WNS Q4 2025 Earnings Call Transcript

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April 24, 2025
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Operator

Good morning, and welcome to the WNS Holdings Fiscal twenty twenty five 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. Instructions for how to ask a question will follow at that time. As a reminder, this call is being recorded for replay purposes.

Operator

Now I would like to turn the call over to David Mackie, WNS' Executive Vice President of Finance and Head of Investor Relations. David?

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Thank you, and welcome to our fiscal twenty twenty five fourth quarter and full year earnings call. With me today on the call, I have WNS' CEO, Keshav Murugesh and WNS' CFO, Arajit Sen. A press release detailing our financial results was issued earlier today. This release is also available on the Investor Relations section of our website at www.wns.com. Today's remarks will focus on the results for the fiscal fourth quarter and full year ended 03/31/2025.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

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 this call, management will reference certain non GAAP financial measures, which we believe provide useful information for investors.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Reconciliations of these non GAAP financial measures to GAAP results can be found in the press release issued earlier today. Some of the non GAAP financial measures management will discuss are defined as follows: Net revenue is defined as revenue less repair payments. Adjusted operating margin is defined as operating margin excluding amortization of intangible assets, share based compensation, acquisition related expenses or benefits, and impairment of goodwill and intangible assets. We are also excluding costs related to our ADS program termination and costs associated with transition to voluntarily reporting on US domestic issue reforms. Adjusted net income, or ANI, is defined as profit excluding amortization of intangible assets, share based compensation, acquisition related expenses or benefits, goodwill and intangible asset impairment, ADS program termination costs, the transition to voluntarily reporting on US domestic issue reforms, and all associated tasks.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

These terms will be used throughout today's call. I would now like to turn the call over to WNS' CEO, Keysha Murugesh. Keysha? Hey, thank

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

you, David. Good morning, everyone. I'm delighted with this quarter's results. In the fiscal fourth quarter, WNS financial results were highlighted by solid sequential revenue growth, operating margin expansion, and strong free cash flow. The company posted net revenue of $323,300,000 representing a sequential increase of 1.3% on a reported basis and 2.6% on a constant currency basis.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

During the quarter, healthy demand for digitally led business transformation and cost reduction initiatives more than offset the impact of unfavorable currency movements. In Q4, WNS added nine new logos and expanded 50 existing relationships. In addition, we are excited to report that during the quarter, the company closed two large transformational deals, one each in the banking and financial services area, as well as another in the travel vertical. We expect these engagements to begin generating revenue in the first half of fiscal twenty twenty six. On March 11, we announced the acquisition of Kippi dot ai, a leading provider of data management services focused on the Snowflake platform.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

Kippi brings to WNS strategy, execution, and managed service capabilities across data engineering, advanced analytics, AI, as well as data science. Their more than 600 global employees represent one of the world's largest Snowflake certified talent pools and will significantly enhance WNS' positioning in the rapidly growing and mission critical data management space. Kippie has built more than two fifty accelerators, enablers, and solutions that allow clients to quickly leverage their data to improve decision making and drive business outcomes at scale. Their capabilities are highly complementary to WNS' existing offerings, and we believe Kippi's seasoned leadership team, talented resources, and strong delivery approach represent an excellent cultural fit for us. Together, we will combine domain, digital, data and AI to create new services and solutions, add new clients, and expand the scope of our existing relationships.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

During WNS' twenty five plus year history, the company has developed intimate knowledge of industry specific operations, processes, workflows, and systems. This foundational business understanding is at the core of everything we do and puts WNS in a unique position to help clients harness and analyze data and leverage state of the art technologies, including AI, generative AI, and agentic AI. Our organic and inorganic investments over the past several years have been focused on strengthening and combining our capabilities across these three pillars for long term success. Just under a year ago, we hired a Chief Business Officer to oversee WNS Next, our umbrella organization covering AI, data and analytics, and technology and automation. We've also now added a new Chief AI Research Officer, a Chief Product and Design Officer, and an EVP of Digital Strategy.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

These experts are leading their respective teams and helping WNS navigate the rapidly evolving technology and services landscape. In addition, our tuck in M and A strategy has increased the breadth and depth of our technology and AI led capabilities with the acquisitions of Wooram, the Smart Cube, OptiBibe, and now Kippi dot ai. Together, these investments are helping us accelerate the creation and deployment of WNS proprietary technology assets, including products, platforms, tools, enablers, and accelerators that are reusable and customizable. These digital assets, which now embed AI, GenAI, and AgenTik AI, are being combined with WNS' global talent to deliver productized services for our clients. By creating solutions at the intersection of domain expertise, data and technology, WNS is now able to understand industry problems well, create transformational AI led solutions, and deliver differentiated outcomes.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

