WNS Holdings (NYSE: WNS) reported Q2 EPS of $0.73, $0.20 better than the analyst estimate of $0.53. Revenue for the quarter came in at $214.4 million versus the consensus estimate of $204.47 million.

Highlights – Fiscal 2021 Second Quarter:

GAAP Financials

• Revenue of $222.6 million, down 1.6% from $226.2 million in Q2 of last year and up 7.1% from $207.8 million last quarter
• Profit of $29.2 million, compared to $28.7 million in Q2 of last year and $14.8 million last quarter
• Diluted earnings per ADS of $0.56, compared to $0.56 in Q2 of last year and $0.29 last quarter

Non-GAAP Financial Measures*

• Revenue less repair payments of $214.4 million, down 2.9% from $220.7 million in Q2 of last year and up 6.4% from $201.4 million last quarter
• Adjusted Net Income (ANI) of $37.9 million, compared to $40.6 million in Q2 of last year and $26.1 million last quarter
• Adjusted diluted earnings per ADS of $0.73, compared to $0.79 in Q2 of last year and $0.50 last quarter

Other Metrics

• Added 8 new clients in the quarter, expanded 17 existing relationships
• Days sales outstanding (DSO) at 34 days
• Global headcount of 41,466 as of September 30, 2020

“In the fiscal second quarter, WNS made solid progress growing our top line, adjusting our cost structure, and ensuring our ability to service clients’ requirements in a difficult business environment,” said Keshav Murugesh, WNS’s Chief Executive Officer. “As a result we were able to post solid sequential revenue growth and healthy margins. We are also pleased that visibility has now improved to the point where the company is comfortable providing annual guidance. Looking forward, while we are seeing some delays in converting larger signed deals into revenue, we are pleased with the overall health of the sales pipeline including new opportunity additions, progress of deals through the pipeline, and contract signings for both new logos and existing client expansions. While we continue to expect some volatility in our business over the next few quarters, we remain confident in our financial strength, differentiated capabilities, underlying business momentum, and proven ability to execute. WNS will continue to focus on ensuring the health and safety of our global employees, securely servicing the needs of our clients, and investing for the expanding BPM opportunity.”

GUIDANCE:

WNS Holdings sees FY2021 EPS of $2.33-$2.48, versus the consensus of $2.33. WNS Holdings sees FY2021 revenue of $830-854 million, versus the consensus of $848.47 million.

WNS is providing guidance for the fiscal year ending March 31, 2021 as follows:

• Revenue less repair payments* is expected to be between $830 million and $854 million, down from $896 million in fiscal 2020. Guidance assumes an average GBP to USD exchange rate of 1.29 for the remainder of fiscal 2021.
• ANI* is expected to range between $121 million and $129 million versus $161 million in fiscal 2020. Guidance assumes an average USD to INR exchange rate of 73.50 for the remainder of fiscal 2021.
• Based on a diluted share count of 52.0 million shares, the company expects adjusted diluted earnings* per ADS to be in the range of $2.33 to $2.48 versus $3.10 in fiscal 2020.
• “The company has provided our forecast for fiscal 2021 based on current visibility levels and exchange rates,” said Sanjay Puria, WNS’s Chief Financial Officer. “Our guidance for the full year reflects a reduction in revenue less repair payments* of -7% to -5% on a reported basis, or -7% to -4% constant currency*. We currently have 98% visibility to the midpoint of the range, consistent with October guidance in previous years.”

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