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WNS (Holdings) Shs Sponsored American Deposit Share Repr 1 Sh  (NYSE:WNS)
Q3 2019 Earnings Conference Call
Jan. 17, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the WNS Holdings' Fiscal 2019 Third Quarter 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' Corporate Senior Vice President of Finance and Head of Investor Relations. David?

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Thank you, and welcome to our fiscal 2019 third quarter earnings call. With me today on the call, I have WNS' CEO, Keshav Murugesh; WNS' 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 third quarter ended December 31st, 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 this call, management will reference certain non-GAAP financial measures, which we believe provide useful information for investors. 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 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' CEO, Keshav Murugesh. Keshav?

Keshav Murugesh -- Group Chief Executive Officer

Thank you, David and good morning, everyone. In the fiscal third quarter, WNS continued to deliver solid financial results across revenue, margin, profit and cash generation. Net revenue came in at $195.9 million representing a year-over-year increase of 6% on a reported basis and 9% organic constant currency.

In the third quarter, WNS added four new clients, expanded six existing relationships and renewed 16 contracts. Adjusted operating margin in Q3 expanded to 23% and adjusted EPS grew 12% versus the third quarter of last year to $0.73 per share. In addition, the Company posted its highest quarter ever in terms of cash from operations. Sanjay will discuss the details of our third quarter financial performance in his prepared remarks.

This quarter, I would like to highlight some of the innovative domain-led solutions we have co-created with our clients over the past few quarters. These examples demonstrate our ability to combine deep vertical knowledge, high-end analytics, process expertise and technology to help our clients improve their competitive positioning. The first solution I would like to discuss is a state-of-the-art offering in the insurance space. WNS has developed the capability to assess challenging claims such as rooftop damages by using images captured through drone technology. WNS takes these drone images and uses advanced analytics and machine learning to assess damage and the associated claim.

This approach enables our insurance partners to automate damage assessments, mitigate risk to employees and reduce cost. A second solution in the insurance space is the digital claims notification application which can be used by policy holders, brokers and third-party administration agents to register and self serve their claims end-to-end with minimal or no human intervention.

The app is available on all smartphones, handheld devices and desktops and is currently offered for both motor vehicle and home policies. This application delivers a seamless experience to end customers enabling them to monitor the status of a claim on a real-time basis. In the healthcare space, WNS HealthHelp has created a new capability, which addresses the management of orthopedic interventions for knee, hip, shoulder and spine issues.

Leveraging a newly developed process workflow and a patent pending clinical rules engine developed in cooperation with university affiliated physicians, we are able to deliver significant savings to our clients, while improving patient outcomes by reducing the amount of surgical intervention required and increasing the appropriate use of clinically correct, evidence-based treatment.

And finally for the energy and utilities vertical, we have created a voice-assisted solution utilizing Amazon Alexa to help manage workflows and end-to-end customer queries including the submission of meter readings, payments, account information and other FAQs. This innovation has significantly reduced call volume and emails, lowered averaging -- handling time, streamlined query hand-off and improved customer satisfaction. While this is currently deployed in the utility space, we are working to customize the solution for other verticals.

I would also like to spend a little time on today's call discussing global business volatility and uncertainty and its impacts on WNS and our clients. As we have discussed on previous calls, our clients have been dealing with a massive amount of business disruption associated with digital requirements, regulatory changes, technology transformation and the need to leverage analytics. Our customers understand that if they are not able to address these challenges and improve the end customer experience, they will lose competitive positioning and market share.

Additionally in my conversations with clients over the past few months, it has become clear, they are also concerned about global political instability, access to talent and the possibility of a macro economic slowdown. With this in mind, they must find the time, resources and funds to support their transformational business initiatives. To date, we have not seen any impact to our business from these global risks. And while there is a possibility that some clients could slow decision making for a period of time, we believe that many clients committed to process outsourcing will continue to move forward with their strategic initiatives and may in fact accelerate plans to leverage lower cost and operating flexibility.

Our capability to co-create solutions with our clients tailored to their unique business requirements enables them to simultaneously reduce cost, manage disruption, digitize processes, leverage a global talent pool, improve the end customer experience and outperform in their respective industries.

In short, an increasingly complex business environment continues to translate into healthy demand for strategic BPM initiatives. We believe WNS remains well positioned for success in this market based on our strong capabilities and ongoing investments in deep domain expertise, technology and automation, advanced analytics and process knowledge.

Our approach is resonating well with both existing and prospective clients, and our financial performance continues to validate our ability to execute. We will continue to target industry leading performance and creating long term value for all of our key stakeholders.

I would now like to turn the call over to Sanjay Puria, our CFO to further discuss our results and guidance. Sanjay?

Sanjay Puria -- Chief Financial Officer

Thank you, Keshav. With respect to our third quarter financials, net revenue came in at $195.9 million, up 5.8% from $185.2 million posted in the same quarter of last year, and up 9.1% on a constant currency basis. By vertical, revenue growth was broad based with the shipping and logistics, healthcare and insurance verticals each growing more than 14% year-over-year.

With respect to our service offerings, revenue growth versus the prior year was driven by strength in industry-specific BPM, auto claims and finance and accounting. Sequentially, net revenue increased by 0.2% on a reported basis, and 0.1%, constant currency. Quarter-over-quarter revenue growth with new and existing clients was largely offset by expected seasonality in our travel business. In the third quarter, WNS recorded approximately $2 million of short term revenue which is not forecasted in quarter four. This amount is the same as reported last quarter.

Adjusted operating margin in quarter three was 23% as compared to 19.9% reported in the same quarter of fiscal 2018 and 21% last quarter. On a year-over-year basis, adjusted operating margin increased as a result of improved productivity, currency movements, net of hedging and operating leverage on higher volumes. These benefits more than offset the impact of our annual wage increases.

Sequentially, adjusted operating margin increased as a result of improved productivity and favorable currency movements net of hedging. The Company's net other income, expense was $2.8 million in the third quarter up from $1.5 million reported in quarter three of fiscal 2018 and up from $2.2 million last quarter. Year-over-year favorability was a result of higher interest income driven by better rates on our liquid mutual funds and lower interest expense resulting from scheduled debt payments.

