Shares of WNS Holdings (WNS) were down 18.1% as of 3:30 p.m. EDT Thursday after the business process management (BPM) solutions company announced solid fiscal second-quarter results but followed by reducing its full-year guidance.
On the former, WNS's adjusted (non-GAAP, which, in this case, subtracts payments to repair centers for "fault" repair cases) quarterly revenue climbed 12.3% year over year to $325 million, translating to adjusted net income of $54.1 million, or $1.09 per share. On average, analysts were expecting adjusted earnings of $1.03 per share on slightly lower revenue.
WNS's strong results despite macro headwinds
WNS credited its revenue growth to a combination of new clients, expanded existing client relationships, acquisitions, and favorable currency exchange. Collectively, these tailwinds offset volume reductions at some clients, as well as the ramp-down of a large healthcare process in recent quarters.
WNS CEO Keshav Murugesh lauded the company's performance "despite a challenging macro environment," noting the company is making progress on its artificial intelligence (AI) and generative AI initiatives. Murugesh added that WNS "continue[s] to believe that [AI] technologies represent more opportunity than risk to our business."
On revenue pressure in the second half
However, management also anticipates top-line pressure in the second half of this fiscal year (ending March 31, 2024) based on "current visibility levels and exchange rates." In particular, WNS expects reduced volume commitments from certain clients, lower project revenues, and a delay in the ramping of its large insurance captive relative to its previous guidance assumptions. As such, WNS reduced its full-year outlook to call for adjusted revenue growth of 8% to 12%, down from previous guidance for growth of 12% to 17%.
That certainly doesn't mean WNS is a broken business. But it's undeniably disappointing to see any company lower its full-year outlook, even after posting better-than-expected quarterly results -- and WNS stock is responding in kind today. Until WNS can show more tangible signs of a reacceleration in growth, I wouldn't blame investors for putting their money to work in any number of other promising stocks.
