WNS (Holdings) Management Discusses Q2 2014 Results - Earnings Call Transcript

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WNS (Holdings) (NYSE:WNS) Q2 2014 Earnings Call October 16, 2013 8:00 AM ET

Executives

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

Keshav R. Murugesh - Group Chief Executive Officer and Director

Sanjay Puria - Group Chief Financial Officer

Analysts

Paul B. Thomas - Goldman Sachs Group Inc., Research Division

Richard Eskelsen - Wells Fargo Securities, LLC, Research Division

Joseph D. Foresi - Janney Montgomery Scott LLC, Research Division

Rahul S. Bhangare - William Blair & Company L.L.C., Research Division

Ashwin Shirvaikar - Citigroup Inc, Research Division

Bryan Keane - Deutsche Bank AG, Research Division

David J. Koning - Robert W. Baird & Co. Incorporated, Research Division

Manish Hemrajani - Oppenheimer & Co. Inc., Research Division

Puneet Jain - JP Morgan Chase & Co, Research Division

Operator

Good morning, and welcome to the WNS Holdings Second Quarter Fiscal 2014 Conference Call. [Operator Instructions] Now I'd like to turn over the call to David Mackey, WNS Corporate Senior Vice President of Finance and Head of Investor Relations. David?

David Mackey

Thank you, and welcome to our 2014 second quarter earnings call. With me today, I have WNS's CEO, Keshav Murugesh, and WNS's CFO, Sanjay Puria.

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 second quarter ended September 30, 2013.

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, which was filed with the SEC in May of 2013. 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 and adjusted net income, or ANI, are defined as operating margin and profit, excluding amortization of intangible assets and share-based compensation. These terms will be used throughout the call.

I will now turn the call over to Keshav. Keshav?

Keshav R. Murugesh

Thank you, David, and good morning, everyone. WNS continued to make good progress, growing our top line and expanding our margins during the second quarter. Q2 net revenue came in at $115.4 million, which represents a 7.6% increase versus the same quarter of last year, and a 1.4% increase sequentially. Year-over-year revenue growth was reduced by softness in the British pound, the South African rand, Australian dollar against the U.S. dollar. Excluding the impact of exchange rate movements, our second quarter constant currency revenue grew 9.8% year-over-year and 3.2% sequentially. Revenue growth was once again broad based across verticals, service offerings and geographies.

Overall, the WNS deal pipeline continues to strengthen as the sales force matures and productivity improves. At the end of the second quarter, we had 78 sales resources globally. On the hunting side of the business, the pipeline expansion is being driven by larger, more complex deals across both the U.S. and Europe. We believe this dynamic is a product of the healthy BPM demand environment, increased WNS visibility in the marketplace and improved sales force productivity.

Lead generation is a key area where we are seeing solid progress in the past year, and our enhanced reputation with the analysts and the advisory community is helping get WNS invited to more strategic transformational deals. From my perspective, this is the healthiest our large deal pipeline has been since I joined WNS in 2010.

With respect to farming activities, our existing customer base remains underpenetrated and we're working on solid opportunities to expand the majority of our strategic relationships. The end-to-end vertical structure and dedicated client-partner model for servicing large accounts is working well and helping to drive top [ph] leadership for our clients and new business opportunities for WNS. Based on the sales cycles for business process management, a healthy pipeline for both hunting and farming is necessary for revenue momentum in the near to midterm.

During the second quarter, WNS added 6 new logos, expanded 9 existing relationships and renewed 7 contracts. This quarter's new logos include the signing of our third large deal of the fiscal year: a 5-year engagement with a U.S.-based Fortune 500 company in the Retail/CPG vertical. We continue to target 5 to 6 large deals this fiscal year, although the timing of formal contract signing and ramp of process hands off -- or handoffs, remain somewhat unpredictable.

With respect to margins and profitability, WNS posted healthy expansion on both a year-over-year and quarter-over-quarter basis. Our second quarter adjusted operating margin came in at 16.2%, and adjusted net income was 14.9%. On a dollar basis, adjusted net income was $17.2 million, up 41% from the second quarter of last year and 19% sequentially. Sanjay will discuss the quarterly financials in more detail during his prepared remarks.

This quarter, WNS continued to work towards increasing our market visibility and brand awareness. In conjunction with NASSCOM, WNS is at the forefront of the efforts to rebrand our industry from business process outsourcing to business process management. This initiative is designed to improve awareness of the high-end mission-critical business process services we deliver for clients and the exciting career opportunities this industry is creating for employees.

With respect to analysts and advisor recognition, WNS was positioned as an emerging player for multiprocess HRO, or human resource outsourcing, in Everest's latest peak matrix. In addition, we partnered with IDC last quarter to create an Analytics Workbook which highlights market trends, customer expectations and challenges organizations must consider when evaluating and outsourcing data management and analytics needs.

The Workbook showcases WNS's leadership position in analytics and our proprietary WADE decision engine framework. Also, WNS was recently added to the World Economic Forum's list of Global Growth Companies. This prestigious list includes some of the world's fastest growing companies who have been identified as having clear potential to become global economic leaders based on their business models, growth record and industry leadership.

At the macro level, the demand environment for BPM continues to remain stable and healthy. While industry momentum is strong, client decision making remains slow, especially in the final stages of large, complex strategic deals. We also continue to see some examples of delayed process handoffs during the Phase 1 of signed relationships. I believe this is a reflection of the increased care clients and prospects are taking as they drive BPM into larger, higher-value deals involving more mission-critical processes.

The downstream benefit of this cautious approach can be seen in terms of better preparations and smoother transitions. This not a new dynamic for WNS. It is, however, more evident as average deal sizes increase. Today, WNS remains well positioned to win several large engagements, and we are comfortable that for a few of these deals, the question is when, and not if, we will be awarded a contract.

With the backdrop of a healthy growth environment, the BPM industry is continuing to evolve. We are excited to report that the industry is clearly heading towards several areas in which WNS has made significant investments over the past few years. First and foremost, the main domain expertise and industry-specific solutions are becoming increasingly important. Second, as clients' BPM experience levels mature, they're looking for nonlinear-engagement models, including transaction-based and outcome-based pricing to align benefits and costs. Third, our global clients now require partners that are capable of providing them a range of value-added services from multiple geographies. And finally, that the industry is moving towards increased use of automation and technology platforms to service clients, shifting the business models towards BPaaS, or Business Process as a Service.

