David Mackey - Corporate Senior Vice President of Finance & Head of Investor Relations Keshav Murugesh - Chief Executive Officer Sanjay Puria - Chief Financial Officer Ronald Gillette - Chief Operating Officer.

Korey Marcello - Deutsche Bank Maggie Nolan - William Blair & Co. Moshe Katri - Wedbush Securities Bryan Bergin - Cowen & Co.

Edward Caso - Wells Fargo Securities Mayank Tandon - Needham & Company Ashwin Shirvaikar - Citigroup Joseph Foresi - Cantor Fitzgerald Frank Atkins - SunTrust Robinson Humphrey Joseph Vafi - Loop Capital Markets Dave Koning - Robert W. Baird & Co. Puneet Jain - JPMorgan Vincent Colicchio - Barrington Research.

Good morning, and welcome to the WNS Holdings’ Fiscal 2018 Fourth Quarter and Full-Year-Earnings 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.

As a reminder, this call is being recorded for replay purposes. 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?.

Thank you, and welcome to our fiscal 2018 fourth quarter and full-year earnings call. With me today on the call, I have WNS’s CEO, Keshav Murugesh; WNS’s CFO, Sanjay Puria; and our COO, Ron Gillette. A press release detailing our financial results was issued earlier today.

This release is also available on the Investor Relations section of our website at www.wns.com. Today’s remarks will focus on the results for the fiscal fourth quarter and full-year ended March 31, 2018. Some of the matters that will be discussed on today’s call are forward-looking.

Please keep in mind that these forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, those factors set forth in the company’s Form 20-F.

This document is also available on the company website. During today’s call, management will reference certain non-GAAP financial measures, which we believe provide useful information for investors. Reconciliations to these non-GAAP financial measures to GAAP results can be found in the press release issued earlier today.

Some of the non-GAAP financial measures management will discuss are defined as follows.

Net revenue is defined as revenue less repair payments; adjusted operating margin is defined as operating margin excluding amortization of intangible assets, share-based compensation and goodwill impairment; adjusted net income or ANI is defined as profit excluding amortization of intangible assets, share-based compensation, goodwill impairment and all associated taxes.

These terms will be used throughout the call. I would now like to turn the call over to WNS’s CEO, Keshav Murugesh.

Keshav?.

Thank you, David, and good morning, everyone. In the fiscal fourth quarter, WNS once again posted solid financial results. Fourth quarter net revenue came in at $198.2 million, representing a year-over-year increase of 29% on a reported basis and 22% constant currency.

Excluding the acquisitions of Denali and HealthHelp, organic constant currency revenue increased 14% versus the fourth quarter of last year. In the fourth quarter, WNS added eight new clients, expanded nine existing relationships and renewed 19 contracts.

In addition to our top line progress, the company also posted solid fourth quarter performance across margins, profitability and cash flow, which Sanjay will discuss in his prepared remarks. I would like to take a few minutes to discuss our full-year fiscal 2018 results before turning to the year ahead.

From both the financial and operational perspective, WNS is pleased with our progress in fiscal 2018. The company grew revenue less repair payments by 28%, which represented 26% growth on a constant currency basis. Excluding the impact of acquisitions, WNS was able to grow organic constant currency revenue by 14%.

Revenue growth was broad-based and healthy across key verticals, service offerings and geographies. We ended fiscal 2018 with 118 clients, generating at least $1 million, up from 974 in fiscal 2017.

We believe the two significant areas of growth for WNS; industry specific BPM revenue and non-FTE revenue are indicators of larger trends in the industry and our ability to successfully meet client expectations in these areas. In fiscal 2018, our industry specific revenues grew by 52%, increasing as a percentage of company revenue from 29% to 35%.

While a portion of this increase was driven by our acquisition of HealthHelp, our progress clearly demonstrates the importance of the main expertise in the BPM space and the need to develop solution focused on addressing industry specific problem, because industry solutions cut across traditional horizontal areas, they are typically more complex in nature and require a high degree of client or provider alignment.

We believe our differentiated vertical organization and ability to co-create innovative solutions with our clients are well suited to address this trend. In addition, in fiscal 2018, our non-FTE revenues grew by 84%, increasing from 25% of company revenue to 36% of revenue year-over-year.

We’re seeing clients increasingly willing to discuss engagement models based on outputs and outcomes, which enable them to increase cost structure flexibility, leverage technology and drive accountability for results.

While the majority of the transaction and outcome-based pricing is with existing clients maturing and migrating, we’re seeing some new clients looking for day one business and digital transformation.

The transition to these non-linear revenue models is being accelerated by increasing industry awareness and adoption of technology platforms and automation tools. As we increasingly deploy technology in our solutions, revenue per employee should continue to improve.

In fiscal 2018, WNS’s revenue per employee increased 18%, or 16% on constant currency basis. Excluding the acquisitions of Denali and HealthHelp, revenue per employee increased 9% or 7% constant currency.

In fiscal 2018, we continued our investments in the areas of domain, technology, analytics and sales, which are aligned to drive differentiated positioning in the BPM marketplace.

We were able to roll out several exciting offerings under the WNS track umbrella, which leverage state-of-the-art technologies, including natural language processing, RPA, cognitive computing, machine learning and artificial intelligence.

New offerings are deployed across key verticals, including travel, insurance, healthcare and retail CPG, as well as in horizontal practice areas, such as analytics; finance and accounting, including procurement; and customer interaction services.

We also stepped up our investments in sales and marketing growing the sales team 17% to 101 resources at year-end and working to increase awareness of our differentiated capabilities within the influencer community, including the sourcing advisors and industry analysts.

In addition to the solutions and offerings, which were created over the past year, we also made progress preparing our global workforce for the changing demands of the BPM industry.

WNS’s hiring, training and re-skilling efforts have focused on shifting the employee base towards higher value, specialized skills across verticals, services and technologies. This transition will be increasingly important as technology and automation replace resources managing lower-level repetitive tasks.

Other highlights from this past year include the successful integration of our Denali and HealthHelp acquisitions and the continued diversification of our businesses across verticals, geographies, clients and delivery locations. As we head into fiscal 2019, the BPM industry remains stable and healthy.

Business disruption continues to be the key driver for both existing and new clients looking to improve their competitive positioning in their respective industries.

