David Mackey - Corporate SVP, Finance and Head, IR Keshav Murugesh - CEO Sanjay Puria - CFO Ron Gillette - COO.

Joseph Foresi - Cantor Fitzgerald Maggie Nolan - William Blair Edward Caso - Wells Fargo Bryan Keane - Deutsche Bank Ashwin Shirvaikar - Citi Mayank Tandon - Needham & Company Frank Atkins - SunTrust Brian Kinstlinger - Maxim Group Puneet Jain - J.P. Morgan Vincent Colicchio - Barrington Research.

Good morning. And welcome to the WNS Holdings’ Fiscal 2017 First Quarter Conference Call. At this time, all participants are in a 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.

Now, I would like to turn the call over to David Mackey, WNS’s Corporate Senior Vice President of Finance and Head of Investor Relations.

David?.

Net revenue is defined as revenue less repair payments; adjusted operating margin and adjusted net income or ANI, are defined as operating margin and profit, excluding amortization of intangible assets and share-based compensation. These terms will be used throughout the call. I would now like to turn the call over to WNS’s CEO, Keshav Murugesh.

Keshav?.

Thank you, David and good morning everyone. We are pleased with our fiscal first quarter results highlighted by healthy constant currency top-line growth. First quarter net revenue came in at $140.8 million, representing a year-over-year increase of 11.3% on a reported basis and 16.7% on constant currency terms.

Sequentially, reported revenue was up 4% or 3.7% on a constant currency basis. While we continue to face ForEx headwinds from global currency softness against the U.S. dollar, our underlying business momentum remains solid. In the first quarter, WNS added six new clients, expanded six existing relationships, and renewed 21 contracts.

The first quarter of fiscal 2017 also saw WNS make continued progress towards positioning the Company for long-term success and demonstrating that our strategic investments are paying-off. During Q1, we completed our acquisition of Value Edge, a leading provider of commercial research and analytic services to the pharmaceutical industry.

This acquisition helps cement WNS’s place as a leader in the high-growth pharma BPM space and provides a unique opportunity for new client acquisition, cross-selling of services and leveraging of technology assets. WNS was also pleased to issue three separate press releases, announcing new client additions during the quarter.

We welcomed Etraveli, Tour East, and Canopius Insurance to our roster of clients and believe each win demonstrates a unique market differentiated capability for WNS.

For Etraveli, the leading online travel agency in the Nordic region, WNS will help accelerate their digital initiatives, manage their fast-growing travel operations, drive efficiencies, and enhance the end-client experience.

WNS was selected based on our unparallel knowledge of the OTA space, track record of improving business outcomes, and reputation as a flexible and adaptive partner. Tour East, one of Canada’s most respected and innovative travel companies chose WNS for our suite of technology enabled travel solutions.

Tour East will deploy Q-Bay, our automated workflow and workforce management offering and RePax, the travel industry’s first fully automated flight disruption management solution. These offerings leverage WNS owned technology IP that addresses industry-specific challenges, generates increased profitability, and improves end-customer satisfaction.

Finally, WNS was thrilled to announce a strategic partnership with Canopius Insurance, a top-10 specialty insurer or reinsurer and member of the Lloyd’s of London and global insurance markets.

WNS will help drive business transformation, productivity and innovation across their complex and highly specialized insurance business and help support strategic, operational, and functional areas including underwriting, claims, actuarial, and finance and accounting.

Canopius selected WNS based on our deep domain expertise in the insurance space and proven track record of delivering results for several of the world’s leading insurers.

We believe that these successes demonstrate that our investments in domain expertise, analytics and technology are resonating well with both existing clients as well as new prospects. As we look forward to the remainder of fiscal 2017 and beyond, it is important that we address the UK’s decision to leave the European Union at the end of June.

Obviously, we are in unchartered waters, and it is far too early to predict the implications of this unprecedented move. That being said, we see the potential for this decision to impact our business in three areas, currency; volumes on existing relationships; and demand for new business.

On the FX front, our hedging programs will provide us with the healthy level of profit protection against any depreciation in the British pound in fiscal 2017, as is already evidenced by our updated guidance. The ability to protect our bottom-line phases out over the next two years as the new hedge positions are layered on at lower rates.

Sanjay will further discuss our financial performance and the impact of currency in his prepared remarks. With respect to revenues from the existing clients and existing processes, we will need to see how Brexit impacts the UK and EU economies and more specifically our clients’ day-to-day businesses.

While volumes can fluctuate over time, we believe our European business should be largely protected by the diversification of our portfolio across different verticals, the long-term nature of our key contracts, many of which have been renewed to 2020 and beyond and perhaps most importantly that the work perform for our clients is mission critical to their business and not discretionary in nature.

Finally, we will need to see how uncertainty and potential economic challenges change the timelines for client decision making. For some prospects and clients, uncertainty has the potential to create delays in decision making and process transitions.

However, for strategic BPM initiatives, possessing strong CFO [ph] sponsorship, uncertainty and potential cost pressures could serve to accelerate outsourcing plans. In the short-term, behaviors will vary client-by-client, but we will need to wait and see how sales cycles are impacted over the coming months.

Long-term, we remain confident that clients will want to partner with firms like WNS for their strategic BPM requirements as the value proposition of lower cost, improved operating efficiency, actionable insights, and digital adoption remain compelling.