Going forward, WNS must continue to invest in creating new service offerings, enhancing our domain capabilities and using technology to enable our solutions to meet the evolving needs of our clients. Investments will be made through a combination of in-house research and development, strategic partnerships, and niche tuck-in acquisitions. At the same time, we remain committed to leveraging our existing investments in sales infrastructure and our Capability Creation Group to help fund these investments and drive margin improvement.

In summary, we're excited about the health of the BPM industry and our comfortable positioning and believe that WNS continues to make progress towards the long-term goals of growing at or above industry rates and improving margins and profitability.

In addition to this morning's earnings press release, WNS also showed a separate release announcing several upcoming changes to our Board of Directors. These changes are part of the company's long-term growth and succession plans and will take effect from the 1st of January 2014.

I would now like to hand the call over to Sanjay Puria, WNS's new CFO, to walk through the financials. Sanjay is a proven performer who brings over 11 years of experience in the offshore services industry to the CFO role. For the past 3 years at WNS, he has worked closely with the executive team and managed several functions, including Corporate Strategy, Financial Planning and Analysis, and Mergers and Acquisitions. Sanjay, over to you.

Sanjay Puria

Thank you, Keshav. I'm excited to take on this new role and look forward as we continue to drive WNS operational and financial progress. With respect to the second quarter numbers, net revenue increased $215.4 million, from $107.3 million in the same quarter last year, growing 7.6%. On a constant currency basis, year-over-year, net revenue grew 9.8% when accounting for depreciation in the British pound, South African rand and Australian dollar against the U.S. dollar. Combined, these 3 currencies now account for approximately 60% of the company's revenue.

Sequentially, net revenue increased by $1.6 million or 1.4%, with a slight improvement in the pound to dollar rate, more than offset by sequential headwinds from the South African rand and Australian dollar. On a constant currency basis, second quarter revenue grew 3.2% sequentially.

Year-over-year, revenue growth was led by the Banking and Financial Services, Utilities and Shipping and Logistics verticals, which all grew over 15%. Growth rates in our more mature Insurance and Travel verticals were also healthy, expanding 10% and 3%, respectively.

From a service operating perspective, revenue growth was paced [ph] by Finance & Accounting and Research & Analytics, which grew 14% and 10%, respectively, when compared to last year. Adjusted operating margin was 16.3% in quarter 2 as compared to 13.7% reported in the same quarter of fiscal 2013 and 13.9% last quarter. On a year-over-year basis, adjusted operating margin improved 250 basis point as a result of depreciation in the Indian rupee, increased operating leverage on higher volumes and improved productivity. These benefits more than offset our investments in the global infrastructure and the impact of our annual wage increases. The sequential adjusted operating margin improvement of 230 basis point is the result of better productivity, operating leveraging and a slight improvement in seat utilization.

Interest expense this quarter was $0.8 million, down slightly from the $0.9 million reported in quarter 2 of last year and the same as reported in the previous quarter. The company's other income was $1.8 million in the second quarter, up from $1 million reported in the same quarter last year and down from $2.2 million last quarter.

The year-over-year increase in other income is the result of higher cash balances and improved returns on our India-based investments. Sequentially, other income was down by $0.3 million as a result of timing on the recognition of investment income.

WNS effective rate in the second quarter was 13.3%, down from 17.2% last year and 16.3% in the previous quarter. Our estimate for the full year tax rate remains unchanged at 15.5% to 16.5%. The company's adjusted net income for quarter 2 was $17.2 million compared with $12.2 million in the same quarter of fiscal 2013 and $14.4 million last quarter. This represented growth in adjusted net income of 41% year-over-year and 19% sequentially.

Adjusted diluted earnings was $0.33 per share in quarter 2, up from $0.24 reported in the second quarter of last year and $0.28 in the prior quarter. As of September 30, 2013, WNS balances in cash and investments total $108.4 million. The gross debt position was $91.9 million, with the company reporting a net cash position of $17.4 million at the end of quarter 2. WNS generated $25.3 million of cash from operating activities this quarter and free cash flow of $20.3 million after accounting for $5 million in capital expenditures. DSO in the second quarter came in at 30 days, down from the 38 days reported in quarter 2 of last year and the 31 days reported last quarter.

With respect to other key operating metrics, our total headcount at the end of the quarter was 26,630. The attrition rate in quarter 2 was 35%, up from 33% in the same quarter of last year and the same as reported last quarter.

Built seat capacity was 22,621 at the end of the quarter. Average built seat utilization in quarter 2 was 1.17 as compared to 1.24 reported in the same quarter of last year and 1.16 in the previous quarter. While we continue to add seats in some locations to support specific client requirements, we remain focused on driving our utilization rates up over the next couple of years as the company grows. This will enable us to leverage our investment in both new geographies and tax-exempt facilities in India, driving both operating margin expansion and a lower effective tax rate.

In our press release issued earlier today, WNS provided an update to our fiscal 2014 guidance. Based on the company's current visibility levels, we expect net revenue to be in the range of $464 million to $476 million, representing year-over-year revenue growth of 6% to 9%. Revenue guidance assumes an average British pound to U.S. dollar exchange rate of $1.60 for the remainder of the year or an average full year exchange rate of $1.57. Excluding the impacts of projected year-over-year currency headwinds, including depreciation in the British pound, Australian dollar and South African rand, our constant currency revenue guidance represents growth of 7% to 10%. We currently have 99% visibility to the midpoint of the revenue range, consistent with October guidance in prior years. Adjusted net income is expected to be in the range of $68 million to $72 million for fiscal 2014, based on a INR 62 to U.S. dollar exchange rate for the remainder of the year, or an average full year exchange rate of INR 60.4. This adjusted net income implies adjusted EPS of $1.30 to $1.37 on a diluted share count of approximately 52.5 million shares. At the midpoint of our guidance, adjusted net income is growing 32% and revenue growth of 8%. The company expects CapEx levels to be in the range of $20 million to $22 million in fiscal 2014.

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

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Paul Thomas, Goldman Sachs.

Paul B. Thomas - Goldman Sachs Group Inc., Research Division

You announced one new large deal in the U.S. in the Retail/CPG space and you've spoken about a couple of other larger opportunities in the U.S. What's the progress on the other ones in the U.S.? And how does the pipeline look in Europe and the U.K.? Is there any improvement you're seeing in Europe versus the U.S.?

