WNS (Holdings) Limited

Good morning, and welcome to the WNS Holdings Fiscal 2023 Fourth Quarter and Full Year 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. And now I'd 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 fourth quarter and full year earnings call. With me today on the call, I have WNS's CEO, Keshav Murgesh, and WNS's CFO, Sanjay Puria. 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 fourth quarter and full year ended March 31st, 2023. 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 20-F. 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, acquisition-related expenses or benefits, and goodwill impairments. Adjusted Net Income, or ANI, is defined as profit excluding amortization of intangible assets, share-based compensation, acquisition-related expenses or benefits, 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. Keshav?

Hey, thank you, David, and good morning, everyone. Despite the challenging macro environment WNS continues to perform well. Our fourth quarter financial results demonstrate the health of the BPM space, the strength and resiliency of WNS's business model, and the company's ability to execute. Net revenue for Q4 came in at $305 million, representing a year-over-year increase of 10.9% on a reported basis. and 15.6% constant currency. Sequentially, net revenue increased by 4.1% on a reported basis and 2.5% on a constant currency basis after adjusting for foreign exchange. Our acquisitions added approximately 6% to year-over-year growth and 2% sequentially. In the fourth quarter, WNS added 11 new logos and expanded 30 existing relationships. Sanjay will provide further details on our fourth quarter financial performance in his prepared remarks. For the 2023 fiscal full year, WNS delivered solid growth in revenue and earnings while continuing to invest for the future. Top line expanded 18.8% on a constant currency basis, driven by broad-based strength across verticals, geographies, and service offerings, as well as our three tuck-in acquisitions. Despite the weak macro, it is clear our clients understand that leveraging digital technologies and advanced analytics across processes are not optional, but in fact, represent necessary business changes required to compete. WNS's ability to deliver these benefits while generating clear, immediate, and significant savings means that the majority of our services are not subject to budgetary pressures or investment prioritization. As a result, process outsourcing decisions have become strategic in nature and are based on the client's evaluation of which activities are best transformed and managed by a client partner and which are best kept in-house. In addition to solid top-line performance in fiscal 23, WNS once again posted industry-leading margins and delivered growth in earnings per share of 13%. During the year, the company also continued to invest both organically as well as inorganically to ensure our ability to meet the evolving needs of our global clients. M&A remains an integral part of our investment plans and a key component of our balanced, disciplined capital allocation program. WNS's approach and philosophy towards M&A is unchanged and is focused on adding niche tuck-in capabilities which enable competitive differentiation including domain expertise, data and analytics, and digital technologies. Our targeted assets should help expand end-to-end capabilities across front, middle, and back office, and create client solutions which span design, build, and run. From a financial perspective, we expect acquisitions to accelerate our long-term growth rate have a margin profile at or above company average and carry a reasonable industry evaluation. In fiscal 2023, WNS completed three acquisitions, which we believe meet these key M&A criteria and integration of these assets is going well. In addition to M&A, share buybacks are also an important element of our capital allocation program. During fiscal 23, WNS purchased or repurchased 1.1 million shares of stock, and since the inception of our buyback program eight years ago, the company has now repurchased 9.9 million shares at an average share price of $50.47. Based on our 31st March share price, this equates to a total return of 85% and an IRR of more than 15%. I would also like to provide you with a quick update on our ESG efforts over the past year. In fiscal 23, WNS made significant progress on our diversity, equity, and inclusiveness initiatives, environmental commitments, corporate social responsibility impacts, as well as training and human capital management programs. Our highlights include improved board diversity, our commitment to the science-based targets initiative and a net zero objective financial aid to earthquake victims in turkey and syria the launch of a formal internal tracking and reporting system for esg and significant expansion of our training reskilling and employee care initiatives the company also received numerous awards and recognitions for our esg programs including the golden peacock award for our wns cares corporate social responsibility impacts inclusion in the 2022 bloomberg gender equality index and being named to the forbes 2022 list of the world's best employers back in february we announced upcoming changes to wns's organizational structure the company has now moved to a strategic business unit or sbu structure which combines the company's existing and verticals into four logical groups each headed by a chief business officer the chief business officers will report directly into me and will be based around the globe including the us uk as well as india the 88 verticals will remain standalone independent business units each with a dedicated vertical leader in order to protect our differentiated domain centric approach to bpm we believe the new organizational structure is vital at this stage of our evolution and will help facilitate next level growth by enabling the company to better drive business synergies enhance scalability generate operating leverage as well as create organizational depth turning our attention to the fiscal 2024 outlook despite the weak global macro WNS enters the year with a broad-based demand for our offerings, an expanding new business pipeline, and strong revenue momentum. In addition, at present, our client volumes remain stable, including the travel vertical. The company begins fiscal 2024 with 88% visibility to the midpoint of guidance, which represents constant currency net revenue growth of 13%. We also expect our margins to be stable and healthy for the upcoming year despite ongoing investments in our business, the continued shift to work from office, and normal annual wage pressure. Margin expansion opportunities going forward will largely be a function of industry evolution as clients increase adoption of higher value and end-to-end solutions and migrate engagements towards more non-FTE pricing models. In summary, I believe the company has strong business momentum, is executing at a high level, and is extremely well positioned in a healthy BPM environment. We remain focused on operating at the intersection of domain, technology, and talent to help our clients to transform their business models, manage their rapidly evolving requirements, and create competitive advantage. This will enable WNS to drive long-term sustainable business value for all of our key stakeholders. I would now like to turn the call over to our CFO, Sanjay Puria, to further discuss our results as well as our outlook. Sanjay?