In fact, this has been validated that several of our larger clients who we have spoken with over the past few weeks, while there is uncertainty about what Brexit means for them in the short run, they remain comfortable about their businesses long term and their relationship with WNS.

In the meantime, we have continued to diversify our revenue portfolio over the past few years. In fact, revenue from the UK has reduced from 55% in fiscal 2010 to 42% in the most recent quarter. Obviously, with the assumed currency depreciation for the balance of the year, we expect this number will further decline.

In our press release issued earlier today, WNS updated our full year guidance for fiscal 2017. We currently expect revenue to be in the region of $541 million to $569 million, representing topline growth of 2% to 7%. Excluding the impacts of currency and hedging, guidance reflects constant currency revenue growth of 8% to 14%.

Revenue growth at the midpoint of guidance is over 11% constant currency, similar to the midpoint of guidance provided in April. We have increased our visibility to the midpoint from 90% to 95%, consistent with prior years.

Adjusted net income or ANI for fiscal 2017 is expected to be in the range of $94 million to $100 million or $1.78 to $1.89 per adjusted diluted share. Other than ForEx impact, our guidance is unchanged from last quarter as the underlying business continues to be strong.

While we cannot predict where the British pound will settle or how specific clients in the UK will be impacted by Brexit, we take comfort in the fact that our mature hedging programs help protect us financially and that the work we do for our clients is mission critical to their businesses.

Today, we are very excited about our overall business momentum and differentiated positioning in the BPM marketplace. CEOs and boards will need to make strategic decisions to reduce cost and build competitive advantage.

In order for companies to survive and thrive, they will need to intensify their efforts in social, mobile, analytics and the cloud and to automate their businesses, leveraging platforms and tools including robotics.

The demand trends for BPM outsourcing continue to show that our industry is underpenetrated with an opportunity for accelerated adoption and that the need for domain-led services and specialized talent is increasingly critical.

We believe that WNS is extremely well-positioned to meet these trends and will continue to be a key partner to the best performing companies across the globe. I would now like to turn the call over to Sanjay Puria, our CFO, to discuss our financials.

Sanjay?.

Thank you, Keshav. With respect to our first quarter financials, net revenue increased to $140.8 million from $126.5 million in the same quarter of last year, growing 11.3% on a reported basis and 16.7% on a constant currency basis. Year-over-year, quarter one revenue was pressured by depreciation in key revenue currencies against the U.S.

dollar, including the British pound, South African rand, and Australian dollar. By vertical, revenue growth was broad-based with the healthcare, retail/CPG, shipping and logistics, and travel verticals each growing over 15% year-over-year.

With respect to our service offering, revenue growth versus the prior year was driven by technology services, finance and accounting, high-end customer interaction services, and research and analytics. Sequentially, net revenue was up 4% or 3.7% on a constant currency basis.

Quarter-over-quarter, revenue growth was broad-based and healthy and aided by a slight currency tailwind net of hedging. Adjusted operating margin in quarter one was 18.6% as compared to 20% reported in the same quarter of fiscal 2016 and 22% last quarter.

On a year-over-year basis, adjusted operating margin decreased due to the impact of our annual wage increases and cost associated with the India Payment of Bonus Act. This headwind was partially offset by operating leverage on high volumes. Currency, net of hedging was neutral year-over-year.

However, quarter one included a charge of $1.7 million for balance sheet revaluation associated with quarter ending depreciation in the British pound. Excluding this item, operating margin would have been essentially flat year-over-year.

Sequentially, adjusted operating margin was pressured by our annual wage increases and currency headwinds net of hedging. Improved productivity and higher volumes partially offset this loss.

The Company’s other income was $2.3 million in the first quarter, up from $2.2 million reported in quarter one of fiscal 2016 and down from $2.6 million last quarter. The changes in interest income, both year-over-year and quarter-over-quarter are largely reflective of changes in our cash balances.

WNS’s effective tax rate in the first quarter was 16.3%, down from 17.3% last year and 17% reported in the previous quarter. These fluctuations are primarily due to timing and the mix of profits between geographies.

The Company’s adjusted net income for quarter one was $23.9 million, compared with $22.6 million in the same quarter of fiscal 2016 and $26.9 million last quarter. Adjusted diluted earnings were $0.45 per share in quarter one, up from $0.42 in the first quarter of last year and down from $0.50 reported last quarter.

As of June 30, 2016, WNS’s balances in cash and investments totaled $146.6 million and the Company had no debt. WNS generated $17.7 million of cash from operating activities this quarter and free cash flow of $12.5 million after accounting for $5.2 million in capital expenditures.

As Keshav mentioned, we completed our acquisition of Value Edge this quarter, which impacted our cash flow by $17.5 million. The Company also repurchased 750,000 shares of stock in quarter one at an average price of $30.49 per share, totaling $22.9 million.

DSO in the first quarter came in at 29 days versus 28 days reported in both quarter one of last year and last quarter. With respect to other key operating metrics, our total headcount at the end of the quarter was 32,448.

Our attrition rate in the first quarter was 34%, down from 36% reported in quarter one of last year and down from 35% in the previous quarter. Global billed seat capacity at the end of the first quarter was 27,123 and average billed seat utilization was 1.21.

As always, we expect the seat utilization metric will fluctuate quarter-to-quarter, based on facility build out requirement and hiring cycles.

