WNS (Holdings) Limited

Good morning and welcome to the WNS Holdings Fiscal 2024 Fourth Quarter and Four Year Earnings Conference Call. At this time, all participants are in a listen-only mode. After management prepared remarks, we will conduct a question and answer session and instructions for how to ask the 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 Executive Vice President of Finance and Head of Investor Relations. David.

Thank you, and welcome to our fiscal 2024 fourth quarter and full year earnings call. With me today on the call, I have WNS' CEO, Keshav Muragesh, WNS' CFO, Sanjay Puria, and our Corporate Financial Controller, Arjit Sen. 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, 2024. 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, acquisition-related expenses or benefits, and impairment of goodwill and intangible assets. We are also excluding costs related to our ADS program termination and costs associated with the transition to voluntarily reporting on U.S. domestic issue reforms. Adjusted net income, or ANI, is defined as profit excluding amortization of intangible assets, share-based compensation, acquisition-related expenses or benefits, goodwill and intangible asset impairment, ADS program termination costs, the transition to voluntarily reporting on U.S. domestic issuer forms, and all associated taxes. These terms will be used throughout today's call. I would now like to turn the call over to WNS's CEO, Keshav Murugan. Keshav?

Hey, thank you, David. And a very good morning, everyone. In the fiscal fourth quarter, WNS's business delivered solid results, despite the very challenging macro environment. The company posted fourth quarter net revenues of $325.9 million, representing a year-over-year increase of 6.9% on a reported basis and 5.9% constant currency. Sequentially, net revenue increased by 3.2% on a reported basis and 2.4% on a constant currency basis after adjusting for foreign exchange. Demand continues to be healthy for business transformation initiatives, leveraging digital and analytics, while client volumes and project-based work remain pressure. During Q4, we added nine new logos and expanded 40 existing relationships. New logos include four large technology-led transformational deals, which are expected to begin ramping towards the end of fiscal Q1. In the quarter, WNS delivered adjusted operating margins of 22% and grew adjusted EPS by more than 8% versus last year. On March the 28th, The company completed the first step towards improving access to capital, exchanging our ADSs for ordinary shares. We are also on track to voluntarily shift from foreign private issuer status reporting under IFRS to domestic filer status reporting under US GAAP in the fiscal first quarter of 2025. These initiatives are expected to improve our ability to participate in the U.S. indexes and certain active investment funds and reduce share price volatility. Despite company-specific headwinds and the weak macro in fiscal 2024, WNS delivered top-line growth of 10.5%, driven by our differentiated domain-focused strategy maintained our industry-leading adjusted operating margins at 21.5% and grew adjusted earnings per share by 13.5%. Other full-year highlights include the implementation of our SBU organizational structure, the successful integration of three acquisitions, reduced corporate attrition, a healthy pipeline, and good traction in large, digitally-led, transformational deal signings. During the year, WNS also continued to make the investments necessary to drive sustainable market differentiation and help our clients compete in a rapidly changing world. These strategic investments are designed to enhance our capabilities across domain expertise, advanced analytics and data management, and cutting-edge technology with a heightened focus on leveraging artificial intelligence as well as generative AI. In fiscal 24, we created a robust pipeline of use cases, built digital assets with GenAI capabilities, and successfully deployed customized solutions integrating ai and genii across multiple service offerings and verticals all of these solutions are underpinned by deep domain expertise and combine human intelligence and artificial intelligence to deliver business outcomes for clients that go beyond cost reduction in fact many of these use cases are focused on driving our clients top line through new offerings improved customer retention and enhanced quality of service during the year we forged strategic partnerships with ai leaders as well as hyperscalers including microsoft azure openai AWS, and Google, and continue to make progress in proactively hiring talent and training our global employee base on AI as well as Gen AI technologies. WNS is also receiving positive recognition for our AI capabilities from the analyst as well as the advisor community. And last month was named a 2024 artificial intelligence award winner by the business intelligence group wns was one of only 11 companies cited for having the products culture and people consistently delivering innovative solutions in the gen ai space while it is clear that ai and genii will be critical components of driving transformation and automation and delivering improved outcomes. It is also important to understand that clients are proceeding cautiously with enterprise-wide initiatives given the many uncertainties that exist today. Key concerns impacting client willingness to adopt and implement at scale include data quality and data privacy, underlying model bias, evolving regulations and costs associated with data preparation, technology setup, and integration. This measured approach was confirmed in the recent GenAI market impact report conducted by WNS and HFS, which solicited insights from enterprise leaders across industries and mirrors comments from the largest hyperscalers, global systems integrators, and industry analysts. Despite these challenges, the company continues to believe that our ability to help clients properly leverage these technologies presents more opportunity than threat. Today, in addition to working closely with clients on pilots, proof of concepts, and customized use cases, we are also seeing AI and GenAI improve the quantity and quality of conversations and increase focus and on driving collaboration, innovation, competitive differentiation, as well as business outcomes. In response to this evolving opportunity and the contraction in our share price, WNS accelerated our buyback programs in fiscal 24, repurchasing 3.3 million shares, or almost 7% of the company's outstanding flow. Looking forward to fiscal 2025, Demand for digital transformation and cost reductions is healthy, and our new business pipeline remains robust. WNS is extremely well positioned in several large industry-specific deals focused on operating model transformation, which have the potential to materially impact our fiscal 2025 and fiscal 2026 growth rates. That being said, our full year visibility today is challenged by the timing of these deals and macro weakness, which continues to impact business volumes as well as project-based work. In addition, as you are aware, the company announced on February 2nd that a large healthcare client had notified us of their intent to terminate our contract for convenience. This cancellation, which will create a headwind of 3.2%, to revenue growth in fiscal 2025 was driven by client changes in leadership, strategy, and business model. As a result, at this point in time, we expect revenue growth to be in the 0% to 5% range on an organic constant currency basis, which assumes no improvement in volumes or discretionary spending during the fiscal year. We also expect our industry-leading margins to remain in the 21 to 22% range. In fiscal 25, the company plans to repurchase up to $150 million of stock, given the current share price weakness. To do this, we will likely require shareholders to override certain proxy advisor recommendations and to vote against our uh to to our repurchase proposal so again i want to clarify that we expect proxy advisor recommendations to work against and we want your support to work for uh you know these recommendations in an up upcoming egm plan for late may we are requesting your support as the company believes the proxy guidelines of repurchase price maximums and program duration are just not practical given our share price movement over the past year. This morning, WLS also issued a press release announcing an upcoming CFO transition. Sanjay Puria, who is with me today in London, will be stepping down at the end of July for personal family reasons, but will remain with the company in an advisory role through the end of April 2025. Arijit Sen, our current corporate financial controller, will formally become CFO on the 25th of July of this year. Arijit has been with WNS for over 15 years in progressively responsible roles, acting as Sanjay's right hand and bringing both company-specific experience and BPM industry expertise to the CFO function. We will be introducing Arijit to our analysts and investors in the coming months. As a trusted partner to myself and the entire organization, I would like to sincerely take this opportunity to thank Sanjay for his 14 plus years of dedication, leadership, and contribution to our success. Thank you, my friend, Sanjay. And my heartiest congratulations to you, Arijit. And with that, I would now like to turn the call over to Sanjay to further discuss our results as well as outlook. Sanjay?