David Mackey - Corporate Senior Vice President, Finance and Head, Investor Relations Keshav Murugesh - Chief Executive Officer Sanjay Puria - Chief Financial Officer Ron Gillette - Chief Operating Officer.

Joseph Foresi - Cantor Fitzgerald Anil Doradla - William Blair Edward Caso - Wells Fargo Brian Kinstlinger - Maxim Group Frank Atkins - SunTrust Ashwin Shirvaikar - Citi Group Bryan Bergin - Cowen Vincent Colicchio - Barrington Research Puneet Jain - J.P. Morgan.

Good morning. And welcome to the WNS Holdings’ Fiscal 2017 Second 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 is defined as operating margins excluding amortization of intangible assets and share-based compensation. Adjusted net income or ANI is defined as profit excluding amortization of intangible assets, share-based compensation and associated taxes.

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. Our second quarter financial and operating results were once again solid and was highlighted by healthy constant currency revenue growth, profitability and cash flow.

Second quarter net revenue came in at $143.7 million representing a year-over-year increase of 7.8% on a reported basis and 16% on constant currency term. Sequentially reported revenue was up 2.1% or 4.6% on a constant currency basis. In the second quarter, WNS added six new clients, expanded 11 existing relationships and renewed 14 contracts.

Despite headwinds from depreciation in the British pound, our business momentum continues to be healthy. Revenue growth and our deal pipeline remains strong and broad base across verticals, services and geographies.

In the past quarter, WNS added important new clients in banking and financial services, healthcare, travels, insurance and retail CPG verticals, which highlights our domain expertise and differentiated approach to BPM.

In banking and financial services, we have added two new logos in the area of digital loan servicing, these clients are both in the UK and have selected WNS as a partner due to our longstanding history of loan processing and our ability to manage end-to-end digital solutions.

In healthcare we have expanded our roster of pharmaceutical clients with the addition of two clients; one in the U.S. and another in the UK, both are for high-end research and analytics work and will leverage our recent value edge acquisition.

We also had a very strong quarter in the travel vertical where WNS signed three new deals across airlines and online travel agencies. These clients have chosen WNS for our demonstrated capabilities and technology enabled solutions in their respective areas of focus.

Geographically these new travel relationships will span three different continents including the U.S., Europe and Asia.

In Q2, WNS's retail/CPG vertical closed a new engagement with one of the world's largest e'tailers adding to our roster of brand name, digital clients and demonstrating the Company's ability to help service their complex process and rapid growth requirements.

While this relationship will start small, we believe the long-term opportunity is significant. And finally we are excited to announce that we have added a new logo to our insurance roster, which has the potential in the coming years to become our top five clients for WNS.

This customer selected WNS for our domain expertise and for our unparallel track record of servicing the end-to-end business requirements for some of the world leading global insurance organizations. Several of this new contract signings have yet to generate their first dollar of revenue and may not be major top-line contributors in fiscal 2017.

However, these deals provide us with a solid foundation for revenue growth in the coming years. We believe these successes demonstrate that our investments in domain expertise, analytics and technology are resonating well in the marketplace and are positioning WNS for long-term success in the BPM industry.

As I mentioned earlier, the British pound continues to depreciate, which is creating a headwind to reported revenue and to a smaller degree of profitability.

That being said, I want to reiterate that at this point in time Brexit has not had an adverse impact on our core business including the deal pipeline, contract awards, project ramps and volumes with existing clients.

In fact, we have been proactively helping clients examine how Brexit may impact their business and how we can quickly and more efficiently adapt to those changes as and when they are finalized.

We continue to believe the smart companies in the UK and Europe will leverage the capabilities of strategic partners like WNS to help drive cost savings and efficiency gains, generate actionable insights with analytics, implement and managed their digital strategies and deal with the added business complexity resulting from Brexit.

In our press release issued earlier today, WNS updated our full-year guidance for fiscal 2017. We currently expect revenue to be in the range of $551 million to $567 million representing top-line growth of 4% to 7%. Excluding the impacts of currency and hedging, guidance reflect constant currency revenue growth of 10% to 14%.

Visibility to the midpoint of growth has increased from 95% to over 98% consistent with October guidance in previous years. Adjusted net income for fiscal 2017 is expected to be in the range of $84 million to $89 million or $1.60 to $1.70 per adjusted diluted share.

These figures include the tax effects on our non-GAAP adjustments for amortization of intangibles and share based compensation, which Sanjay will discuss in his prepared remarks. In conclusion, we are pleased with our second quarter performance and remain excited about our business momentum and differentiated positioning in the BPM marketplace.

We feel that the demand environment for our services remain stable and healthy with clients looking for a broad range of capabilities and solutions from their partners.

These include reducing costs, improving efficiency, meeting regulatory and compliance related challenges, providing actionable insights, improving the end customer experience and digitally enabling the organization.