While the depreciation in the British pound, resulting from the Brexit vote had minimal impact on our quarter one financial results, our revised full year 2017 guidance does reflect reduction in both revenue and profit.

On a positive note, our hedging programs have held to mitigate the impact of a 6% drop in the British pound versus our prior guidance. In our press release issued earlier today, WNS provided updated guidance for fiscal 2017.

Based on the Company’s current visibility level, we expect net revenue to be in the range of $541 million to $569 million, representing year-over-year revenue growth of 2% to 7%. Revenue guidance assumes an average British pound to U.S. dollar exchange rate of 1.30 for the remainder of fiscal 2017.

Excluding exchange rate impact, our revenue guidance represents constant currency growth of 8% to 14%. We currently have 95% visibility to the midpoint of the revenue range, consistent with July guidance in prior year. Adjusted net income is expected to be in the range of $94 million to $100 million based on 67.5 rupee to U.S.

dollar exchange rate for the remainder of fiscal 2017. This implies adjusted EPS of $1.78 to $1.89, assuming a diluted share count of approximately 53 million shares. Excluding FX impact, our ANI and EPS guidance for fiscal 2017 remains unchanged from the prior quarter.

With respect to capital expenditures, WNS anticipates our requirement of fiscal 2017 to be in the range of $22 million to $25 million. We’ll now open up the call for questions.

Operator?.

Thank you. [Operator Instructions] Our first question comes from the line of Joseph Foresi with Cantor Fitzgerald. Your line is open..

Hi. I was wondering if you could provide a little bit more color on the impact from Brexit, and I am wondering if you could do that around just the business itself. Obviously you’ve provided FX.

But, have you seen any changes in business patterns; have you heard anything from those clients that talked about sort of some short-term uncertainties; and how do you expect that to impact the business itself?.

Thanks Joe and it’s great to see that you’re first on the call today. So, first of all, let me say that I actually was in the UK during the period that the work took place; I spent almost 10 days there including the day all of it happened.

And I was actually spending a lot of time with our obviously largest clients and some of our more significant clients across the UK just trying to understand impact if any.

Now, let me tell you that from those discussions, I found that everyone was only focused on how we could help them and their businesses in terms of reducing cost, more digital adoption, all the good things that we are very well-known for.

And from their perspective the impression I got, as I interacted with clients, was that they obviously needed to spend time understanding the impact of Brexit to their own businesses. But generally, I felt comfortable coming back from there, saying that the underlying business itself has not changed.

Clearly, while there could be some short-term impacts on client transactions and volumes and behaviors and things like that, overall, I don’t see any significant change in terms of our business, essentially because first and foremost we still believe, as I said earlier, the whole BPM industry is underpenetrated.

The work that we do for clients is core, mission critical; it is not discretionary in nature. And from our perspective, again, when you look at our contracts as well, are -- we have -- major of our contracts are protecting us through 2020 and beyond.

So, again, we’ll have to wait and watch to see what is the impact with an individual business is but I didn’t see any panic or anything of that kind. And in fact, it was business as usual in terms of the quality of discussions..

And then the broader pipeline, I think you talked about signing three deals.

How should we think about kind of the patient decision making, the size of those deals, and what the impact could be to short and long-term numbers, from just the demand in the pipeline?.

I think, Joe, we have not seen a fundamental change at this point in time in terms of the overall demand environment, the progress that feels through the pipeline, the size, duration of those deals. So, I think at this point, we remain pretty comfortable.

And I think you see that in the guidance that our business is tracking well, clients are following through, deals are moving through the pipeline, and BPM as a whole is in a very healthy place..

And then, last one from me from a hedging perspective and an operational perspective, have you changed your approach to the business at all and made any adjustments, either for the FX or for what’s going on in the UK?.

As we follow our hedging program, which is 24 months rolling forward, so -- and instead of taking a view based, we always go with our rule based approach and that has worked very good for us for the long-term.

And for this year, as you’ve seen, we already have hedged 90% for the year and as well as we are already hedged 60% for next year as it is too volatile from a account perspective. We have enough levers to take care to protect for the future. But, right now, we are very comfortable with our hedging program and what we are following..

And I think just to follow-up on what Sanjay said, at this point in time, we are not changing our hedging philosophy; we’re not changing our approach. We certainly have to watch and wait and see.

And one of the options that we have in terms of our ability to longer term manage structural depreciation in the British pound or structural changes in any currency is to change that hedging approach, take a longer term view and better protect the business if we think that will work better, something we have to watch over the next couple of quarters to see if it makes sense.

But at this point in time, the philosophy remains unchanged..

Thank you. Our next question comes from the line of Anil Doradla with William Blair. Your line is open..

Hi. This is Maggie Nolan in for Anil Doradla. I wanted to follow up on your business in the UK.

Do you feel like there is any -- exposure to multiple verticals, do you feel like there is any one vertical that’s more prone towards softness or uncertainty or that would have a positive spending as a result of the Brexit?.

No. As I mentioned in my prepared remarks, as well as my answer to Joe earlier, I actually was there; I spent time with clients across all verticals; I spent time with clients managing horizontal businesses as well. And we feel extremely comfortable that they are much more focused on the advantages that the model delivers to them.

And from our -- and there maybe short-term kind of reactions, the medium to long-term continues to be very, very solid..