Sequentially, interest income was up as a result of higher cash balances, a slightly higher effective interest rate and onetime other income of $0.3 million. WNS' effective tax rate for quarter three came in at 20.7%, up from 10.8% last year and down from 21.8% last quarter. Last year in quarter three, WNS had a $5.2 million favorable net tax adjustments associated with provisions for the 2017 US Tax Reform bill. This quarter, the impact of the US Tax Reform bill was finalized and WNS recorded an additional tax benefit of $0.4 million.

Other changes in the quarterly tax rate are primarily due to the mix of work delivered from tax incentive facilities and the mix of profits between geographies. For fiscal quarter four, we expect our effective corporate tax rate to be approximately 22%, and going forward in the 22% to 23% range. The Company's adjusted net income for quarter three was $38 million compared with $34.2 million in the same quarter of fiscal 2018 and $33.7 million last quarter.

Adjusted diluted earnings was $0.73 per share in quarter three versus $0.66 in the third quarter of last year and $0.65, last quarter. This represents growth in EPS of 11.8% year-over-year and 13% sequentially.

As of December 31, 2018, WNS' balances in cash and investments totaled $215.2 million, and the Company had $75.4 million of debt. The Company generated $59.5 million of cash from operating activities this quarter and free cash flow of $54.8 million after accounting for $4.7 million in capital expenditures. As Keshav mentioned, quarter three cash from operations was the highest in the Company's history and was largely the result of sequential improvement in collection and higher profits.

DSO in the third quarter came in at 32 days as compared to 30 days last year and 35 days last quarter. With respect to other key operating metrics, total headcount at the end of the quarter was 38,892. Our attrition rate in the third quarter was 28% as compared to 25% reported in quarter three of last year and 32% in the previous quarter. Global billed seat capacity at the end of (technical difficulty).

Operator

One moment ladies and gentlemen, we did have a disconnection. Once again, ladies and gentlemen, please stand by. All right, we're now reconnected.

Sanjay Puria -- Chief Financial Officer

Okay. We're just sorry for the interruption. We'll just continue. As of December 31, 2018, WNS' balances in cash and investments totaled $215.2 million, and the Company had $75.4 million of debt. The Company generated $59.5 million of cash from operating activities this quarter and free cash flow of $54.8 million after accounting for $4.7 million in capital expenditures. As Keshav mentioned, quarter three cash from operations was the highest in the Company's history and was largely the result of sequential improvement in collection and higher profits.

DSO in the third quarter came in at 32 days as compared to 30 days last year and 35 days last quarter. With respect to other key operating metrics, total headcount at the end of the quarter was 38,892. Our attrition rate in the third quarter was 28% as compared to 25% reported in quarter three of last year and 32% in the previous quarter. Global billed seat capacity at the end of the third quarter was 32,137 and average billed seat utilization was 1.21. The Company expects to continue hiring in quarter four and to significantly increase seat capacity in support of fiscal 2020 committed project ramps.

In our press release issued earlier today, WNS provided updated full year guidance for fiscal 2019. Based on the Company's current visibility levels, we expect net revenue to be in the range of $787 million to $799 million, representing year-over-year revenue growth of 6% to 8%. Revenue guidance assumes an average British pound to US dollar exchange rate of 1.27 for the remainder of fiscal 2019.

Excluding exchange rate impacts, revenue guidance represents constant currency growth of 9% to 11% all of which is organic. We currently have over 99% visibility to the midpoint of the revenue range consistent with January guidance in prior years. Adjusted net income is expected to be in the range of $137 million to $141 million based on a INR70 to US dollar exchange rate for the remainder of fiscal 2019.

This implies adjusted EPS of $2.62 to $2.70, assuming a diluted share count of approximately 52.2 million shares. With respect to capital expenditures, WNS currently expects our requirements for fiscal 2019 to be up to $35 million.

We'll now open the call for questions. Operator?

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question comes from Korey Marcello with Deutsche Bank. Your line is now open.

Korey Marcello -- Deutsche Bank -- Analyst

Good morning, guys. Thanks for taking my question. I guess I just wanted to start out on the organic growth. You know, it remains really strong in recent quarters, but it has moderated and even just looking at some of the short term revenues and timing and stuff, is there anything else to kind of call out there?

And then, I guess going forward as you kind of look at the demand environment in the pipeline currently, should we expect the Company to kind of maintain (technical difficulty) growth rates or is there potential for reacceleration from some of the larger deals ramping and things of that nature?

Keshav Murugesh -- Group Chief Executive Officer

Sure. Let me address that. So I think the first thing I want to mention is that I'm very comfortable with the state of our pipeline. It continues to be very solid. We're seeing larger deals, more transformational deals in the pipeline and also being converted. More importantly, we're seeing these deals across all our core verticals, horizontals and geographies. In many cases with the investments we've now made around technology, we're seeing a lot of the deals now being, technology transformation led along with a very strong finance and accounting and analytics kind of flavor. So really broad based and across, you know, all areas.

I must say that at this point in time, the deal position is stronger than the same time last year. So while at this point in time we may have signed a fewer logos with -- you must realize they are all with higher ACV. And just to give you a statistic at this point in time, it is 26% higher ACV than this time last year.

So overall the metrics are actually tracking very well, deal flow tracking very well, client interactions going very well. But finally, we are never in control of timing. Timing finally becomes a factor that is controlled by the client. Having said that, as I just mentioned in my prepared remarks, I actually think that, the demand environment is very strong and the potential for us to continue to do extremely well in this environment is very good.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

And I would just add to that Korey, in terms of kind of the organic constant currency growth rate that we've been posting, obviously, we had a couple of quarters last year that were extremely strong and we knew coming into this year that the comparatives from our year-over-year basis were going to be much tougher in the back half of the year. And I think you're seeing a little bit of that in terms of what's showing up with the slow growth rate.

But the reality is, like you mentioned, you know, when you look at the known headwinds walking into this year which were 9% and back half loaded, and you look at the fact that we've been able to generate about 1.5% less on a year-to-date basis in terms of kind of the short term less visible revenues, I think that really goes a long way to explain why the growth rate in the back half of this year -- while very, very strong overall, is a little bit slower than it's been in the last three, four quarters.