Our investment programs have been geared towards meeting these requirements and we believe the Company remains well positioned to capitalize on these trends and to deliver enhanced value to all of our key stakeholders. I would now like to turn the call over to Sanjay Puria, our CFO to discuss further our financials. Sanjay..

Thank you Keshav. With respect to our second quarter financials, net revenue increased to $143.7 million from $133.3 million in the same quarter of last year, growing 7.8% on a reported basis and 16% on a constant currency basis. Year-over-year, quarter two, revenue was pressured by depreciation in key revenue currencies against the U.S.

dollar, including the British pound and South African rand. By vertical, revenue growth was broad-based with the healthcare, travel, shipping and logistics and retail/CPG verticals each growing over 10% or more 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 2.1% or 4.6% on a constant currency basis.

Quarter-over-quarter, revenue growth was broad-based and healthy despite headwinds from currency net of hedging. During quarter two, the Company also benefitted from some delays in anticipated project ramp downs and a spike in volume relating to seasonality in our travel verticals.

We do not anticipate that these revenues will continue into fiscal quarter three. Adjusted operating margin in quarter two was 19.8% as compared to 23.1% reported in the same quarter of fiscal 2016 and 18.6% last quarter.

On a year-over-year basis, adjusted operating margin decreased due to the currency movements, net of hedging, the impact of our annual wage increases and costs associated with the India Payment of Bonus Act.

These headwinds were partially offset by operating leverage on higher volumes, sequentially adjusted operating margin increase as a result of improved productivity and higher volumes. These benefits were partially offset by wage increases and the reduction in seat utilization.

Quarter-over-quarter, favorability from the $1.7 million balance sheet revaluation charge taken in quarter one which did not recur in quarter two was offset by the negative effects of currency net of hedging.

The Company's other income was $2.1 million in the second quarter, up from $1.8 million reported in quarter two of fiscal 2016 and down from $2.3 million last quarter. The variance in interest income both year-over-year and quarter-over-quarter reflects the changes in our cash balances and effective interest rates on investments.

WNS’s effective tax rate in the second quarter was 27.7%, up from 25.9% last year and 26% in the previous quarter. These fluctuations are primarily due to timing and the mix of profits between geographies.

As Keshav mentioned earlier, our non-GAAP tax rate now reflects, the tax impact associated with our adjustment for amortization of intangibles and share based compensation. As per our previous calculation method, the effective tax rate would have been 15.5% in quarter two as compared to 16.9% last year and 16.3% in the prior quarter.

The Company’s adjusted net income for quarter two was $22 million, compared with $24.2 million in the same quarter of fiscal 2016 and $21.1 million last quarter. Adjusted diluted earnings were $0.42 per share in quarter two versus $0.46 in the second quarter of last year and $0.40 last quarter.

Again, this figure reflects the revised non-GAAP calculation method. As per the old method of calculating our non-GAAP ANI and adjusted EPS, the figures would have been as follows. Quarter two ANI of $25.7 million versus $27.1 million last year and $23.9 million last quarter.

Quarter two adjusted EPS of $0.49 per share versus $0.51 last year and $0.45 last quarter. As of September 30, 2016, WNS’s balances in cash and investments totaled $159.6 million and the company had no debt.

WNS generated $18 million of cash from operating activities this quarter and free cash flow of $11.1 million after accounting for $6.9 million in capital expenditures. The company also repurchased 395,444 shares of stock in quarter two at an average price of $29.43 per share totaling $11.7 million.

DSO in the second quarter came in at 30 days versus 27 days reported in quarter two of last year and 29 days reported last quarter.

With respect to other key operating metrics, our total headcount at the end of the quarter was 31,719, the ramp down in headcount occurred at the end of the quarter and relates to the project ends and quarter two travel volume spike mentioned earlier.

Our attrition rate in the second quarter was 35%, the same as reported in quarter two of last year and up from 34% in the previous quarter. Global billed seat capacity at the end of the second quarter was 26,996 and average billed seat utilization was 1.19.

As always, we expect the seat utilization metric will fluctuate quarter-to-quarter, based on facility build out requirement and hiring cycles. 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 $551 million to $567 million, representing year-over-year revenue growth of 4% to 7%. Revenue guidance assumes an average British pound to U.S. dollar exchange rate of 1.24 for the remainder of fiscal 2017.

Excluding exchange rate impacts, our revenue guidance represents constant currency growth of 10% to 14%. We currently have 98% visibility to the midpoint of the revenue range, consistent with October guidance in prior years. With respect to ANI and adjusted EPS we are pleased to report that despite reusing our assumptions for the British pound to U.S.

dollar exchange rate in our guidance from 1.30 last to 1.24 today, we have been able to absorb the impact to earnings and actually increase the midpoint of our EPS guidance. Adjusted net income is expected to be in the range of $84 million to $89 million based on 66.5 rupee to U.S. dollar exchange rate for the remainder of fiscal 2017.

