WNS(US:WNS)2025-05-13 15:50Currency and Tax Impact - The depreciation of the Indian rupee, Philippine peso, and Euro against the US dollar positively impacted the company's results of operations in fiscal 2025 [416]. - The company expects its tax rate in the Philippines to continue to impact its effective tax rate, with an estimated additional income tax expense of approximately $7.9 million in fiscal 2025 if tax holidays were not available [422]. - The Sri Lankan government revised the corporate tax rate from 0% to 15% for profits earned from export revenue, which will affect the company's current and deferred tax items recorded by its subsidiary in Sri Lanka starting in fiscal 2026 [425]. - The company operates from various delivery centers in the Philippines, eligible for tax exemption benefits expiring between fiscal 2025 and fiscal 2031, with a prevailing special tax rate of 5.0% on gross profit after the expiry of tax benefits [424]. Revenue and Profitability - Revenue for the year ended March 31, 2025, was $1,314.9 million, a decrease of $8.4 million or 0.6% compared to $1,323.4 million in 2024 [429]. - Revenue less repair payments (non-GAAP) for the year ended March 31, 2025, was $1,265.5 million, down $18.8 million or 1.5% from $1,284.3 million in 2024 [434]. - Operating profit increased to $175.4 million in 2025, representing 13.3% of revenue, compared to $140.9 million or 10.6% in 2024 [428]. - Gross profit margin improved to 35.4% in 2025 from 35.3% in 2024, while the cost of revenue as a percentage of revenue slightly decreased to 64.6% [428]. - Profit after tax for fiscal 2025 was $170.1 million, an increase of $22.6 million from $147.5 million in fiscal 2024, with a profit margin of 12.9% [457]. Client Concentration and Market Vulnerability - A few major clients account for a significant portion of the company's revenue, and any loss of business from these clients could reduce revenue and significantly harm the business [25]. - The company's revenue is highly dependent on clients concentrated in a few industries, primarily located in the US, UK, Europe, and Australia, making it vulnerable to economic slowdowns in these regions [25]. Operational Challenges - The company may experience difficulties in attracting and retaining sufficiently trained employees, which could adversely affect its operations and financial performance [29]. - The company faces competition from both onshore and offshore BPM companies, as well as from IT companies offering BPM services, which could impact its market share [25]. - The company experienced a decrease in revenue from existing clients of $66.7 million, partially offset by $57.0 million from new clients and revenue from the acquisition of Kipi.ai [429]. Segment Performance - Segment revenue for BFSI was $518.0 million in 2025, up from $461.9 million in 2024, while TSLU segment revenue decreased to $377.8 million from $406.1 million [508]. - HCLS segment revenue decreased by 18.1% to $135.9 million in fiscal 2025 from $165.9 million in fiscal 2024, primarily due to the loss of a large healthcare client and currency depreciation [514]. - BFSI segment revenue increased by 12.1% to $518.0 million in fiscal 2025 from $461.9 million in fiscal 2024, driven by revenue increases from existing clients and new clients [516]. Financial Position and Cash Flow - As of March 31, 2025, the company had cash and cash equivalents of $106.9 million, primarily held in various currencies including Indian rupees and US dollars [547]. - The company reported outstanding debt of $243.5 million as of March 31, 2025 [548]. - In fiscal 2025, net cash provided by operating activities increased to $207.2 million, up from $200.8 million in fiscal 2024, driven by a $12.9 million increase in cash inflow for working capital [558][559]. - Net cash used in investing activities increased significantly to $92.7 million in fiscal 2025 from $24.3 million in fiscal 2024, primarily due to a cash outflow of $63.4 million for acquisitions [563]. Expenses and Cost Management - Selling and marketing expenses rose to $82.9 million in fiscal 2025, up from $78.3 million in fiscal 2024, primarily due to increased employee costs and wage inflation [446][447]. - General and administrative expenses decreased to $178.5 million in fiscal 2025 from $184.1 million in fiscal 2024, mainly due to lower employee costs and share-based compensation [448]. - Finance expenses increased to $18.5 million in fiscal 2025, up from $15.3 million in fiscal 2024, primarily due to interest on long-term loans [456]. Future Outlook and Investments - The company expects capital expenditures for fiscal 2026 to be approximately $65.0 million, with fiscal 2025 capital expenditures amounting to $54.1 million [555]. - The company is investing substantially in WNS Analytics to enhance its offerings in research, data, analytics, and AI, supporting business growth and digital transformation [566]. - The company plans to continue investing in research and development to strengthen its analytics capabilities and support client transformation journeys [566].