I would now like to provide you with a brief recap of the past year before turning our attention to fiscal 'twenty six. From a financial perspective, fiscal twenty twenty five was a challenging year for WNS, driven by customer specific revenue headwinds, including a large healthcare client loss, the delivery transition from on-site to offshore for an internet based procurement relationship, and volume based ramp downs in the online travel space. Full year net revenue came in at $1,266,000,000 down 1.5% on a reported basis and down 1.7% on a constant currency basis. The revenue decline resulted in lower expense coverage, which adversely impacted our adjusted operating margin. Despite this pressure, WNS continued to invest in accelerating capabilities and building organizational depth, including a 16% increase in our sales force during the fiscal year.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

From a profitability standpoint, WNS was able to offset the revenue and margin pressure with non recurring benefits from the reversal of a tax liability in the second quarter and the sale of a facility in India in the fourth quarter. Together, these two items contributed approximately $21,000,000 to adjusted net income and $0.46 to adjusted EPS. In fiscal twenty twenty five, WNS generated strong free cash flow and deployed our capital in a balanced, disciplined manner, including aggressive share repurchases, capability based tuck in M and A, and scheduled debt repayments. Other highlights from this past year include our transition from IFRS to U. S.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

GAAP reporting and WNS' inclusion in the Russell two thousand, as well as the MSCI U. S. Small cap indices, which help improve access to capital, trading liquidity and company visibility. As we enter fiscal twenty twenty six, we are excited about the company's solid business momentum, healthy pipeline, differentiated capabilities and expanding market opportunity. In fiscal twenty twenty five, we added 33 new logos and expanded 179 existing relationships, representing healthy increases over the previous year.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

We also completed our acquisition of Kippi in the high growth data management space, and we have closed two large deals in the fourth quarter alone. WNS has now posted two consecutive quarters of sequential top line growth, and the three customer specific revenue headwinds mentioned earlier are now largely behind us. Today, demand for services that deliver business transformation and cost reduction remains stable and healthy despite the volatile macro environment. Our pipeline is broad based across verticals and services and maintains a healthy balance between traditional deals and large transformational opportunities. Clients continue to move forward with decisions as evidenced by our recent large deal signings and now the new logo additions as well.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

And while we must be vigilant for potential changes in client behavior in the coming months as well as quarters, we are encouraged by the fact that our business model remains fundamentally defensive and recurring in nature. WNS begins fiscal twenty twenty six with 90% visibility to the midpoint of our revenue guidance, which represents 9% growth on both a reported as well as constant currency basis. The guidance midpoint for ANI assumes stable year over year adjusted operating margins, despite increased investments and growth in adjusted EPS of more than 11%, excluding one time benefits in fiscal 'twenty five. In summary, by using our industry focused operational knowledge to unlock the power of data and state of the art technologies like AI, GenAI and AgenTiC AI, WNS is well positioned to meet our clients' rapidly evolving requirements, deliver impactful business outcomes, and drive long term sustainable shareholder value. I would now like to turn the call over to our CFO, Arjun Senth, to discuss further our results as well as outlook.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

Arjun?

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

Thank you, Keshav. In the fiscal fourth quarter, WNS' net revenue came in at $323,300,000 down 0.8% on a reported basis from $325,900,000 last year and up 0.1% on a constant currency basis. Year over year, revenue was adversely impacted by a loss of a large healthcare client in Q2 of twenty twenty five, reductions in travel volumes and unfavorable currency movements. Sequentially, net revenue increased by 1.3% on a reported basis and 2.6% constant currency.

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

The quarter over quarter revenue growth was driven by broad based demand for AI led transformation, automation and cost reduction solutions, which more than offset reduced revenue with large utilities clients resulting from the Q3 completion of a platform migration project and unfavorable currency movements. In Q4, WNS recorded $1,300,000,000 of short term high margin revenue. Adjusted operating margin in Q4 was 21.4% as compared to 20.9% last year and 19.3% last quarter. Year over year, adjusted operating margin improvements were driven by favorable currency movements and were partially offset by increased investments in infrastructure and sales. Sequentially, margin improvement was driven by operating leverage in high volumes, improved productivity and favorable currency movements.

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

The company's net other income slash expense was $16,900,000 of net income in the fourth quarter as compared to $800,000 of net income in Q4 of fiscal twenty twenty four and $900,000 of net expense last quarter. Year over year, the favorable variance is the result of $16,700,000 from the sale of facility in India. Sequentially, the favorable variance is a result of the facility sale, reduced interest expense driven by debt repayments and increased interest income on higher cash balances. WSN effective tax rate for Q4 came in at 23.2% as compared to 21.7% last year and 22.8% in the prior quarter. Both year over year and sequentially, the tax rate increase was driven by changes in our geographical profit mix and the percentage of work delivered from tax incentive facilities.