This imply adjusted EPS of $1.60 to $1.70, assuming a diluted share count of approximately 52.5 million shares. The ANI and existed EPS figures including the impact of tax effect on our amortization of intangible and share base compensation.

As per the prior method of calculation, the corresponding ANI and EPS ranges would have been $95 million to $100 million and $1.81 to $1.91, under the revised calculation method, we expect our effective tax rate for fiscal 2017 to be in the range of 26% to 27% as compared to 17% to 18% under the prior methodology.

With respect to capital expenditures, WNS anticipates our requirement for fiscal 2017 to be in the range of $23 million to $25 million. We’ll now open up the call for questions. Operator..

[Operator Instruction] Our first question comes from Joseph Foresi with Cantor Fitzgerald. Your line is open..

Hi, I think you mentioned in your remarks that the headcount change and utilization change was due a to ramp down in travel.

Maybe if you could just talk about how much of that was seasonality versus the ending of a project, I think you mentioned a project end and how we should think about that going forward?.

So, from an headcount drop perspective as you likely mentioned that it was seasonality as well as a project end specifically the project ends which got a delay which was expected earlier by the end of quarter one, but we’ve got also delayed beyond expectation to quarter two. And as well as it was also due to the mix of the productivity.

If you also observe that our revenue growth is faster than the headcount growth and this is related to the headcount drop. But we expect our headcount to grow in quarter three and quarter four based on some of the recent wins as well as some of the attraction what we have seen, which Keshav also mentioned in his prepared remarks..

Okay. I guess just, it was one project or couple of projects that ended or you thought you are going to get and you didn’t get. I’m just kind of sort of understand exactly where the ebbs and flows of travel, obviously it’s going to pick-up again next quarter and move forward.

But was it one project that you had in the pipeline that fell out of the pipeline. So why did you fall out just more clarity on that would be great..

Sure, let me take that Joe. We had not have anything that we expected to happen that didn’t happen.

Essentially what we had were a couple of processes and a couple of projects that were scheduled to come to completion at the end of the fiscal first quarter, because the clients had some delays in terms of transitioning work and because some of the project scope got expanded, they moved into Q2 and start to generate some additional revenue in Q2.

But this had nothing to do with the pipeline, this had nothing to do with won or lost deals, this had to do with essentially extended visibility on to some things that we thought we’re going to come to completion in the fiscal first quarter and it was across several projects and several clients.

The travel seasonality is a completely separate issue and relates more to the fact that as we’ve seen in the past, we know that there are seasonal impacts to some of our clients businesses, especially in the OTA space.

I do believe that this will be a seasonality issue for us going forward to where we do see some spikes in the fiscal second quarter related to volume and the pull back in the fiscal third quarter.

But that essentially, this is now going to be a little bit of ongoing seasonality to our business and really what we saw in terms of Q2 revenue and the impact going into Q3 is that both the travel seasonality issues and the projects coming to completion have created a headwind moving from Q2 to Q3.

But again nothing that was not anticipated or expected..

Got it. Okay. And then my second question. Just I understand there is no immediate impact from Brexit, but obviously it’s a long process. How should we think about the process, as it helps or hurts your business and has there been any change in pipeline or deal conversion? Thanks..

Thanks Joe, so I’ll take that. Very frankly from our perspective at this point in time it continues to just be positive. So we’re not seeing any change in customers behavior, we have seen no changes whatsoever in how prospects are interacting with us.

If anything else, what we’re seeing is a little more positive momentum, because I think our teams have been quite successful in terms of convincing prospects that they should really not be waiting for the next two years, but making a smart decisions earlier.

So from our perspective, we are continuing to see solid momentum, we’re continuing to see people take decisions, we’re not seeing anyone big feet off the accelerator and if anything else, our sales team are using this as an opportunity to really sell more to both existing clients and prospects.

So now that the overall process is obviously going to take quite a long time and we’ll have to wait to see what the long-term impacts are. But from our perspective at this point in time, we just are looking at is as business as usual and we continue to make the progress.

And if you look at some of the wins we had recently also they actually came from the UK, so we are not seeing smart management teams not taking decisions, in fact they are..

Great. Thank you..

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

Hey guys thanks for taking my question. So a couple of clarifications, so when I look at the first quarter, second quarter combined from a headcount addition, obviously this is lower than what we’ve historically seen.

So optically, I mean I’m trying rationalize, because when you look at second half of last year, you had a very strong headcount addition.

So was the first half of this year largely more or less kind of absorbing some of the greater than expected ramps that you saw in the second half of last year, is that right we have looking at it?.

I think Anil when you look at what we saw in terms of the revenue acceleration in the first half of this year, it was more about the headcount in the hiring at the end of fiscal Q3 and during fiscal Q4 of last year than about what took place in the first quarter of this year.

