3Q24 earnings beat street, improved FY24F guidance
- 3Q24 adjusted (adj) net income of US$58.2m (+7.6% q-o-q, +15% y-o-y) was 18% above street estimates on margin surprise while adj revenue (non-GAAP measure) of US$316m (-2.8% q-o-q, +7.8% y-o-y) met street expectations.
- 3Q24 adj revenue growth dropped q-o-q due to ramp-down of a large healthCare process, the offshore delivery transition of a large internet client, volume and reductions with certain client.
- FY24F adj net income revised upwards which is 4% above street estimates, citing healthy demand going forward. FY24F adj revenue guidance is inline with street
3Q24 adj net income of US$58.2m (+7.6% q-o-q, +15% y-o-y) was 18% above street estimates. In 3Q24, WNS Holdings (WNS) recorded adj net income (excluding amortization of intangible expenses, share-based compensation expense, acquisition-related expenses, and associated tax impacts) of US$58.2m (+7.6% q-o-q, +15% y-o-y), was 18% higher than street expectations of US$49.5m, on margin surprise. Adj net income margin in 3Q24 was 18.4% (16.6% in 2Q24) compared to street expectation of 15.8%. Higher adj net income q-o-q was due to lower SG&A expenses, tax benefit resulting from the reversal of a deferred tax liability on intangibles, and favorable impacts from currency movements. Adj revenue of US$316m (-2.8% q-o-q, +7.8% y-o-y) met street expectations. 3Q24 adj revenue dropped q-o-q as a result of ramp-down of a large healthCare process, the offshore delivery transition of a large internet client, volume reductions with certain clients and unfavorable currency movements. North America contributed ~47.2% (48.7% in 2Q24) to the total revenue in 3Q24. The total headcount stood at 60,652 (+1.3% q-o-q, +4.6% y-o-y) in 3Q24.
Revised FY24F adj net income guidance is now 4% above street estimates. WNS has increased its FY24F adj net income growth guidance from 2%-8% y-o-y growth given in 2Q24 to 8%-11% y-o-y growth (US$212m-US$218m adj net income). The mid-point adj net income guidance is 4% above street expectations. Meanwhile, adj revenue guidance was also changed from 8%-12% y-o-y growth given in 2Q24 to 9%-11% y-o-y growth (US$1,270m-US$1,292m adj revenue), inline with street estimates. The revised guidance includes expected healthy demand for core process automation and cost-reduction based solutions, and ongoing softness in transaction volumes from certain clients and discretionary project-based revenues. WNS maintains its capex guidance of US$60m for FY24F.