|
3.2 |
|
||
Investments |
|
74.7 |
|
|
93.4 |
|
||
Contract assets |
|
41.9 |
|
|
39.8 |
|
||
Deferred tax assets |
|
35.8 |
|
|
34.8 |
|
||
Other non-current assets |
|
46.2 |
|
|
44.3 |
|
||
Total non-current assets |
|
744.0 |
|
|
596.4 |
|
||
TOTAL ASSETS |
$ |
1,201.4 |
|
$ |
1,164.5 |
|
||
|
|
|
||||||
LIABILITIES AND EQUITY |
|
|
||||||
Current liabilities: |
|
|
||||||
Trade payables |
$ |
22.6 |
|
$ |
27.8 |
|
||
Provisions and accrued expenses |
|
33.7 |
|
|
36.8 |
|
||
Derivative liabilities |
|
18.5 |
|
|
6.0 |
|
||
Pension and other employee obligations |
|
81.1 |
|
|
105.8 |
|
||
Current portion of long-term debt |
|
15.8 |
|
|
— |
|
||
Contract liabilities |
|
13.6 |
|
|
13.7 |
|
||
Current taxes payable |
|
3.4 |
|
|
2.3 |
|
||
Lease liabilities |
|
23.1 |
|
|
27.0 |
|
||
Other liabilities |
|
25.5 |
|
|
11.4 |
|
||
Total current liabilities |
|
237.4 |
|
|
230.7 |
|
||
Non-current liabilities: |
|
|
||||||
Derivative liabilities |
|
2.7 |
|
|
0.8 |
|
||
Pension and other employee obligations |
|
17.6 |
|
|
16.2 |
|
||
Long-term debt |
|
63.7 |
|
|
— |
|
||
Contract liabilities |
|
9.4 |
|
|
13.3 |
|
||
Other non-current liabilities |
|
7.4 |
|
|
0.1 |
|
||
Lease liabilities |
|
154.5 |
|
|
140.0 |
|
||
Deferred tax liabilities |
|
21.6 |
|
|
9.3 |
|
||
Total non-current liabilities |
|
276.8 |
|
|
179.8 |
|
||
TOTAL LIABILITIES |
$ |
514.2 |
|
$ |
410.5 |
|
||
|
|
|
||||||
Shareholders' equity: |
|
|
||||||
Share capital (ordinary shares |
|
7.8 |
|
7.8 |
||||
Share premium |
|
137.1 |
|
|
110.3 |
|
||
Retained earnings |
|
882.7 |
|
|
818.4 |
|
||
Other reserves |
|
4.6 |
|
|
2.7 |
|
||
Other components of equity |
|
(263.5 |
) |
|
(185.1 |
) |
||
Total shareholders’ equity including shares held in treasury |
$ |
768.8 |
|
$ |
754.0 |
|
||
Less: 1,100,000 shares as at |
|
(81.6 |
) |
|
— |
|
||
Total shareholders’ equity |
$ |
687.1 |
|
$ |
754.0 |
|
||
TOTAL LIABILITIES AND EQUITY |
$ |
1,201.4 |
|
$ |
1,164.5 |
|
About Non-GAAP Financial Measures
The financial information in this release includes certain non-GAAP financial measures that we believe more accurately reflect our core operating performance. Reconciliations of these non-GAAP financial measures to our GAAP operating results are included below. A more detailed discussion of our GAAP results 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 BPM and WNS Auto Claims BPM. 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 for “fault” repair cases where WNS acts as the principal in its dealings with the third party repair centers and its clients. WNS believes that revenue less repair payments for “fault” repairs reflects more accurately the value addition of the business process management 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 presented by recalculating prior period’s revenue less repair payments denominated in currencies other than in US dollars using the foreign exchange rate used for the latest period, without taking into account the impact of hedging gains/losses. Our non-US dollar denominated revenues include, but are not limited to, revenues denominated in pound sterling, South African rand, Australian dollar and Euro.
WNS also presents or discusses (1) adjusted operating margin, which refers to adjusted operating profit (calculated as operating profit / (loss) excluding goodwill impairment, share-based expense and amortization of intangible assets) as a percentage of revenue less repair payments, (2) ANI, which is calculated as profit excluding goodwill impairment, share-based expense and amortization of intangible assets and including the tax effect thereon, (3) Adjusted net income margin, which refers to ANI as a percentage of revenue less repair payments, (4) net cash, which refers to cash and cash equivalents plus investments less long-term debt (including the current portion) and other non-GAAP financial measures included in this release as supplemental measures of its performance. WNS presents these non-GAAP financial measures because it believes they assist investors in comparing its performance across reporting periods on a consistent basis by excluding items that are non-recurring in nature and those it believes are not indicative of its core operating performance. In addition, it uses these non-GAAP financial 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 financial measures are not meant to be considered in isolation or as a substitute for WNS’ financial results prepared in accordance with IFRS.