So we talked a lot about hiring ahead of demand in Q3 and Q4 of last year that we had firm visibility to growth and acceleration. Some of that was for the seasonality that we saw in the travel business, but some of that was for a new clients that we are ramping up as we discussed around some of the larger wins that we saw in Q3 and Q4.

So I believe we hired over 2,500 people in the back half of last year. So I think what we are really seeing now is that we have been kind of able to stabilize that.

We’ve also seen over the last two quarters, a good acceleration in our productivity, and I know Keshav throughout the call once talked a little bit about technology in automation and some of the impacts that it's having on our business.

But we’ve dramatically improved revenue per employee over the first half of the year, as a matter of fact on a constant currency basis, revenue per employee is up a little over 6% year-to-date.

So what we want to do long-term obviously is to make sure that we are continuing to grow revenue at a faster rates than headcount, there is obviously going to be some seasonality to that in terms of the hiring cycle and when people join and when people leave.

But I think what you are seeing is that all of this growth kind of tends even itself start over three, four quarters and we are now positioned for growth in the back half of this year that should be kind of more in line with company growth..

Great. Now Keshav, glad to see your macro commentary especially on the Brexit, which is very different from what we are seeing in the IT world, but now there are two ways of looking at it right; one is the uncertainty in spending and the other thing is the declining purchasing power by some of your customers.

Now, I understand many of your contract is in local currency, so the second may not be impactful.

But going forward, if you were to break it down into these two parts, if you guys and more generally the BPO industry were to be impacted, which of the two areas do you think is perhaps something you would see first rather than the other?.

Look, I mean I think that’s a great question and again I must underline the fact that this quite futuristic, because at this point in time, it is still business as usual.

As I said, we are still seeing lots of signing, we are seeing lot of activity on the ground and I think customer still - they want to work with clients or with provider who understand their business well and who can lead them through the significant change that they are going to see over the medium to the long-term.

So I mean that is where really WNS is scoring. The whole currency impact, as well as the impact of what could happen in the future is something that is not really a key consideration at this point in time.

I think everyone is really looking at business impact and how they stack-up against competition at this point in time and that is what is driving results.

So I still like to think that even in the medium to long-term as we continue to invest in our core verticals build very, very strong capability in our horizontals, add very, very strategic kind of consulting thinking inside our company.

That is what is going to resonate in the minds of our customers as oppose to what the long-term impacts of Brexit is going to have, because as long as they need to be in business, they need to be highly competitive and we need to work with smart providers and I think that’s where we continue to score.

But Dave, Sanjay, Ron if you have any theories or views or guesses on what could happen over the next two or three years, feel free to add-on..

Right. And if you don’t mind me squeezing one final comment. So Keshav you are the Chairman of the NASSCOM. So you get to see what is going on with many of your BPO players. So the narrative and commentary that you talk about the Brexit and the relative installation, clearly you are seeing that with the newness.

But is it fair to say putting on your Chairman hat that statement could be extended to the BPO industry in general?.

Yes, I would say that generally, the BPM industry has delivered very differently to most of the other sectors, as we have seen over the past few quarters.

And I think this comes from essentially the fact that we have understood the business requirements of our customer’s better, we have probably invested ahead of the curve in terms of some other things that they want. And as a result of which we are driving the agenda with them as oppose to being dictated to.

So I think that’s a very, very different way of looking at our business. So I would like to really say that the overall industry impact for BPM is very different to what you probably are seeing or hearing about from the others.

And within that space again, the more differentiated players are probably going to be producing better results and producing better impact with their clients..

Great. Thanks a lot Keshav..

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

Hi. Good morning, good evening. Could you talk a little bit about where you are and where the industry is in the automation cycle? I know as you have been adding clients, they often start T&M and are you having any influence in maybe getting them to convert to automation fixed price, fixed unit contracts to help protect margins here? Thank you..

All right, Ed let me start with that answer and then we’ll have Ron talk a little bit more about it. But very frankly from our point of view, the whole automation story as well as the need to drive these models where headcount and revenue were being dealing were something that we started speaking about years ago.

And we in fact underlined it as one of our core differentiator. So in terms of building internal IP, building internal automation tools, creating mini platforms within the company, these were things that we started years ago. Over the past few years, we’ve added a number of very, very strong relationships.

As the result of which our technology impact in terms of creating very sticky revenue streams for ourselves and at the same time, going into client environments and saying that we can actually help you with the help of domain, technology and analytics to dramatically change how you look at a particular problem has been significantly enhanced.

Having said that, I must say that every client as I have said in the past has three stages; one is the tradition model, the transitional model and the innovative transformational models, so you have to use different impacts of both analytics and technology in each one of these stages based on where the client is in its lifecycle.

Based on where the advisors and the analyst community is in terms of advice, I think a lot of them are pushing to the clients community the fact that they should be much more vary about the whole technology kind of stack in the technology gain.

And therefore clients are talking a lot more about it, many of them are not completely ready for some of it. So from a WNS perspective as we sign a number of new clients, which is a very, very healthy sign, let me assure you there are lot of than actually start on the [P&M] (Ph) model first, right.