As a result, companies are increasingly turning to BPM partners to help reduce cost, increase operational efficiency and flexibility, manage regulatory and compliance-related changes, generate actionable insights, increase revenue sources, drive digital transformation and improve the end-client experience.

We entered the year with 90% visibility to double-digit organic constant currency growth and a pipeline, which continues to be very healthy across our business portfolio. We also signed two large deals in fiscal fourth quarter of 2018, which we expect to be meaningful contributors to revenue, as they ramp and scale in the coming years.

The first deal, which began ramping in fiscal Q4 is with one of the world’s largest container shipping companies. We believe this relationship has the potential to be a top time – top 10 client for WNS. The second large deal is with one of the world’s largest insurance companies and is expected to begin ramping in fiscal Q2 of 2019.

This engagement is complex and transformational in nature and leverages WNS’s insurance expertise, technology platforms, analytic skills, and digital capabilities. Based on the client’s current plans, we believe this relationship has the potential to become a top five revenue contributor for WNS.

Given the health, relatively maturity and rapid changes impacting the BPM industry, we must continue to invest in our business to maintain and accelerate our differentiated positioning. Investments will continue to focus on domain expertise, advanced analytics and technology-enabled solutions.

These capabilities will be created through a combination of internal R&D efforts, strategic partnerships and tuck-in acquisitions. Our goal from a financial perspective continues to be maintaining operating margins in the high-teens, while delivering industry-leading organic constant currency growth.

We will also continue to leverage our healthy balance sheet with a balanced, disciplined approach to capital allocation. This includes tuck-in acquisitions to enhance capabilities, share repurchases, debt prepayment and routine CapEx.

In summary, we believe that WNS is well-positioned as a strategic BPM partner with the demonstrated capabilities to transform our clients’ businesses and help make them much more competitive. As a result, we are performing well in a healthy demand environment, driven by disruption in our clients’ businesses.

WNS remains focused on creating long-term sustainable business value for all of our key stakeholders, including clients, employees and shareholders. I would now like to turn the call over to Sanjay Puria, our CFO, to further discuss our results and guidance.

Sanjay?.

Thank you, Keshav. With respect to our fourth quarter financials, net revenue came in at $198.2 million, up 28.6% from $154.1 million posted in the same quarter of last year and up 21.9% on a constant currency basis. Excluding the impact of acquisition, year-over-year organic constant currency revenue grew 14.4%.

By vertical, revenue growth was broad-based with the healthcare, shipping and logistics, retail CPG, utilities and travel verticals, each growing more than 15% year-over-year.

With respect to our service offerings, revenue growth versus the prior year was driven by strength in technology services, industry specific BPM, finance and accounting and customer interaction services. Sequentially, net revenue increased by 7.1%, or 4.6% on a constant currency basis.

Quarter-over-quarter revenue improvement was driven by $5 million of currency benefit net of hedging, $5 million of short-term revenue, which is not expected to continue in quarter one and by new client revenues and expansion of existing relationships, totaling $8 million.

While the company was pleased to see client ramps and new deals signing generate revenue in the quarter ahead of expectation at this point in time we do not believe this to be indicative of a macro trend towards shorter sales cycle.

Adjusted operating margin in quarter four was 20.4% as compared to 18.1% reported in the same quarter of fiscal 2017 and 19.9% last quarter. On a year-over-year basis adjusted operating margin increased as a result of improved productivity, operating leverage on higher volumes and acquisition related expense incurred in quarter four of last year.

This benefit more than offset the impact of our annual rate increases and currency movements net of hedging. Sequentially adjusted operating margins increased as a result of improved productivity and operating leverage on higher volumes which more than offset currency movements net of hedging and lower fleet utilization.

As we have discussed in the past, on a quarter-to-quarter basis three will be trade-offs between seat utilization and productivity metrics. The company’s net other income expense was $2.4 million in the fourth quarter up from $1.6 million reported in quarter four of fiscal 2017 and up from $1.5 million last quarter.

Year-over-year, favorability in interest income driven by higher cash balances was partially offset by a full quarter of debt expense associated with our fiscal quarter four 2017 acquisitions. WNS effective tax rate for quarter four came in at 23%, up from 18.9% last year and up from 10.8% last quarter.

Versus last year the effective tax rate increased as a result of a one-time tax reversal of $1.5 million in quarter four of fiscal 2017. Sequentially, our tax rate increased as a result of a one-time favorable tax adjustment of $5.2 million recorded in the fiscal third quarter, relating to the 2017 U.S. tax reform bill.

Other changes in the quarterly tax rate are primarily due to a mix of profit between geography, on a going forward basis we expect WNS effective corporate tax rates to be approximately 25%. The company’s adjusted net income for quarter four was $33 million compared with $24 million in the same quarter of fiscal 2017 and $34.2 million last quarter.

Adjusted diluted earnings was $0.63 per share in quarter four versus $0.46 in the fourth quarter of last year and $0.66 last quarter. As of March 31st 2018 WNS balances in cash and investments totaled $221.3 million and the company had $89.1 million of debt.

WNS generated $39.8 million of cash from operating activities this quarter and free cash flow of $34 million after accounting for $5.9 million in capital expenditures. DSO in the fourth quarter came in at 30 days as compared to 29 days last year and 30 days last quarter.

With respect to our key operating metrics, total headcount at the end of the quarter was 36,540. Our attrition rate in the fourth quarter was 31% as compared to 34% reported in quarter four of last year and 25% in the previous quarter. Global build seat capacity at the end of the fourth quarter was 30,390 and average build seat utilization was 1.20.

I would now like to provide you with a brief financial summary for fiscal 2018 before discussing our outlook for the coming year. Net revenue for the year came in at $741 million, growing 28.1% on a reported basis and 25.8% on a constant currency basis. Excluding the impact of acquisitions, organic constant currency revenue growth was 14.2%.

Full-year revenue growth was led by the healthcare, shipping and logistics, retail CPG and banking financial services verticals, which all grew over 24%. The company’s fiscal 2018 adjusted operating margin came in at 19%, down from the 19.4% reported in fiscal 2017 and in line with guidance entering the fiscal year.