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

The company's adjusted net income for Q4 was $66,200,000,000 compared with $53,900,000,000 in the same quarter of fiscal twenty twenty four and $47,000,000,000 last quarter. Adjusted diluted earnings were $1.45 per share in Q4, up from $1.12 in the fourth quarter of last year and up from $1.04 last quarter. As of 03/31/2025, WS's balances in cash and investments totaled 267,400,000 and the company had $2.3500000.0 dollars in debt. In the fourth quarter, we generated $53,400,000 of cash from operating activities, paid $63,400,000 for an acquisition of Kippy, incurred $18,600,000 in capital expenditures and made debt repayments of $33,000,000 DSO in the fourth quarter came in at thirty four days as compared to thirty three days reported in Q4 of last year and thirty four days last quarter. With respect to other key operating metrics, WNS' total headcount at the end of fourth quarter was 64,505 and our attrition rate was 39% as compared to 33% reported in Q4 of last year and 32% in the previous quarter.

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

We expect attrition to average in the low to mid 30% range, but the rate could remain volatile quarter over quarter. Bill seat capacity at the end of Q4 was 42,494 and Dubliners averaged 72% work from office during the quarter. I would like to provide you with a brief financial summary for fiscal twenty twenty five before discussing our outlook for the coming year. Net revenue for fiscal year came in at $1,266,000,000 down 1.5% on a reported basis and down 1.7 on constant currency. Revenue growth during the year was driven by healthy new logo additions and existing client expansion that was overshadowed by the three client specific revenue headwinds Keshav mentioned earlier.

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

The company's fiscal twenty twenty five adjusted operating margin was 19.5%, down 110 basis points versus fiscal twenty twenty four. Margin favorability from currency movements and improved productivity was more than offset by increased investments and reduced operating leverage on lower revenue. Net interest income expense for the year improved by $11,700,000 and was driven by our India facility sale of $16,700,000 in Q4. This benefit was partially offset by reduced interest income on lower average cash balances and increased interest expense on higher average debt levels. The company's effective tax rate was 19.9%, up from 18.3 last year, but below normalized levels due to a $8,600,000 nonrecurring tax benefit in Q2.

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

Full year adjusted net income came in at $208,700,000 down 4% year on year, while adjusted EPS came in at 4.55 representing an increase of 3%. WNS' average share count reduced by 7% as a result of our aggressive share repurchase in the first half of the year. Our fiscal twenty twenty five profitability was favorably impacted by $21,000,000 or $0.46 per share as a result of nonrecurring benefits, including a tax liability reversal in Q2 and our facility sales in India in Q4. In fiscal twenty twenty five, WNS generated $207,200,000 in cash from operations, spent $54,100,000,000 on capital expenditures, made debt repayments of $174,000,000 and incurred $63,400,000 for acquisitions. The company also repurchased 2,800,000,000.0 shares of stock at a total cost of $1.9700000000.0 dollars or $53.46 per share.

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

Our disciplined balanced approach to capital allocation resulted in WNS ending the year with a net cash balance of $24,000,000 The company's global attrition rate for the year was 35% and work from office increased to 72 as compared to 68% last year. In our press release issued earlier today, WS provided our initial full year guidance for fiscal twenty twenty six. Based on the company's current visibility levels, we expect net revenue to be in the range of $1,352,000,000 to $1,404,000,000 representing year over year growth of 7% to 11% on both reported and constant currency basis. We currently have 90% visibility to the midpoint of the range, which assumes an average British pound $2 exchange rate of 1.29 for the full year. Guidance includes our acquisition of Kippy dot ai, which is expected to contribute approximately 2% revenue and be neutral to adjusted EPS.

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

Fiscal twenty twenty six revenue projections assume a year over year headwind of approximately 2% related to fiscal twenty twenty five ramp downs with the healthcare client and online travel volumes and do not include any revenue contribution from unsigned large deals or improvements in discretionary project spending. WSS full year adjusted net income for fiscal twenty twenty six is expected to be in the range of $199,000,000,000 to $211,000,000,000 based on an 87 to a U. S. Dollar exchange. This implies adjusted EPS of $4.43 to $4.7 based on a diluted share count of approximately 44,900,000,000 shares.

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

As Keisha mentioned, excluding the $0.49 of onetime benefits in fiscal twenty twenty five, the midpoint of guidance represents an increase of more than 11% in adjusted EPS. With respect to capital expenditures, WS Currency expects our requirements for fiscal twenty twenty six to be up to $65,000,000 We will now open the call for questions. Operator?

Operator

Please press 11 on your telephone and wait for your name to be announced. If your question has been answered or you wish to remove yourself from the queue, please press 11 again. In the interest of time and to enable everyone on the call to participate, please limit your queries to one question and one follow-up. Please stand by while we compile the Q and A roster. Our first question comes from the line of Brian Bergen of TD Cowen.

Operator

Your line is now open.