Korey Marcello -- Deutsche Bank -- Analyst

Great. Thanks, guys. And then I guess, as a quick follow up, I guess, on the margin side, those tend to be just tracking really nicely recently, really above the 20% guidance that you guys talked about for 2019 or fiscal year '19 and even above the kind of high teens over the mid-term. Any kind of update there for the year on where you expect margins to fall and any reason why you would expect these margins to kind of remain elevated over the next few quarters? Thanks.

Sanjay Puria -- Chief Financial Officer

Yeah. You know, so -- for, specifically for quarter three, the margin was little on the higher side. It was driven by a couple of factors which was currency favorability as well as the non-recurring revenue of $2 million, where majority of it fall to the bottom, as well as a better performance from a productivity perspective.

Having said that, as we saw the exceptional quarter and it's not sustainable at this level, but directionally, we believe that margin approximately should be around 20%, which is a very healthy margin. As well as on quarter four as specifically as -- earlier as we've mentioned that there was certain hiring in the infrastructure which was expected, got pushed to quarter four and accordingly where guidance for quarter four is not hidden, but we believe and expect margin to be in the range of 20% for quarter four as well as going forward.

Korey Marcello -- Deutsche Bank -- Analyst

Thanks, guys.

Keshav Murugesh -- Group Chief Executive Officer

Thanks, Korey.

Operator

Our next question comes from Mayank Tandon with Needham. Your line is now open.

Kyle Peterson -- Needham & Company -- Analyst

Hey, good morning. This is actually Kyle Peterson on for Mayank today. Just want to touch a little bit on some of the vertical demand, particularly, I would know, utilities has been a little bumpy. I think you guys have had some project transitions in that space, but just want to see, kind of how is the core demand in that segment and just want to see if you have any visibility on when some of these transitions could start to level off a bit.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Sure. Let me take that Kyle. You know, you are 100% correct. The challenges that we've had this year in the utility space were known coming into the year, it's largely around a couple of clients where we knew one had a volume challenge and the other had a process consolidation challenge. So the headwinds that we're seeing in the utilities space were known walking into the year, we're probably getting, if I got another quarter of headwind in that space. So I do think we should have a pretty clean slate as we walk into fiscal '20 to be able to post growth within the utility and energy space that is more in line with Company growth rate.

Kyle Peterson -- Needham & Company -- Analyst

Great. And then if I could just follow up little bit on M&A just want to see if you guys could add any color on what the pipeline is in that space? If there's anything in particular you guys would be looking for in terms of whether it's vertical specialty, technical capability or something like that?

Keshav Murugesh -- Group Chief Executive Officer

Sure. I'll take that. So, you know, once again I must mention that you know, we will continue to be very opportunistic in terms of M&A. We believe M&A, you know, particularly around capability-led kind of growth is a good use of our cash. We have a strong pipeline at this point in time is across some very core areas that we had, we've been identifying over the past few quarters.

We're looking at assets which are capability-led and at the same time accretive to overall numbers of WNS. For us, I think the focus is right time, right size and fit and right the value that we want to make sure that it only adds to the overall momentum of the Company.

I just want to remind you that at this point we -- over the past couple (ph) of years, we have done some really nice tuck-in kind of acquisitions. And the approach that we have followed and the discipline that we have followed has been very successful. And that's how we're going to see this play out. So, it'll be much more focused on capability-led acquisition, if something comes up which is transformational and is attractive, we'll still look at it as well.

Sanjay Puria -- Chief Financial Officer

And maybe just to add to that you know as part of our capital allocation program, M&A based on the capability-led as Keshav mentioned is going to be one of the key focus.

Kyle Peterson -- Needham & Company -- Analyst

Understood. Thanks, guys. Nice quarter.

Keshav Murugesh -- Group Chief Executive Officer

Thank you, Kyle.

Operator

Thank you. Our next question comes from Maggie Nolan with William Blair. Your line is now open.

Maggie Nolan -- William Blair -- Analyst

Good morning and good evening. You mentioned deals with higher ACV and obviously the nature of these deals and the nature of your work that you're doing is changing to some degree. So, does this also change the normal timeline we should expect in terms of when a new client may ramp up and peak in terms of revenue contribution?

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Sure. Let me take that Maggie. I think you're 100% correct. Anytime we're dealing with the new customer and a scope that is transformational technology-led in nature, we do anticipate that the sales cycle will be longer. And we saw that, with both of the large deals that we've added in Q4 of last year and Q1 of this year and that, you know, the ramp of those projects can be a little bit slower.

I think the biggest issue with the large transformational deal isn't necessarily the sales cycle changing, but the fact that the timing of when they're going to start is extremely uncertain. In fact the one that we find in the shipping and logistics area started a little bit early. The one that we have signed in the insurance space, we have been working on for a little over two years.

So, it is a little bit more volatile in terms of starts and stops and we certainly have to watch how that plays out. We want to make sure that when we look at the overall pipeline while we do have more large transformation-led types of deals that we're augmenting those -- that pipeline with some of the smaller, more short term deals as well. But you know, overall the pipeline is healthy, it's robust, but absolutely if we've got by and large, a higher percentage of that pipeline coming from large transformational deals, I would expect to have a longer sales cycle on that type of work.

Maggie Nolan -- William Blair -- Analyst

Okay. Thanks. Understood. And then, given the macro environment and some of the commentary we've been hearing about a tightening labor market, what are we seeing in terms of wage increases and how does that compare with kind of typical wage increases? Are there any changes there to note?

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Yeah. No changes to note. I think, we have seen some redistribution of where the wage increases are coming from across the portfolio. But overall, I think the expectation as we head into fiscal '20 is that weight wage increases and the overall impacts of the P&L are going to be similar to what we've seen in the past and that's incorporated in Sanjay's comments about having a 20% operating margin going forward.

Maggie Nolan -- William Blair -- Analyst

Great. Thank you.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Thanks.

Keshav Murugesh -- Group Chief Executive Officer

Thank you, Maggie.

Operator

Thank you. Our next question comes from the line of Moshe Katri with Wedbush. Your line is now open.