And it is only over a period of time that they move too much more technology intensive models. So from our perspective, we actually belief that the penetration is at a different level at this point in time, we are very positive about the number of clients we have signed, where they are in their overall journey.

But in terms of technology as a whole, I’ll have Ron add a little more now..

So let me add on to the cash of just share, so as far as the pricing model goes the conversations of being much more positive around outcome based pricing, clients are seeing the value in that to themselves, so outcome based and unit transaction pricing we are seeing some of that find its way into initial deals as well, not just relationships or the existing clients.

So I think that’s very positive to see the education of the clients move up and see the value towards themselves. As far as technology enablement you know that’s been part of our message for a long time, it's part of how we deliver the value to our clients overtime in both quality and productivity.

Those conversations have gone well and we are seeing acceptance of what we offer and bring more so than we would have seen a year ago. So I think the story is positive, it's caused us to continue to look at what we are able to bring to our clients and create more solutions to bring to them as well. So a positive story on both fronts..

My next question is on competition, just curious are you seeing people getting in or you are seeing people getting out and does it matter whether their attacking the market vertically specific solutions or more generic sort of horizontal F&A kind of opportunities? And does this automation ahead of the curve that you talked about a competitive advantage? Thanks..

That’s an excellent question I must say Ed. Let me say that in terms of competition in the deals that we are in, I would like to reconfirm that it’s the usual suspects that we see. I think clients are also quite discerning in terms of who they want to see in the final list.

So even if a hunt start with 10 or 15 players that include pure plays, integrated SIs, whatever. Ultimately, you will see based on the vertical or the horizontal component of the discussion, it quite often ends up being two or three of the leading kind of pure plays and then one or two of the other added into the mix so to speak.

But having said that, again I think clients, if you look at how we have been position, we’re seeing that whether it is a horizontal led deal or a vertical led deal or a deal that starts with say a higher end service like F&A and analytics.

Really proud to say that WNS is now positioned globally across - all the significant deals across every one of our key verticals. While some of the others are probably still focused on delivering on their older go-to-market approaches.

So therefore, if it’s F&A deal, you will see particular kind of company, if it’s an insurance deal related to North America. We would expect to see certain players in competing. But all of them shouldn’t expect to see WNS in every one of the deal. So that is where, I think we’re scoring extremely well and the confidence around the pipeline that’s one.

And the second, as we’ve invested so significantly in terms of the whole technology story as Ron talked about. Some of this is actually helping us with the Omni-point as we grow into some of these deals.

You saw one or two quarters ago, we spoke about a large insurance company awarding probably the largest analytics led contract to WNS that has taken up extremely well, we’re now looking at expansion more. At the same time, one of the new contracts that we signed recently and I spoke about.

Again is focused a lot of domain, but again what also helped us win was the fact that our knowledge of technology and platforms and higher value services scored better than competition. So I will say that we will have to keep investing in these areas, customers will be more discerning.

But at the same time, the relationships between WNS and its customers is becoming even more strategic, it is going to the highest levels, it is going to the Board rooms and to the CEO’s offices and I’m delighted with that progress..

Thank you..

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

Great. Thanks so much.

Can you just provide some details in travel leisure as well as healthcare both were up 33% year-over-year looks like in revenue based on your segment results? Can you highlight how much is coming from older customers versus new relationship ramping and where are we in that ramp?.

Let me take a crack at that Brian. Certainly with the travel business, I would say that the acceleration and the improvement is a combination of new customers ramping, as well as some of our longer term travel clients accelerating their - they are positioning their spend with WNS.

This has been kind of a business for us that was seriously impacted two plus years ago by the loss of Travelocity, and we've kind of been in recovery mode since then, but what we've been able to do is add several new anchor accounts over the last two to three years.

Keshav spoke in his prepared remarks today about three new customers in the travel vertical that were added just this quarter alone.

So we've got really good traction which we would expect given our track record our domain expertise our roster of customers, and we've now gotten a position where I think a lot of the headwinds to our travel business are behind us and we're seeing good healthy acceleration across both new and existing clients.

On the healthcare side, again I think there are two things going on, one new customers adding, second the addition of the value edge here in the second quarter has helped us as well, and we're seeing cross sell opportunities from that both in terms of selling the value edge technology to additional new customers, which Keshav mentioned, but also selling value edge and its capabilities into our existing customer base.

So you know the good news is both from if you will a hunting and affirming perspective, I think both the travel and the healthcare businesses are extremely healthy..

And then within that travel piece, you mentioned Travelocity now, that relationship there was some expectations that you would hope to gain share there overtime with the new partner.

How was that played out, was that a driver of growth or has that not materialized like you had hoped?.

I would say it's very - it's in driver of growth, it's been instrumental to some of the acceleration in our travel business and we're very happy with the relationship, the health of the relationship and the progress that we've made over the last year and a half..