And I think Maggie, if you do see any kind of exposure specific to verticals, it would come from cyclical businesses. So, is there are possibility that for example volumes for verticals such as airlines get impacted by something like this is something we have to wait and see what happens.

But, we don’t see impacts for example, even relative to volumes in businesses like pharmaceuticals and businesses like utility. These are very sticky businesses where the transaction volumes and the processes that we manage should not have a lot of volatility relative to cyclical impact.

So, again, something we have to wait and watch, but at this point in time no impact, either in terms of the demand cycles or in terms of the volumes on the processes we manage..

And let’s not forget the fact that there is a two-year period even before potentially implementing this whole decision..

And then, you talked about three of the six new client additions.

Can you give a little more color on the rest of the new clients and where, what the geography, the location of those clients and then what end-markets they’re in as well?.

Sure. So, Keshav talked quite a bit in terms of his prepared remarks about the progress that we have made this quarter in adding two brand name clients in the travel vertical and Etraveli and in terms of Tour East; talked about Canopius Insurance in terms of an add for us on the insurance side.

We also had some good success this quarter; we added another client -- another two clients in the banking and financial services and the sixth client add was in the retail/CPG vertical..

Thank you. Our next question comes from the line of Edward Caso with Wells Fargo. Your line is open..

Hi. Good morning, good evening.

Of your pipeline, how much of it is sensitive to UK or Europe? And just trying to get a feel for -- obviously this would be F18 kind of work, but trust trying to get a sense for the exposure of your pipeline?.

I’ll take that, Ed. I think at an overall level, if you look at the pipeline as a percentage relative to the UK, you’re probably looking at exposure that’s a little bit below where it is today.

So, if we’re running right around 40%, 42% of revenue in terms of run rate and obviously that number will be coming down quite a bit, as Sanjay mentioned, based on the depreciation in the pound, I would say that we’re probably closer to a little bit over a third in terms of the pipeline exposure to the UK..

And just to add that historically also we have seen like in FY10, we were somewhere around 55% concentrated towards the UK and in the last four or five years, the concentration has come down to 40%-42%, based on the diversification strategy of the Company..

And a different area; are you seeing any willingness of clients to accelerate past that first initial FTE focused engagements and to embrace automation sooner in the lifecycle of the client relationship?.

So, Ed, this is Ron. Our conversations with are changing somewhat. There is always a safety factor from the client’s point of view, using a common metric of FTE.

But, our discussions around automation or discussions around alternative pricing models, whether it is transaction pricing or outcome based pricing, have all been a solid uptick, and we’re finding more clients wanting to incorporate that into the contracts, maybe not initially, but putting a placeholder that they want to move to that over time.

So, I would say that -- and significant part of our conversations today with clients, there is a strong appreciation for what that means for them. And there seems to be a direction of uptake of that concept broadly with the clients we’re talking to, and I think in the marketplace..

Yes. I think in general, the interest in those models that’s accelerating. It will definitely take time to see that pull through in terms of the impact on the financials.

But, as we’ve talked about quite a bit in the past, the reality is and clients understand this all too well that the move to transaction and outcome based models involves a loss of control for the client. So, it’s always something that’s going to proceed cautiously.

While they understand the economic benefits and the flexibility that those models provide, there are also operational and cultural issues that come with that move..

Given the weakness in your share price and the fact that in the last quarter you really couldn’t get going to mid-quarter on the repurchase, could we see higher levels here of share repurchase activity and how do you balance that out against a desire maybe to do some market spending acquisitions? Thanks..

That’s an excellent question, Ed, and thank you for that. We have obviously spoken quite a bit about our capital allocation programs over the past few quarters. And we continue to expect good solid cash flows coming in quarter-on-quarter. At this point in time, we have an approval for 3.3 million shares from a buyback perspective.

And, the company will consider all these options without impacting investments, potential M&A, things like that. At this point in time, I must say that the guidance assumes 1.1 million shares in the guidance as of now..

I am sorry, assumes 1.7 million shares repurchased?.

At this point in time, guidance assumes 1.1 million..

1.1, okay..

Of which 750,000 shares have already been done, as Sanjay mentioned. .

So, the long and the short of it, Ed, is at this point in time, relative to our guidance, we have not changed assumption about share repurchase from where we were in April but we’re still holding to that 53 million shares.

But, as Keshav mentioned, given where the stock price is, we need to certainly take a closer look at potentially accelerating some of those share repurchase programs, but balancing that with our cash flow requirements and other investment opportunities including tuck-in M&A acquisitions, which honestly remains the primary focus of the Company, to find those assets that help us build out our capability and accelerate growth..

Thank you. Our next question comes from the line of Bryan Keane with Deutsche Bank. Your line is open..

Hi. I just want to ask about the quarter itself, the 16.7% constant currency was quite strong, stronger than even the top-end of the range.

I guess, my question was, did you guys expect that kind of a strong start to the year or did anything in particular surprisingly outperformed for you guys in the first quarter? And then, secondly, from here, obviously given the guidance, growth rate will decelerate a little bit; just want to think about some of the pluses, minuses going forward to impact growth..

Thanks for that. The 16.7% growth is primarily based on where we were in quarter one of last year. So, the quarter one of last year was soft. Usually we -- it’s the 5% overall ramp downs based on productivity and projects and other stuff, usually happens in the first half. So, as compared to quarter one of last year, this quarter was pretty strong.