Moshe Katri -- Wedbush Securities -- Analyst

Thanks. Good quarter. Can you talk a bit about the puts and takes in terms of what drove margins this quarter, maybe you can go into some of the different variable and how these actually impacted margin including FX. And then you know, the ACV number that was up 26%, I'm sorry, is that a booking number? Or is that the backlog or the pipeline? Some color there will be helpful. Thanks.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Sure. So, first I guess, to your first -- the first part of your question, Moshe, when you're talking about the operating margin, are you looking at it from a sequential perspective or from a year-over-year perspective?

Moshe Katri -- Wedbush Securities -- Analyst

Year-over-year.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Okay. So, on a year-over-year basis, if you look at our adjusted operating margin, we're up about 300 basis points. If you were going to break that down, I would break it into about 50% related to FX and 50% related to operations. So, I think you're looking at a nice healthy balance, that's come from currency, largely driven by depreciation in the Indian rupee as well as favorability in terms of productivity and higher volumes that are driving leverage in our business.

So, a nice mix in terms of what's contributed on a year-over-year basis. When you look at the ACV figure, being up 26% on average year-over-year, that is actually new client addition. So that is sold business. So from that perspective, we're afraid to -- both the combination of backlog as well as booked based on when the deal was signed and when the deal started to generate revenue.

Moshe Katri -- Wedbush Securities -- Analyst

Understood. And then the commentary on 16 new renewals this year, I mean, year-to-date, I think, is that an -- the usual number maybe, you can give us kind of a color in terms of relativity (ph), how does that compare to prior years? And then looking into the next fiscal year, is there anything unusual in terms of the renewal rates as well? Thanks.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Sure. So year-to-date we've had -- we've expanded 35 relationships and renewed 48. If you look at where we were, in the same place of last year, we were at 31 expansions and 40 renewals. So, I think we're tracking to actually be ahead of where we were last year in terms of expansion of existing relationship and renewals of -- renewals or extensions of contracts. Nothing at this point in time that's unusual, I think, as we head into fiscal '20. So good solid momentum in terms of our ability to cross-sell and upsell our existing customer base.

Moshe Katri -- Wedbush Securities -- Analyst

Great. Thanks for the color.

Operator

Thank you. Our next question comes from Joseph Vafi with Loop Capital. Your line is now open.

Joseph Vafi -- Loop Capital Markets -- Analyst

Hey, guys. Good results, good morning, good evening. I was wondering, I think I heard, Sanjay say that healthcare grew about 14% in the quarter. I know that Keshav mentioned the HealthHelp innovation -- interventional solution in his prepared remarks. Just wondering if I can get a little more color on what's driving growth in healthcare? And do you think if that's sustainable at this point, then I have a follow up.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Sure. Let me take that, Joe. I think, you know, we've made some strategic investments over the last couple of years in the healthcare space, specifically the acquisitions of HealthHelp and Value Edge. I think, we're seeing the results of those acquisitions in terms of both the ability to expand the relationships that they had brought to the table as well as the ability to add new relationships to the portfolio.

The growth has been really solid. We've been adding new service offerings primarily in the pharmaceutical and in the healthcare payer space. We certainly feel very, very good about what we've been able to do here. Our ability to add new logos that have the ability to expand over time, so certainly view healthcare as a driver of growth and hopefully growing above Company average going forward.

Sanjay Puria -- Chief Financial Officer

Yeah. And maybe just to add that, you know, with those acquisitions and the logos what we have, we also had a good opportunity to cross-sell lot of the existing services, which is around finance and accounting, and research and analytics, to all those logos. And we feel very positive about that.

Joseph Vafi -- Loop Capital Markets -- Analyst

Great. That's helpful. And then, you know, as we move forward and perhaps more deals are becoming more technology driven or led, do we or how do we look at that technology investment in the Company? How much is that, kind of goes into, like an R&D line versus perhaps technology work that is passed on to the customer in terms of overall pricing on deals? Thanks.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Sure. So let me take that Joe. I think, you know, in general when you look at our investments in R&D, sort of developing certain product capabilities. The reality is, the majority of the R&D that we have as an organization is in evaluating product and then understanding how we can best incorporate those products and those solutions into our existing services and offerings.

So you know, the R&D is something that by and large gets expense. Now the reality is that everything that we do for our clients is customized. So, to the extent that, either the software or the process needs to be customized, refined, changed for the specific customers, that's something that's absorbed within the specific deal and taken to consideration when we look at the pricing in the margins on those activities.

Joseph Vafi -- Loop Capital Markets -- Analyst

Thanks so much.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Thanks, Joe.

Operator

Thank you. Our next question comes from Joseph Foresi with Cantor Fitzgerald. Your line is now open.

Drew Kootman -- Cantor Fitzgerald -- Analyst

Good morning. This is Drew Kootman on for Joe. I was wondering, if you guys could touch on the potential areas for out-performance as you look into the end of the year and fiscal '20, is that a new client signed, existing client base acquisitions? Just wondering, what will drive growth to above average in the future?

Keshav Murugesh -- Group Chief Executive Officer

Good question. So I think, from my perspective, I'm quite comfortable with the opportunities that are available in the existing pipeline for a new client itself. And therefore how quickly some of those deals will actually convert into actual signings will actually determine how much of time we have across the rest of this year and maybe the next year to actually reap the benefits of that signings.

So, I would say, it's more working closely with the customer and really helping, tipping them across that finish line, so to speak. More importantly, I will say that the pipeline of growth that we are also seeing from existing clients that we signed, say in the last, in this year and maybe in the close of last year, and the way, they have started to ramp has significant potential for fiscal 2020 obviously. And again, in terms of how quickly some of those programs actually take off will determine where we actually end up in terms of overall numbers.

The most important thing I want to say here is, WNS' sales people are really focused on working with the clients in terms of just helping them to appreciate the kind of offerings we have and then help them to take those decisions. The Company has made all the right investments in terms of sales, in terms of domain, in terms of technology, analytics, all the horizontal kind of services. We have done some really strong acquisitions that are leading the way in terms of delivering on the pipeline.

And I would say that organic growth from a hunting point of view and a farming point of view and maybe a little bit of capability-led M&A will actually help, take that number beyond the general expected number in the long term.

Drew Kootman -- Cantor Fitzgerald -- Analyst

Great. And just a quick follow up. Which regions do you expect to see the most strength heading into fiscal year '20?