Bryan Bergin
MD - Equity Research at TD Cowen

Hi, guys. Good morning, good afternoon. Thank you. I want to start on client demand. So first off, good to hear the two large deals that were signed in the fourth quarter.

Bryan Bergin
MD - Equity Research at TD Cowen

I know those have been a long time coming for you. But aside from those, can you just talk about just broader client sentiment, what you've been seeing around signing, engagement ramps, and spending behavior, just particularly since the March?

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

Yeah, Brian, so thanks for that question. Interestingly, you know, while there is a bit of uncertainty in the minds of a number of clients, around where the macros are, what are the kind of pronouncements and announcements coming on tariff wars, as well as reactions of different countries, which could impact each of these companies' supply chains or different elements of their business. What we are seeing is a consistent theme coming to the fore, which is nobody wants to wait now anymore in terms of their digital transformation kind of journeys, But more importantly, everyone is quite clear about the fact that their cost reduction and cost leadership programs must anyway happen along with it. So as you can see, we've actually been able to accelerate closures. In fact, some of the closures we were able to finish earlier than what we had anticipated before.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

Some of the large deals that we announced during this quarter, we originally thought would actually take a little longer to close. And the advantage of this now means that we actually get full year's revenue coming in on some of these deals, both large as well as small. So actually, what we see is enhanced activity from clients, clients being cautiously optimistic, taking calls in terms of cost reduction and digital kind of disruption. And from our perspective, as long as there is no paralysis, that always very well for our business model for the long term.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

And I think just to Keisha's point, Brian, when you look at the roughly 90% of our business that is transformation, automation, cost production, where we're actually managing operations for our clients, the reality is that's a strategic decision on the client's part. If they've made that decision that they need to find a partner to accelerate that journey, the fact that we save them money at the same time is never going to be an issue in a weak environment. And certainly wouldn't go as far as to say that our business is countercyclical, but the reality is that 90% of our business is and does continue to have a very low macro correlation. Where we have to watch for potential volatility would be on the 10% of our business that's project based, which at this point remains fairly stable, and to see if there are any potential impacts down the road to volumes.

Bryan Bergin
MD - Equity Research at TD Cowen

Okay, makes sense. That's clear. And then if we kind of dissect the 'twenty six growth outlook, so seven to 11 reported in constant currency with like two points in organic. Can you give us a sense just on the other puts and takes as it relates to things like productivity commitments, client ramp downs, the large deal assumption, just kind of the build up to that, the kind of the gross versus net growth dynamic.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Sure. I think overall, Brian, we're kind of back to a more normalized environment. So I think the headwinds that we're looking at for the year relative to client ramp downs, productivity improvements and projects, the projects that are rolling off, We're still looking in that 11% range for that piece of the business. The other piece that Arijit called out in his prepared remarks is we do have a 2% annualized impact from the large healthcare ramp down and from the ramp down that occurred throughout the year in the OTA space. So those two items will create an additional 2% headwind in fiscal 'twenty six, but our growth algorithm in the 9% at the midpoint is inclusive of roughly a 13% overall headwind in the business.

Bryan Bergin
MD - Equity Research at TD Cowen

Okay, thank you.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Thanks, Brian.

Operator

One moment for our next question. Our next question comes from the line of Mayank Tandon of Needham. Your line is now open.

Mayank Tandon
Senior Analyst at Needham & Company

Thank you. Dave, maybe just to extend Brian's question there. Could you talk about the cadence of growth through the fiscal twenty six in terms of the organic trends versus the M and A contribution? Would that be pretty evenly split? And then also same question on the margin front, how we should think about the cadence of margins as the year progresses.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Yeah, look, I think we're kind of back from a cadence perspective, Mayan, to normal numbers, right? The reality is the acquisition took place about mid month in March, so we should have a full quarter's worth of contribution in fiscal Q1. In terms of the cadence of the business,

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

I think both Keshav and

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

I already talked about the fact that excluding the health care ramp down, which was in fiscal Q2 of 'twenty five, we've now put up three quarters in a row of 3% sequential growth in the business on constant currency basis. So we enter the fiscal year with good momentum. Obviously, as you're all aware, Q1 is typically seasonally soft for us on the revenue side. So because we give our productivity improvements in Q1, the expectation walking into the year similar to as always is that we're going to be flat, slightly up in Q1, but it's always kind of a softer quarter because of that 3% to 4% productivity headwind that we have embedded in that. Similarly, the margin perspective, Q1 is going to be soft for us because we get the productivity headwinds in Q1 on the revenue side, we get the wage increases on the cost side, and we're also going to have the ramp of these two large deals that are going to be hitting us in Q1 and into Q2.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

So our expectation at this point is that we're going to be somewhere in the 17% to 17.5% operating margin for Q1, but to see that number sequentially improve as we move throughout the year, and as both Arjun and Keisha mentioned, looking at this point in time with our aggressive investments, flattish operating margin at that 19.5% level for the full year.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

Yeah. And just to add, Mike, if you look at from an overall year perspective, Dave mentioned if you look at we are seeing margin expansion in H2. And of course, as our revenue visibility increases and we start tracking our projections, we also expect the overall margins to also improve. In a similar manner that we told you this year when we had this year as well, you would have seen our margins expanded in Q4 as well. And we expect a similar trajectory to also happen.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

But as of right now, like Dave mentioned, we are looking at similar operating margins for fiscal twenty six versus '25 due to reasons Dave mentioned.