We have seen six clients, new logo what we already won, some acceleration of the transitions and other stuff has already started. So, accordingly, if we see our guidance, it is based on very consistent basis of the visibility what we have. So, we already have a 95% visibility to the mid-point of the guidance.

And overall, if you observe, there is a range of 8% to 14%, so there is always a possibility of the upside, but we feel very comfortable based on where we have the visibility for the guidance what we have provided..

And I think the other thing that’s important to remember Bryan is when you look at Q2 going forward, obviously as Sanjay mentioned, we’ve got a very easy comp that we were working against in Q1.

And those comps get more difficult, as we move throughout the year, but that being said, we know we’ve got a sizeable step down in terms of revenue reset in Q2 because of the depreciation of the pound.

So, when you look at our Q2 numbers, you’re going to see that revenue on a reported basis is going to be down slightly on a quarter-over-quarter basis. So, again, some of this is the optics around the business.

But yes, I think the assumption baked into the guidance as we move throughout the year is that that constant currency growth rate will slow down a little bit as we head towards the back half of the year.

But, our hope is that as these deals move through the pipelines as the ramps of what we have starts to improve and as our visibility improves, that we can increase those numbers towards the back half of the year end and move off of our midpoint today towards the higher end..

Okay, that’s helpful. And then, just on the Brexit discussion, I think, Dave, you mentioned that some of the UK business comes from -- or the business to watch will be the cyclical businesses.

Can you just remind us what percentage of revenue that is, the cyclical business in the UK? And then in the past slowdowns and recessions, what was kind of -- any way to think about the magnitude of an impact that impacted some of those cyclical businesses just to get a sense of what we could be facing in more of a worst case scenario?.

Yes. With respect to the previous cases, I don’t know that there is anything that we can draw direct parallel to with what we’re talking about here because that is as Keshav mentioned; I think we really are in unchartered waters.

With respect to the exposure to our cyclical businesses, some of that is definitional but just looking at our exposure across verticals in the UK, I mean I think you’re looking at less than 20% exposure to cyclical businesses..

Thank you. Our next question comes from the line of Ashwin Shirvaikar with Citi. Your line is open..

I guess my question to start with is about guidance. And of course revenues go down roughly 2% in the middle of the range, ANI and EPS goes down roughly 4%. And the revenue guide down because of FX was completely expected. But, I was, because of the hedging I was sort of looking for equivalent impact on ANI and EPS.

So if you can maybe walk through some of the specific nuances of what causes slightly bigger impact on ANI and EPS in spite of the hedges? And maybe just country specific and not related to GBP, maybe South African rand or something like that. But if you could walk through that that would be helpful..

Ashwin, from ANI perspective, the major impact specifically was related to the pound depreciation and it all depends from where the hedge position and the hedge book was there and as well as -- so it’s just 9% pound depreciation, but 90% was already hedged and 10% of the position was open. So that was the one impact over there.

As well as other impact was where the options were there, because we hedge based on the options in the forward as a base on the hedge book that was a second impact. But holistically, even if you see on a 12 million, even from a midpoint perspective, ANI down, and if you bring then down from ANI perspective, it’s a $3 million to $4 million.

But at the same time, on the quarter one, we had a balance sheet, a reval impact which is to an extent of $1.4 million to an ANI, so net-net those two, has contributed towards the ANI impact over there..

I think that’s the biggest difference that you’ll see, Ashwin, in terms of just at a generic level, the 10% unhedged. And again that goes across currencies. But, between the 10%, it’s unhedged and $1.4 million of balance sheet reval which Sanjay mentioned, that accounts for almost the entire drop in ANI.

So that change in guidance is entirely related to currencies. The reality is, as we’ve talked about in the past, what we hedge are our cash flows. So, things like balance sheet revaluation at quarter end are things that will not be protected by a hedge, the hedge is on the cash.

So, the 1.4 million was exposure and it was exposure based on where the British pound was at the end of calendar Q2 versus where the British pound was at the end of calendar Q1. Other than that, I think what you would have seen is a much lower impact to the bottom-line.

And again, that balance sheet reval if the pound were to comeback is something that we would recover..

And that’s extremely useful. So, no change other than FX, like you guys said.

The other question more long term is in terms of where you have a preference going forward to base your full-year resources to the extent that you kind of go through a shock to the system like this; does that over the longer term, affect how you conduct business? And, I’m not asking just about how you do your hedges but how you conduct your business in terms of your own greater attention maybe to automation or maybe you place more people than before in a different geography?.

Ashwin, actually that’s an excellent and a strategic question. And let me tell you, from our perspective, we believe we are executing extremely well based on the value proposition that we have been speaking about, the differentiation that we have created in the marketplace.

And if you just look at how our pipeline has grown, it is truly global in nature that is encompassing all verticals, key horizontals and also including all the new disruptive trends, in which WNS has invested very proactively, whether it is social, mobile analytics, cloud, robotics, things like that.

So from our perspective, we will continue to pay attention to all these key geographies, because that’s very, very key for us to understand, there is huge market opportunity across the globe for our services; our pipeline is clearly showing that; and there is tremendous excitement within WNS sales teams in terms of how prospects and clients are interacting with us.

That is one. Secondly, from an offerings point of view, as we’ve said, we’ve clearly kept investing in all these new areas as well as a lot in automation.