Keshav Murugesh -- Group Chief Executive Officer

Well, at this point in time like I said, growth is expected to be broad based. So first and foremost, I must again say that the pipeline that we have going into next year is strong across all the key geographies as well as offering areas. Having said that, Europe and UK actually led in terms of actual conversions during this year, but that doesn't mean that some of the deals inside North America where decisions are now imminent will not actually, you know, change that kind of metric for next year. So, what we are focused on, is just making sure that we have the right pipeline, we have the right impact across that pipeline, and we are focused on really taking it across every one of our core horizontal and vertical areas.

Drew Kootman -- Cantor Fitzgerald -- Analyst

Thank you.

Keshav Murugesh -- Group Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Bryan Bergin with Cowen. Your line is now open.

Bryan Bergin -- Cowen & Company -- Analyst

Hi. Thank you. I wanted to ask on the fiscal '19 revenue growth range, 200 basis points here. I think it's about two times what typically it is at this point in time. Anything to call out there given your typical 99% visibility to midpoint?

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Yeah. I think, you know, what we wanted to make sure that we were doing here, Bryan, in terms of the guidance is, making sure that people are still aware that we do have upside, walking into the fourth quarter here, obviously with over 99% visibility for the midpoint that the midpoint short of something going wrong at this point in time is pretty well locked in.

Given that we don't have any short term revenues in our numbers for Q4, given that we do have some pipeline opportunities here that we're working on, one of the things we wanted to make sure was that we left some of the upside in the guidance for people to see here. And obviously given the way we guide and given that the midpoint is visibility based, we need to add the same downside to -- the upside to make that a true midpoint. So, becomes a math exercise after that, but essentially we feel really good about our ability to meet the midpoint obviously given where our visibility is here if we wanted to make sure that we left a little bit of upside here.

Bryan Bergin -- Cowen & Company -- Analyst

Okay. Understood. And then the ACV figure you provided is encouraging. I wanted to ask on the margin. Can you talk about the margin profile? The new deal is coming through relative to your existing business, are you getting, are these tech-led deals driving a structural change for you? And then just of those new client additions I think you said four, the industries that those are in?

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Sure. So, a couple of different things. I think when you look at the deals we're signing and the structural margin portfolio, we believe over the next three to five years, these deals have the potential to be margin accretive to the Company overall. Obviously if they're technology-led, if they're strategic to the customer, then we do have the ability to generate better margins on that. You know, part of that transition though is making sure that clients continue to move down a path and transition the services from FTE-based to transaction and outcome based where we have that margin leverage. So that decision to move in many cases is outside of our control, but certainly we see that opportunity.

In terms of the client adds, this last quarter, we -- as Keshav and Sanjay mentioned, we added four new clients. Three of them were actually in the retail CPG space and the other was in the travel space.

Bryan Bergin -- Cowen & Company -- Analyst

Okay. Thank you.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Thanks, Bryan.

Operator

Thank you. Our next question comes from Rick Eskelsen with Wells Fargo. Your line is now open.

Rick Eskelsen -- Wells Fargo -- Analyst

Good morning. Thank you for taking my question. Keshav, in your prepared remarks you did mentioned that clients are asking about access to talent. I wonder if you can just sort of talk about that as it relates to your business. We've heard from some of the larger IT companies that some of the access to digital talent is harder, but I know obviously the BPM industry is different on the talent side. So maybe if you could talk about talent access.

Keshav Murugesh -- Group Chief Executive Officer

Sure. I think, with all the macroeconomic uncertainty that they are faced with, I think what clients are really looking at doing is, doubling down on making sure that they understand their markets wells, what their customers want, and really coming up with the right set of offerings and programs for their end customers.

Therefore from their perspective, what they're looking to do is really work with strong partners like WNS who act as an extension of their enterprise. And so when I spoke about talent there, you know, clearly what they're saying is we have enough on our plates in terms of just understanding where our business is headed and how to really stave off disruption in our business. And therefore we have great appreciation of the kind of programs that you have as a Company in terms of people, process, technology and talent. And therefore are really encouraged by the kind of investments we're making around talent, whether it is around skill building (technical difficulty).

Operator

I'm sorry ladies and gentlemen, it looks like we had a disconnection again.

Keshav Murugesh -- Group Chief Executive Officer

Yeah. So...

Operator

(inaudible) to continue.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Sure. And I can kind of take the question. So, do you have a follow up to that? Because I can kind of take it from here.

Rick Eskelsen -- Wells Fargo -- Analyst

Yeah. I guess just to follow up.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Probably wait for a minute to be taken (ph).

Rick Eskelsen -- Wells Fargo -- Analyst

The follow up was just on the travel and leisure side. I think, I heard in the prepared remarks that it was normal seasonality. It looked a little bit bigger than normal. So, just curious you could kind of talk about that vertical in specific.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Yeah. Similar things. So, the travel vertical, we obviously, from a sequential perspective had a seasonality issue and it's something that we see in our fiscal third quarter and the calendar fourth quarter of every year. In addition to that, we did have a ramp down in our business that we knew about walking into the year. So we talked again about the 9% headwinds walking into the year, the deals that we saw, that we're going to create that headwind for us, in the back half of the year were in the travel space, in the utility space, and then one in the auto claim space as well. So this was something that was not a surprise to us. Actually, it was something that we did proactively to help mitigate margins for us. And again, I think we feel pretty good about the travel space overall and where we sit. But right now the optics are a little bit soft in that space, on a year-to-date basis, it's certainly less so.

Rick Eskelsen -- Wells Fargo -- Analyst

Great. Thank you.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Thanks, Rick.

Operator

Thank you. And we do have them reconnected back again with us. Our next question is going to come from the line of Frank Atkins with SunTrust. Your line is now open.

Frank Atkins -- SunTrust Robinson Humphrey -- Analyst

Thanks for taking my questions. First question I wanted to ask a little bit about the top client, any color on the dynamics there, seen some nice movement there?