Our effective tax rate was 19.9%, down from 23.5% in fiscal 2017, as a result of our non-recurring reserve reversal in quarter two and a one-time impact of the 2017’s U.S. tax reform bill in quarter three. In total, this tax items contributed $6.9 million to fiscal 2018 profit, which is not expected to recur in fiscal 2019.

Full-year adjusted net income and adjusted diluted earnings per share, both rose over 28% in fiscal 2018, reaching $118.4 million and $2.24, respectively. In fiscal 2018, WNS generated $136.3 million in cash from operations and $102.6 million in free cash, both increasing 48% year-over-year.

During the year, company repurchased 1.1 million shares of stock at a cost of $39.5 million, or $35.95 per share spent $33.7 million on capital expenditures, made scheduled debt payment of $28.1 million and made made a deferred payment of $5.5 million relating to our quarter four 2017 acquisitions.

WNS ended the year with a net cash balance of $132.2 million, or approximately $2.50 per diluted share. In our press release issued earlier today, WNS provided our initial guidance for fiscal 2019.

Based on the company’s current visibility level, we expect net revenue to be in the range of $801 million to $847 million, representing year-over-year revenue growth of 8% to 14%. Revenue guidance assumes an average British pound to U.S. dollar exchange rate of 1.40 for fiscal 2019.

Fiscal 2019 guidance also includes the impact of IFRS 9, which is applicable to WNS effective April 1, 2018. IFRS 9 requires companies to report cash flow hedging gains and losses on the revenue line, which WNS had previously reported on the FX gain/loss line.

WNS’ fiscal 2019 guidance includes $1.7 million in revenue relating to this change, which has been removed from the constant currency revenue growth calculation. Excluding exchange rate impact, revenue guidance represent constant currency growth of 7% to 13%. As our acquisition have now anniversaried all of this projected growth is organic.

Fiscal 2019 revenue guidance includes a headwind of approximately 9% relating to productivity improvement, project runoff, volume production and non-recurring revenue items from fiscal 2018. We currently have 90% visibility to the midpoint of the revenue range consistent with April guidance in prior years.

Adjusted net income is expected to be in the range of $115 million to $227 million, based on a Rs. 55 to U.S. dollar exchange rate for fiscal 2019. This implies adjusted EPS of $2.18 to $2.41, assuming a diluted share count of approximately 52.8 million shares.

At our extraordinary general meeting held in March, shareholders approved a 3.3 million shares, 36-month repurchase authorization, which has been factored into the share count and EPS guidance. With respect to capital expenditures, WNS expect our requirements for fiscal 2019 to be approximately $30 million. We’ll now open up the call for questions.

Operator?.

Thank you. [Operator Instructions] Our first question is from the line of Korey Marcello of Deutsche Bank. Your line is open..

Hey, guys, congrats on the solid results and the outlook. I just wanted to start off on the – on sort of the large deal wins that you talked about ramping in the year.

Can you give a little bit more color there and help us kind of understand how you’re thinking about the revenue growth trajectory from a quarterly cadence perspective going forward, given those wins?.

Sure. Let me take that Korey. As Keshav mentioned, we did sign two large deals in the fourth quarter. One of them began generating revenue in the quarter itself, which was somewhat of a surprise to us, obviously, a pleasant surprise. We’ve got visibility to the first couple of waves of commitment from net client and shipping logistics vertical.

And given that we’ve had some transition revenue and some upfront billings associated with that, I would expect the revenue, at least, at this point in time to be relatively consistent across the quarters in fiscal 2019 for that client. The second large deal that we signed, we do not believe we’ll begin ramping until fiscal Q2 of 2019.

And obviously, we hope to see a steady ramp with the amount of work that we’ve been awarded already across the three quarters in fiscal 2019, our Q2, Q3, Q4.

But longer-term, over the next three to five years, we expect both of these relationships to continue to add processes move down transformational path and become meaningful contributors to the overall corporate revenue..

Thanks. That’s helpful. And then just as a follow-up maybe, can you kind of talk about the margin outlook? I know you’re kind of targeting the high-teens.

But should we assume similar seasonality in the past? And then how much of the non-FTE increase was kind of due to the acquisitions? And what does that mean for margins, I guess, longer-term as you see that kind of continue to increase?.

Yes.

Obviously, we do expect a similar pattern to our margins in fiscal 2019, where we’re going to take a reduction in Q1, both from a revenue perspective, as well as from a margin perspective as a result of the committed productivity improvements that we give to clients, as well as the impact of our annual wage increases, which are skewed towards April 1st of each fiscal year.

And we would expect kind of similar to last year to see roughly 100 basis point improvement net adjusted operating margin number as we go across the quarters throughout the year. When you look at the implied guidance, the expectation for fiscal 2019 is that, operating margin should be in the same general ballpark as where they were this year..

Thanks, guys..

Thanks, Korey..

Thank you. Our next question is from the line of Maggie Nolan of William Blair. Your line is open..

Hi, guys, congratulations. Obviously, you’re having success at winning some of these large and dynamic deals.

And I’m wondering as you go through this transition where these companies are looking to you to generate revenue and be kind of a transformational partner, can you give us an idea of how that shows up in your pitch process and whether you’ve had any changes to your client acquisition strategy as a result of those trends?.

Sure. I think, that’s a great question. And it fitted perfectly to our completely differentiated strategy in terms of how we go to the market.

So I think, the core of our offering is around the fact that we understand our clients’ business and their business domains extremely well to the extent that we have – we give them a lot of comfort around appreciating their sub-verticals as well.

And therefore, when we go into a discussion, I think, the clients appreciate the fact that they’re interesting with people who understand their business well, who speak the language that they appreciate, and more importantly, are able to come in as consultants who can advise them in terms of what is likely to change or likely to happen from their business point of view, give them a sense of how competitors are looking at the same segment, give them a sense of where competition – new competition is likely to come from.

Along with that, really focusing on helping them understand that, we bring in strong technology capability, we can lead in terms of technology transformation first, and then drive the heavy-lifting from our global kind of delivery centers gives a lot of comfort.

Most importantly, the fact that when we go in, we’re able to actually explain to them that we’re building a lot of IP ourselves, building great partnerships with technology companies, and investing in all of the areas of disruption.

It means that, we’re giving them comfort that they have to just focus on their external markets knowing fully well that there’s a safe pair of hands to the back-end that is operating as an extension of their enterprise.

