WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of global
Business Process Management (BPM)** services, today announced
results for the 2014 fiscal third quarter ended December 31, 2013.
Highlights - Fiscal Third Quarter 2014:
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 less repair payments* in the fiscal third quarter was $119.6
million, representing a 5.4% increase versus the third quarter of last
year and a 3.7% increase from the previous quarter. Year-over-year,
revenue improvement was broad-based with the growth rate paced by
strength in the Banking & Financial Services, Utilities, Shipping &
Logistics, and Insurance verticals. On a year-over-year basis, revenue
was pressured by currency headwinds resulting from depreciation in the
South African rand and Australian dollar against the US dollar.
Sequentially, revenue was favorably impacted by appreciation in the
British Pound against the US dollar. Excluding exchange rate impacts,
constant currency revenue less repair payments* in the third quarter
grew 6.0% year-over-year and 1.1% sequentially.
Adjusted operating margin* for the quarter was 18.4%, as compared to
13.9% in Q3 of last year, and 16.2% reported in the second quarter. On a
year-over-year basis, operating margin improved as a result of
depreciation in the Indian rupee against the US dollar, improved
productivity and operating leverage associated with higher revenue.
Partially offsetting this favorability were investments in global
infrastructure which reduced seat utilization and the impact of our
annual wage increases. The sequential improvement in adjusted operating
margin* from Q2 to Q3 was largely driven by favorable currency exchange
Adjusted net income (ANI)* in the fiscal third quarter was $19.8
million, up $5.8 million as compared to Q3 of last year and up $2.6
million from the previous quarter. Third quarter ANI* margin was 16.6%,
as compared to 12.3% in Q3 of last year, and 14.9% reported last quarter.
From a balance sheet perspective, WNS ended the fiscal third quarter
with $122.5 million in cash and investments and $87.6 million of gross
debt. In the third quarter, the company generated $22.6 million in cash
from operations, and had $5.7 million in capital expenditures. Days
sales outstanding were 31 days, as compared to 32 days in Q3 of last
year and 30 days reported in the previous quarter.
"During the third quarter, the company was able to grow our top line,
expand margins and profits, and generate healthy cash flow. Our new
business pipeline remains robust, and we continue to move deals along at
a slow and steady pace. WNS added 4 new logos this quarter, including
our fourth large deal of fiscal 2014. This new relationship with a major
US Insurer will begin with Finance and Accounting and actuarial
services, and has long-term growth potential," said Keshav Murugesh,
WNS's Chief Executive Officer.
"We believe recognition of our competitive positioning is improving as
the BPM industry shifts towards domain-led solutions and higher value
service offerings. WNS plans to continue investing in enhancing our
capabilities to meet the evolving needs of our clients, with the
objective of growing our organic revenues at or above industry levels."
Fiscal 2014 Guidance
WNS has updated guidance for the fiscal year ending March 31, 2014 as
"The company has updated our forecast for fiscal 2014 based on current
visibility levels and exchange rates. Our revised guidance for the year
reflects top line growth of 8%, with over 99% visibility to the midpoint
of the range. This guidance represents 8% to 9% revenue growth on a
constant currency* basis. Profitability is expected to expand at a much
greater pace than revenue this fiscal year, with our revised ANI*
guidance now reflecting 32% to 36% year-over-year improvement," said
Sanjay Puria, WNS's Chief Financial Officer.
WNS will host a conference call on January 15, 2014 at 8:00 am (Eastern)
to discuss the company's quarterly results. To participate in the call,
please use the following details: +1-877-415-3185; international dial-in
+1-857-244-7328; participant passcode 97628452. A replay will be
available for one week following the call at +1-888-286-8010;
international dial-in +1-617-801-6888; passcode 30218126, 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 global business process
management company. WNS offers business value to 200+ global clients by
combining operational excellence with deep domain expertise in key
industry verticals including Travel, Insurance, Banking and Financial
Services, Manufacturing, Retail and Consumer Packaged Goods, Shipping
and Logistics, Healthcare and Utilities. WNS delivers an entire spectrum
of business process management services such as finance and accounting,
customer care, technology solutions, research and analytics and industry
specific back office and front office processes. As of December 31,
2013, WNS had 26,578 professionals across 33 delivery centers worldwide
including China, Costa Rica, India, Philippines, Poland, Romania, South
Africa, Sri Lanka, 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, 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 2014
guidance and 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; political or economic instability in the
jurisdictions where we have operations; regulatory, legislative and
judicial developments; our ability to attract and retain clients;
technological innovation; telecommunications or technology disruptions;
future regulatory actions and conditions in our operating areas; our
dependence on a limited number of clients in a limited number of
industries; our ability to expand our business or effectively manage
growth; our ability to hire and retain enough sufficiently trained
employees to support our operations; negative public reaction in the US
or the UK to offshore outsourcing; the effects of our different pricing
strategies or those of our competitors; and increasing competition in
the BPM industry. 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).
About Non-GAAP Financial Measures
The financial information in this release is focused on non-GAAP
financial measures as we believe that they reflect more accurately our
operating performance. Reconciliations of these non-GAAP financial
measures to our GAAP operating results are included below. A discussion
of our GAAP measures is contained in "Part I -Item 5. Operating and
Financial Review and Prospects" in our annual report on Form 20-F filed
with the SEC on May 2, 2013.
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 SEC on May 2, 2013.
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 (1) adjusted operating margin, which refers to
adjusted operating profit (calculated as operating profit excluding
amortization of intangible assets and share-based compensation expense)
as a percentage of revenue less repair payments, and (2) ANI, which is
calculated as profit excluding amortization of intangible assets and
share-based compensation expense, and other non-GAAP measures included
in this release as supplemental measures of its performance. WNS
presents these non-GAAP measures because it believes they assist
investors in comparing its performance across reporting periods on a
consistent basis by excluding items that it does not believe are
indicative of its core operating performance. In addition, it uses these
non-GAAP 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 measures are
not meant to be considered in isolation or as a substitute for WNS's
financial results prepared in accordance with IFRS.
* 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.**
Previously described as Business Process Outsourcing (BPO) in our prior
annual reports on Form 20-F and current reports on Form 6-K containing
our quarterly results for periods up to (and including) fiscal Q1 2014
ended June 30, 2013.
WNS (HOLDINGS) LIMITED
Growth of revenue (GAAP) and revenue less repair payments
Three months endedDec 31, 2013 compared to
repair payments (Non-GAAP)
Reconciliation of cost of revenue (GAAP to non-GAAP)
Reconciliation of gross profit (GAAP to non-GAAP)
Reconciliation of selling and marketing expenses (GAAP to
Reconciliation of general and administrative expenses (GAAP to
Reconciliation of operating profit (GAAP to non-GAAP)
Reconciliation of profit (GAAP to non-GAAP)
Reconciliation of basic income per ADS (GAAP to non-GAAP)
Reconciliation of diluted income per ADS (GAAP to non-GAAP)
As atDecember 31,2013
As atMarch 31,2013
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