Keshav Murugesh -- Group Chief Executive Officer

Yeah. I think, what's really coming together is some of the effort that we've been making over the past few quarters that we've been talking about, I think finally the client has actually started making good progress on some very core kind of programs that they were talking about for quite a while. And having said that, I must say that we continue to have some really compelling discussions with that client on a few more initiatives which may take a little longer, but we're quite confident with the relationship that we have established and the impact that we have created for them, we will benefit over the medium term.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

I think the other thing that's important to note, Frank, is that, over the last four quarters, we have had some back and forth in terms of number one and number two client at WNS. So the number one client in any given quarter over the last four quarters has not necessarily been the same quarter-to-quarter, and that's also important to understand.

Frank Atkins -- SunTrust Robinson Humphrey -- Analyst

Okay. Thank you very much. That's helpful. And then secondly, I wanted to ask about revenue by horizontal, if we look at industry-specific and analytics, can you talk about some of the drivers and kind of key components of growth going forward and where could they be as a percentage or kind of revenue mix longer term?

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Sure. Let me take that. So when we look at the industry-specific, obviously the growth in that segment this year has been extremely strong. We're up year-to-date, I believe the industry-specific revenues are up 21%. Part of what we see in that space is that a lot of the things that our customers are asking for from a demand perspective are domain-led and specific to their verticals or sub-verticals.

So we believe that industry-specific will continue to be extremely strong for us. It's where we've seen the large transformational deals tend to be focused. Analytics should also be a driver for us along with F&A. These are ways that we're able to connect with our customers to generate enhanced business value and we do expect both of those segments to be strong going forward as well. So, if you were to kind of ask where the pipeline and where the growth has come from and what's representative of kind of where we see, the industry, it's strategic F&A, it's high-end analytics, and it's industry specific BPO.

Frank Atkins -- SunTrust Robinson Humphrey -- Analyst

Okay, great. Thank you very much.

Operator

Thank you.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Thanks, Frank.

Operator

Our next question comes from the line of Ashwin Shirvaikar with Citi. Your line is now open.

Ashwin Shirvaikar -- Citigroup -- Analyst

Thank you. Hey, guys. Good job here. Congratulations.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Thanks, Ashwin.

Ashwin Shirvaikar -- Citigroup -- Analyst

My first question is on automation. Some of our checks show that new techniques like RPA are kind of becoming business as usual. Is this something that clients incorporate as a matter of course? So, would you tend to agree with that and as that becomes more normal? Is it possible to get metrics around automation, number of bots penetration, and things like that.

Keshav Murugesh -- Group Chief Executive Officer

Yes. So let me just start with the answer. I'm sure Dave and Ron will have more to contribute, but I think you know the first thing that we all must appreciate and understand is that every business today in the world is a tech business. And you know, what we may talk about some of these tools and efficiency gain kind of programs whether it's RPA machine learning, AI, things like that, to just make life easier in terms of delivering a solution to our clients. The reality is, as we keep getting better and better at it, we will just keep, we'll keep making smoother -- this smoother delivery and we'll keep moving to newer and newer kind of designs, newer technologies and newer ways of delivering the model.

So, first thing I would say is that, you know, clients invest in technology platforms and things like that in order to get their model more efficient. We invest in technology in order to deliver in a much more streamlined and seamless manner, make sure that we can reduce our cost with a much more sticky business as well as create a business model for our clients which is derisked dramatically from a operational efficiency point of view.

At the same time, we also had different partners in order to make sure that we are delivering the ROI that our clients need. So, the reality is every one of these areas will continue to evolve and none of these areas will remain as a stand-alone, standard for the future as well. So Ron and Dave if you want anything more, please go ahead.

Ron Gillette -- Chief Operating Officer

Yeah. So, I would agree with what Keshav saying that automation is going to continue to be a theme with all of our clients, tech enablement, a theme there. I would say that the number of bots deployed and trying to put metrics around that, it doesn't really tell the story, because it's more of what clients' needs are and the state of their existing platforms and systems in most cases. But that's just also one part of the story. A lot of what we're doing today is innovative or transformational tools or platforms that we're creating and deploying to clients as well as looking at their existing systems and helping them reengineer them, so that they can be more efficient and deliver the processes that we see and advocate to them as being best-in-class that they should adopt.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

And I would just add one other thing to what both Keshav and Ron said. When you look at deployment of technology, I think you can bifurcate to some extent that deployment of technology into new clients, new relationships as well as the deployment of technology into existing clients. Now clearly, as we've spoken about the larger, more transformational deals that we're signing and we're starting to ramp on, we're seeing technology. It's part of the initial solution and it's part of what we're going into the client with -- on the first instance.

The separate issue is how quickly existing clients allow the deployment of technology into their existing environments. And part of both of these, Ash, when that -- that's always important to remember is we're ready to deploy technology. We have the tools, we have the assets, whether they're our own proprietary technology or third-party partnerships, we certainly know what they are and how to use them.

The biggest challenge that we tend to see is the amount of behavior change required on the client end that would enable us to leverage that technology. So while we're aggressively pushing for deployment, we still have a lot of clients that push back at this and say, you know what, the process changed, the ownership and accountability that comes with that deployment of technology is not something that we're organizationally ready for yet. So I think while it is as part of every discussion that we're having today, the pace at which that technology gets deployed is going to be client specific.

Keshav Murugesh -- Group Chief Executive Officer

Yeah. I think that that's important enough...

Ashwin Shirvaikar -- Citigroup -- Analyst

Got it. Appreciate it.

Keshav Murugesh -- Group Chief Executive Officer

Sorry, Ashwin, it's just, it's such an important question, because it's not something that will disappear with this quarter. It's something that we think will, you know, continue to gain momentum over the next few quarters as well. You know, WNS' position is that, technology is just one of the inputs that go into delivering a great solution to its clients. You know Just rushing behind technology alone is not going to solve the business problem. So, I think along with that, just being agile, making sure there's a right business case behind it, and finally the most important aspect which is ensuring there is end customer impact along with analytics being embedded into it is what we focus on delivering to our clients. And that's what's really driving our business momentum.

Ashwin Shirvaikar -- Citigroup -- Analyst

Got it. Appreciate those insight. You know, the statement about adding seat capacity in anticipation of 2020 demand, I might have missed it, but did you also talk about the cadence of that addition of seat capacity? And if you could also provide then clarity on the revenue per seat metric that did go down this quarter. Is that sort of the only part of those seat additions? Or what -- is something else going on there?

