WNS (Holdings) Limited (WNS) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents mixed signals. While the company has strong growth potential through AI initiatives and a robust deal pipeline, current financial performance shows declines in revenue, operating margins, and net income. The guidance is cautious, reflecting challenges in the OTA sector and regulatory uncertainties. The share repurchase program is a positive, but increased debt and high attrition are concerns. Overall, the market is likely to react neutrally as investors weigh the potential for future growth against current financial challenges and macroeconomic headwinds.
Key Financial Performance
Net Revenue $310.7 million, down 4.4% year-over-year from $325 million; decrease attributed to loss of a large healthcare client, volume reductions in online travel, and ongoing weakness in discretionary project-based revenues.
Adjusted Operating Margin 18.6%, down from 21.5% year-over-year; decrease due to lower revenue, employee utilization, increased investments in infrastructure and sales, and higher SG&A levels.
Adjusted Net Income $51.5 million, down from $54.4 million year-over-year; impacted by revenue decline and increased expenses.
Adjusted Diluted Earnings Per Share (EPS) $1.13, up from $1.10 year-over-year; increase due to one-time tax benefits.
Cash from Operating Activities $43.6 million; reflects operational performance.
Capital Expenditures $12.7 million; reflects ongoing investments.
Debt Repayments $43 million; reflects financial management.
Cash and Investments $221.5 million; reflects liquidity position.
Debt $262.8 million; reflects financial leverage.
Days Sales Outstanding (DSO) 38 days, up from 35 days year-over-year; indicates changes in collection efficiency.
Headcount 62,951; reflects workforce size.
Attrition Rate 34%, up from 30% year-over-year; indicates workforce turnover.
Build Seat Capacity 43,108; reflects operational capacity.
Work from Office Average 72%; reflects operational model.
Operating Highlights
AI-led analytics assets: WNS has built AI-led analytics assets across all key horizontals, including finance and accounting, procurement and supply chain, and customer support.
Industry-specific capabilities: WNS has created unique industry-specific capabilities such as claims management for insurance, R&D for big pharma, and Gen AI-led documentation for logistics.
New logos and expanded relationships: During the second quarter, WNS added nine new logos and expanded 41 existing relationships.
Large deal pipeline: Currently, WNS has more than 20 large deals, representing over $500 million in annual contract value.
Adjusted operating margin: Adjusted operating margin in Q2 was 18.6%, down from 21.5% last year due to lower revenue and increased investments.
Cash from operating activities: WNS generated $43.6 million of cash from operating activities in Q2.
Investment in analytics and technology: WNS is making strategic investments in analytics, technology, and domain expertise to drive long-term growth.
Revised fiscal 2025 guidance: WNS has lowered its full-year guidance due to reduced online travel volumes and slower conversion of large deals.
Risk or Challenges
Revenue Decline: WNS reported a net revenue decrease of 4.4% year-over-year, attributed to the loss of a large healthcare client and ongoing reductions in online travel revenues.
Large Deal Pipeline: The timing of contract signings and associated revenue ramps from the large deal pipeline is uncertain, leading to the removal of large deal revenue contributions from fiscal 2025 guidance.
Online Travel Volumes: Continued reductions in online travel volumes are expected to impact revenue in the second half of fiscal 2025.
Employee Utilization and Attrition: Adjusted operating margins decreased due to lower revenue and employee utilization, with an attrition rate of 34%, which may remain volatile.
Debt Levels: Increased debt levels and lower cash balances due to share repurchases have resulted in higher net expenses.
Economic Factors: The company faces headwinds from a weak macro environment affecting discretionary project-based revenues.
Regulatory Issues: The guidance assumes no improvement in discretionary project spend, which may be influenced by regulatory changes.
Guidance & Outlook
Large Deal Pipeline: Currently, WNS has more than 20 large deals, representing over $500 million in annual contract value spread across all key verticals, services, as well as geographies.
Investments in Analytics and AI: WNS is making strategic investments in data, analytics, and AI, focusing on developing proprietary technology tools and platforms.
Analytics Growth: WNS's standalone analytics work has grown at a 20% CAGR over the past three years, with analytics now embedded in the majority of total company revenues.
Recognition in Analytics: WNS has been recognized as a market leader in analytics, AI, data platforms, and automation services by various industry analysts.
Fiscal 2025 Revenue Guidance: WNS expects net revenue to be in the range of $1.25 billion to $1.296 billion, representing a year-over-year range of minus 3% to plus 1% on a reported basis.
Adjusted Net Income Guidance: Full-year adjusted net income for fiscal 2025 is expected to be in the range of $190 million to $200 million.
Adjusted EPS Guidance: This implies adjusted EPS of $4.13 to $4.35, assuming a diluted share count of approximately 46 million shares.
Capital Expenditures Guidance: WNS currently expects capital expenditures for fiscal 2025 to be up to $65 million.
Shareholder Return Plan
Share Repurchase Program: In the second quarter, WNS repurchased 1,156,000 shares of stock at an average price of $56.61, impacting Q2 cash by $71.7 million. Through the first half of fiscal 2025, WNS has repurchased 2.8 million shares at an average price of $53.46, totaling $149.7 million.
Key Q&A
Earnings Word Cloud
WNS Transcript
The earnings call revealed several concerns: declining revenue and high attrition rates, which could affect operational stability. Despite positive adjusted net income and EPS, the revenue guidance for fiscal 2025 is weak, with a projected decline. The Q&A section highlighted client ramp-downs and productivity challenges, further impacting growth outlook. Although share repurchases were executed, they may not offset the negative sentiment from revenue decline and attrition issues. Given the market cap of $2.36 billion, the stock is likely to experience a negative reaction, falling between -2% to -8% over the next two weeks.
The earnings call presents mixed signals: modest revenue growth and a positive large deal pipeline are offset by high attrition, margin pressures, and dependency on a few large clients. The Q&A section reveals uncertainties in deal signings and travel volumes, yet management remains optimistic about future margins. Given the company's mid-sized market cap, these factors suggest a neutral short-term stock price movement, with no strong catalysts for significant change.
The earnings call presents mixed signals. While the company has strong growth potential through AI initiatives and a robust deal pipeline, current financial performance shows declines in revenue, operating margins, and net income. The guidance is cautious, reflecting challenges in the OTA sector and regulatory uncertainties. The share repurchase program is a positive, but increased debt and high attrition are concerns. Overall, the market is likely to react neutrally as investors weigh the potential for future growth against current financial challenges and macroeconomic headwinds.
The earnings call reveals a mixed picture: a slight revenue decline and margin contraction, but an optimistic outlook due to large deals and AI initiatives. The Q&A highlights uncertainties about revenue timing and client behavior, but also confidence in future growth. The share buyback plan is a positive factor, but weak financial performance and flat guidance weigh negatively. Given the market cap of $2.36 billion, the stock is likely to remain stable, with a neutral sentiment expected (-2% to 2%) over the next two weeks.
WNS Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