Great, and then in, in the current quarter we're in, it sounds like you are expecting revenue to fall some and less travel and some seasonality in the quarter.

How much revenue is falling off from either projects ending or less travel?.

So, I'll take that. From quarter two onwards we know that it's going to be around 1%, 1.5% or approximately $2 million falling due to the travel seasonality, what Dave mentioned as well as almost $3 million from the project ends, which you spoke about, which you are expecting at the end of quarter one, but you know it went till the quarter two end.

And as well as that's going to be the currency volatility, which is going to be impacting you know because the guidance if you see, based on the British pound depreciation from 1.30 to 1.24 that may also impact the revenue in quarter three and onwards..

So 5 million a quarter before currency..

Yes..

Just for Q3 right, so, we do expect that the seasonality issue on the travel side though, what will certainly create a follow up in Q3, but that number should pick back up if you will from an apples-to-apples volume perspective in Q4, Q1, Q2 of the next year..

Great, okay, and then finally just on the cash, on the change in accounting, is that a better proxy now for cash taxes and then what prompted the change in the middle of the year?.

So, as we keep on continuously evaluating our public reporting on the non-GAAP basis, specifically more towards a relevant presentation of our non-GAAP financial and the performance and as well we believe that this was a right time for us to change our ANI methodology specifically on the tax impact, which was not there earlier and nothing very specific.

But just to have a more relevant presentation of our non-GAAP financials..

And is that a better reflection of tax cashes, is that right?.

It’s nothing from a cash perspective, it’s only on the non-cash item, which is specifically on amortization, as well as on the share-based compensation. So no cash impact from overall cash flow perspective..

Okay. Thank you..

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

Thanks for taking my question. First question is a little bit of tick down on the top customer as a percentage of revenue.

Could you talk about what is driving that and has there been any change in the growth trajectory there?.

I think there is no change Frank in terms of the health of relationship. We do continue to see volume pressures on a standalone basis with that customer. Obviously, the biggest issue that you see quarter-over-quarter is depreciation in the British pound which effects how that customer shows as a percentage of revenue.

We do and have spoke about some opportunities at this customer over the next couple of years and have seen some very early signs of progress in terms of their ability to integrate an acquisition that they have done. So that is an opportunity that we hold out for this customer.

But bottom-line is when you look at where we are today, you look at the currency headwind as Sanjay just spoke about in terms of the British pound going from 1.3 to 1.24. It’s entirely possible that this will not be a 10% client to share and all of this by the way obviously baked into our guidance.

But from a diversification standpoint, from a client concentration standpoint, these are very good things for WNS long-term..

Okay that’s helpful. And then wanted to ask a little bit about the research and analytics horizontal.

What type of people are you seeing there and how are clients accepting of these capabilities and can we expect to see that continue to take up as a percentage of revenue going forward?.

Absolutely. I mean actually this is very, very exciting area of growth for the company and it is actually been delivering fantastic results for us.

So I don’t know if you ever read, but we now deliver almost 20% of our Company’s revenue from the all research and analytic space, 13.4% on a standalone basis and the rest which is embedded in industry specific solutions.

Now as we have publicly stated in the past, we do not believe that standalone analytics alone is something that companies or clients would want to pay for. And that’s the reason, we have embedded of these kind of offering inside our domain based offerings.

We believe that the value that we deliver to our clients as a result of embedding analytics along with the traditional business process is very much appreciated and something the client will pay for with higher pricing as well.

At this point in time, the margin that we’re delivering from these services is actually higher than the overall margin of the rest of the services. So very, very positive and [indiscernible] in terms of how analytics is playing. Now what we are doing therefore is continuing to build out very, very strong capability in these areas.

So the recent M&A that we did with value edge is really adding more capability there, analytics consultant and intubation groups have been created, some labs have been created in-house. Specific investment being created in the talent pool as well as in terms of scientist, data modelers, statisticians.

You will recall that last quarter we also announced a joint MBA in business analytics with the leading university out of Delhi. All of this along with the partnerships we now have with Roslyn, The Denodo on the technology side is all pointing towards how impactful this area is and how we are investing in all of this.

And in terms of capabilities, they grow across the entire spectrum of horizontal and vertical at this point in time, leveraging domain expertise, predictive analytics, descriptive analytics, digital experiences, so many other areas.

And the success measures really are around the top line, the profitability, the fact that we are starting new engagements with analytics now as oppose to the traditional offering that we have had.

You know that one of our largest pharma accounts depends completely on us for analytics and we do some fantastic cutting-edge work for them across the globe.

Similarly the recent win that we brought in from Australia from one of the top companies called QBE, started with analytics so very, very excited with this areas and a strong investment area for WNS..

Fantastic. Great to be here. Thanks..

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

Thanks guys good quarter, good to see you all overcome pretty significant FX headwinds here..

Thanks Ashwin..