Mayank Tandon
Senior Analyst at Needham & Company

Got it. And then just to maybe delve into the two large deals, are you able to quantify the impact and maybe discuss the type of services you're providing? And to that extent, are there more large deals in the pipeline that you could potentially close in fiscal 'twenty six?

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Yeah, look, I think, Mike, we've been consistent in our large deals definition, These are at a minimum $10,000,000 in annual contract value. We're still going through the process of kind of finalizing the ramp up here, and we've been hopefully conservative in terms of their contribution relative to fiscal 'twenty six. We are actively ramping these deals at this point in time, so it's not a let's hope this is going to happen, but we're not going to be getting a full year's worth of revenue from either of these deals at this point. One, we expect to be fully ramped hopefully by Q2. The other should be ramping as we move through the first half of the year.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

So obviously,

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

those deals will be

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

a function of both the timing of the ramp and the overall size we have not disclosed. In terms of the type of work that's being done, as Keisha mentioned, one of the deals is in the banking and financial services space. It's worked for one of the world's largest payment platforms, and we're going to be doing risk operations, enhanced due diligence for them, user operations, and technical payment processing. In the travel side, which is the second large deal, this is in the corporate travel management space, and it's going to be operations and fulfillment, in addition to online bookings for them. So, both of these deals kind of in core middle office for these companies and focused on things that are mission critical to running their businesses.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

Yeah, and just to add to your second part of your question, look, the pipeline going forward is also very healthy. We had a similar pipeline last quarter as well, and the pipeline continues. We are seeing some fairly late stage conversations in three or four clients, but as we mentioned in our remarks a couple of quarters back, from a guidance perspective, we will only include deals just signed. So while we are optimistic about getting some of these closed in the next couple of quarters, once we sign them, we'll give them the guidance. But the pipeline is healthy.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

There are some active conversations, and the conversations are at multiple levels, including some of them are sources as well.

Mayank Tandon
Senior Analyst at Needham & Company

That's great to hear. Congrats on the quarter. Thank you.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Thanks, Brian.

Operator

One moment for our next question. Our next question comes from the line of Surinder Thind of Jefferies LLC. Your line is now open.

Surinder Thind
Surinder Thind
Senior VP & Equity Analyst at Jefferies

Thank you. Just following up on the large deals, are there any characteristics that we should be aware of in terms of maybe the duration of the contracts, expectations around productivity improvement or just more broadly with the newer contracts that you're signing, just any color that you can provide there with clients' anticipation of your integration of AI and the productivity expectations?

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

Yeah. I I think that's a great question. So I think the key is all of these large deal transactions help move us away from the traditional models that this industry normally operates in with clients and positions us significantly away in a higher value area, away from traditional BPM. So that's the first thing I would like to say, because now what's coming to the fore is not just our superior knowledge of business domains and subdomains, but also our great understanding of technology, analytics, digital transformation, our partnerships that we didn't speak about earlier, but that we have now created across all the large players, whether it's around cloud, whether it's around technology, whether it's around agentic, whatever. All of this comes together, which means the quality of conversation with these clients now moves from a TCO, from just a simple cost saving model to much more a TCO oriented kind of a model where we're actually walking in, telling our clients that here's what they normally spend in a particular area.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

We take out large components of that area, keeping certain parts which are unique to them inside, and then delivering all of that at a particular price point. And that allows the company, the client on the one hand, to save money, to be far more efficient, and to see the impact of some of the technology tools that we bring to the fore. But from our point of view, it builds a very strong relationship with the client. It creates what I call a black box approach with each of these clients. It allows us to work on models that can, over a period of time, dramatically change margin profile.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

And more importantly, we always start with one area, but these large deals always have a path towards new processes and new areas. Like for example, the travel company that we spoke about, or the banking platform company that we spoke about, these are very large players globally. We may have started with one area, but we have already scoped out the next two or three areas that we will go after, which potentially over a couple of years would position all of these clients as, I think, the top five, top 10 because of this unique approach. And this is the approach that we are taking to not just the large clients, but also other traditional, better, but smaller clients where we believe the potential for creating a large deal is available.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

I would just add to Takesha's comments, Surinder, that both of these deals are five plus years in duration.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

So kind

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

of following that, when you're doing transformation, it's going to take a long time for the client to get comfortable. And as a result, these deals typically don't have one, two, three year kinds of life. So both of these are five year plus deals. The other thing that's interesting that we're seeing kind of across the portfolio is that the productivity commitments that we have to give to clients are a function of what they're ready to do and what they're willing to let us do on the front end. So if client is willing to let us deploy AI, Gen AI, Agensic AI as part of the upfront solution, then the productivity commitments over a five, six year period tend to actually be a little bit less.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

If the client is moving forward with us in today's model with an understanding that over the next four to five years, we're going to be deploying more and better technology, then the productivity improvements tend to be going up a little bit. So overall, I would say when you look at the profile of the deals we're signing, it's mixed. But overall, the productivity commitments at at at the company level are very similar to where they've been.