I think a combination of all of this and the fact that we will reward our own leaders around revenue growth – profitable revenue growth, and more importantly, the impact we’re creating for our clients means that the trust factor is built very, very heavily. So the team at WNS really is core creation.

And in most solutions that where we have been successful and where we have beaten competition, it is our ability to co-creative a winning solution or a winning innovation with a client that is setting us apart..

Thanks. And then building up on that, you talked about kind of delivering that proprietary technology.

How do you balance that with some of these third-party partnerships that you have in order to best meet your clients’ needs?.

Yes. Again, yes, one thing that we – we’ve made clear over the years is that, in terms of technology, anything that is strategic for WNS, we will build through our internal R&D and we will own the IP and nothing has changed there.

In addition to that, wherever we believe that we have to accelerate acquisitions of a platform or a domain-based solution that is – that has accelerated through platform use, we have gone down the M&A route. So we have actually acquired some of the capability through our acquisition strategy.

And beyond that, we have tied up with the number of these partners and the key there is really to go to a client and help them essentially deliver the highest ROI on their investments and technology that they’ve already made.

So we go in there and say that, we’ll make your technology investments more efficient with the use of all of these channels that we bring to the table. And I think, that is what clients appreciate very much.

We come in with a domain knowledge, we come in with a deep understanding of our own technologies, and we bring in the right kind of partners and ecosystem of technologies that makes the ROI on the existing investment much higher.

I think that is what creates a transformational relationship, because thereafter, between partner and us – between the client and us, we operate through a very well-disciplined governance model. And as I said earlier, we operate as an extension of their enterprise.

So the reality is, they see us as being part of them, and that gives them lot of comfort in the phase of disruption..

Well, thank you and congrats, again..

Thank You..

Thanks..

Thank You. Our next question is from the line of Moshe Katri of Wedbush Securities. Your line is open..

Hey, thanks. Great quarter. Couple of things. Can we get an update on your top clients – your top client actually in the UK. Talk also a bit about what you’re seeing in the UK market in terms of build pipeline? Thanks..

Sure. Obviously, what we continue to see with our largest client is a very stable, healthy, value-added relationship.

But consistent with what we’ve seen across the last four or five years is very slow reduction on a year-over-year basis in terms of the amount of work we’re doing for that client, if they become more efficient, as their volumes are under pressure.

So it’s been a slow steady reduction in terms of the revenues we get from that client from that perspective, as well as from the perspective of the productivity improvements that we see. With respect to the UK overall, we see the market is being extremely healthy right now. Lots of opportunity, very strong pipeline.

As Keshav mentioned, we signed a large insurance deal in the fourth quarter, which will be ramping in fiscal 2019, that deal is based out of the UK. So we feel very good and very comfortable about the overall market in UK. And more importantly, given the company’s history, tradition, culture are positioning within the market in the UK..

Let me just add a little bit of color to the second part of that answer. Today, in an environment of Brexit, it is from our – from a WNS perspective difficult to just consider the UK alone without considering the rest of Europe.

And as they’ve already mentioned, with the uncertainty and in our case actually, the opportunity coming from Brexit, we’re actually seeing UK companies starting to accelerate and then give out more business to relevant companies like WNS.

But at the same time because of uncertainties that Brexit poses for different countries and companies still figuring out how it will impact them, we’re actually seeing acceleration from other markets in Europe as well. And that I think augurs very well from a WNS perspective..

So just a follow-up quickly, is there anything to consider in our numbers from FX hedging for fiscal year 2019?.

I think, from an optics perspective, there will be Moshe – the reality is, as Sanjay mentioned, the impact of IFRS 9 on our financial statements for next year is going to be that the revenue – that the hedging gains and losses on our cash flows are going to be required to be moved from the FX line to the revenue line.

So from a straight visibility standpoint, if you only think that’s going to be left on that FX gain and loss line is balance sheet revaluation. Our expectation for fiscal 2019 is that, that number is going to be somewhere between $2 million and $3 million of a gain, with the balance having moved up to the revenue line from a reporting standpoint.

We will, however, remove that hedging gain and loss along with the currency fluctuation from our constant currency calculation. And as Sanjay mentioned, the expectation for fiscal 2019 is that that amount has moved from the FX line to the revenue line is about $1.7 million..

And maybe just to add to that, if you consider the last year’s numbers from a operating margin perspective, because if the FX gain line moved to the revenue line and then turned off $14 million is that operating margin arithmetically will reduce by 30 basis points.

And also the other impact is going to be the revenue volatility because of the exchange rate movement is going to be less – lesser than what we used to see earlier..

I missed it. Thanks a lot..

Thanks, Moshe..

Thank you. Our next question is from the line of Bryan Bergin of Cowen. Your line is open..

Hi, guys, thank you. I wanted to ask about the verticals. You obviously spoke about key services lines of the strength.

Are there any particular where our industry verticals that stand out stronger than others in your fiscal 2019 outlook?.

Look, I’ll tell you – I’ll take that first. Actually, we expect to see broad-based growth across all our verticals, horizontals and geographies, as we’ve already underlined earlier.

But at the same time, based on what is actually happening in the market and the stress that certain kind of businesses are seeing in the marketplace, we’re actually expecting that some specific verticals, particularly the shipping, logistics vertical will continue to accelerate. We expect insurance will continue to do – want to do more.

And we expect healthcare and utilities also to be reasonably buoyant. So these are the three or four kind of verticals that I believe have higher potential for play during 2019 and beyond..

Okay, thank you. And then you noticed – you noted the sales investments that you’re making and the ramp you had in the workforce there.

Any particular regions where you’re adding more on that? And then can you just talk about your onshore expansion efforts and headcount as well?.

Sure. Let me talk about the sales part. David and others will cover the rest.

But in this age of disruption and in this age of opportunity, as WNS sees it, I think, having really smart people with the DNA of WNS who understand domain, who understand technology, who understand business, who can articulate the solutions well, and who can create across a win-win deal for clients and for WNS is really where we’re investing.

And as you know, over the past few years. we have kept transitioning the sales model from one to another where we have kept moving the value chain to a completely new level and the result of all of that has been the fact that you know whereas earlier we were much more exposed to a particular geography.

If you just look at how WNS is now positioned, we are very well-positioned from a risk point of view across – around the globe from a sales point of view.