Keshav, you just expand on analytics, but I wanted to broaden that out to discuss digital and digital transformation. Something that you mentioned very frequently in your comments today and it's good to see again digital wins, but I’m curious as to the economics of these digital add-ons relative to the other works you do.

Would you expect a sort of corresponding, delinking of headcount growth and revenue growth in the types of headcount for digital, how does that change?.

Sure, I think it will impact all the areas you spoke about Ashwin. And at this point in time, I think it's important to appreciate and understand that not just WNS is so focused on digital, but generally thanks to all the buzz from the analyst and the advisor community. A lot of the clients and prospects also want to have a digital story, right.

And from that perspective they are also carving out areas where they are ready and in those areas that’s where we come in with our offerings and we help them in terms of providing a different kind of resource one.

Second thing, provide a different kind of outcome based kind of solution to them and more importantly enable them to become much better connected with their client base. In the past few quarters, we have spoken about a number of offerings that we have kept coming out across in our verticals particularly the travel side as well.

So I won't go into those details again, but all of those offerings are resonating extremely well in the marketplace.

Whatever started out as pilots a few quarters ago are now offering which are creating tremendous buzz and exciting with our airline clients, with our OTA clients, with our new digital clients that we spoke about the e'tailers and people like that.

And you have to expect therefore that some of these models will create faster revenue growth with lower headcount. And we also expect that the way we deliver it will also have very positive impact on margins. Having said that, I also want to mention that not every client is completely ready for these models.

And I also want to make sure that everyone appreciate the fact that what we do is to be a solid extension of our clients enterprise and therefore managing their traditional needs, managing their transitional needs and managing their transformative needs is where we earn your bread and butter and which is what is very much appreciated by our clients.

So this is a journey that we have to go through, all of it won’t happen at one shot. But the fact that we’ve been investing behind the scenes in all of these areas is seen as very positively by our clients..

Okay. Perhaps you can take your comment on the digital related margins offline, because I do want to ask a question about cash usage. I’m wondering why given your healthy balance sheet and cash flow, and we are not seeing maybe a more aggressive buyback and is that because of your M&A pipeline being fairly active..

So you are absolutely right. As Keshav mentioned earlier also from a capital allocation program perspective, we are very actively looking for the tuck-in acquisitions for the capability and we have a really good pipeline around that into the multiple areas where we really want to go after.

Having said that, where the stock price is today definitely gives an opportunity for us to really accelerate some of the share buyback program and we are actively looking and pursuing that..

Okay. And the acquisition. Sorry, go ahead..

I’m sorry. This point reference to it, it’s important to note that last quarter our assumptions for average shares outstanding were 53 million. The average share outstanding assumption for this quarter was 52.5..

Yes, got it. The follow-on there was and this is the last question I promise, was I know you are doing well in the UK, but it’s also important for investors that you may be should not be overly exposed to any particular geography.

And is that changing how you look at even your M&A or your organic pipeline?.

So from our perspective, I think in terms of the M&A pipeline our focus really is around capability creation and capability acquisition. And from a capability point of view, we expect, we will have strong impact and momentum across all of our verticals and geographies as well. So we expect as we do this it will drive revenues globally.

At the same time from a pipeline point of view. I must mention that our pipeline, in every one of the geographies including North America and Asia-Pac are very positively positioned at this point in time.

And some of the M&A target that we’re also looking at, could also have a slant or a bias towards North America essentially because of how they are positioned. But having said that, while they could bring in higher North America, U.S. dollar revenues, the capabilities that they bring in can be leveraged across the globe.

So again, our focus is capability enhancing M&A, but at the same time we're very conscious about how to drive this M&A pipeline as well as models of organic growth for the company..

It's also important Ashwin to understand that we've made some significant investments in building out our global footprint and whether that's having two centers here in the US to service clients, whether it's fine tuning and expanding the sales force in the U.S. over the last three to four years.

And the reality is I think what you are seeing now is on an organic basis that diversification is taking place. Our growth in North America in the first half of this fiscal year is almost 30%. So we have very good traction in the U.S., we're seeing good healthy growth.

Sure we would love to augment it we would love to further diversify and obviously having the history and the legacy as a UK company with both British Airways and with Aviva, it’s something that we've been living with for many, many years.

But to Keshav's point, there is great opportunity for us in the UK, we have a great brand name reputation, Brexit is creating disruption which we certainly don't want to invite competition into our backyard.

But the goal is to try and grow our other geographies at a rate faster than the UK and to continue that diversification, but not at the expense of missing out on good client opportunities..

That makes sense. Thank you guys..

Thank you, our next question comes from Bryan Bergin with Cowen, your line is open..

Hi, thank you. On the new clients, are the additions broad based across the service lines, or any specific activities stand out. Then you mentioned the new insurance logo, how should we think about the ramp up on that new client..