Surinder Thind
Surinder Thind
Senior VP & Equity Analyst at Jefferies

That's actually quite helpful. And then in terms of just maybe following up on some earlier commentary in the prepared remarks, when we think about client behavior, I think it makes sense that you probably would not see a material change given the focus and the types of works that you guys do. But you also talked a little bit about assuming no improvement in discretionary spend. Now should you be assuming some degradation or is it just truly there's, we're too early in this, what I would call, period of uncertainty for clients to actually be changing behavior or seeing, for you to be seeing any change in behavior? Is it is it a timing issue at this point, or is it clients truly just aren't changing behavior with respect to your line of work?

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

So, look, let me try to interpret that. Look, the core business that Dave mentioned earlier is basically the business business technology business, right, which is mission critical for clients. And, of course, there, we don't expect to see any changes because we feel a lot of that business is actually lacking in. So, you know, as as demand for cost take out increases, we actually expect that sort of business to present similar levels. But to your point on the discretionary expenditure, look, it's a it's a difficult one.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

So at this point in time, if you recall, we've said our visibility to guidance is 90% to to midpoint, and that is in historical present. We see where we sort of look where we were typically at the Q1 for each year. So at this point in time, we are not baking in any improvements or degradations. We are assuming that that part of the business continues in line with our core business. And given that with the acquisitions of Kippi and the TSC and Uram, given the fact that our project based revenue has increased in percentage from where we were historically, Any improvement in the macros or the discretionary expenditure will actually help us improve our revenue out of the year.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Yeah. I think to Serge's point, we believe we've largely derisked this based on the visibility that we've provided here. The reality is on top of that surrender that if you look at the project work that we do, and obviously it's discretionary in nature, the client has to write a check up front and then get the benefits over time, right? But if you look at the primary driver for our discretionary projects, whether that's procurement, whether that's automation, whether that's analytics, these projects all have a cost reduction theme to them, Right? The only difference is as opposed to getting the savings day one, the client has to write a check first and then get the savings over time.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

So while we do believe that these projects could get deprioritized, because they do drive cost savings and they are critical to clients. We believe that they're not going to drop that far in the prioritization. And in fact, if you look at project based revenues and the revenues that we've gotten from our acquisition, those numbers were relatively stable even in fiscal 'twenty five.

Surinder Thind
Surinder Thind
Senior VP & Equity Analyst at Jefferies

Got it. That's helpful. Thank you.

Operator

One moment for our next question. Our next question comes from the line of Puneet Jain of JPMorgan. Your line is now open.

Puneet Jain
Puneet Jain
Associate - Equity Research at JP Morgan

Hi. Thanks for taking my question. So there's been like some sensitivity to travel volume in the past with like the macro environment. So with like how things where they are right now as it relates to macro outlook, what does the guidance bake in for travel volume? How low some of those contracts are to possibly, like, the minimum level of commitments from those clients?

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

So let me start actually, Puneet. It's a great question. And, you know, I I fully understand where you are coming from as far as the question is concerned because of the macros. But, you know, I'll let you in on a little secret. One of the biggest pipelines that we have really now is in the is in the travel and the shipping and logistics space, which is a little counterintuitive because you would expect with all that is being spoken about, those are likely to get impacted the most.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

But some of the wins that we have had in this last year, the pipeline that we have now built, the decisions that we are seeing are all very much focused on these areas, which means all of them are preparing for potential changes in their business model. So everyone seems to be very focused now on the cost leadership mantra, which actually plays in extremely well from our point of view, because many of them also seem to be first time outsourcers. And particularly in the corporate travel space, many of them have never actually done any of these programs. So with that having been said, I'll ask Dave and Arjun to give you a little more color on the minimums and stuff.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Sure. Let me take some of that, Puneet. Look, I think we've been very consistent in explaining to you guys that the challenges that we've had in the travel space have really been because in certain areas we operate at the intersection of a volatile segment, right, in terms of travel, a volatile service offering in terms of CX, and a volatile business model in terms of digital. Right? So where we've seen this impact in our business over the last couple of years and where there's been this pressure, it's primarily been in the OTA space.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

It has not been in airline operations. It has not been in hotels because what we're doing there is more middle or back office focus. If you look at the OTA space and you look at where we were in Q4, online travel was down to 3% of company revenue. We have not baked in improvements in those numbers in fiscal twenty six. Certainly, we add new logos, that'll help.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Certainly, if we can help these clients move from traditional models to AI, agentic AI led models, then that has upside for us. But at this point in time, we really feel that the online travel volumes for us are bumping along the bottom. There really is very limited downside risk, especially because the fact that that 3% is spread over seven or eight different customers. We don't have a client concentration risk on top of the fact that we don't have a major business risk in this segment.