So the investment really is to ensure that we have the right kind of resources that are able to have these kind of conversation from a vertical point of view are able to articulate a solution from a technology and analytics point of view, are able to actually talk the language of analytics because you need specialized people doing that when you’re doing that, when you are interacting on an analytics kind of deal, and also having experts who can talk the CFO framework as well as advanced procurement or finance and accounting solutions.

So the opportunity is as such that it could be vertical legged, it could also be horizontal legged, but because of our vertical strategy the ability to penetrate and radiate is much higher and therefore just having better and better quality salespeople and higher numbers across the globe and driving higher productivity is what we are doing..

Yes, and I think the other part of your question, Bryan, when you look at the onshore headcount, obviously I think Keshav addressed the sales component of that with respect to the delivery component, the reality is that the model that we followed for the last 3, 4 years anyway is that we are going to let our clients tell us where the work needs to be done.

We are not going to take a field of dreams approach to this and build it and they will come. So certainly we’ve seen accelerating demand within the U.S., we are building out higher-end capabilities within the U.S., some of that organically, some of it through our acquisition strategy.

We do believe that we’ll continue to grow at a healthy clip as clients want more integrated, customer facing, high alignment types of services and solutions and we’re fully prepared to be able to deliver that..

Thank you..

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

Hi, good morning, good evening. I was curious why the revenue guidance ranges is as wide as it is given your sort of positive view of everything.

If you could give us context relative to prior years, thanks?.

Yes, for the guidance, it is primarily based on the visibility what we have, so consistently during April at this timeframe we have a 90% visibility and what we wanted to realistic to the – based on the visibility of what we have, you know quarter four as well as for the last year if you believe that quarter-over-quarter for four quarters we had a nonrecurring revenue related to maybe gain share or project based and other stuff which is almost like 2.5% for the next year and going forward we don’t have any visibility to that kind of a revenue which may come, so based on 90% that’s the range in the midpoint we believe from a guidance point of view..

And I think to Sanjay’s point, the midpoint and the visibility entering the year has been consistently right at 90%.

The other thing is from a revenue range perspective each of the last five years the range between the high and the low has been between 5% and 6%, this year is at 5.7, so very, very consistent both in terms of the visibility approach, as well as the overall size of the range entering the year..

Right, my other question is the trend on productivity you mentioned 9% in the guidance, is that – can you give us some historical perspective to what it used to be and where you think it might be going?.

Yes, historically it used to be 5% to 6% range what we have from a productivity perspective including some of the project based or the strategic direction from a client, which continues to be there, what you know adding to that was a 2.5% which I had mentioned which is relating to the nonrecurring revenue what we had during the whole year quarter-over-quarter to which we don’t have the visibility..

And then that’s the biggest difference that is that the $19 million, the $4 million to $5 million per quarter that we actually experienced within fiscal 2018 that we talked every quarter about not having visibility to even walking into quarter let alone a year, those numbers have not been included in our fiscal 2019 guidance and as a result when you look at the year-over-year headwind, the $19 million that we actually got in fiscal ‘18 creates a 2.5% headwind to our growth in fiscal ‘19.

Again, we’re hopeful that it does continue to happen that we do have higher volumes, gain shares all the things that we’ve been experiencing this year, but to Sanjay’s point, from a methodology standpoint, from a consistency standpoint, we are entering the year with 90% visibility and that visibility does not include these items as we don’t have at this point..

Great, thank you..

Thanks Ed..

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

Thank you, good morning.

Keshav, you called out the RPA growth and also I think in the past you’ve talked about working with digital clients, does that change the hiring pool that you’re targeting going forward? And also does that also mean at some point we could see maybe acquisition on the IT side and maybe or partnerships with IT services companies on some of the integrated type work?.

Right Mayank. So first of all a great question, and yes, I think as WNS has evolved its solutions and has become far more relevant to a broader category of clients across the globe, we have become very relevant to some of the so-called digital factors as we would call them.

And therefore the need to have the right kind of thinking, the right kind of knowledge and the right kind of people is critical for us.

So remember as we went down that path, some of the acquisitions that we did was essentially to plug that gap first from a capability point of view, as well as to bring in the kind of people that could engage with some of these digital companies.

So Denali for example, if you look at the kind of talent that we have brought into Denali, forget the capability, I think the capability is outstanding, so I think what I am much more excited about is this quality of talent that we’ve brought in.

Similarly if you look at HealthHelp right, the entire solution that is offered is a unique domain intensive, but very platform focused kind of offering and if I again look at the kind of talent we have acquired as a result of that acquisition simply outstanding.

So for us it is a case of, and the same with the value adds actually and for us it is a case of how are we constantly acquiring the kind of talent that can engage with clients at a frontend in terms of these conversations and at the same time driving programs inside the company to at least make sure that large component of people delivering at the back end are also upgraded in terms of their knowledge.

At the same time what we’ve also done is, rather than wait for countries or governments or Universities to create programs, we have actually gone ahead and have invested in programs where we are creating the curriculum, the course content and driving the acquisition of a new kind of talent on the analytics side on the digital side of things like that.

So it’s an effort that is being made across many areas and in the longer-term our M&A strategy also will reflect some of it.

Again, at this point in time I’m not committing to anything, all I will say is, we are very, very focused on looking at certain areas where we believe we may have gaps and we think the market opportunity is still very, very strong for WNS’s services and we’ll fill those gaps by bringing in strong capability along with outstanding talent..

That’s very helpful, Keshav just a quick follow-up, maybe for Dave.

Could you reconcile the growth in the top client with the fact that insurance was actually down sequentially and anything on the banking and financial services side that may have caused some weakness even though it’s a pretty small segment?.

Yes, I mean, with respect to – let me answer the second question first.

With respect to the banking side, obviously it’s as you said a small number and we are going to see that volatility quarter-to-quarter, especially where we have components of project work, in the insurance space I think we’ve got a lot of moving parts going on, obviously from an overall standpoint on our largest client, we do have some quarter-to-quarter movements, but as I mentioned earlier over the course of year-over-year we expect that that client is going to continue to decrease on a percentage of revenue basis.

When you look at the nonrecurring components of our business that also had an impact, it was in the insurance verticals, but we think overall the insurance is going to be very strong. As Keshav mentioned, heading into fiscal 2019, you’re going to see the impact of this new large deal that we signed ramping up.