Let me take that Bryan. Yes, very broad based in terms of the client additions that Keshav was speaking about, certainly a couple of them starting with research and analytics, at least two of them starting on the industry specific side. We have one that's starting on the customer interaction side, and actually one on the F&A side as well.

so very, very healthy broad based and I think it goes to show what Keshav was talking about earlier this, you know how clients start their BPM journeys differ greatly based on their history, their culture and their immediate business needs.

So we need to be ready to meet that requirement whether it's bolting on a social media frontend to what they already do, whether it's streamlining the back end F&A or whether in the example that he gave about the large new insurance opportunity. The long-term ability to essentially manage everything for this customer end-to-end.

You know the ramp, we see its coming in three or four phases today. It's going to start relatively slow as most all these relationships do, but we do hope as we move into fiscal 2018 that we can move out of phase one and into phase two which should be a significant boost to revenue for us if things progress the way we hope they well..

Okay, and then you may have mentioned on hedge position into 2018, any change to hedge strategy and then just medium term operating margin, any updates here going forward..

So there is no change in our hedging strategy as of now, we still continue with our 24 months rolling hedge with a mix of options and forwards, but we’re continuously monitoring and we do have an opportunity specifically where how the pound is depreciating, but we are continuously assessing that.

And as early mentioned, we do expect where the currency is today the operating margins till to be from a high-teens perspective..

Okay, thanks.

Last one just on retail and CPG offshore IT service providers have had communicated some weakness so far in this earnings season, doesn’t sounds like you are seeing that, you just kind of talk about retail clients, their outside span in what areas they are looking at?.

Yes, let me take it Brian. I think what we’re seeing obviously as Keshav mentioned earlier in the retail space, in the banking space and in the insurance space as well. Very, very different business BPM versus IT. And what we’re seeing obviously is good healthy opportunity on the retail space.

The opportunities are actually across the Board, there are a number of large retailers and we spoke about one large e'tailers as well. That has really not done much in terms of BPM.

So the opportunities for us in the space which from an IT perspective tends to be pretty heavily saturated, similar to banking and financial services, similar to insurance. The opportunities on the BPM side remain extremely healthy..

Okay, thank you..

Thanks Brian..

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

I have a question related to automating business processes, are you seeing a meaningful increase of new competitors in your larger verticals?.

Not really. So I think the way we have to look at this is clients want to interact with providers, who first of all understand business, who give them a broad capabilities set that can provide an end-to-end kind of service to them. And it is from that perspective that WNS scores over any other player generally.

Now having said that they also would like to work with clients or like to work with providers who have invested in some of the newer areas including technology and analytics and things like that.

And that is where in order to ensure that we are building a very sticky relationships and sticky revenue stream, we are investing in these areas and creating this differentiated kind of position. Again, I must mention, being a software company alone does not mean you have the right of path with some of this plan.

I think it is domain expertise along with the ability to help them in their strategic journey, their digital journey and the ability to bring in the right kind of partnerships or the right kind of models, which is what they value..

Okay. And then one last question. Last quarter, you said 33% of your pipeline was tied to the UK.

Does that tick back up to where your run rate is?.

I would say the overall mix of the pipeline remains pretty stable Vince. Good healthy opportunity in the UK, good opportunity in the U.S. we will see which one come through quicker, which ones are larger in scope.

But across geographies, our pipeline remains healthy growing and mix remains largely unchanged at this point in time, would expect to change much quarter-to-quarter..

That’s it for me. Thanks guys..

Thank you. Our next question comes from Puneet Jain with JP Morgan. Your line is open..

Hi. Good quarter, guys. Can you talk about your auto claims business, seems like it was up solidly in constant currency.

Was it because of the recent legal status and is it sustainable the year-on-year upside you had in this quarter?.

Yes. So you know Puneet as we mentioned earlier that we were investing into this legal services portion, because that was more relevant as the client were expecting an end-to-end capability from that particular piece of business.

And as we invested that has started paying off in terms of the growth and still at early stage, but we are seeing some good traction over there, but from a short-term perspective we believe to be stable from a stable growth perspective as of now..

And then second will increased adoption of automation result in higher than usual productivity benefits that you offer to clients, you know the usual 5% every year that you talk about, or will that 5% remain the same, but will stem from automation instead of some other productivity improvement initiative?.

Yes, so right now, from a client committed productivity perspective it's pretty stable from a 5% and 5% was also just not related to productivity, but it was also a mix of some of the discretionary projects as well as strategic decision at the client end, including captives or consolidation or M&A.

But having said that as Keshav did mention about the expectations from the client on the automation is there and we are using that even as a opportunity to drive even more gain share.

Wherever we have - we leave that entire discussion to the client so we expect that to continue but at the same time maturity level from a client level deferred on a case-to-case basis, but we expect a good opportunity over there..

All right. Thank you..

Thanks Puneet..

Thanks Puneet..

At this time, we have no further questions in the queue. This concludes today's conference call. Thank you for your participation, you may now disconnect..