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

And just to add to further color, Kesha mentioned that our pipeline in travel is way robust. If you look at some of the deals that we are talking about, a lot of those deals are actually in different areas like corporate travel and management, which further sort of diversifies our portfolio from being OTA and airline historically to more OTA airline and corporate travel management. And we feel that will also help us derisk any macro sort of sensitivity around the business and gives us more depth and scale in the kind of work we do, because each of these deals are large, they're complex, they're sort of and they're really sort of integral to the client office. Right? So that's the way we're all starting to get the macro impact on the Cali portfolio.

Puneet Jain
Puneet Jain
Associate - Equity Research at JP Morgan

Got it. Got it. No. Thanks for that. And for the utilities client, like, where you had some headwind, can you talk more about, like, nature of that headwind?

Puneet Jain
Puneet Jain
Associate - Equity Research at JP Morgan

What drove that? And also, what percentage of your overall revenue stems from such platform based services?

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

So overall, I mean, you know, this this is a platform migration. Right? This would be part of what we report as technology services across the company. You know, we we don't do tons of this work, but certainly if we've got clients that are looking for help here, we're happy to do that. We help this large client migrate their platform from an asset that they were using externally to one that they purchased.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

And then now we're continuing to manage that process on the new platform. So given our domain expertise, given our process expertise, we were the right partner for them to help do that platform migration. The challenge was that it created a little bit

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

of a bump for us

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

in revenue in fiscal q two and q three. And once that platform migration was successfully completed, obviously, that revenue stream fell off. So it remains a very healthy, happy client for us. And and obviously, when you look at our segment reporting and you look at our business, right, you'll see this hit the utilities vertical. You'll see this hit the CX revenues.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

You'll see us hit the the largest client in terms of customer concentration, and you'll see us hit the The UK revenue. So as as that kind of rips through the segment, that's where you see the impacts to the business in in from q three to q four.

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

And, Pradeep, just,

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

you know, just just some added commentary. You know, I wouldn't call this a headwind. Right? Dave mentioned why the revenues in Q2 and Q3 are up. But if you exclude those, you will see over the last six quarters, the numbers have been broadly stable.

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

So the volumes are there. Because we did some incremental work, it looks seems to be a headwind, but the underlying volume work continues as a client, and we have great relationships with the client across the CXOs and the board level. So at this point, you know, we have no cause of cause of concern in terms of time.

Puneet Jain
Puneet Jain
Associate - Equity Research at JP Morgan

Got it. Thank you.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Thanks, Puneet.

Operator

Our next question comes from the line of Robbie Bamburger of Baird. Your line is now open.

Robert Bamberger
VP - Senior Equity Research Associate at Baird

Yeah. Thanks for taking my question. So, employees were up two percent sequentially and then accelerated to 7% in fiscal Q4. Can you maybe talk about your hiring plans? And should we think of this as essentially a ramp before revenue acceleration in fiscal twenty twenty six?

Robert Bamberger
VP - Senior Equity Research Associate at Baird

And then any color on geographies you're ramping in?

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Yes, that's exactly right, Robbie. I mean, you look at the headcount additions in fiscal Q4, this is the ramp for these large deals that are ramping in Q1 and Q2. And obviously, part of the reason we've got that margin pressure in Q1 and leading into Q2 a little bit is because we've hired in advance of actually getting the full revenue contribution. So you see that impact in Q1. But yes, a lot of what you've seen in terms of the reacceleration in hiring in Q4 is about, we kind of ate through the excess capacity in the organization in Q2 and Q3 as revenue rebounded.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Now we're hiring for future growth.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

So just a little just an additional commentary there as well. The Q4 headcount also includes the impact of the acquisition of PP, where we had about 600 plus join us in March, so that's why the numbers might be a little skewed. But like Dave said, the bulk of this is towards hiring for the for the planned ramps and the and and the revenue growth starting q one of. And I think the headline news, as both the gentlemen have said, is that growth is back. We are hiring.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

We are getting people ready to deliver on our priorities. But at the same time, I also want to mention that in terms of quality, we're also hiring people, lots more people onshore in our client facing locations, salespeople, more digital kind of people, more technology people, all of whom and more leaders who are actually facing off with end clients, because we actually think that next year is going to be super exciting for us. So it's not just a case of hiring people who are delivering to these processes, but it's also hiring high quality resources who are now facing off with clients and leading these conversations around domain, digital, technology, transformation, and analytics.