The company is not able to provide our forward-looking GAAP revenue, profit and earnings per ADS without unreasonable efforts for a number of reasons, including our inability to predict with a reasonable degree of certainty the payments to repair centers, our future share-based compensation expense under IFRS 2 (Share Based payments), amortization of intangibles associated with future acquisitions, goodwill impairment and currency fluctuations. As a result, any attempt to provide a reconciliation of the forward-looking GAAP financial measures (revenue, profit, earnings per ADS) to our forward-looking non-GAAP financial measures (revenue less repair payments*, ANI* and Adjusted diluted earnings* per ADS, respectively) would imply a degree of likelihood that we do not believe is reasonable.
Reconciliation of revenue (GAAP) to revenue less repair payments (non-GAAP) and constant currency revenue less repair payments (non-GAAP) |
||||||||||||||||||
|
Three months ended |
Three months ended
|
||||||||||||||||
|
|
|
|
|
|
|||||||||||||
|
(Amounts in millions) |
(% growth) |
||||||||||||||||
Revenue (GAAP) |
$ |
307.1 |
|
$ |
273.6 |
|
$ |
295.3 |
|
12.2 |
% |
4.0 |
% |
|||||
Less: Payments to repair centers |
|
17.8 |
|
|
19.2 |
|
|
20.5 |
|
(7.3 |
%) |
(13.3 |
%) |
|||||
Revenue less repair payments (non-GAAP) |
$ |
289.3 |
|
$ |
254.4 |
|
$ |
274.8 |
|
13.7 |
% |
5.3 |
% |
|||||
Exchange rate impact |
|
0.0 |
|
(14.1 |
) |
|
(7.4 |
) |
|
|
||||||||
Constant currency revenue less repair payments (non-GAAP) |
$ |
289.3 |
|
$ |
240.3 |
|
$ |
267.4 |
|
20.4 |
% |
8.2 |
% |
Reconciliation of cost of revenue (GAAP to non-GAAP) |
|||||||||
|
Three months ended |
||||||||
|
|
|
|
||||||
|
(Amounts in millions) |
||||||||
Cost of revenue (GAAP) |
$ |
203.0 |
$ |
180.8 |
$ |
198.4 |
|||
Less: Payments to repair centers |
|
17.8 |
|
19.2 |
|
20.5 |
|||
Less: Share-based compensation expense |
|
2.0 |
|
1.5 |
|
2.1 |
|||
Adjusted cost of revenue (excluding payment to repair centers and share-based compensation expense) (non-GAAP) |
$ |
183.2 |
$ |
160.2 |
$ |
175.8 |
Reconciliation of gross profit (GAAP to non-GAAP) |
|||||||||
Three months ended |
|||||||||
|
|
|
|
||||||
|
(Amounts in millions) |
||||||||
Gross profit (GAAP) |
$ |
104.1 |
$ |
92.8 |
$ |
97.0 |
|||
Add: Share-based compensation expense |
|
2.0 |
|
1.5 |
|
2.1 |
|||
Adjusted gross profit (excluding share-based compensation expense) (non-GAAP) |
$ |
106.1 |
$ |
94.3 |
$ |
99.1 |
|
Three months ended |
||||||||
|
|
|
|
||||||
Gross profit as a percentage of revenue (GAAP) |
33.9 |
% |
33.9 |
% |
32.8 |
% |
|||
Adjusted gross profit (excluding share-based compensation expense) as a percentage of revenue less repair payments (non-GAAP) |
36.7 |
% |
37.0 |
% |
36.0 |
% |
Reconciliation of selling and marketing expenses (GAAP to non-GAAP) |
|||||||||
|
Three months ended |
||||||||
|
|
|
|
||||||
|
(Amounts in millions) |
||||||||
Selling and marketing expenses (GAAP) |
$ |
16.0 |
$ |
14.0 |
$ |
14.2 |
|||
Less: Share-based compensation expense |
|
1.6 |
|
1.3 |
|
1.7 |
|||
Adjusted selling and marketing expenses (excluding share-based compensation expense) (non-GAAP) |
$ |
14.4 |
$ |
12.7 |
$ |
12.5 |
|
Three months ended |
||||||||
|
|
|
|
||||||
Selling and marketing expenses as a percentage of revenue (GAAP) |
5.2 |
% |
5.1 |
% |
4.8 |
% |
|||
Adjusted selling and marketing expenses (excluding share-based compensation expense) as a percentage of revenue less repair payments (non-GAAP) |
5.0 |
% |
5.0 |
% |
4.6 |
% |
Reconciliation of general and administrative expenses (GAAP to non-GAAP) |
|||||||||
|
Three months ended |
||||||||
|
|
|
|
||||||
|
(Amounts in millions) |
||||||||
General and administrative expenses (GAAP) |
$ |
43.1 |
$ |
36.2 |
$ |
40.4 |
|||
Less: Share-based compensation expense |
|
8.9 |
|
8.7 |
|
9.9 |
|||
Adjusted general and administrative expenses (excluding share-based compensation expense) (non-GAAP) |
$ |
34.2 |
$ |
27.5 |
$ |
30.5 |
|
Three months ended |
||||||||
|
|
|
|
||||||
General and administrative expenses as a percentage of revenue (GAAP) |
14.0 |
% |
13.2 |
% |
13.7 |
% |
|||
