WNS (Holdings) Ltd

NYSE:WNS

Earnings Call Transcript 2022-Q1

[Operator]

Good morning, and welcome to the WNS Holdings Fiscal 2022 First 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' Executive Vice President of Finance and Head of Investor Relations. David?

[David Mackey]

Thank you, and welcome to our fiscal 2022 first quarter earnings call. With me today on the call, I have WNS' CEO, Keshav Murugesh; WNS' CFO, Sanjay Puria; and our COO, Gautam Barai. 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 first quarter ended June 30, 2021. 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 today's 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, Chief Executive Officer]

Thank you, David, and good morning, everyone. Despite some renewed COVID related challenges this past quarter, WNS continued to perform well and post solid financial results. Net revenue for fiscal Q1 came in at $236.3 million, representing a year-over-year increase of 17.3% on a reported basis and 11.4% constant currency. Sequentially, net revenue increased by $8 million or 3.5% on a reported basis and 3% constant currency.

In the first quarter, the company added 7 new logos and expanded 17 existing relationships. Hiring accelerated in support of both new wins and committed volume increases with existing clients with the company adding almost 3,000 employees during this quarter. WNS also posted strong adjusted operating margins of 20.8% despite COVID-related margin pressure and we repurchased 1.1 million shares. Sanjay will provide further details on our first quarter financial performance in his prepared remarks.

Given the pandemic related volatility in the past quarter, I wanted to provide you with a brief update on some of the associated impacts to our business. As expected, we are seeing that vaccination rates, infection levels and economic recoveries are not consistent across the globe. In early May, the country of India experienced a massive spike in COVID-19 cases. Case counts peaked at over 400,000 per day leading to shortages in oxygen and hospital beds, government-imposed lockdowns and increased fatalities. WNS responded to this sudden surge by dramatically reducing our in-office headcount, purchasing oxygen concentrators, increasing employee benefits and hiring additional resources to manage productivity loss stemming from personal or family illness. These actions resulted in over $1 million of additional costs in the first quarter and the sequential decline in our global work from office percentage from 23% last year or last quarter to 15%, with India headcount in-office dropping below 5%.

On a positive note, our proactive response enabled WNS to support our employees' health and safety, while successfully managing a rapid transition back to work from home. Service and delivery levels in the quarter remained stable at 99%, and there were no material adverse impacts to client operations or company revenue. This recent surge of cases in India further stress tested our business continuity approach and validated the hybrid operating model as being structurally more resilient. By mid-June, case counts in India had dropped well below 100,000 per day. Hospital and infrastructure availability was largely restored and lockdown restrictions were being eased. I am also proud to announce that last month, WNS began procuring and delivering vaccinations for our employees and their families in India.

So far, we have administered over 8,000 doses and we are working to expand vaccinations across our global delivery network. We are also planning to make these programs available to our clients, employees and business affiliates of WNS. While India struggled in Q1 with the COVID surge, the U.S. economy benefited from declining case counts and the lifting of restrictions. This progress extended to the vertical -- to the travel vertical, where we are seeing meaningful improvement in the U.S. domestic leisure market, and more specifically, the online travel sector. The magnitude and timing of the recovery, however, has caught a number of our travel clients by surprise. WNS is working closely with them to understand their changing requirements, and we are aggressively hiring and training additional resources to bring increased support levels online as quickly as is possible.

Our revised guidance reflects increased volume commitments and associated fulfillment cycles for quarter 2 and beyond. There also remains further opportunity to improve revenue going forward as U.S. domestic travel continues to rebound and when the business and international travel segments begin to recover.

I also wanted to spend a few minutes today speaking to you about the ongoing ESG activities at WNS. In May, we released our first-ever corporate sustainability report, which highlights WNS' efforts in fiscal 2021 towards developing, measuring and integrating sustainability goals into the company's long-term strategic plans. With the help of KPMG, we performed a comprehensive materiality assessment to better understand the ESG elements of our business that are most critical to WNS' success and those that are of primary importance to our stakeholders. In addition to expected focus areas such as ethics and compliance, talent management, diversity, data security, corporate social responsibility and private change, the survey also highlighted digitization and innovation as important success factors for WNS.