Robert Bamberger
VP - Senior Equity Research Associate at Baird

Yep. Very helpful. Thank you. And then maybe just turning to GenAI. Any way to put color on how many clients are currently using GenAI with you?

Robert Bamberger
VP - Senior Equity Research Associate at Baird

And, you know, are you able to leverage those GenAI assets across, you know, multiple different clients? And then maybe thinking about the mix shift of, contracts, should it move more towards fixed base or transaction based contracts as Gen AI comes on?

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Let me take that, Robbie. I think to date, we've deployed Gen AI solutions at around 20 of our clients. Most of the work that we've done there is, Gabe spoke a little bit about this in his prepared remarks, reusable components that we've created and and packaging those reusable components to feature GenAI as part of product type services. Right? So so we create a technology asset, a digital asset.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

It leverages AI, GenAI, Agenda AI. And then what we do is we wrap services around that product, around that platform so that we can create differentiated experiences for our customers. So we we've actually been successful in deploying these assets with about 20 customers at this point in time, and and we do see good demand for these for these assets. I I think we will continue to see that progress as we move throughout fiscal twenty six, and the expectation is that the contribution in revenue as we move throughout the year from AI, Gen AI, Agenda AI, will continue to increase.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

And that's the reason why earlier I also spoke about the fact that we have built very strong partnerships now with some of the technology providers on the

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

other side, particularly around agentic AI and some of these specific areas that will help us continue to be a very smart company. 31 use cases across 20 clients that we have spoke about, 13 digital assets fully developed at this point in time, strong partnerships created, but more importantly, sending out a very strong signal to prospects and clients that we are ready to help them when they are.

Robert Bamberger
VP - Senior Equity Research Associate at Baird

Yep, very helpful. Thank you.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

Thank you.

Operator

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

Vincent Colicchio
Managing Director at Barrington Research Associates

Yeah. Another question on AI. Keshav, I think last year you you come up with a number for what portion of revenue will be tied to AI. Would you like to take a stab at that kind of a number for '26?

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

Oh, that's a great question. You know? You know, at this point in time, it is about 5%, you know, close to 5% of our revenue from, you know, from these models. I think what we will expect is it will increase an inch upwards, but at this point in time, we are not in a position to give you a specific number. But I think this is a question that we can keep, you know, asking across the quarters.

Vincent Colicchio
Managing Director at Barrington Research Associates

And to what extent is access to skilled labor on the AI side limiting your growth there?

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

Not at all. Like I mentioned earlier, all the new leadership positions are actually based out of the markets. Right? And around them, our ability look. We don't need large armies of people to do this.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

We need focused small teams who can come in and help us, you know, manage. So if you look at it, some of it is coming in through our, you know, organic growth and acquisition of talent onshore as well as offshore. Some of it is coming through acquisitions, smart acquisitions like Ipi that we just did. Mean, 600 people coming in just from that one acquisition is how we are managing it. So at this point in time, while we are very well set and well prepared in terms of leading our customers down this path, we also think there will be a time frame for clients, particularly the traditional clients, to move away from the old models that they used to, to some of these new models to leverage these areas.

Keshav Murugesh
Keshav Murugesh
Group CEO & Director at WNS

And therefore, we will have enough access to talent. We will have enough opportunity to upscale, reskill existing talent, and we will have enough opportunity to lead in terms of some of these areas.

Vincent Colicchio
Managing Director at Barrington Research Associates

Thanks for that. And just one more. What caused the spike in attrition?

Vincent Colicchio
Managing Director at Barrington Research Associates

Is there

Vincent Colicchio
Managing Director at Barrington Research Associates

anything meaningful to see there?

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Not not nothing specific, Vince. I mean, all all the attrition was once again focused at the entry level of the organization. We've got strong ability to manage that. Actually, there's a certain amount of attrition at that level that's healthy to running our business and maintaining our cost structure. So not nothing that we're concerned about, nothing that we believe is a trend.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

That that number just tends to jump around quarter to quarter.

Arijit Sengupta
Arijit Sengupta
Chief Financial Officer at WNS

Yeah. Well, I think at a high level, I'd also say that, you know, when growth is back at an industry level, one should also expect some of these things to happen.

Vincent Colicchio
Managing Director at Barrington Research Associates

Guys.

David Mackey
David Mackey
Executive VP of Finance & Head of Investor Relations at WNS

Thanks, Jens.

Operator

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

Executives
    • David Mackey
      David Mackey
      Executive VP of Finance & Head of Investor Relations
    • Keshav Murugesh
      Keshav Murugesh
      Group CEO & Director
    • Arijit Sengupta
      Arijit Sengupta
      Chief Financial Officer
Analysts
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WNS Q4 2025
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