We’ve also signed two other large deals across the globe in the last 24 months that should be in ramp mode. So I think, what you’re going to see from WNS, both in terms of overall customer concentration, as well as the insurance vertical. There’s a reduced reliance and a reduced exposure to the volatility within that largest client..

Thank you. Congrats on results..

Thanks, Mayank..

Thank you. Next question comes from the line of Ashwin Shirvaikar of Citi. Your line is open..

Thank you, guys. Solid results, again. Congratulations on that. I wanted to ask about revenue per build up seat. And obviously, over the last few years, you’ve done a pretty good job increasing that that particular metric.

I guess, one part of the question is, can you continue doing that with any components of that become, what capabilities do you need to keep adding that incremental value is perceived and paid for? And then the second part of it is the productivity part. And maybe you can split that out into [debuts to it]?[ph].

Yes, I guess, you got a lot of moving parts in there, Ashwin. One of the things that we do track pretty closely from a productivity metrics perspective are both the revenue per employee and I would say, as a byproduct of that more than anything else revenue per seat.

One of things we talked a lot about is that, if you look within a quarter and sometimes even within a year, there can be ramps within your hiring cycles. There can be ramps within building out infrastructure ahead of demand. So, the fee count and the headcounts are not necessarily aligned.

And then I think, as we’ve also discussed from a productivity perspective in some ways, those metrics can actually start to fight with each other. So, one of the things we’re focused on is long-term driving increasing revenue per employee. And I think we’ve done a really nice job of doing that.

As Keshav mentioned in his prepared remarks, we saw real healthy growth in fiscal 2018 on an organic constant currency basis. You’re looking at solid 7%, 8% growth in revenue per employee. Some of that driven by Internet excludes the acquisition.

So, one of the things we’re going to continue to see is that, as we deploy more technology, we’re going to be less reliant on headcount to deliver services. We’re going to be less reliant on facilities to support that headcount. And as the skill sets required shift, the location of where we deliver from will also ship.

So these are all going to be moving parts going forward. But at the end of the day, it’s going to be driven by client demand. And the fact that we know we’re going to have to continue to automate in technology-enabled, the services we deliver to our clients. Bottom line is, if we’re not doing that, we’re not going to be successful.

So, the right metric to watch from that perspective over time is the revenue per employee..

Got it. That’s fair. The other question I had is, with regards to sort of the pipeline in terms of M&A. I think, Keshav, you mentioned that was going to continue to be one of the key things you look out for.

Any idea with regards to the thoughts on the types of acquisitions what you continue to look for?.

Sure, Ashwin. Again, like I said, we’ll be very, very opportunistic. And as a company, we are very disciplined in terms of identifying opportunities, working with the ecosystem, re-qualifying them, and then we’re not just then making calls where we want to move ahead with something or not.

From our perspective at a high-level, I would say at this point in time, there are many areas, which are exciting growth areas for us and where we may need some additional capability, which we may not want to waste time building out ourselves, right? And so some of those would be certain higher-end analytics areas, some specific domain areas on some high-growth kind of verticals that we called out a little earlier.

On the F&A side, again, there could be one or two areas that we’re looking at. And on the technology side, we will also be looking at a few areas, which are part of this pipeline. So I likely say that, we have a very interesting pipeline at this point in time.

But being for the disciplined company, we’re making sure that it picks all the boxes before we decide to do something. So, again, we will be opportunistic and we will do whatever is right for our clients and for our shareholders..

Got it, understood. Thank you, all. Keep up the good work..

Thank you, Ashwin..

Thank you. Our next question is from the line of Joseph Foresi of Cantor Fitzgerald. Your line is open..

Hi. I was wondering if you could give us some puts and takes on FY 2019 margins. I think, I missed the commentary about FX.

But our margins and our expansion is based on revenue growth, or do you think they might be able to expand through cost savings over time? I’m just trying to get the good sense of the margin profile?.

Sure. I think, the implied guidance for fiscal 2019 Joe is that our margins are going to be on an operating basis relatively stable. We do know that as clients transition to non-FTE models and we’re successful in being able to deploy technology against those non-FTE, non-linear revenues that there’s a margin opportunity.

The flipside to that is, we’re running a 19% adjusted operating margin business. It’s extremely healthy from an overall profitability perspective. And to Keshav’s point, we know we need to continue to invest in our business to make sure we’re not missing out on the massive opportunity that’s sitting in front of us.

So, the expectation is that, while we probably will internally drive productivity and improve margin, the reality is, we’re going to be redeploying that investment into the business to make sure that we’re continuing to grow at a premium rate..

Okay.

And then my second one, what are the potential areas for outperformance as you look at FY 2019? Would it be the large contract that you signed at the end of the year? Is it driving more revenue at your present client base, or acquisitions be something that we should be taking a look at? I’m just wondering if you have to look at the real area of opportunity that you think might drive into the top-end of that guidance or above? What would you see as being the biggest opportunity?.

So, Joe, if you ask me, every one of those things that you mean are opportunities for us. I mean, end of the day, I think, we are a very relevant company to our clients, very relevant partner in terms of what we offer to them. The reality is, it is – what we offer finally is disruptive from our clients – from a clients’ delivery point of view.

So from their perspective, it is then making the final decision that will help accelerate revenues beyond whatever we are called out at this point in time. So that’s something that could be positive for us, because you saw this year as well. We had certain thought process even last quarter.

But you saw with some of the new clients that we brought in, they wanted to accelerate the pace much faster. So that could happen again, so that’s one. M&A, as you put it, if there’s something that as a company that comes up, it could add to the revenue by top line.

And other than that an existing client wanting to start, go into a completely new area based on months and months of effort from WNS could also lead to growth. So from my perspective, I actually think the market for growth and acceleration is there. The guidance provided today is based on consistency and visibility..

Yes. And I think just kind of further, Joe.

If you look at kind of the components of what will drive accelerated revenue growth or get us closer to the high-end? Keshav spoke a lot about the overall health of the pipeline and the fact that, we feel very, very comfortable about the deals and the large deals that we’re playing in, and how many are are kind of getting close to an area where we potentially could close them similar to what we saw in Q4.

