WNS Discloses Client Intent to Terminate

Rhea-AI Summary

WNS (Holdings) Limited (WNS) discloses in its Form 6-K filed with the SEC that one of its top five customers by revenue contribution in fiscal 2024, in the HCLS SBU, served a termination notice on January 31, 2024. The customer accounted for 4.1%, 6.5% and 7.3% of revenue and 4.3%, 6.8% and 7.9% of revenue less repair payments (non-GAAP) in fiscal 2024, fiscal 2023 and fiscal 2022, respectively. This termination is effective July 1, 2024, and does not impact revenue in fiscal 2024. The company is in discussion with the customer around the support required for the transition of the services and is currently ascertaining the related financial and accounting impact.

Positive

• None.

Negative

• The termination of a top customer may have a negative impact on future revenue and financial performance.

Insights

Market Research Analyst

The termination of the contract with a top customer for WNS, a major player in the Business Process Management (BPM) sector, is a significant event that warrants close examination. A client that contributes a substantial percentage to the company's revenue, as indicated by the figures 4.1%, 6.5% and 7.3% over the past three fiscal years, represents a key account. The loss of such a customer could potentially trigger a reassessment of the company's revenue projections and growth strategy.

From a market research perspective, the departure of a major client may signal underlying issues that need to be addressed, such as competitive positioning, service quality, or pricing strategies. It could also prompt concerns among investors and analysts about the company's ability to retain its other top customers and attract new ones. The impact on the stock price could be negative in the short term as the market reacts to the uncertainty of future revenue streams.

Financial Analyst

Financially, the disclosure of the termination notice by WNS is a critical piece of information for shareholders and potential investors. The fact that the customer accounted for an increasing share of revenue over the past three years and yet decided to terminate the contract may lead to volatility in the company's stock. While the termination does not affect fiscal 2024's revenue, it raises concerns about fiscal 2025 and beyond.

Analysts would need to adjust their financial models to account for this change, potentially lowering earnings forecasts and altering valuation multiples. The company's efforts to ascertain the financial and accounting impact suggest that there could be significant one-time costs associated with the transition, which could affect profit margins. The long-term financial health of WNS may be dependent on how effectively the company can mitigate the loss of revenue through cost management and by securing new contracts.

Risk Management Expert

The identification of this event within the 'Risk Factors' section of the SEC filing underlines the importance of risk management in corporate strategy. The termination of a contract with a key customer is a material risk that can affect a company's operations and financial stability. Effective risk management would involve contingency planning and the diversification of the client base to minimize the impact of such events.

Stakeholders should be interested in the company's risk mitigation strategies, including how it plans to replace the lost revenue and whether it has a robust pipeline of potential new business. The company's discussions around support for the service transition could also be crucial in maintaining industry relationships and reputation, which are essential for long-term sustainability in the BPM sector.

NEW YORK & LONDON & MUMBAI, India--(BUSINESS WIRE)-- WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of global Business Process Management (BPM) solutions, today disclosed in its Form 6-K filed with the SEC the following information in Part III Risk Factors:

“For example, one of our top five customers by revenue contribution in fiscal 2024, which is in the HCLS SBU, served a termination notice on January 31, 2024. The customer accounted for 4.1%, 6.5% and 7.3% of our revenue and 4.3%, 6.8% and 7.9% of our revenue less repair payments (non-GAAP) in fiscal 2024, fiscal 2023 and fiscal 2022, respectively. This termination is effective July 1, 2024, and does not impact our revenue in fiscal 2024. We are in discussion with the customer around the support required for the transition of the services and are currently ascertaining the related financial and accounting impact.”

About WNS

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 600 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 December 31, 2023, WNS had 60,652 professionals across 66 delivery centers worldwide including facilities in Canada, China, Costa Rica, India, Malaysia, the Philippines, Poland, Romania, South Africa, 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, 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 2024 guidance, estimated capital expenditures, expected foreign currency exchange rates, and our plans to exchange outstanding ADSs for our ordinary shares and reporting change discussed above and the expected resulting benefits. 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 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 (including Vuram, OptiBuy, and The Smart Cube), and to successfully grow our revenue and expand our service offerings and market share; future regulatory actions and conditions in our operating areas; and our ability to manage the impact of climate change on our business. 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).

View source version on businesswire.com: https://www.businesswire.com/news/home/20240201634809/en/

Investors:

David Mackey

EVP – Finance & Head of Investor Relations

WNS (Holdings) Limited

+1 (646) 908-2615

david.mackey@wns.com

Media:

Archana Raghuram

EVP & Global Head – Marketing & Communications

WNS (Holdings) Limited

+91 (22) 4095 2397

archana.raghuram@wns.com; pr@wns.com

Source: WNS (Holdings) Limited

FAQ

What is WNS (Holdings) Limited's ticker symbol?

WNS (Holdings) Limited's ticker symbol is WNS.

What information did WNS disclose in its Form 6-K filing with the SEC?

WNS disclosed information about the termination of one of its top five customers by revenue contribution in fiscal 2024.

How much did the terminated customer account for in terms of revenue in fiscal 2024?

The terminated customer accounted for 4.1% of revenue and 4.3% of revenue less repair payments (non-GAAP) in fiscal 2024.

When is the termination of the customer effective?

The termination is effective on July 1, 2024.

What impact does the termination have on revenue in fiscal 2024?

The termination does not impact revenue in fiscal 2024.

What is WNS currently doing in response to the termination?

WNS is in discussion with the customer around the support required for the transition of the services and is currently ascertaining the related financial and accounting impact.