Keshav R. Murugesh

Okay, so let me talk about that. So in terms of the overall pipeline, irrespective of whether it's the U.S. or in either U.K. and Europe, as I mentioned earlier, I have never been as excited as I am at this point in time since joining the company in terms of the kind of deals we're playing in, the size and the scope and complexity of those deals, and the kind of progress we are making including our win ratios in terms of the progress that we're making. So how deals are progressing through the pipeline is extremely positive from our point of view. The fact that we are being invited to a number of deals, which means my sales people, my Business Unit Leaders and I personally are having to fly all over the globe to meet with clients on the other side, to give them comfort and help them in terms of their taking the final decision is very high. And in terms of the deals that we have signed, again, I must mention that the recent ones that you spoke about are all large, complex deals, one. The second one is very interesting is in most of these cases, recently, the deals have all been signed with first-time outsourcers. So again, very positive from our perspective in terms of the fact that our ability to grow these accounts over the next 5 to 6 years, it is very high. So overall, I would say deal activity in both continents is exceedingly positive. Size of deals, scope of deals, complexity of deals, much bigger than what we have seen in the past and the best pipeline that I have seen in the last 3 years.

David Mackey

And Paul, just to give a little color on the geographic mix, of those several large deals that we think are close to decisions and we think that WNS is well positioned for, by far, the healthiest geographies for us would be the U.K. and the U.S. at this point in time. Although it is really encouraging to see, I think, for the first time in quite a while, a couple of large opportunities in Continental Europe. So I do think it's somewhat reflective of the overall demand environment for BPM, business process management, that the U.S. and the U.K. are driving the bus, if you will, in terms of the opportunity pipeline. But we do see some good traction in Continental Europe and there are a few sizable opportunities that we're in play for.

Paul B. Thomas - Goldman Sachs Group Inc., Research Division

Great. I need a little more on the margin improvement in the quarter. Utilization only improved a little bit. So was the improvement mostly the higher volumes? In the past, you talked about a 1% move in seat utilization affecting operating margins by about 25 basis points. Is that still a good way to think about the potential for improvement as utilization continues to move up?

Keshav R. Murugesh

Yes. So you are right. 1% of the seat utilization improved 25 basis points. So I think that's a good benchmark from a seat utilization improvement, as well as on the operating margin improvement.

David Mackey

Yes. And I think, Paul, just add to that, you're right. We had very, very modest seat utilization, although we're certainly excited and encouraged to see that seat utilization moving in the right direction for the first time in several quarters. The seat utilization improvement this quarter was less than 1%, so obviously the margin improvement sequentially was not driven, to a large extent, by the improvement in seat utilization. It's also important to note that the margin improvement this quarter versus last quarter was not driven by currency either. It you look at the key drivers for the sequential operating margin improvement, it really is higher volume that's helping us leverage our fixed investments. It's a slight improvement in the seat utilization. But the biggest, the biggest improvement for us in terms of quarter-over-quarter, what was really in our productivity and in our ability to kind of digest and manage the wage increases that we gave in the first quarter. And also, the fact that the mix of services are starting to shift a little bit more towards higher-value, higher-margin types of opportunities.

Keshav R. Murugesh

Yes, and I would just add out there that I think the way we have been leveraging technology and in our own platforms have also been very positive. So if you just look at the numbers, you'll also see that whereas revenue grew 10%, or close to 10% on constant currency terms, I believe the headcount grew hardly above 3%, 3.5% on a year-on-year basis.

David Mackey

That's a great point, Keshav. If you look at our improvement year-over-year in terms of revenue per employee, we're actually up about 5% year-over-year.

Paul B. Thomas - Goldman Sachs Group Inc., Research Division

Okay, last one from my end. Any surprises with respect to business volume forecast? I know at the start of the year, clients tend to be a little a conservative and sometimes you can page ahead of that through the year. How are with respect to those initial forecast halfway through the year?

David Mackey

Sure. I'll take that, Paul. I think when you look at the majority of the volume expectations that we have, and obviously, that's going to be driven by a handful of our larger customers, they do tend to be conservative as we walk into the year. I think through the first half of the year, volumes had been largely in line with our expectations. Now we have been getting some updated forecast for the balance of the year that are somewhat mixed. We have a couple of clients that are showing some better volumes, we have a couple of clients that are showing some reduced volumes, and we're going to have to wait and see how those materialize. But I think overall, if you look at our business today versus what we expected walking into the year, I think the average volumes for our large customer base are pretty much in line with expectation.

Operator

The next question comes from the line of Joseph Foresi, Janney Montgomery Scott.

We'll go to the next question that comes from Edward Caso from Wells Fargo.

Richard Eskelsen - Wells Fargo Securities, LLC, Research Division

It's Rick Eskelsen on for Ed. Keshav, I just wanted to maybe drill down a little bit into your comments about the project decisions and the deal ramp-ups being uncertain and maybe a little bit slower for the large deals. I know that's not something new here, but I guess I just wanted to ask, is that something that's changed here in the quarter? Or just a continuation of the prior trend?

Keshav R. Murugesh

Yes, actually, it's nothing new, really. it's just a case of how -- it's more client's specific behaviors, I would say. So like I said earlier, I, first of all, want to underline the fact that in terms of our win ratios and win rates in terms of the pipeline, it's the healthiest I have ever seen. At the same time, you have to also understand that WNS is now playing much larger, much, much more complex deal than it has in the past. And we are much larger and much more global in nature than traditional deals were, one.

And the second is also in terms of the nature of the client itself. A lot of these now are first-time outsourcers. So combination of both of these means that clients are just taking a little longer, in terms of the last mile effort in terms of closing the documentation, planning on their waves. And then as they move through the different waves of progress on outsourcing sometimes, we see that their plan against the actual, particularly in wave 1, they take a conservative approach. So that's all that we are seeing at this point in time, nothing new. And from our perspective, therefore, what it really means is that some of that revenue momentum is just getting pushed out a little bit. And at this point in time, based on the new guidance we gave, we feel comfortable that, that's a range that is achievable at this point in time. And if some of those decisions just move a little faster, then our ability to get the higher end is very, very possible.

Richard Eskelsen - Wells Fargo Securities, LLC, Research Division

That's very helpful. The next one is on the Capability Creation Group. You guys have talked about this a lot recently, and how you're leveraging it more. Just maybe if you could go into a little bit about how much of a differentiator it is for you? And I guess, the question is more, does it help you compete better against the existing base? Or do you get to compete against the different players because you have this Capability Creation Group working for you?