Many of the key ESG focus areas identified in this sustainability report have, in fact, been vital to managing the impacts of the COVID pandemic, beginning with the company's commitment to protecting our people, clients and communities. From an employee perspective, WNS has extended significant resources to ensure the health, safety and economic stability of our global staff. Efforts, including protection of our employees' financial well-being by carrying excess headcount and enhancing benefit programs and prioritizing their health and safety through proactive education programs, shifting to work-from-home models, implemented in-office safety protocols and initiating vaccination programs. For our clients, WNS was able to support their immediate requirements by rapidly innovating, by rapidly innovating, co-creating and implementing new work-from-home solutions to maintain mission-critical operations.

We are also helping meet their longer-term requirements by driving increased transformation and digitization in existing processes and by continuing to make the necessary strategic investments in our business despite COVID-related revenue and margin pressure. With respect to the communities in which we live and work, the company shifted our WNS Cares initiatives to virtual and has made contributions of over $1.5 million to COVID relief efforts across the globe since the beginning of the pandemic. In short, I believe the company has been able to strike the proper balance in supporting our employees, clients, shareholders as well as communities. I'm also pleased to see that our sustainability efforts are gaining recognition in the market.

Recently, WNS has received the #1 ranking in Cowen’s 2021 ESG assessment among 19 of our business services peers. We have also been included and achieved favorable scoring in the 2021 Bloomberg Gender Equality Index, and received international awards for our learning and development programs, energy conservation and CSR initiatives. While we have made significant strides on the ESG front, these are only the first steps in what must be an ongoing journey of continuous improvement. The company leadership understands that our ability to remain competitive and drive long-term success depend in part on integrating critical ESG components into our corporate strategy and goals.

Looking forward, we continue to see healthy momentum in the BPM space driven by BPM space driven by increased demand for digital transformation, advanced analytics and cost reduction. The transition of our business from outsourcing to automating and transforming is not only helping our services become more mainstream, it is also expanding our addressable market. We believe WNS remains well positioned in the BPM space, having made the right investments over the past several years to capitalize on these trends and differentiate our capabilities. For this fiscal year, we currently have 95% visibility to double-digit revenue growth, industry-leading margins, strong free cash flow and a healthy broad-based pipeline.

I will now like to turn the call over to our CFO, Sanjay Puria, to discuss further our results as well as our outlook. Sanjay?

[Sanjay Puria, Chief Financial Officer]

Thank you, Keshav. In the first -- in the fiscal first quarter, WNS' net revenue came in at $236.3 million, up 17.3% from $201.4 million posted in the same quarter of last year and up 11.4% on a constant currency basis. Sequentially, net revenue increased by 3.5% on a reported basis and 3% on a constant currency basis. Sequential revenue improvement was broad-based across verticals, services and geographies and driven by both new logos and expansion of existing relationships. Adjusted operating margin in quarter one was 20.8% as compared to 17.5% reported in the same quarter of fiscal 2021 and 20.8% last quarter.

Year-over-year, adjusted operating margin increased largely as a result of reduced COVID-related margin pressures, increased operating leverage on higher volumes and favorable currency movements, net of hedging. These benefits were partially offset by the quarter 1 impact of contractual profitability commitments, employee wage increases and the reinstatement of our corporate leave policy. Sequentially, margins declined as a result of committed productivity commitments, wage increases, costs related to the COVID spike in India, the reinstatement of our corporate leave policy and hiring in advance of revenue. These headwinds were partially offset by operating leverage on higher volume, reduced SG&A resulting from quarter four bonus and incentive amounts and favorable currency movements, net of hedging. The company's net other income and expense was $0.5 million of net income in the first quarter as compared to $0.5 million of net expense reported in quarter one of fiscal 2021 and $200,000 of net expense last quarter.

Year-over-year, the favorable variance is attributable to $1.2 million of nonrecurring interest income on a tax refund and lower interest expense resulting from scheduled debt repayments. These items were partially offset by lower interest rates on cash and investments. Sequentially, the interest in net income is driven by an incremental $0.4 million of interest income on tax refunds and higher cash balances. WNS' effective tax rate for quarter one came in at 21.5%, down from 25.1% last year and down from 22.6% last quarter. This quarter's tax rate included a onetime $0.8 million tax benefit relating to the tax treatment of our liquid mutual funds. Other changes in the quarterly tax rate are primarily due to a mix of profits between geographies and the mix of vol delivered from tax incentive facilities. The company's adjusted net income for quarter one was $39 million compared with $26.1 million in the same quarter of fiscal 2021 and $36.7 million last quarter. Adjusted diluted earnings were $0.76 per share in quarter one versus $0.50 in the first quarter of last year and $0.71 last quarter.