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Yeah. So, couple of things Ashwin, I think in Sanjay's prepared remarks, we're actually looking at the potential to add almost a 1,000 seats here in the fourth quarter in anticipation of the demand that we've already signed here. So part of what we're seeing and you saw it in the first quarter, you saw it. If you can see it again here in Q4 is that, when we do add seat capacity we tend to add it in a step function.

So, you can't add 50 seats when you add 50 heads. You add the seats and then you fill them. You add the seats and then you fill them. So, Q4 for us is going to be a step function, an increase in seat capacity. We're certainly not going to be increasing the headcount at the same pace that we're increasing infrastructure in the fourth quarter.

So from that perspective you will see the seat utilization metric come down. But this is -- this is part of what we need to do to continue to prepare ourselves for the growth going forward. In terms of the revenue per employee metric, you're going to see swings quarter-to-quarter part of what happens if you just take the simple math and divide revenue by average number of heads as you don't get the currency impact. The expectation for this full year that's implied in our guidance is that revenue per employee this year should be up a little bit over 2%.

So, we are driving that productivity. It is showing up, net of the seat utilization metric in terms of higher margins for us this year, the implied guidance for this fiscal year is a 21% operating margin. So, we are certainly making sure that we're focused on the seat utilization metric, the revenue per employee metric, but also need to understand quarter-to-quarter based on hiring cycles and infrastructure builds that those numbers can move.

Ashwin Shirvaikar -- Citigroup -- Analyst

Got it. Now that closes the gap I was looking for. Thank you.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Thanks, Ashwin.

Operator

Thank you. Our next question comes from Dave Koning with Baird. Your line is now open.

David Koning -- Robert W. Baird & Co. -- Analyst

Yeah. Hey, guys, I guess a couple of things, just on the different revenue metrics, the Aviva contract, they're the biggest client, was up 20% year-over-year, which is better than it's been in a while. Is there anything one-off happening at the biggest client? Or is there something new with the revenue or the services you're selling that's going to sustainably kind of keep it at a pretty high level?

Sanjay Puria -- Chief Financial Officer

Yeah. So, you know Aviva perspective, it's a mix of both things, what -- we are also seeing some of the traction from a growth perspective and the expansion in some new areas, that's driving growth. It's also part of a non-recurring revenue over there, because of the some of the gain share model and the productivity what we are able to drive at the client end. So it's a mix of both. And having said that, we are in discussion in various multiple new areas from a growth perspective. Again, it's just a -- it's a matter of a time from a closure perspective.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Yeah. I think Aviva continues to present a couple of opportunities for us, Dave, as we spoke about in the past. We wanted to continue to move into new areas and sell services. The second is the integration of some of the acquisitions that they've done over the past couple of years. But we also understand that historically, there has been some pressure there in terms of the productivity commitments that we have for Aviva and the currency. So a couple of things that are fighting against us, but there remains some opportunities for us to continue to move that client relationship forward.

David Koning -- Robert W. Baird & Co. -- Analyst

Okay, great. And then the other thing, I know travel, historically, we can see in the numbers it does have a little bit of negative seasonality in fiscal Q3, no question. But this quarter was a little worse maybe a few million worse than normal. It seems to decline by 13% sequentially, often it will be down modestly to kind of in this range, but this was a little bigger. Anything to call out one time that it kind of bounces back in Q4?

Sanjay Puria -- Chief Financial Officer

So, you know, your observation is right, that, you know, other than travel seasonality, you know, at the start of the year, when we spoke about some of the known ramp down issues for the year, it was also into the travel vertical. But it was all known over there and it was around some specific client. But there's a vertical. The pipeline seems to be strong and great opportunity ahead. So we expect it to -- because, that's one of the travel, it's one of the strongest vertical along with the insurance from a Company perspective and we expect it to back on the track from a growth perspective.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Yeah. So, this was part of the 9% headwind we knew about walking into the year, Dave.

David Koning -- Robert W. Baird & Co. -- Analyst

Yeah. Gotcha, gotcha. Okay. And then -- and then just the last quick thing. So, the interest other line, you called out I think a few $100,000 or so of kind of onetime benefit, but that should continue. We shouldn't expect that to continue that dramatically different than $2.5 million, $2.6 million per quarter or something like that, right.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

No, I think as long as the net cash balances remain the same, we should be fine Dave. The one caveat I would say is that, if we do get into healthy share repurchase numbers or we do get into an acquisition that would affect our cash balances. Then you could see that number change. But overall, yes, I think in terms of our ability to continue to generate that in the business as usual environment, yes, correct.

David Koning -- Robert W. Baird & Co. -- Analyst

Okay. And congrats, you guys just keep crushing that. Thanks, guys.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Thanks, Dave.

Keshav Murugesh -- Group Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Puneet Jain with J.P. Morgan. Your line is now open.

Puneet Jain -- J.P. Morgan -- Analyst

Yeah, hi. Similar question to the one asked by Ashwin before. So, are you seeing different automation or RPA adoption rates across horizontal and industry-specific workflows? And broadly, how much of business can be automated? And what's impact on deal contract value when you automate a workflow?

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Sure. So let me take that Puneet. I mean, I think we kind of gone to the question of you know, look, we are certainly deploying technology where we can. We're deploying technology where our clients will allow it. We do see it more as a function of the specific client relationship than to say we're automating this service or that service. So we have, for example, industry specific work that's done, you know, 90% labor, 10% technology, we have industry specific work that's done, 50-50 depending on what it is.

So, I think part of it is understanding that what we're really doing. And I think Keshav spoke to this is -- leveraging technology that help us solve client problems. But the portfolio and the overall mix is getting more technology enabled over time both from the combination of new clients willing to start a relationship with components of technology as well as existing clients over time migrating to allow us and enable us to leverage technology in terms of how we deliver what we're doing for them.

So, look if everything we were doing, we're in a transaction or an outcome based model, we would be aggressively deploying technology, but the reality is most of the things that we do, 65% of our work is still FTE-based, and in those relationships the client in many cases controls, how we do the work? Where we do the work? And with whom we do the work? So, a lot of this is not in our control, and we're certainly aggressively pushing it. We sell it on the front as an opportunity. We tell clients that we're willing to migrate to these types of models and with technology-enabled and whatever they're ready. But we don't control the pace, the same way we don't control the pace of when new deals start and when they ramp. We don't control the pace of when clients move toward transaction and outcome based services and the technology enablement of those services.