Keshav R. Murugesh

That's a great question, Rick. So I'm very excited about this particular group and the investments we've made there because it's really starting to pay off. So first and foremost, the capability creation group really drives leadership with our traditional horizontal offering that we now take through our vertical kind of go-to-market strategy to each of our clients. So the client interacts with our vertical leaders and the client partners, but there's always a sliver of horizontal offering being required in there. And this offering, the Capability Group is constantly upgrading and improving and creating new offerings, which we take to the market. So first and foremost, not only are they constantly upgrading and implementing changes and adding new technology competence that make a process much stickier and much more impactful, the second thing that is happening there is this group is helping us increase the menu card of services, first of all, to our existing clients, but at the same time creating new offerings that we can actually take to new prospects. So it helps us grow inside our existing base of clients, but it also helps us compete. Most importantly, more than compete, it helps us differentiate ourselves dramatically against the competition.

Now just to, again, underline some of the comments that Sanjay made, if you recall, he said that the F&A component of our business has grown 14% year-over-year. The analytics component of our business grew about 10.3%. All of this is really driven by the Capability Creation Group. And therefore, that is going to play a very important part in the long-term story of this company, and also is going to drive better margin performance long-term.

Richard Eskelsen - Wells Fargo Securities, LLC, Research Division

Again, just the last 2, a quick numbers question. What was the guidance on a -- or on a organic constant currency basis? I think you've given that in the past.

David Mackey

Yes, I think, Paul, the only thing -- we did our large acquisition in the first quarter of fiscal 2013. So if you look at our organic constant currency, it's virtually the same as constant currency growth for this year.

Richard Eskelsen - Wells Fargo Securities, LLC, Research Division

Okay. And then just the last one the rupee. The benefit in operating margin, what was the year-over-year and the sequential number for that?

David Mackey

In terms of the rupee?

Richard Eskelsen - Wells Fargo Securities, LLC, Research Division

Yes.

David Mackey

Inclusive or exclusive of the hedging. So again, we can look at just how the rupee moved, but we also had significant losses on the hedging associated with that rupee improvement.

Richard Eskelsen - Wells Fargo Securities, LLC, Research Division

So let's do inclusive.

David Mackey

Okay, so if you look at quarter-to-quarter, the net improvement, just from the rupee -- now again, we had some headwinds from some of the other currencies on a net basis, but the net improvement from the rupee quarter-over-quarter was about 140 basis points. And on a year-over-year basis, the net improvement from the rupee was about 250 basis points.

Keshav R. Murugesh

Thank you, Rick.

Operator

The next question comes from Joseph Foresi from Janney Montgomery Scott.

Joseph D. Foresi - Janney Montgomery Scott LLC, Research Division

Just my first question was it seemed like the constant currency growth rate was tweaked down just a little bit. I wonder if you could help us understand that versus sort of the very positive commentary you gave on the demand side?

Keshav R. Murugesh

Right. So Joe, as I mentioned earlier, all that we are seeing, so I think from our perspective, in terms of the demand environment, in terms of the penetration levels on an industry -- from an industry point of view, nothing has changed. And in fact, we're actually seeing better traction and better win rates. But as I've mentioned earlier, what we are seeing is also client-specific behaviors which -- because of which we cannot control the timing of certain elements being executed by clients. So what we can control, we're able to do. What clients need to control, we're not in control of.

But out here, what we are saying is, at this point in time, because of the fact that a number of these new clients and prospects that we have won are really brand-new clients signing up for these large, complex deals, their ability to move across the waves is taking a little longer terms of execution. And at the same time, even with the existing clients, because of the size and scope of the deals, what is happening is we've seen in a few cases, this behavior from clients pushing the deals out a little bit at this point in time. So that really is actually the reason for our giving this guidance.

Having said that, our own perspective is it's a situation where we appear to be moving some of this revenue a little out across the quarters. So I just give you -- I'll give you a sense of the first large deal, for example, that we signed in Q1. We reported it in Q1 and by the time the wave actually commences and revenue starts coming in, as opposed to a Q2 kind of a ramp, we are likely to achieve it in Q3 or Q4 because the client is taking the conservative view, working closely with us, scoping things better, getting all the documentation in place, planning the whole governance even better than they would -- than you normally have seen with many clients in the past. But we actually think that's very healthy for us long-term.

David Mackey

Yes, just, Joe, just to echo Keshav's comments. We've signed 3 large deals so far this year. And I think one of them is proceeding as we had expected. But as Keshav mentioned, one of the deals that we signed in the first quarter that we really thought had very good opportunity to begin immediately based on the clients and their needs and what they have communicated to us, that has been pushed out at least a quarter in terms of how long it's going to take to get to full ramp and kind of a steady state. The third large deal that we signed was actually very late in the second quarter, and we don't expect that to contribute meaningfully now until Q4. So I think what we've done is taken into account what's happened with the first 3 large deals that we've signed. We still believe we're going to track to sign 5 or 6 large deals of this year. But we've taken a very conservative approach in terms of how we expect these last 3 large deals to ramp up and what we expect them to contribute this year. So I think, really, the only thing that's changed quarter-over-quarter in terms of top line guidance is that we've taken a slightly more conservative approach to how large deals are going to ramp.

Joseph D. Foresi - Janney Montgomery Scott LLC, Research Division

Okay. And so I guess, just a follow-up on that one. As we think about the revenue trajectory, I mean, when -- and even though on the margin side, with these deals ramping and taking maybe a little bit longer, is December, one of the lighter quarter, and then we start to really hit March and June of next year, I mean, how should we think about sort of the ebb and flows of the revenues and the margins as we start to ramp on these large deals?

David Mackey

Yes, I'll take that, Joe. I think, from a margin perspective, when you look at the number of large deals and look at the transition revenue as a percentage of total, I don't think we're looking at significant variances quarter-to-quarter. So realistically, the traction and trajectory in terms of large deals shouldn't be having a major impact on margins. Now, we could have a good quarter or a really bad quarter, depending on whether things accelerate or decelerate. But overall, I don't think it's going to create a margin issue. It's really going to be a function of each individual deal, each individual client, how quickly they engage once we've signed the contract and, as we've always talked about, how quickly those contracts actually sign. So I think we should see relatively stable, steady trajectory in terms of the revenue in the coming quarters here. But obviously, have to kind of watch and see how these things move in terms of fits and starts.