As of June 30, 2021, WNS balances in cash and investments totaled $311.3 million and the company had $16.8 million of debt. WNS generated $15.3 million of cash from operating activities this quarter and incurred $7.7 million in capital expenditures. During the quarter, the company repurchased 1.1 million shares of stock at an average price of $77.31, which impacted quarter one cash by $85 million. DSO in the first quarter came in at 32 days as compared to 39 days last year and 30 days last quarter. With respect to other key operating metrics, total headcount at the end of the quarter was 46,918 and our attrition rate in the first quarter increased to 32%, up from 11% reported in quarter one of last year and up from 30% in the previous quarter. Hiring in the quarter was for new business ramps, committed volume increases in travel and COVID-related backup resources. Base seat capacity at the end of the first quarter remains relatively steady at 34,738. The seat utilization metrics, which the company typically provides as a measure of infrastructure productivity, are not meaningful given we are currently operating at 85% work-from-home globally. In our press release issued earlier today, WNS provided our revised full year guidance for fiscal 2022.

Based on the company's current visibility levels, we expect net revenue to be in the range of $961 million to $1.9 billion, representing year-over-year growth of 11% to [16%] on a reported basis and 8% to 14% on a constant currency basis. Revenue guidance assumes an average British pound to U.S. dollar exchange rate of 1.38 for the remainder of fiscal 2022.

Consistent with our guidance approach in previous years, we currently have 95% visibility to the midpoint of the range and our projections do not include any uncommitted short-term revenue. Full year adjusted net income for fiscal 2022 is expected to be in the range of $158 million to $168 million based on a INR 74.5 to U.S. dollar exchange rate for the remainder of fiscal 2022. This implies adjusted EPS of $3.09 to $3.28, assuming a diluted share count of approximately 51.2 million shares. With respect to capital expenditures, WNS currently expects our requirement for fiscal 2022 to be up to $35 million.

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

[Operator]

[Operator Instructions]. Our first question comes from the line of Maggie Nolan with William Blair.

[Ted Starck-King, William Blair]

This is Ted on for Maggie. Can you talk about the ability to add new clients? I think the client sentiment right now on outsourcing and delivery ability just kind of with COVID going on in India.

[Gautam Barai]

Yes. In terms of what we are seeing that the client demand continues to be robust, and we continue to add new clients as also alluded by Keshav in his prepared remarks earlier, what we are also able to do is effectively ramp up due to our hybrid operating model, which balances our work-from-home to work-from-office requirements. So we are seeing no pressure in terms of ability to deliver and execute to our committed ramp-up cycles with our clients.

[David Mackey]

And just to add a little color to that, Ted. I think what this really shows is how mission-critical these services and solutions are to our clients today. The reality is, given the disruption, given some of the challenges that are going on out there, clients understand that this isn't going to be easy, but the reality is they understand that they can't wait a year or 2 years or 3 years until we're completely past the COVID cycle to be able to start to transform and to automate their businesses. So I think what this really is doing is helping to demonstrate just how critical and just how strategic these types of initiatives are to our clients.

[Ted Starck-King, William Blair]

Okay. That's helpful. And my follow-up question is, what are you seeing in terms of the current wage inflation levels in the current pricing environment?

[Keshav Murugesh, Chief Executive Officer]

So the current wage is back to the pre-COVID level, which is a bit normal. What we used to have approximately at an average of 8% in the organization. And we are not seeing any pricing pressure. The whole discussion is all about productivity, efficiency, transformation, and that's what the discussion about the total cost of ownership.

[Operator]

Our next question comes from Bryan Bergin with Cowen.

[Bryan Bergin, Cowen]

A question on travel and leisure client conversations. Just curious what you're seeing in projected spending and the budgets that they are providing for the year? And are you seeing any recent volatility based on variance?

[Gautam Barai]

So as Keshav alluded in his prepared remarks. So what -- our guidance assumes the confirmed ramp-up that our clients have provided to us over the next 2 to 3 quarters. What we are seeing is a current ramp-up across our OTAs, especially due to the domestic travel bookings in the U.S. and some forward leisure bookings domestically in the U.S. and certain other countries. But definitely, there is a scope that we see is as the -- depending on the waves of COVID pandemic evolving, where we see is increased bookings in hotels to transcontinental flight should they pick up, that gives us additional volumes. But at the moment, the clients are also conservative in providing confirmed forecasts.

