WNS Holdings Balances Growth and Costs: Q4 Earnings Rise Amid Revenue Shifts, Eyes 2026 Expansion

WNS (Holdings) Limited (NYSE: WNS), a global leader in business process management (BPM), delivered mixed results for its fiscal fourth quarter ended March 31, 2024, with adjusted earnings rising year-over-year but revenue growth slowing sequentially. While the company’s full-year performance remained strong, its cautious outlook for fiscal 2025 and ambitious 2026 targets highlight a balancing act between strategic investments, cost pressures, and macroeconomic headwinds.

Q4 2024 Results: Adjusted Earnings Up, Revenue Faces Sequential Hurdles
The company reported adjusted net income (ANI) of $54.1 million, a 3.2% increase from $52.4 million in Q4 2023 but a 7% drop from Q3 2024’s $58.2 million. Sequential declines stemmed from a $30.9 million impairment charge tied to a terminated healthcare client contract and costs related to transitioning from American Depositary Shares (ADS) to ordinary shares listed on the NYSE. Meanwhile, revenue less repair payments grew 6.9% year-over-year to $325.9 million but rose only 3.2% sequentially, reflecting headwinds like offshore delivery transitions for a major internet client and volume reductions with certain accounts.

Despite these challenges, WNS maintained operational resilience. Full-year 2024 revenue less repair payments rose 10.5% to $1.28 billion, while adjusted diluted EPS increased 13.5% to $4.38. Management emphasized margin discipline, with adjusted operating margins holding at 21.5%, a testament to cost controls amid rising wage inflation and one-time expenses.

2025 Guidance: Caution Ahead of Expansion
For fiscal 2025, WNS guided for revenue less repair payments of $1.293–$1.357 billion, implying 1–6% reported growth or 0–5% constant currency growth. This moderation reflects cautious assumptions about exchange rates (USD/INR: 83.0, GBP/USD: 1.27) and ongoing investments in AI/Generative AI solutions. Adjusted ANI is projected to dip slightly to $206–$218 million, with adjusted diluted EPS expected between $4.34–$4.59—a marginal 0.2–4.8% increase from 2024’s $4.38.

The guidance underscores a near-term focus on stabilizing margins and navigating headwinds like client attrition. CFO Sanjay Puria noted that fiscal 2025’s results exclude non-recurring benefits from 2024, such as a $21 million tax liability reversal, which could pressure YoY comparisons.

2026 Outlook: Ambitious Growth Targets and Strategic Moves
Looking further ahead, WNS unveiled fiscal 2026 revenue guidance of $1.35–$1.40 billion, signaling a 7–11% increase over 2025’s midpoint. This optimism hinges on two key drivers:
1. Strategic Acquisitions: The Q4 2025 acquisition of Kipi.ai, a data and analytics firm, is expected to contribute 2% of revenue growth by enhancing AI capabilities and client offerings.
2. Operational Leverage: With 90% visibility into its 2026 revenue target, WNS cites strong client retention (40 expanded relationships in Q4 2024) and pipeline momentum, including large deals in Banking & Financial Services and Travel.

Adjusted diluted EPS for 2026 is projected to rise 8–15% to $4.43–$4.70, excluding one-time items. Capital expenditures of up to $65 million will support technology upgrades and global delivery center expansions.

Risks and Considerations
- Currency Fluctuations: A 1% INR appreciation versus the USD could reduce revenue by ~2%, per management estimates.
- Client Concentration: A terminated healthcare contract and offshore transitions highlight reliance on key accounts.
- Margin Pressures: Wage inflation and AI investments may strain margins in the short term.

Conclusion: A Hold with Upside Potential
WNS’s Q4 results reflect a company navigating macro challenges while positioning itself for long-term growth. The 2026 guidance—driven by AI-driven solutions and strategic acquisitions—suggests management’s confidence in its value proposition. However, investors must weigh near-term risks like currency volatility and margin pressures against the company’s strong balance sheet ($267 million in cash as of FY2025) and disciplined capital allocation (3.3 million shares repurchased in FY2024).

With adjusted diluted EPS growth of 13.5% in FY2024 and a 7–11% revenue target for 2026, WNS appears poised to capitalize on its BPM expertise and digital transformation. Provided currency risks remain manageable and client wins offset attrition, the stock could offer low-to-mid teens returns over the next three years, making it a hold for investors seeking exposure to a resilient BPM leader.

Data sources: WNS FY2024/FY2025 earnings releases, investor presentations, and SEC filings.