Joseph D. Foresi - Janney Montgomery Scott LLC, Research Division

Got it. Okay, last one for me. Just given that -- and you reaffirmed it in, I think, your comments earlier, talked about getting back to, and then eventually above industry growth rates. Given the pipeline and the commentary and the large deal signing and the win rates kind of moving into your direction, can you give us some sense of timing as to when you expect that to start to make its way to numbers? And when you start to expect that growth rate that you're putting up now to accelerate?

Keshav R. Murugesh

Look -- go ahead.

David Mackey

Sure. I think what you've seen, Joe, is steady acceleration in the growth rate. Now obviously, we'd like to see it happen faster, but that's something that's beyond our control. I don't think you're going to see an inflection point, if you will, in terms of our growth rate, just the way these services layer on to the revenue base. So what I think you're going to see is slow and steady progress. But clearly, if we're able to grow -- we grew last year around 8% on an organic constant currency basis. Our midpoint of guidance this year is 9% on an organic constant currency basis. And if things line up the way we see them lining up this year in terms of signing new deals and the potential for ramp acceleration into next year, we should be very well positioned to continue to accelerate that growth next year. Now obviously, it's a lot about the timing. And certainly, we have to look and see how our customer base and their existing volumes and existing processes behaves.

As we've talked about a lot, there are 3 real components to the revenue growth. One is the large deal signings and how quickly they're ramped. The second is the existing volumes that we have on existing processes for our client base. And the third is how effective we are in farming that base and new opportunities. So we have to look at all 3, but I think the opportunity for WNS to continue to accelerate that top line growth and get to that leadership position is clearly right in front of us.

Keshav R. Murugesh

And I just add on there that, based on my conversations that I'm having with clients and particularly even the new clients, my comfort level is that once they actually start off in terms of the wave 1, their ability to catch up and their need to catch up, is very high. And you should expect to see that over 2 or 3 quarters, there will be a huge catch up effect, with individual clients making up for what they may have missed in the first wave in a particular quarter. But very, very positive conversations that we are having with them.

Operator

The next call comes from Rahul Bhangare William Blair.

Rahul S. Bhangare - William Blair & Company L.L.C., Research Division

The first is on seat utilization, just to follow up to Paul's question from earlier. Utilization is still quite low, when should we expect that number to increase more materially? Is it going to be linear with when these large deals start ramping?

Sanjay Puria

Well, so we'll be able to leverage the investment done to improve the seat utilization. We are very focused on that. And as Keshav said, these large deals, once they start ramping up, we will be able to see some seat utilization improvement. Having said that, we'll have to continuously invest in the new facilities from time to time to meet our clients' requirements. So the major focus is on seat utilization improvement. But at the same time, we'll continuously keep on investing from time to time.

David Mackey

So I think the long and the short of it, Rahul, is we're going to continue to improve our seat utilization probably over the next couple of years. It's going to be a slow and steady process. It's not going to happen in any one given quarter. And we're going to need to manage not only the total number of seats and the overall seat utilization, but the locations that we need to build and to manage to support our customer requirements. So if we grew 15% next year, and as a result of that, we had to expand our infrastructure in South Africa and the Philippines and Romania, we're going to go ahead and do that. We're going to grow and service our customers and it will not result in any seat utilization. Now we don't think that's going to be the long term game. If you look at what's driven down the seat utilization over the last couple of years, it's largely been about the tax exempt facilities in India. So we've made a bet, if you will, that the long-term health and growth of the BPM industry is going to be servicing 70%, 80% of the requirements out of our delivery centers in India, and I don't think that that's something that we're concerned at all about. Again, it's a little bit about the timing and what clients want on the front end and what they want on the back end. But we do have some good visibility with the existing clients that we're bringing on board here to significant requirements out of India. And as Keshav mentioned, these are, by and large, new clients to outsourcing, which means they're new clients to WNS, which means we can leverage our special economic zone facility.

Rahul S. Bhangare - William Blair & Company L.L.C., Research Division

Okay and then just my second one. Keshav, when you talk to clients, do you feel like there's a risk -- an incremental risk of longer cycle times, given the political environment in the U.S.?

Keshav R. Murugesh

Not at all. Actually, what's really happening is that in spite of all of that, the number of conversations we are having with prospects and clients actually have increased significantly. So while all of this is taking time and will take time to convert into revenue, the reality is that conversations actually have gone up. Everybody understands, with the kind of economic uncertainty and then the political uncertainty that they're hearing about, they have to continue to perform in terms of their roles in their companies. And they're actually looking at taking decisions, leveraging the model. At the most, what they would like to see is not much publicity about it. That's all we're seeing. But I must confess, over the last few quarters, we actually saw a few of the new prospects and new clients actually do a -- even do press releases.

Rahul S. Bhangare - William Blair & Company L.L.C., Research Division

Got it. And Sanjay, congratulations on the new role.

Sanjay Puria

Thank you.

Operator

The next question comes from Ashwin Shirvaikar from Citibank.

Ashwin Shirvaikar - Citigroup Inc, Research Division

I guess my first question is with regards to margins, obviously, a very good performance from you guys. The question really is, is your sales force investment now at a point where we can start looking for sustainable SG&A leverage in the model, or do you continue to make those kind of investments?

Keshav R. Murugesh

Yes. So Ashwin, I think that I'm really happy with the productivity of the sales force and the impact that they have created. But at the same time, I think one of the things that we will do, as Sanjay mentioned earlier, is we'll continue to invest in all the right areas. So we don't think this is the time to under invest, for example, in sales and marketing. So for example, if you look at the whole branding impact, I think we've done a fantastic job in terms of branding and building a solid kind of impact in the employee or employment geographies. But we actually think that this is the time to actually invest in creating an impact in client geographies, such that we are seeing as that premium kind of player in this industry with a differentiated position. So we will invest in some of that. In terms of sales, again, as we continue to focus on the vertical strategy, as well as leveraging the capability and groups. We will want to keep investing in the right kind of talent in order to make sure that -- particularly in areas where we are seeing high growth, the specific verticals and the horizontals, if you look at the growth that we are now seeing in Finance & Accounting and Analytics, I can tell you that in almost every deal we have won recently, there's a significant F&A comp kind of impact. Again, we believe that this is the right time for us to keep investing in that area as well. So it's a situation where we keep investing. But at the same time, we're extremely conscious of the fact that we have to keep growing margin with the revenue, and if you see the performance, we have done that, right? If you look at seat utilization -- I don't know, that's a big, big area of discussion. But I want you to know that for us, it's a big area of focus, right? And irrespective of the fact that the seat utilization came out at 1.17 or whatever, our margins actually look like this. So we know that in the medium term, as we deliver on some of these levers, margin looks much better. But again, we're not going to be under investing in the core areas that affect our top line.