And therefore, as you look at how our business is transforming, they are becoming far more sticky in nature in terms of how the services are being delivered and how clients are focused much more on business outcomes and strategic thinking with WNS as opposed to trying to manage what we do for them.

So again, kudos to the operations team at WNS, as well as the capability teams; that has allowed our clients to think more strategically. And again, we will continue down that path.

So overall, I will say that even in terms of short-term trends of Brexit and things like that, as we’ve had conversations with clients and I said earlier also, I was personally there for those 10 days, interacted with even our largest clients, and the whole conversation was all around the fact that our clients remain comfortable today about their businesses long-term and their need to leverage global BPM and their partnership with WNS.

So, it is business as usual. We will continue to do what is right. We have invested significantly in North America sales force. There is a strong pipeline that is being generated there across verticals. There is a strong pipeline that is being generated in the Asia Pac region as well. And we feel very comfortable with that..

Also important to remember, Ashwin, we believe we’ve got a competitive advantage in the UK. And while we may be dealing with the short-term issue here in terms of how clients behave or what happens, we certainly don’t want to lose that competitive advantage. The history of the Company is the legacy of WNS.

And the last thing we want to do is invite competition to come in and take away share because we’ve taken our eye off the ball; so, no change, as Keshav mentioned, to the overall strategy. And we think there will be good opportunities across the globe including the UK as we go forward..

One last clarification question; the clients that you mentioned, any of them, do they have the potential to become top 3, top 5, top 10 type clients?.

Yes. In fact, our top client itself was one of them, right? And again, I must also mention one more thing, and it is important for me to mention how the Company’s services are being seen. WNS actually ran advisor interactions in the UK at exactly the same time and their attendance was a record attendance.

We actually had five of our large clients, senior most people come and talk about the value proposition as well as what we were actually doing for them. And the analysts and the advisors that came in actually didn’t come just from the UK; they came from all over Europe. We had people from Italy; we had people from other countries as well.

And in fact, I felt so comfortable with those interactions and they felt so comfortable with that interaction. So I am pretty certain that while in the short-term all of this can cause minor disturbances as people really re-measure the impact on their own businesses, in the longer term, this business proposition is very, very strong..

Thank you. Our next question comes from the line of Mayank Tandon with Needham & Company. Your line is open..

Thank you, good morning. Keshav, I just wanted to go back to the question about the constant currency growth rate.

You have seen the acceleration; obviously you’ve benefited from the comps versus 1Q last year, but just given that a lot of these deals that you won over the past two, three years are hitting their sweet spot, can we expect the sustainable constant currency organic growth rate to accelerate over time from the 11% that you’ve guided to at the midpoint the range for this year, maybe to low to mid teens over time; is that something that’s conceivable for WNS?.

Mayank, actually it’s interesting; this question is interesting because actually from our perspective, as you’ve seen that consistently now we are delivering constant currency growth that is in the low double digits and is the highest in the industry in terms of growth rate.

At the same time, as I’ve said, we’ve been investing in all these new areas; and this is not new; we’ve been doing it for a while now.

I’ve been talking about some of these differentiation as well as our strong focus on analytics as well as finance and accounting as well as platform based services that are potential to go into subscription model is very high. This quarter we spoke specifically about one plant that has got Q-Bay and RePax.

And I remember a few quarters ago I defined what these were and how they have the potential to move more towards subscription models. So, if you ask me, the possibility to continue acceleration based on the new services as well as accelerated adoption as well as the new models that have been socialized by WNS is very, very high.

But finally, I must say the decision taking lies with the client because some of these models are highly disruptive in nature. So, we feel very comfortable with the fact that we are already leading in terms of industry growth rates but yes, the potential for us to continue acceleration is also there, based on how clients continue to adopt the model..

And then, going on to the analytic side, could you just once again share with us what type of work you’re doing across which verticals and analytics specifically, and what is that as a percentage of revenue today and what is the growth and margin profile of that business versus your core operations management business, if I can call it that?.

So, let me start, I mean I am sure Ron and Dave will want to add on, but, very, very exciting how our mature analytics offerings have been positioned in the marketplace. So, for us, this whole analytics story is not something new; it is something that we have kept building on over the past few years.

You’re aware that this Company has a history of acquisitions where we have brought in some very strong capability as well as resources into the Company a few years ago. And as we position the domain based differentiation, the impact of analytics on the business story has become much, much higher and is accepted extremely well with clients.

At this point in time, we’re really excited about the fact that almost 13% of our revenues comes from analytics and another 5% to 6% comes from analytics, which is embedded in the other services. So, close to 18% to 20% of revenue really is analytics oriented.

Again, I must say, if you go back a quarter or two, you will see some of the press releases that we spoke about including the new QBE contract in Australia started with analytics. That’s the kind of trust and comfort clients now have with WNS.

They’re beginning their life journey with WNS around the highest impact areas, which is really impacting every one of that businesses and thereafter, our -- we are actually moving into core operations and business. So that’s how we have positioned this whole analytics thing.

It is a very core offering that we provide as part of our vertical offering and therefore the clients love it.

Ron or Dave, do you want to add anything else?.

Yes. So, you asked a question about the verticals we serve and the type of service. So, it’s very widespread. Again, as Keshav mentioned, we embed analytics into all of our services. But for those who buy analytics as a direct service itself, we do that into two fashions.

