Highlights:
GAAP Financials
-- Revenue of $107.8 million, down 14.2% from $125.7 million in Q1 of last year (primarily due to change in accounting for repair payments) and down 4.9% from $113.3 million last quarter
-- Profit of $2.8 million, compared to $0.7 million in Q1 of last year and $4.4 million last quarter
-- Diluted earnings per ADS of $0.06, compared to $0.01 in Q1 of last year and $0.09 last quarter
Non-GAAP Financial Measures
-- Revenue less repair payments of $102.6 million, up 4.9% from $97.8 million in Q1 of last year and up 2.8% from $99.8 million last quarter
-- Adjusted Net Income (ANI) of $11.1 million, compared to $10.0 million in Q1 of last year and $13.2 million last quarter
-- Adjusted diluted earnings per ADS of $0.22, compared to $0.22 in Q1 of last year and $0.27 last quarter
Operations Update
-- Finalized acquisition of Fusion South Africa
-- Announced first US delivery center in Columbia, South Carolina
-- Added 3 new clients in the quarter, expanded 10 existing relationships
-- Days sales outstanding (DSO) at 33 days
-- Global headcount of 25,939 as of June 30, 2012
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* of $102.6 million in the first quarter increased 4.9% year-over-year, and 2.8% as compared to the previous quarter. Sequential revenue growth was broad-based, with particular strength in the Insurance, Healthcare, and Utilities verticals. Year-over-year, revenue improvement was also broad-based and driven by growth in the Utilities, Travel, and Insurance verticals.
Adjusted gross margin* for the quarter was 33.9%, as compared to the 31.3% in Q1 of last year, and 35.5% reported last quarter. Sequentially, gross margins were pressured as a result of our annual wage increases. Depreciation in the Indian rupee helped partially offset this impact. On a year-over-year basis, gross margin favorability was driven by higher revenue and rupee depreciation, which was partially offset by wage increases and higher infrastructure costs. First quarter adjusted operating margin* was 13.2%, as compared to 14.0% in Q1 of last year and 17.5% reported in the fourth quarter. The sequential reduction was driven by annual wage increases and expenses associated with the Fusion South Africa acquisition. On a year-over-year basis, the reduction in operating margin is the result of wage increases, infrastructure expansion and acquisition costs. Currency favorability and operating leverage associated with higher revenue partially offset these costs.
Adjusted net income (ANI)* in the first quarter was $11.1 million, down $2.1 million sequentially. The reduced adjusted operating margin* discussed above was partially offset by favorable income on cash balances and a lower effective tax rate. On a year-over-year basis, ANI* increased $1.1 million as lower operating margin was more than offset by increased income on cash balances and a reduced effective tax rate.
From a balance sheet perspective, WNS ended the fiscal first quarter with $52.2 million in cash and an additional $12.8 million in marketable securities. The Fusion South Africa acquisition reduced the quarter-ending cash by approximately $8 million. Gross debt at the end of the first quarter was $87.2 million, consistent with Q4 levels. Days sales outstanding for Q1 was 33 days, down from 35 days in the prior quarter.
"WNS continues to make progress towards our financial and operational objectives. Revenue less repair payments improved 7.0% on a constant currency basis* versus the same quarter of last year, despite some short-term client-specific headwinds in auto claims and travel. WNS was also able to significantly enhance our global delivery capability during the quarter, as we completed the acquisition of Fusion Outsourcing in South Africa and announced the opening of our first U.S. delivery center in South Carolina," said Keshav Murugesh, WNS Group Chief Executive Officer.
"We remain cautiously optimistic about the market environment for BPO services, which currently remains stable and healthy. WNS will continue to invest in expanding our geographic footprint, technology-enabling our solutions and driving non-linear revenue growth. Additionally, the entire organization remains focused on enabling our sales force to improve productivity and accelerate profitable revenue growth."
Fiscal 2013 Guidance
WNS has updated guidance for the fiscal year ending March 31, 2013 as follows:
-- Revenue less repair payments* is expected to be between $420 million and $440 million. This assumes an average GBP to USD exchange rate of 1.55 for the remainder of fiscal 2013.
-- ANI* is expected to range between $50 million and $54 million. This assumes an average USD to INR exchange rate of 56.0 for the remainder of fiscal 2013.
"The updated fiscal 2013 guidance is based on current visibility levels and exchange rates. Guidance for the year reflects top line growth of 6% to 11%, with 95% visibility to the midpoint of the range. Revenue guidance includes the impact of the recently completed Fusion acquisition, which is expected to contribute between $9 million and $10 million to fiscal 2013 revenue. On a constant currency basis, our updated guidance implies higher 2013 organic revenues of $5 million to $6 million compared to our previous guidance," said Alok Misra, WNS Group Chief Financial Officer.
Company CFO Resigns
WNS also reported today that Alok Misra, the company's Chief Financial Officer, has announced his resignation in order to return with his family to Bangalore, India. Mr. Misra will continue to be an officer and employee of the company through August 16, 2012, and afterwards will continue with the company in a consulting role to ensure a smooth transition. Kumar Subramaniam, WNS's Corporate Senior Vice President, Finance, will assume the role of interim CFO from August 17, 2012. The company has initiated a search for a new CFO.
"Alok has been a valued member of the WNS team for over four years. We wish him well as he moves on, and thank him for his many contributions," said Murugesh.
"WNS is an excellent company with a strong future," said Misra. "It has been a privilege to be a part of a talented team that has positioned the company for long-term success in the industry. I am committed to helping ensure an orderly transition in the coming months." |