Ashwin Shirvaikar - Citigroup Inc, Research Division

Investing is obviously a good thing, something you should continue doing. I guess my question was a little bit more around can you get sustainable operating leverage in terms of that particular line? I guess, one very basic question I have is, how do you define a large client versus not a large client? So for example, you signed 6 clients, you defined one of them as large. Is there sort of a -- and can you remind us what you mean by large? What's the level?

David Mackey

Yes, let me take, Ashwin. I think there's 2 things that you're confusing now. We did sign 6 new logos or 6 clients this year, we also signed 1 large deal. Now it does happen that the large deal that we signed is with a new client, which is not always the case. So how we've defined a large deal is a specific identified piece of work that has the ability to generate a minimum of $5 million of annual contract value. So the large deal, if you will, is about a specific piece of work. The new logo, it's about adding a new customer. So for example, if we added a brand new customer in that number of 6, and it happened to be one of the world's Fortune 10 top brands, and we think it has the potential as that relationship grows and expands over the next 5 to 10 years to become a meaningful customer for us, it would not be considered a large deal if what we've engaged on in the front end is not $5 million minimum ACV. So we do need to delineate a little bit between the difference between a large deal, a new customer and a potential new large relationship.

Ashwin Shirvaikar - Citigroup Inc, Research Division

Understood. Okay. Okay. In terms of volumes, and you did point out volumes -- the increase in volume was one of the reasons that contributed to margins. The volume increases, are they sustainable in the next couple of quarters? What's driving those volume increases?

David Mackey

Well, I think by volumes, what we're referring to, Ashwin, is the fact that our revenue values are up quarter-to-quarter, our revenue was up year-over-year and that's giving us a certain level of investment leverage. So to your point earlier, we had -- a year ago, we had roughly -- if look at the same quarter last year, for example, we had, I believe, close to 80 sales people in the organization. We've got 78, as Keshav mentioned, at the end of this quarter. So there's been very little change in terms of the size of the sales force in the past year. However, if you look the amount of revenue that we've got covering that cost of sales, there's certainly a significant improvement, as we've mentioned, close to 10% year-over-year. So what we've got is operating leverage that's coming from higher volume. By higher volume, we mean higher revenue value.

Ashwin Shirvaikar - Citigroup Inc, Research Division

All right. I thought you meant higher -- the rate of transaction is like higher number of cost, execution or something like that.

David Mackey

No, no, no. This is -- this relates to company revenue.

Ashwin Shirvaikar - Citigroup Inc, Research Division

Okay, got it. In terms of -- just, again, talking on the investment side, can you talk a little bit more about the progress that you're making on building analytics expertise, for example? I know you mentioned in it a few places in the call, but if you can put it all together, that will be great.

Keshav R. Murugesh

I'll take a stab at it first. And one of the things that we are focused on is driving home the advantage that we now have with our Research & Analytics capability, where we embed analytics kind of capability inside each one of our offerings that we take to the client. So whereas the client may actually see some of these offerings as a vertical offering or as part of a vertical process, we are able to use analytics to expand the original scope of work by saying that based on the data that we now have access to, or based on data that you may have access to that you have not yet shared with us, we can give you some new insights that can help you with your business. That actually has started resonating extremely well from our point of view. And to some extent, I would say, it's actually creating a new revenue stream where something didn't exists in the first place. So one of the things that we're looking to do also is to actually build a separate analytics capability independent of the research side, right, so that we can leverage that model much better from an overall KPO point of view as well. And as you probably are aware, we've publicly said this, but between the Research & Analytics folks at the company, we have close to about 2,000-odd people working in that space. We just -- we believe that our ability now to leverage that practice and build greater impact and help clients with decision support kind of solutions is very high. So that's an area that we will continue to focus on, invest and build more leadership in.

.

David Mackey

Yes. And let me just add a little bit to that, Ashwin, because I do think it's important. As Sanjay mentioned, our Research & Analytics revenues, on a year-over-year basis, are up about 10%. So we're pretty happy to see good traction in that segment. In terms of -- one of the questions that was asked a little bit earlier about the Capability Creation Group and some of the things that we're doing there to create differentiators in the marketplace, Research & Analytics is clearly one of the areas that the Capability Creation Group is spending a lot of time on. And it's everything from identifying a new partner out there for data virtualization to -- we've recently established a lab internally to help clients move from expensive license analytics platforms to open-source solutions. And we're also incubating a number of new concepts within the Capability Creation Group around enhancing social media and around website analytics. So a lot of activity. As Keshav mentioned, it has the ability to create some additional revenue streams, and obviously, a lot of it has to do with how you define what analytics means. But at the end of the day, it's how do you take that data and help clients make better decisions. And it's not necessarily something that's always a strategic offering, if you will. A lot of it can be just about helping the individual clients better understand their business and helping them to try and compete better in their respective markets. So I think it's all about value addition and not necessarily creating a revenue stream that's independently something that you can go and cross sell to multiple clients.

Operator

The next question comes from Bryan Keane from Deutsche Bank.

Bryan Keane - Deutsche Bank AG, Research Division

I just wanted to ask a couple of clarifications. Last quarter, I think revenue growth was 13% constant currency, and it moderated just slightly to 10% constant currency. I just wanted to make sure, is there a couple of things to point to that just, comparing year-over-year first quarter to second quarter, that caused this slight moderation?

David Mackey

I think the biggest issue, when you look at year-over-year growth rates, Bryan, is obviously as we move throughout fiscal 2013, we had some pretty good acceleration beginning in Q2 and moving even more so into Q3 and Q4. So a lot of this, I think, just has to do with some increasingly difficult comps as we get towards the back half of the year.

But I don't think anything in terms of revenue trajectory or the overall health of our business is creating this issue.

Bryan Keane - Deutsche Bank AG, Research Division

Okay. And then maybe just a followup on that, Keshav, the 7% to 10% constant currency guidance, how does that compare to the industry growth rate and where do you think the company should be?

