New Delhi: WNS Holdings Ltd reported a 92% drop in profit for the June quarter over the preceding three months but marginally lifted the range of its revenue outlook for the full year.
The business process outsourcing (BPO) firm reported a net profit of $700,000 (Rs3.1 crore) for the three months ended 30 June against a loss of $5.8 million in the corresponding quarter last year, under the newly mandated International Financial Reporting Standards (IFRS). That, however, is sharply down from the profit of $8.8 million the New York Stock Exchange-listed firm reported for the preceding March quarter.
This was mainly due to wage increases in April, higher tax expenses and a significant reduction in revenue from repair payments.
Adjusted net income increased to $10 million from $2.2 million in the year-ago quarter but was down from $18.2 million in the March quarter. Several BPO firms such as Genpact Ltd report adjusted net income, which in WNS’ case excludes amortization of intangible assets and share-based compensation expense.
The company’s management, while acknowledging looming macroeconomic concerns, has increased outlook for the full year. It now expects adjusted revenue of $387-407 million for the year compared with its previous outlook of $383-407 million.
Expectations for adjusted net income continue to be in the range of $43-47 million.
Keshav Murugesh, chief executive of WNS, said that over the previous five quarters, the company has focused executing its strategy to grow revenues and enhance margins, which has begun to pay off.
“We believe that the environment is improving for quality domain and technology aligned BPO services and WNS is well-positioned to capitalize on this opportunity despite experiencing macroeconomic headwinds within several of our key verticals,” he said.
Murugesh added that WNS signed six new clients in the June quarter, in addition to several expansions.
Under IFRS, the company’s revenue declined 16.2% from a year ago and 21.2% sequentially to $125.7 million, which the company attributed primarily to the change in accounting for repair payments.
WNS has significant business in the auto claims industry and revenues from that division are pass-through in nature.
For instance, in the June quarter, the company received $27.8 million as repair payments from that vertical, compared with $60.7 million in the year ago period, which brought down its revenues during the period.
Net revenue minus the repair payments increased 9.6% over a year earlier to $97.8 million.
WNS said it has re-negotiated contracts with some clients and repair centres in the auto claims business, whereby the significant risk of services and the credit risk are now borne by these clients instead of WNS.
“While this change has resulted in a lower GAAP (generally accepted accounting principles) revenue figure, it has had no material impact on operating metrics such as revenue less repair payments,” the company said.