I think, that’s kind of the presale side of it. So if you look at fiscal 2018, we added 29 new clients across the year, that was an increase of new client adds by 21%. At the end of the year, we had an 118 customers of at least $1 million. That’s up 26% increase in the farming opportunity within our business.

So when you kind of look at where the opportunities are, obviously, in the short-term, the easiest revenue is always going to come from your existing customers. But the reality is, if you look at what happened in Q4, we saw a ramp from a brand-new customer that was unanticipated.

So I think, there are a number of levers that we have to get towards the higher-end of guidance, including the 2.5% short-term revenues that wasn’t baked into that number. So what we’re certainly optimistic as we move throughout the year that we’ll see a similar pattern to what we saw last year.

But at this point in time, this is where we sit from a visibility standpoint..

Okay. Thank you..

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

Thanks for taking my questions. I wanted to get a quick update on the analytics practice that’s doing well.

What do you see there in terms of pipeline? And just to confirm, there’s a portion of that is still classified in the industry specific horizontal, is that correct?.

Yes, that’s correct, Frank, and we actually have components with all of our horizontals embedded in – into the industry BPO number. And that’s, because the way we charge the customer and the way we go to the customer is independent of traditional horizontals.

When you charge an insurance client a certain price per claim, there’s really no way to break that out between what is customer interaction? What is F&A? What is R&A? So, one of the things that’s happened as we’ve moved more work to industry specific BPO, technology-enabled more of that is that, you have a less visibility into the specific horizontals from a visibility perspective.

That being said, our R&A business on a standalone basis is 12% of revenue. There’s, at least, another 6%, 7% of revenue embedded within our industry specific BPO, which would push us up closer to 20% of company revenues and it’s growing, at least, on par overall with the company’s growth rate.

So feel very good about the investments that we’ve made in R&A, the traction that we see in that business. But as Keshav mentioned, we want to continue to acquire assets, deepen our capabilities, expand our skill sets and take those to market. So it’s clearly an area of focus going forward..

Okay, great.

And then on the two large deals, can you talk about why do you think you won those? And was that a takeaway, or was that new work for those clients?.

I’ll take that. Simple one sentence, I think, from a clients’ perspective as they gave us feedback, they said that we were absolutely the best company to partner them. And that was based on essentially our understanding of the domain. The fact that we really helped them in terms of leveraging their technology to provide the right kind of solutions.

And more importantly, that in our DNA, in embedding analytics behind everything was something that they appreciated a lot. So I would say that that is really the core of why we are winning in our deals.

And the fact that in one case, which is a brand-new client, they actually allowed us to lead through technology transformation shows the comfort and the confidence that they have in our technology thinking, in the technology assets that we brought to play, the partnerships that we introduced into the deal, and a lot of comfort thereafter in terms of just doing the heavy lifting.

In the case of the other client, let me tell you that this was already an existing client, happy with our work. But based on change in strategic direction at the company, they needed to accelerate the pace much faster.

And again, being so comfortable with us across the years, they were – it was an easy choice for them, because the ability to work across multiple geographies, multiple process areas, and very quickly give them the kind of ROI from a cost reduction point of view, efficiency gain point of view, and insights point of view, was something that they appreciated with WNS..

Yes. And then the answer to the other part of your question, Frank, is that one of the deals that we won would have been directly from the client. The client was doing the work in-house.

The second would actually be an approach, where the client had fragmented vendors in their operating activities and they’ve actually looked to WNS to replace all of those vendors and consolidate operations..

Okay, great. That’s helpful color. Thank you, guys..

Thank you. Our next question is from the line of Joseph Vafi of Loop Capital. Your line is open..

Hey, guys, good morning, good evening, good results. Just kind of as a follow-up on Frank’s question, I know, Keshav, I think you mentioned that that sales cycle compressed a little bit and you don’t want to call that a trend yet.

But perhaps, you could provide a little more color as to the reasons those – you think those sales cycles compressed for these specific clients.

Was it their own business? We’re seeing volume gains and they needed a better solution to service their business, or was it primarily cost-driven? Was it or technology-driven, that would be helpful? And then the same commentary on the two large clients, I think, were they cost-driven or were they volume-driven, given the strong macro? Thanks..

Right. Again, excellent question. So I think, as I interacted with each of these clients and my team understood the decision-making purpose well, I think, what came out very clearly was not really any one of these specific elements. I mean, all of them obviously have a part to play.

But these companies being the absolute leader in their space just wanted to leverage a great partnership and a great adviser like us to just be competitive and stay ahead of competition by a few years. And I think, that is what is most exciting from our perspective..

And I think you need to break the decision into two pieces, Joe. One is, whether or not a contract gets signed in a timeframe that you expect. The second is, how quickly does that work start to ramp once the debt deal has been signed.

As Keshav mentioned in his prepared remarks, we’ve signed two large deals this quarter, but one of them is not going to start ramping until the second quarter of next year. So that kind of had a more normal profile, if you will.

With respect to the other one, you had a client that just really wanted to be very aggressive about how they position themselves. They wanted to get to market quicker and the comfort level was there to move quickly with WNS. So, again, and I think that’s part of the reason we talked about this not necessarily being a trend.

These are really client specific behaviors that are driven by their individual situation. But at the end of the day, it’s going to come down to comfort. Nobody is going to move in a meaningful way and outsource core mission critical parts of their business unless they’ve been able to establish that level of comfort..

Okay, that’s helpful. And then just quickly, if we kind of circle back to maybe the non-FTE service solution part of the mix. If you look back, say, two to three years, could you quantify the percentage of non-FTE that was part of a solution mix versus some of the stuff that you’re bidding now? Thanks a lot..

Yes. We kind of had a strange journey, if you will, in the non-FTE and some of that relates back to several years ago. The loss of Travelocity, which created a significant dip in our non-FTE revenues.

But if you look over the last three, four years, I think, what you’ve seen is a slow and steady transition more so within the existing client base than the new customers starting to non-FTE types of business. So the non-FTE component of our revenues, for example, in fiscal 2015 was 74%, were down to 64% here in fiscal 2018 that just completed.

So we’ve seen a full 10% shift from non-FTE, I mean, sorry, from FTE to non-FTE models. And I think, we’re going to continue to see that. What was interesting, I think, this quarter and Keshav touched on it in his prepared remarks, was to see a very large client that was comfortable moving to a non-FTE model sooner rather than later.