Keshav R. Murugesh

Yes, I think from our perspective, being the -- in the low double digits is where the industry growth rate is. And being there or better that is where our first target is in terms of how we want to grow.

Bryan Keane - Deutsche Bank AG, Research Division

And are you -- I guess, are you happy with the progress of the company since, obviously, it's been a big turnaround? But the speed of the progress, I know we talked about WNS growing faster than industry averages, so I just want to get an update on your overall perspective on where -- the direction of the company?

Keshav R. Murugesh

Right. So I'm extremely pleased with the progress we are making. We obviously do have systemic issues that may -- that are essentially out of our control. So in terms of what we can do to drive our business forward, I think, everything is working well. We're building the pipeline, our sales people are working well, we're converting very well, our win rates are up. And so I think all of that is working exceedingly well. From our conversion, some of that will be actual revenue. As we have said, this year, we are actually seeing some of the new clients, new prospects, as well as some of our existing clients wanting new different kind of processes, actually take a little longer in terms of the last mile. But all of this means that in the medium term, this will actually help us accelerate. So we are actually very comfortable in terms of the overall strength of our pipeline, the number of deals we have in there, the stage progress across those deals and the kind of conversations we are having with our plans and extremely confident that our ability to meet and beat our kind of goal is very, very high and very quickly.

David Mackey

I think the other thing, Bryan, that's really been interesting, and we haven't talked a lot about it, but I think it's been implied in a lot of the things we've said. We've had some headwinds as a result of our top 10 customers that were with us 3 years ago. I mean, we really started this turnaround with a pretty significantly mature client base. And if you look at the company's top 10 customers in fiscal 2011, they represented 53% of revenue. Those same customers today represent only 46% of revenue. So if you look at what's happened, that top 10 from 3 years ago has grown at about 2% compounded. So we really had this headwind, if you will, from having a large, mature customer base. And I don't think that's a newsflash to anybody who has been following the company, but I think we've been pretty successful in accelerating the growth rate despite some pretty significant headwinds coming from that mature customer base. And I think as we continue to progress and continue to add new logos that have longer-term expansion opportunities, that ability to accelerate growth going forward really starts to improve. So the less and less reliant we can become on these large, mature, stable relationships that we have, the better off we're going to be in terms of having that growth acceleration opportunity and I think we're certainly getting there.

Bryan Keane - Deutsche Bank AG, Research Division

Okay, very helpful. Last question for me. If I look at the operating margins, the improvement year-over-year looks like it was all based on the net improvement from the rupee. I think rupee was 250 basis points up year-over-year. So I guess, is that to where you guys -- expectations were for roughly, I mean, x rupee to be flat on a margin expectation, or would you be disappointed if you didn't get more leverage in the actual core business, x rupee?

David Mackey

I think, Bryan, when you look at year-over-year, our operating margins year-over-year are up about 250 basis points, right? If you look at what's happened, and obviously, the rupee has been a huge tailwind for us, but from a pound perspective, from another currency perspective, year-over-year, it's actually been a pretty significant headwind for us. So net-net, if you look at currency impacts on WNS year-over-year, currency has been about 140 basis points of favorability. So year-over-year, we really have 110 basis points of solid operational progress. And that's despite wage increases, and that's despite seat utilization that on a year-over-year basis is still 150 basis points of headwind. So I think we've really done a good job from a productivity perspective, from a leveraging of fixed cost perspective, in improving our margins. And if we can certainly remove the impact of the currency fluctuations and do better going forward on the seat utilization side, there are margin expansion opportunities going forward. So I think operationally, we have made very good progress in the last year.

Operator

The next question comes from Dave Koning from Baird.

David J. Koning - Robert W. Baird & Co. Incorporated, Research Division

So basically, the high-level takeaway on revenue growth is just we have 4 quarters of about 10% organic constant currency, slowing a little bit in the second half, but there's a lot of enthusiasm up the pipeline, no reason it can't get back to that 10%-plus level over the next several quarters, kind of after we exit this year?

Keshav R. Murugesh

Absolutely, Dave. So we're extremely confident there. I must also underline one more area that I did not speak about in the past, but I think I should talk about it. I think the maturity of the company is such now that I must also mention that we have also, in spite of progressing 2 or 3 deals all the way to closure, we walked away right at the end after more or less winning the deals based on our final assessment of risk reward, as well as the impact or ability for us to penetrate and radiate over the next 6 or 7 years across the tail of the business. So one of the things we have also -- we are extremely focused on at this point in time is making sure that as we bring in clients in particular, we are ensuring that we are passing our test of penetration, radiation, strategic, as well as being the clients that we can leverage across the longer-term period. So I would say, some of that impact also is baked into what we announced today. But I think it actually puts us in a very good place for the long term.

David J. Koning - Robert W. Baird & Co. Incorporated, Research Division

Okay. Great. Great. And then just M&A plans, I mean, you built your cash balance in a really good spot. Now I mean, is that something pre-active pipeline?

Keshav R. Murugesh

Yes, so we're, all the time, having discussions, Dave. We will be, obviously, opportunistic. But it will always be around building further excitement on the technology front, on the capability side and not bringing an acquisition just to bring in revenue. So the entire focus is around the capability creation side, vertical platforms, things like that. And I must tell you that we are pretty active in terms of looking at deals. Unfortunately, at this point in time, we haven't had anything in the recent past that we felt was so compelling, we'll go and put our cash out behind it.

Operator

The next question comes Manish Hemrajani from Oppenheimer.

Manish Hemrajani - Oppenheimer & Co. Inc., Research Division

Can you talk about pricing in general in light of the currency depreciation in the rupee? Also on existing clients, is propensity there to come back to the table and negotiate lower?

David Mackey

Sure, I'll take that, Manish. I think we're very happy with the fact that the change in the rupee -- it has not affected client's behavior, it has not affected our pricing. I think clients understand the value that we're delivering. I think clients understand that this is a long-term relationship. It's really easy if a client comes to you and says, because the rupee depreciated -- and by the way, the rupee has moved kind of back to a 60, 62 level, not at the 70 level that it was sitting at a few weeks ago, it's really easy to have a conversation with a client to say, "Yes, we can certainly look at something that's more of a risk reward. But do you effectively want a contract that's denominated in rupees?" And most clients don't want to accept currency risks, we'll certainly take the opportunity to come back and try and negotiate pricing when the rupee moves. But I think at the end of the day, they're fundamentally understanding of the fact that this is a long-term relationship and it's about the value that's being delivered. So we're not seeing irrational pricing demands from clients. And I'm equally pleased to say we're not seeing irrational pricing decisions from our peers, either. The bottom line is, they understand that this is a 6-, 7-year relationship plus, and the fact that if you go ahead and make pricing decisions today based on a INR 70 from a cost perspective, odds are that sometime during the duration of that relationship, you're going to get burned. So I do think that the industry has been really pragmatic about dealing with the rupee issue and will continue to do so.