One, we will create a center of excellence for our clients that will give them a long time sustained analytics operations, so that they don’t have to make that investment themselves or it augments their current team. Additionally, we do project-based work.

And when we do that project-based work for clients, they then become annuity clients for us where they continually are buying the services from us. So, we’ll land a team dedicated to a client and build out those capabilities.

We are firming that by building platform solutions in the analytics space that we’re in process of deploying at clients, and other clients are looking to buy these platforms. So, our pursuit of this is strong. We’re finding good opportunities to uptake.

And as Keshav mentioned, in many cases, our first contact with the client is in the analytics space and then reads the potential for other services to go to the client..

And then, I think just to further a little bit on what both Keshav and Ron said, Mayank, the reality is, while today, we see selling pure analytic solution as a way to come in and demonstrate our knowledge and capability and help our client solve the business problem, we believe long-term that the real value to analytics is embedding in everything we do.

We do not believe that clients are going to want to separately for analytics. They’re going to expect as part of managing their core processes that we deliver these kinds of insights. So, as Keshav mentioned, we’ve got 13% of our revenue today that is standalone analytics.

We’ve got another 5% to 6% of revenue that’s embedded in our industry-specific solutions. Longer term, we believe that’s what the future is going to be that these capabilities are going to have to be part and parcel to the services that we provide to clients.

But in the interim, we do need to provide analytics on a standalone basis for us to get our foot in the door..

And one last question on the model.

I just wanted to make sure, did the India bonus tax payment have any impact to non-GAAP EPS or adjusted net income? And is that going to continue or is that just a one quarter hit?.

It’s going to continue, because that’s a regulation now. Last year, it was just a catch-up for ‘14-’15, but now it’s part and parcel of the comp, because it’s a regulation..

How much was the hit in the first quarter, and what should we expect for the future quarters?.

So, it’s 2.5 million for the -- approximately 2 million for the year. So, it’s $400,000 to $500,000. Based on the current headcount what we have and as and when we keep on growing and headcount keeps on increasing, it’s going to go up..

Okay. So that’s embedded in the adjusted net income guidance.

Correct?.

Yes. Those numbers are included in our adjusted net income; they’re not excluded from the numbers we report. And as Sanjay mentioned, it’s now structural. So, in terms of explanation on a year-over-year basis, beginning in Q3, you will no longer see that as an adjusting item; there may be plus or minus $100,000.

But, on a run rate basis, it will be built into our structure, beginning in Q3 of this year..

Thank you. Our next question comes from the line of Frank Atkins with SunTrust. Your line is open..

I wanted to ask a little bit about the constant currency revenue guidance again.

As we look at the range 8% to 14%, are the swing factors there primarily the ramp of new clients, are there other swing factors involved, what kind of defines the low-end and the high-end of the range in your view?.

Sure, I’ll take that, Frank. So, when we talk about having 95% visibility to the midpoint, what that means is we have that number committed at this point in time through the balance of the year. So, honestly, for us to end up below the midpoint of guidance at this point in time, two things would have to happen.

Either we would not sell and close any more business between now and the end of the year or something that we had committed would fall off. We would have an M&A activity or a client decides to bring something back in-house.

But honestly something would at this point, given our track record, something would have to go wrong for us to end up below the midpoint of guidance. In terms of what would get us above the midpoint towards the higher end of the guidance or beyond, you’re exactly right.

It would be an acceleration in either the ramp of what we’ve sold or in terms of our existing clients consumption of services. The reality is new clients, new deals as we get towards the middle of the year, tend to not have a material impact on our numbers.

So, we can accelerate that number in Q1, Q2 but as you’ve seen in the past, when we get to Q3 and Q4 the visibility to the midpoint gets up into the 98%, 99% range and that range of possible outcomes squeezes from the 5% we’re sitting at right now down to 2% to 3%.

So, highly visible business, highly recurring; we’ve got another couple of quarters here where we can close and beat that number but honestly with respect to the bottom-line that range is there because we provide a mid-point, which means by definition, the amount to the high end and the amount of to the low-end needs to be the same..

Okay, that’s very helpful, thank you.

And then wanted to ask a little bit selling and marketing expense where do you see that going in the remainder of the year? And what impact do you see of the ramps and potentially Brexit and just your strategy their going forward?.

So from a selling and marketing expenses for the year, we believe that to be in the range of 7% to 8% in that range. And because as and when we keep on having more new clients, the investment towards the farming and the farmers need to be there because they need a coverage for the long-term penetration in the growth perspective.

So that’s going to be there but for the full year as an average 7% to 8% is a good range..

Okay, great and last one from me, any color on the annual wage increase, how that went and the current hiring environment?.

So, the annual wage increase is pretty much consistent what we used to have with the earlier year, except for the Payment of the Bonus Act which got added over there. Excluding that, it’s as an average 8% annual wage increase what we have seen for the year..

And in terms of hiring, let me mention that I think WNS is a preferred kind of choice for smart people to work with. So from that point of view, our pipeline for good recruits has been strong, we’ve been recruiting really solid people.

And since we earlier also spoke a little bit of an analytic, I must -- I think it’s important for me to underline the fact here that we are the first Company that has recently created a new MBA in business analytics program out of India which we reported earlier.