Puneet Jain -- J.P. Morgan -- Analyst

Understood. I mean, and is there a way to size how much of business can be subject to technology deployment over the long term? Like, I know, like the use cases could change over time, but based on what we know today based on technology environment today, is there a way to size the impact of automation? How much penetration potential there is?

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

I mean, it's...

Keshav Murugesh -- Group Chief Executive Officer

I'll say that at this point in time what we're doing is we're appreciating the fact that the change that you're seeing around technology adoption is really still evolutionary. It's just helping to create new opportunity for us. From our perspective, we are clearly focused on continuing to move up the value chain. So, while automation is something that is a very important part of the input that we bring to the table, we had never taking away from the fact that human intelligence and human kind of intervention is going to be diluted.

So, in every one of the areas we are focused on, whether it is the vertical areas or horizontal areas or even the finance and accounting areas, we're constantly really focusing on reskilling for digital and making sure that a unique combination of people, technology and process comes together to drive outcomes for our clients.

And while doing that, we will make the best use of automation in order to ensure our people are leveraged in the best possible manner. So, very difficult for us to size how much of it will actually get replaced by automation at this point in time. All I will say is that the market out there is very strong for us, the demand is very strong. And it's going to take quite some time before which automation alone will deliver the kind of solutions that WNS can deliver.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

And other thing, just to add to that what Keshav said, Puneet, we've seen over the last five, six, seven years that the market has expanded to the possible if you will. I mean, what is outsourceable today is dramatically different than what clients thought was outsourceable 10 years ago. And I think you're going to see the same thing with technology and automation. What is automatable today is going to be dramatically different.

Look, RPA is not new. RPA has been around for a long, long time. It's just getting enough attention and enough momentum today to where people are getting comfortable to use it. And that's again the same thing. When our clients going to be comfortable, allowing deployment and leverage of some of the technology and solutions are there. When are they going to be vetted and market-centric enough that clients will allow us to do that? So that's something we don't have an answer for, it's something we don't have control over. But it is something we're out in front of and we're comfortable that we'll be able to help our clients get there when they want to.

Puneet Jain -- J.P. Morgan -- Analyst

Got it. And let me also quickly ask the customary question on Brexit. With all the uncertainty in the UK and broadly, like, potential for macroeconomic slowdown, can your backlog and pipeline support continued high single to low double digit growth, over the near term if some of those risks materialize?

Keshav Murugesh -- Group Chief Executive Officer

So, Puneet, I must again mention that at this point in time, Brexit has generally been a non-event for us. Some of the things that we have been reading about, and the impacts that we're seeing whether it's on currency, whether it's on demand, all of it actually has been playing out very slowly over the past few quarters. And I guess for most people believe, even what happened yesterday or day before, didn't really come out as a surprise, because the market had already message written (ph).

I just want to mention that for our business model, Brexit is just another form of disruption, right? And therefore, while it may impact timelines in the short term, the reality is, our focus is to continue to make sure that we are being very partner like to our clients. We're not seeing any let up in terms of the demand from clients who are supposedly, actually impacted by this Brexit. And our conversations in terms of the impact that we can create for their businesses continues to be very positive.

Puneet Jain -- J.P. Morgan -- Analyst

Got it.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

And then I'd just add to that -- I think just to add to that, Puneet, whether it's Brexit or whether it's the potential for a macro slowdown, if you look at the value proposition for the services that we're delivering, the value proposition doesn't change. And I think, it could be effectively argued that the value proposition in an environment where things are a little bit more challenging, a little bit more complex, a little bit more costly, that the value proposition for process outsourcing actually increases. Our ability to execute and deliver on the disruption that they're dealing with, in addition to the ability to save them money and add flexibility to the cost structure. These are things that are very compelling. And if we do see a slowdown or we do see a Brexit, there's as much if not more opportunity for that to actually help our business than to hurt it.

Puneet Jain -- J.P. Morgan -- Analyst

Understood. Thank you.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Thank you.

Operator

Thank you. Our next question comes from Vincent Colicchio with Barrington Research. Your line is now open.

Vincent Colicchio -- Barrington Research -- Analyst

Yeah. Just one for me. What needs to happen to hit the high end of your expectations for the year?

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

I think a couple of things, Vince. We certainly need short term revenues to be sizable in the fourth quarter that would help us get there. We need our existing client relationships to expand and we certainly have a healthy pipeline that can do that. But again don't control the timing. I think we'd love to add a new client or two, but given that we're in the middle of January here, by the time, we sign a deal and ramp a deal, it's not going to have much of an impact on the quarter. So, the two biggest things that could help us get to the high end of the guidance or above for this fiscal year would be the short term less visible revenues as well as expansion of existing relationships.

Vincent Colicchio -- Barrington Research -- Analyst

Fair enough. Thanks, guys. Nice quarter.

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Thanks, Vince.

Keshav Murugesh -- Group Chief Executive Officer

Thank you.

Operator

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

Duration: 71 minutes

Call participants:

David Mackey -- Corporate Senior Vice President of Finance and Head of Investor Relations

Keshav Murugesh -- Group Chief Executive Officer

Sanjay Puria -- Chief Financial Officer

Korey Marcello -- Deutsche Bank -- Analyst

Kyle Peterson -- Needham & Company -- Analyst

Maggie Nolan -- William Blair -- Analyst

Moshe Katri -- Wedbush Securities -- Analyst

Joseph Vafi -- Loop Capital Markets -- Analyst

Drew Kootman -- Cantor Fitzgerald -- Analyst

Bryan Bergin -- Cowen & Company -- Analyst

Rick Eskelsen -- Wells Fargo -- Analyst

Frank Atkins -- SunTrust Robinson Humphrey -- Analyst

Ashwin Shirvaikar -- Citigroup -- Analyst

Ron Gillette -- Chief Operating Officer

David Koning -- Robert W. Baird & Co. -- Analyst

Puneet Jain -- J.P. Morgan -- Analyst

Vincent Colicchio -- Barrington Research -- Analyst

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