WNS (Holdings) Limited

Good morning, and welcome to the WNS Holdings Fiscal 2023 First Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, we will conduct a question-and-answer session, and instructions for how to ask a question will follow at that time. As a reminder, this call is being recorded for replay purposes. Now I would like to turn the call over to David Mackey, WNS's Executive Vice President of Finance and Head of Investor Relations. David?

Thank you, and welcome to our fiscal 2023 first quarter earnings call. With me today on the call, I have WNS's CEO, Keshav Muragesh, WNS's CFO, Sanjay Puriya, and our COO, Gautam Barai. A press release detailing our financial results was issued earlier today. This release is also available on the investor relations section of our website at www.wns.com. Today's remarks will focus on the results for the fiscal first quarter ended June 30th, 2022. Some of the matters that will be discussed on today's call are forward-looking. Please keep in mind that these forward-looking statements are subject to known and unknown 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, those factors set forth in the company's Form 20F. This document is also available on the company website. During this call, management will reference certain non-GAAP financial measures which we believe provide useful information for investors. Reconciliations of these non-GAAP financial measures to GAAP results can be found in the press release issued earlier today. Some of the non-GAAP financial measures management will discuss are defined as follows. Net revenue is defined as revenue less repair payments. Adjusted operating margin is defined as operating margin excluding amortization of intangible assets, share-based compensation, and goodwill impairment. Adjusted net income, or ANI, is defined as profit excluding amortization of intangible assets, share-based compensation, goodwill impairment, and all associated taxes. These terms will be used throughout the call. I would now like to turn the call over to WNS's CEO, Keshav Muragesh.

Hey, thank you, David, and a very good morning, everyone. WNS's financial results in the fiscal first quarter continue to demonstrate solid performance, including top line growth, margins, as well as free cash flow. Net revenue for Q1 came in at $274.8 million, representing a year-over-year increase of 16.3% on a reported basis and 20.8% on constant currency. Sequentially, net revenue reduced by 0.1% on a reported basis but increased 2% on a constant currency basis after adjusting for foreign exchange. In the first quarter, WNS added seven new logos and expanded 30 existing relationships. The company also delivered strong adjusted operating margins of 21.1% and grew adjusted EPS by 18% year over year. Sanjay will provide further details on our first quarter financial performance in his prepared remarks. For the past few years, WNS has been consistent in our message that while tuck-in M&A was a key organizational priority, we would continue to be disciplined in our approach and remain focused on finding assets that were ability-based or capability-based, good cultural fits, and had strong financial performance. On the 1st of July, we were excited to announce the acquisition of VURAM, a global leader in intelligent enterprise automation, which we believe checks all the right boxes. From a capability standpoint, Vuram brings demonstrated experience and expertise in helping companies accelerate end-to-end digital transformation by aligning, automating, and optimizing processes to enable the creation of scalable BPM solutions. Their low code approach to intelligent automation, leveraging strategic partnerships with industry leading technology platform and tool providers, enables faster speed to market and a highly flexible approach to designing and deploying customized client solutions. This complementary capability will not only allow WNS to accelerate new client transformation programs, but will also help us enhance ongoing productivity improvements for existing engagements. Vuram's services span the client's front, middle, and back office and include process automation, digital consulting, user experience, and user interface solutions, advanced analytics, quality assurance, as well as testing. The company's approach to driving process automation is horizontal in nature and therefore can be easily applied to any WNS vertical or service offering. In addition, Buram has created unique reusable components including automation accelerators specifically tailored to key verticals including banking and financial services, insurance, as well as healthcare. Today, the Vuram team is comprised of more than 900 professionals providing WNS with a new set of digital skills and an additional channel for sourcing digital talent. Culturally, we also believe Vuram is an excellent fit for WNS as well. They utilize a client-centric approach driven by customized services and solutions operate a globally distributed delivery model and have a very strong focus on employee care as well as development. In fact, Vuram has been recognized as one of the best companies to work for in India each of the past five years. Vuram also brings a proven track record of delivering growth and margins which meet or exceed WNS's financial benchmarks. This past fiscal year, Vuram grew revenue more than 35% and delivered adjusted operating margins in excess of 30%. We are very excited to welcome the Vuram team to the WNS family and we look forward to working together as we continue on our journey towards digitally led human assisted services and solutions. Later on, This call itself, Sanjay will share with you additional financial details of the acquisition, including the expected contribution to fiscal 2023 guidance. Today, I also wanted to spend a few minutes talking about the weakening global macro environment and its potential impacts to WNS. As we all are aware, most countries today are experiencing significant economic and political challenges. Now the impacts of rising inflation, slowing growth, labor supply pressures, geopolitical conflicts, supply chain issues, as well as the COVID pandemic has increased the likelihood of a global recession and are forcing companies to reassess their business plans as well as their spending levels. Fortunately for WNS, We believe that demand for our services will continue to have low macro correlation and overall will remain healthy. Today, our revenue momentum is being driven by our clients' need to digitize processes in order to be competitive in their respective markets. This is really not optional or discretionary and cannot be postponed until the economic environment is healthy. We saw this theme emerge during the pandemic as clients moved forward signing new transformational deals and expanding the scope of existing arrangements despite the volatile macro. In addition, it is important to remember that the bulk of WNS's services, while helping automate processes and improve competitive positioning, also deliver significant and rapid cost savings to clients. Since there is very often little or no upfront financial investment on the client's part, the decision to move forward with these initiatives is much easier and far less exposed to budgetary pressures. In fact, we believe there is an opportunity to see scopes of work increase and sales cycles reduce as clients look to accelerate savings in this environment. While we expect demand for new business will remain healthy in a weak macro, we are also comfortable with the overall stability of our existing book of business. Today, approximately 95% of WNS's revenue is recurring in nature, highly visible, and backed by long-term contracts. Because the functions we manage are mission critical to the client's day-to-day business, Any decision to change partners or bring back work in-house can be very risky and expensive for clients or potential prospects. Today, we are not seeing any adverse impacts to our business from a weakened macro environment. And in fact, we continue to see strength in our pipeline, deal flow, as well as business momentum. That being said, we will continue to monitor our client base for potential headwinds. In short, we believe that the stable nature of our services, coupled with resilient demand, driven by our clients' need to digitize, better compete, and save money, will enable WNS to perform well even in a weak global macro environment. We are also comfortable that our company is well positioned to capitalize on the growing digital opportunity in the BPM space. WNS will continue to focus on investing for the future executing on our strategic initiatives and delivering sustainable value for all of our key stakeholders. I would now like to turn the call over to CFO, Sanjay Puria, to further discuss our results and outlook. Sanjay.