And the demand for that particular program from experienced people with 3-4 years of experience, math and accounts kind of backgrounds has been outstanding. And the first batch actually starts on the 22nd of this month or so.

And we expect therefore to bring in really top notch analytics kind of professionals into the company on a dedicated basis through this program. So clearly, we are investing not just in analytics but we are investing also in ensuring that the right kind of resources dedicated to WNS are being trained and brought in, in a very proactive manner..

Thank you. Our next question comes from the line of Brian Kinstlinger with Maxim Group. Your line is open..

Thank you.

Your largest customer has been in the news about halting trading for one of its funds; and while this might not impact you directly, maybe talk about how you think about this changing the fundamentals of that contract, long term and could that have an impact?.

As far as our contract with our large client is concerned, everything has been fixed, as you recall a year or two ago, and it runs till 2022. So, really from that point of view, we are extremely well-protected.

And in terms of that particular, the funds that you spoke about, I think the actions that they seem to have taken is consistent with what most players in the market took at that point in time, while they were measuring the impact of this -- big changes around Brexit and things like that.

Having said that, I must mention, Aviva, this company is one of if not the most capitalized insurers in the UK with a strongest Solvency II rating.

So from that perspective, again, I spent time interacting with the leadership of each one of these companies while I was in the UK, and while they’re still trying to understand the longer term impacts of the business, they are quite clear that irrespective their needs to continue to leverage BPM and WNS remains high..

And then can you talk about the revenue added from Value Edge in the June quarter?.

It’s very minimal because we completed the acquisition by 14th June; so, it’s very minimal somewhere around couple of thousand dollars?.

And what’s the contribution you expect for the year?.

For the year, we expect right now to be in the range of $5 million to $6 million for the year..

And then the last question, if we assume the exchange rate in the British pound, the U.S.

dollar exactly where it is today, can we talk about hedging for next year? I know you are hedged out longer than a year; are you -- you would half the hedges on than you have in 2018 compared to 2017, just maybe a discussion around the British pound for that?.

So, we look for the next year, we are approximately 60% hedged for FY18 based on the revenue visibility what we have..

Thank you. Our next question comes from the line of Puneet Jain with J.P. Morgan. Your line is open..

Hi, thanks for taking my question. So, a quick question; so, given 15% of revenue stems from client transaction volume; so, have your assumptions changed on expected transaction volume in your guidance, specifically given the UK Brexit? And I understand a lot of that is auto claims and should not be impacted but just want to know your views on that..

No change to volume expectations at this point, Puneet..

And then margins, did you share margin expectations implied in your guidance; we calculated 19% to 20%; is that still the right expectation?.

That’s correct..

And the press release indicated that includes balance sheet translation.

Does that gain or loss go in your FX line generally?.

Yes, it’s in the FX line. So, you’re going to see that watching again some of the hedging gains that we have this quarter..

Right; and there should not be -- assuming currency rate stay at current levels, there should not be any further balance sheet translation gain or loss?.

Relative to the British pound, that’s correct..

Thank you. Our next question comes from the line of Vincent Colicchio with Barrington Research. Your line is open..

Most of mine were asked.

Contact center service line revenue was quite strong; could you remind us what’s driving that and should that continue to be strong throughout the year?.

Our customer interaction services as we spoke about quite a bit, Vince, is, A, it’s the entry point for a lot of our new client relationships. So, Ron spoke quite a bit about analytics as an entry point. We also see customer interaction services as an entry point.

And again, that now encompasses for us more than just traditional voice-based work; that also includes mobile, social, a lot of the front-end channels that our clients are asking us to manage on their behalf. So, we continue to expect customer interaction services to be strong.

We would expect F&A from a back-end to be strong and analytics, because these are really where clients are going to their first experience. To get into core mission critical operations to manage claims for an insurer, to manage passenger revenue accounting for a travel agency or for an airline; these are signs some level of maturity.

So, we do expect that these relationships begin to start -- either on the front-end or the back-end..

So, let me add to that. Last year, we had a significant customer interactive services client. We began with those services with the client. Since that time, we’ve now added financing accounting and back office services with the same time.

So, hat Dave said was a penetration of those services, high-end CIS services that now led to a good farming and cross-sell with the client, because we’ve built their trust and we’re able to add on the other services that WNS offers..

I think the other thing that’s important, Vince, is to understand that when you look at what’s happening in the industry and the move to digital adoption, as clients want to have multiple channels with how they interact with their customers, they’re not going to want multiple vendors to manage those multiple channels.

So, customer interaction services, whether it’s voice, email, chat, social, mobile, sensors, these are always that our customers are going to interact with their customers. And we need to be prepared to manage that. And certainly, we think it’s one of the easiest ways for clients today to begin their digital journey..

And maybe just to add to that, if you look even from a specific numbers perspective, year-over-year, the finance and accounting has grown more than 20%. So, it supports what Ron and Dave was mentioning that you may start with customer interaction services but it gives ample of opportunity for you to cross-sell into the other services..

And one last question.

Pricing environment, any changes there?.

From our perspective, it continues to be stable and healthy. Once in a while you see some irrational behavior, by some particular player was trying to be opportunistic. But based on the value proposition that WNS provides, we’ve not really had any surprises. So we continue to see there is a very stable pricing environment..

And at this time, we have no further questions in the queue. This will conclude today’s conference call. Thank you for your participation and you may now all disconnect..