Adjusted general and administrative expenses (excluding share-based compensation expense) as a percentage of revenue less repair payments (non-GAAP) |
11.8 |
% |
10.8 |
% |
11.1 |
% |
Reconciliation of operating profit (GAAP to non-GAAP) |
|||||||||
|
Three months ended |
||||||||
|
|
|
|
||||||
|
(Amounts in millions) |
||||||||
Operating profit (GAAP) |
$ |
41.3 |
$ |
41.3 |
$ |
41.3 |
|||
Add: Share-based compensation expense |
|
12.6 |
|
11.4 |
|
13.7 |
|||
Add: Amortization of intangible assets |
|
5.3 |
|
2.8 |
|
3.0 |
|||
Adjusted operating profit (excluding share-based compensation expense and amortization of intangible assets) (non-GAAP) |
$ |
59.1 |
$ |
55.5 |
$ |
57.9 |
|
Three months ended |
||||||||
|
|
|
|
||||||
Operating profit as a percentage of revenue (GAAP) |
13.4 |
% |
15.1 |
% |
14.0 |
% |
|||
Adjusted operating profit (excluding share-based compensation expense and amortization of intangible assets) as a percentage of revenue less repair payments (non-GAAP) |
20.4 |
% |
21.8 |
% |
21.1 |
% |
Reconciliation of profit (GAAP) to ANI (non-GAAP) |
||||||||||||
|
Three months ended |
|||||||||||
|
|
|
|
|||||||||
|
(Amounts in millions) |
|||||||||||
Profit after tax (GAAP) |
$ |
33.2 |
|
$ |
32.1 |
|
$ |
33.1 |
|
|||
Add: Share-based compensation expense |
|
12.6 |
|
|
11.4 |
|
|
13.7 |
|
|||
Add: Amortization of intangible assets |
|
5.3 |
|
|
2.8 |
|
|
3.0 |
|
|||
Less: Tax impact on share-based compensation expense(1) |
|
(3.1 |
) |
|
(2.5 |
) |
|
(3.1 |
) |
|||
Less: Tax impact on amortization of intangible assets(1) |
|
(1.3 |
) |
|
(0.8 |
) |
|
(0.7 |
) |
|||
Adjusted Net Income (excluding share-based compensation expense and amortization of intangible assets, including tax effect thereon) (non-GAAP) |
$ |
46.6 |
|
$ |
43.1 |
|
$ |
45.9 |
|
|||
(1) The company applies GAAP methodologies in computing the tax impact on its non-GAAP ANI adjustments (including amortization of intangible assets and share-based compensation expense). The company’s non-GAAP tax expense is generally higher than its GAAP tax expense if the income subject to taxes is higher considering the effect of the items excluded from GAAP profit to arrive at non-GAAP profit. |
|
Three months ended |
||||||||
|
|
|
|
||||||
Profit after tax as a percentage of revenue (GAAP) |
10.8 |
% |
11.7 |
% |
11.2 |
% |
|||
Adjusted net income (excluding share-based compensation expense and amortization of intangible assets, including tax effect thereon) as a percentage of revenue less repair payments (non-GAAP) |
16.1 |
% |
17.0 |
% |
16.7 |
% |
Reconciliation of basic earnings per ADS (GAAP to non-GAAP) |
||||||||||||
|
Three months ended |
|||||||||||
|
|
|
|
|||||||||
Basic earnings per ADS (GAAP) |
$ |
0.69 |
|
$ |
0.66 |
|
$ |
0.68 |
|
|||
Add: Adjustment of share-based compensation expense and amortization of intangible assets |
|
0.37 |
|
|
0.29 |
|
|
0.34 |
|
|||
Less: Tax impact on share-based compensation expense and amortization of intangible assets |
|
(0.09 |
) |
|
(0.06 |
) |
|
(0.08 |
) |
|||
Adjusted basic earnings per ADS (excluding share-based compensation expense and amortization of intangible assets, including tax effect thereon) (non-GAAP) |
$ |
0.97 |
|
$ |
0.89 |
|
$ |
0.94 |
|
Reconciliation of diluted earnings per ADS (GAAP to non-GAAP) |
||||||||||||
|
Three months ended |
|||||||||||
|
|
|
|
|||||||||
Diluted earnings per ADS (GAAP) |
$ |
0.66 |
|
$ |
0.64 |
|
$ |
0.65 |
|
|||
Add: Adjustments for share-based compensation expense and amortization of intangible assets |
|
0.36 |
|
|
0.28 |
|
|
0.33 |
|
|||
Less: Tax impact on share-based compensation expense and amortization of intangible assets |
|
(0.09 |
) |
|
(0.06 |
) |
|
(0.08 |
) |
|||
Adjusted diluted earnings per ADS (excluding share-based compensation expense and amortization of intangible assets, including tax effect thereon) (non-GAAP) |
$ |
0.93 |
|
$ |
0.86 |
|
$ |
0.90 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20221019006141/en/
Investors:
EVP – Finance & Head of Investor Relations
+1 (646) 908-2615
david.mackey@wns.com
Media:
Global Head –
+91 (22) 4095 2397
archana.raghuram@wns.com ; pr@wns.com
Source: WNS
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