And that’s something we’re going to have to watch over the next few years. But obviously, we would much rather big technology and start with models that are aligned with the client day one. The reality is from a client behavior standpoint, typically most customers have not been ready for that model day one.

Let’s see if that transition time accelerates, let’s see if more customers are willing to behave this way. But at this point, I don’t think, we’re ready to call it a trend..

Thank you..

Thanks, Joe..

Thank you. Our next question is from the line of Dave Koning of Baird. Your line is open..

Oh, yes. Hey, guys, thanks. And I just have two quick ones. The first one just on FX gain just to make sure I’m totally clear.

The only difference to fiscal 2018 would have been $15-more-million of revenue in the same adjusted EBIT in a little lower margin, because the revenue is a little higher?.

$14 million, correct. $14 million would have moved from the FX line up to the revenue line, no change to EBIT, no change to profit, no change to operating profits and margins, but a slight book reduction in margin, because you are going to have the same margin revenue, the same margin dollars on a higher revenue base..

Yes, got you.

And then the second one, just from a sequentially trends throughout the year, it looks like guidance would imply something like 2% sequential growth each quarter of the year, is that pretty much right or is there some seasonality to the sequential growth to the year?.

Yeah, there is going to be seasonality Dave, the reality is because we give productivity improvements in Q1, because we don’t have at least this point in time the visibility to that $4 million or $5 million of recurring revenue that we’ve been seeing, the stuff that we don’t have the project based gain sharing.

At this point in time we would expect Q1 to actually be down sequentially from Q4, but yes across the four quarters we would expect to see a steady increase, the only caveat to that would be fiscal Q3 is usually a little bit softer sequentially because of the impact of the travel vertical..

Got you, great..

I think, I do think it’s important that everyone understands that the expectation at this point is for Q1 to be down sequentially both from a revenue perspective, as well as from an adjusted operating margin perspective..

Okay, great, thanks, great job..

Thanks Dave..

Thank you. Our next question is from the line of Puneet Jain of JPMorgan. Your line is open..

Yeah, hi, thanks for squeezing me in.

Can you bake that 9% headwind you talked about from productivity improvement turnoff et cetera into individual components and how did each compare to last year?.

Yeah, I don’t think we are going to break it into the individual components Puneet.

I think the 5% that we’ve been talking about historically which encompass productivity improvements, the 5% to 6% that we talked about historically between productivity improvements, volume and strategic changes in our customers’ business right, that they shave off a division, they consolidate operations, these are the kinds of thing that will affect us from time to time.

I think that number remains fairly consistent, I think the one difference from the traditional headwind if you will is that $19 million or 2.5% of revenue that relates to those short-term nonrecurring types of revenues that are not visible walking into a quarter that we experienced this year.

So like Sanjay mentioned earlier, $19 million on $741 million of last year’s revenue is 2.5% headwind. Again it doesn’t mean it won’t happen again this year, but in terms of the visibility and the headwind on a year-over-year basis as it relates to visibility that 2.5% is included in the 9..

Got it, that was my second question, like if 2.5 is included in there, so thanks for that.

And quickly one more, do you expect overall addressable market to increase or shrink with higher adoption of automation and technology solutions that you are implementing for your clients?.

So Puneet I am a big bull in terms of the potential for this market, because I think we are now all of us getting into areas which traditionally we did not expect to see as potential areas of growth, so frankly I think the addressable market will only continue to expand technology and client related changes will mean opportunity for smart companies to understand the clients’ business and who have invested at the backend in social, mobile analytics, cloud technology, RPA, AIML and things like that will actually be the preferred companies that will drive this growth and analytics will continue to be at the forefront of driving insight for these clients, so I’m really, really positive about how things which can shape up for this industry..

And I think what we are seeing and what we are hearing from clients too is that, while obviously from an industry perspective and from a financial perspective, we get a lot of questions around the impacts of technology and automation as it relates to productivity and cannibalization.

What people don’t seem to understand is that it’s driving increased interest in this space, it is accelerating the pipeline for WNS and I believe for the entire space and more importantly, it’s increasing the scope of what is outsourceable.

So I think it’s going to generate a accelerated adoption, I think it’s going to increase the overall market sizes as Keshav mentioned and one of the byproducts as there may be slightly lower revenue per unit because a portion of that work is going to get done with technology and automation as opposed to labor..

Got it. Thank you..

Thank you..

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

Yes, just one for me. On HealthHelp, I know you had a very large customer there when we did the acquisition.

I was wondering if you can update us on your ability to diversify the customer base?.

Yes, I think, obviously, moving into new areas with a large client can be a difficult call, especially when it’s driven by acquisition. I think, the large client has been very receptive to the scope of the new organization as a whole and some of the things that we can help them with. Discussions are ongoing. We’re very optimistic.

But at this point, we have not seen a major impact in our revenues from expanding beyond the traditional scope of services. So still remains a high opportunity for us, and we’re excited about the fact that it’s not yet baked into these numbers..

Okay. Nice quarter, guys. That’s it for me. Thanks..

Thanks, Vince..

Yes, thank you..

Thank you. And our next question is from the line of Ashwin Shirvaikar of Citi. Your line is open..

Hey, guys, just one quick clarification follow-up. The $19 million that’s been referenced a few times in the call will be non-recurring? You guys do tend to have some level of non-recurring each year.

So do you readily remember what that equivalent number was in the prior year before that?.

Yes, I mean, if you look at what’s been happening, Ashwin, we’ve been generating $4 million, $5 million a quarter beyond what our traditional visibility has been. So this really represents an acceleration over the last, I would say, six quarters to numbers that we had not seen before there.

So we do believe that this is a variable volume, the short-term volume and Sanjay spoke a little bit about it, as a result of some of the analytics work that we’re doing, some of the Denali work that we’re doing on the procurement side.

This work is creating a little bit more of that kind of short-term pop to our business than we traditionally had and it’s really kind of weird said over the last six quarters, as I mentioned. So we believe this 2.5% is truly incremental..

Got it. Okay, thanks..

Thank you. And at this time, there are no further questions in queue. This will conclude today’s conference call. Thank you for your participation. You may now disconnect. Everyone, have a great day..