WNS posts 34% profit growth in Q1; Organic growth, currency drive numbers

On a sequential basis, margins shrunk due to impact of our annual wage increases; advance hiring and infrastructure build out for project ramps, and higher share-based compensation expense

Mumbai-based business process management (BPM) company WNS on Thursday posted 34.1 per cent growth in profit from $16.7 million last year to $22.4 million for the quarter ended June 30 (in GAAP numbers).

Revenue in the first quarter was $199.8 million, representing a 10.9 per cent per cent increase versus Q1 of last year and a 140 basis points decrease from the previous quarter.  

“Excluding exchange rate impacts, constant currency revenue less repair payments* (non GAAP) in the fiscal Q1 grew 10.3 per cent versus Q1 of last year and 0.6 per cent sequentially. Year-over-year, fiscal Q1 revenue improvement was driven by healthy organic growth across key verticals, services, and geographies, and favorability from currency net of hedging.” said the NASDAQ listed company in a statement.

Sequentially, organic revenue growth was offset by contractual productivity commitments for clients and currency movements net of hedging. Operating margin in the Q1 was 12.6 per cent as compared to 11 per cent in Q1 of last year and 14.5 per cent in the previous quarter largely due to of increased productivity, operating leverage on higher volumes, and favorable currency movements.

On a sequential basis, margins reduced due to the impact of our annual wage increases; advance hiring and infrastructure build out for project ramps, and higher share-based compensation expense.

WNS ended Q1 with $193.3 million in cash and investments and $89.2 million of debt. In the Q1, the company generated $14.7 million in cash from operations and had $9.2 million in capital expenditures, said management.

“In the fiscal first quarter, WNS continued to generate solid financial performance, growing revenue less repair payments (non GAAP ) 12 per cent year-over-year. Excluding the impact of currency movements and hedging, year-over-year first quarter top line improved by more than 10 per cent on a constant currency  basis , all of which was organic,” said Keshav Murugesh, WNS’s Chief Executive Officer.  

He added that the company is increasingly deploying technology and automation in our solutions, and working to attract, retain and retrain our resources for the changing BPM landscape.

“The company has updated 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 (Non GAAP)  to 11 per cent, or 7 per cent to 13 per cent  on a constant currency basis.  We currently have 95 per cent visibility to the midpoint of the range,” he added.