Manish Hemrajani - Oppenheimer & Co. Inc., Research Division

Got it. And just following up on Ashwin's question a little bit earlier. It looks like you've still not right sized the sales force here and you continue to add heads, 72 last quarter and 78 this quarter. What are their productivity levels and how are they delivering on their quotas? Can you break -- and also, can you also break out the number of sales folks in hunting versus farming?

Keshav R. Murugesh

Yes, I'll take a stab at it first. But in terms of the sales force, it's, I think at this point in time, 41 in hunting and about 37 in farming -- [indiscernible] any of it is wrong. But 41 and 37, so they're equally -- in more or less equally split in terms of the numbers. And in terms of quotas and how they're performing, I would say at this time -- at this point in time, the productivity has increased, we're seeing more success with some of these people. But we must also understand that some of these people are also reasonably new into the system because we're all the time also managing our sales people. So I would say, at this point in time, 30%, 35% is where we are in terms of the overall rate in terms of quotas. And going forward, there's an option before us to keep taking that even higher. Having said that, again, I must -- I'm also very pleased to say that some of these people are also working on some really large deals from a WNS perspective.

David Mackey

I think that's the key, Manish, is to -- from our perspective, the sales force is maturing, the sales force is becoming increasingly productive. We've talked about a much larger pipeline. We've talked about a number of large deals close to closure. We've certainly accelerated the number of large deals that we're winning. But in terms of is this team fully productive? The answer is no. We've been as high as 81 sales people in the last year, we've been as low as 72. We're going to be in that 70 to 80 range until we're confident that we have the right number of people, the right mix of people, the right skill set. But a lot of that has to do with how you measure productivity. And as you're maturing the sales force, for us, a lot of that productivity metric has been about activity levels and moving things through the pipeline. We're now at that point where productivity gets measured by deals signed and revenue generated. So we're kind of that inflection point in our business now where we should start to see the results from the sales force coming through in terms of revenue generation, and it will allow us to make a better decision about how productive this force is. And certainly, that's something we want to assess before we start adding additional heads, right? We want to make sure that the 70 to 80 people that we have in this organization are the right people, in the right seats with the right skill sets. And once we're confident that, that's something that's translating into revenue, we can look at increasing our investments if we think it will generate additional revenue. But again, that's something that I think is down the road.

Keshav R. Murugesh

I just want to mention one more thing. I know it's not asked here, but I just want to volunteer something. And it is around the kind of incentive programs that we launched this year for our sales force, which actually is driving a different kind of behavior as well as, which we think is healthy long term for the company. So as opposed to just rewarding one year's revenue at different levels, we changed the format such that for the business development managers who are actually running some of these deals, they were -- they are being rewarded bulk based on the long-term tenure and the long-term size of the some of these deals. So that more that EPV value -- as opposed to the ACV value, as we go higher, some of these people are being measured and rewarded based on the current year's revenue, as well as [indiscernible]. As we go to the highest EBITDA this year's revenue, so it's a good mix of -- an incentive plan, it's driving a different kind of behavior, and we're actually seeing our wind direction, the aggression around winning these large, multi-year kind of deals has actually increased. And we believe some of it is also how we designed our plan.

Operator

The next question comes from Puneet Jain from JPMorgan.

Puneet Jain - JP Morgan Chase & Co, Research Division

Keshav, could you talk about the opportunities you see in the U.S. health care business? Overall health care declined in this quarter. But should we expect growth improvement there rest of the year, specifically as Affordable Care Act kicked in?

Keshav R. Murugesh

Yes, I think at this point in time, I would say that from a healthcare business point of view, our pipeline -- our overall health care business is reasonably small, as you're aware. But if you look at the pipeline that has been generated and some of the deals we are playing in, we see some exciting kind of possibilities that we believe should convert over the next 1 or 2 quarters or so. So that's what is exciting us at this point in time. At the same time, we are also doing our strategic planning kind of sessions to look at what are the specific areas that are likely to benefit from some of the recent announcements and changes in legislation in the U.S. that we could drive. And whereas managed care is an area that has been spoken about a lot, we're still going to be doing our exercises in terms of what kind of impact we can make in that business. So overall, I would say at this point in time, healthcare is an area of opportunity based on the pipeline we have. But it's not something that we are extremely aggressive about based on -- compared to we compared to what other people may be saying.

David Mackey

Just to add a little color to that, Manish. I think this is clearly one of the areas that I think as we go through our strategic planning process and look at the available opportunities in M&A, this is certainly an area where we would look to find an external partner to bring some capability into the organization to take advantage of some of these longer-term trends. Obviously, it's a relatively immature vertical in terms of business process management. And certainly, we see a long-term opportunity here. I think the other thing that's important to understand when you look at the softness in our Healthcare business, this quarter, both sequentially and year-over-year, that's really driven by one large client that we had discussed walking into the year that had sold off a division that we were supporting. So the softness in our Healthcare revenues this quarter has nothing to do with our capability. It's about a planned reduction that we have spoken about walking into the year.

Puneet Jain - JP Morgan Chase & Co, Research Division

Great. And Sanjay, as you ramp up in your new role, is there anything you would change in the way you run the finance organization, specifically in your guidance philosophy and maybe also in your views on hedges, leverage, et cetera?

Sanjay Puria

Yes, I think we have a pretty solid team already existing. So there are not much requirement, from -- any changes the way we are running it. And well as from a guidance philosophy perspective, we have been pretty consistent. And we'll just follow that consistent philosophy based on the visibility to the midpoint of the guidance to be continued

Keshav R. Murugesh

I would just add that Sanjay has traditionally been extremely involved in all of this over the years and, therefore, is very familiar with all of this. And I must also mentioned that he and I have also had a history together, having worked together, so we understand each other well. But he has actually been involved in setting a lot of these policies over the years. So as he said, probably, no need to make any significant changes anywhere.

Operator

At this time, we have no further questions in the queue. This will complete today's conference call. Thank you for your participation. You may now disconnect.

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