[Keshav Murugesh, Chief Executive Officer]

Yes, Brian, this is Keshav, I will just add a little bit here. And obviously, what's happening around travel is very opportunistic, very positive from our point of view. And clearly, we are benefiting from some increased volumes based on what Gautam just spoke about. But at the same time, I'd like to mention that at this point in time, our revenues are still almost 25% below pre-COVID level. So there is a huge potential for growth from here. And for that to be realized, lots more has to happen. First and foremost, we think that the whole health passport system that airlines and countries are talking about has to take off, more vaccination needs to get done. And most importantly, transatlantic traffic, as Gautam mentioned, should take off. So having said that, while we are positive about it and we expect to keep benefiting along the way, we will wait with caution to see how our clients actually project these numbers over the next few months.

[David Mackey]

A couple of things I'd like to add to that, too, Bryan. One, the other thing that's important to remember, and Keshav touched on it in his prepared remarks a little bit, is that there is a lead time that's associated with what the travel clients want, right? So for example, if they do start to see a pickup in volume, come to us and are willing to commit to higher volumes going forward. there still is a 2- to 3-month cycle for us to go out and hire these resources and train these resources for the specific processes that there's demand for. So there's always going to be somewhat of a lag between what you see in a pick-up externally and what we see in terms of the ability to generate revenue. The other color I'd like to give you around the travel vertical is in addition to, as both Keshav and Gautam mentioned, the opportunity to recover the lost business, we are also seeing significant traction in the travel vertical with new logos. So we are seeing new companies coming to us, looking for help in a post-pandemic environment. And these are really all centered around, not just saving costs, but also trying to attract and retain customers and improving the customer experience in an environment where that's going to be extremely important to trying to rebuild loyalty, rebuild capability.

[Bryan Bergin, Cowen]

Just a follow-up here on gross margin. Can you comment on what drove the change here relative to where you've been in the last several quarters? How much of this was pandemic-related costs versus some of the normal course of business? And how should we expect gross margin to trend over the next couple of quarters?

[Sanjay Puria, Chief Financial Officer]

Yes. So I'll take that. Specifically for this quarter, we had less than $1.5 million of the COVID-related impact, specifically for this quarter, which was around some of the hiring -- additional hiring what we had to do because of the COVID absenteeism, because there was a surge and employees were not able to come to work as well as some of the benefits program, what we started during this quarter which Keshav touched upon, whether it was the insurance coverage for our people or whether it was a home care, vaccination camps and so on. What we expect margin definitely to improve sequentially to the next quarter as we move forward because some of this cost as we are seeing, as the COVID is -- the situation is getting relaxed, so we may have that improved. But again, if there is a second wave or a third wave, then definitely, there may be some impact to protect the revenue, but some impact on the margin.

[David Mackey]

Yes. And I think, Bryan, just to reiterate, Q1 is typically a seasonally low quarter for us from a margin perspective, both in terms of the wage increases that we give to our employees as well as the productivity commitments that we give to our clients. So certainly, the reduction sequentially is something that was expected. I would actually say that -- If you look at where we finished the first quarter, our gross margin came in probably a little bit below expectation because of the COVID surge. But the SG&A also came in lower on a sequential basis because of some of the incentives and bonuses that Sanjay mentioned that were paid in Q4 that were not recurring in Q1. So certainly, it was a good overall quarter from an operating margin perspective, but we do see upside as we move across the 3 quarters for the rest of this year, which is what's implied in our full year guidance, which still has adjusted operating margins in the 21% to 22% range.

[Operator]

Our next question comes from Mayank Tandon with Needham.

[Mayank Tandon, Needham]

Congrats on the quarter. Keshav, maybe I would ask you sort of a high-level question to start. Are you seeing the pace of deals converting from signing to revenue accelerate here at this stage in the pandemic versus say pre-pandemic. I'm assuming that given the cost pressures and the focus on digital transformation, there might be more of an impetus on the part of clients to move faster? I just want to get your thoughts around that.

[Keshav Murugesh, Chief Executive Officer]

Yes. Thanks, Mayank, for that question. So first and foremost, I would say that 3 things are working in our favor. One is the investments we have made over the years in some of the core programs that I have always spoken about, which, I think, at this point in time are all resonating extremely well from a client point of view. Now when we talk about digital, when we talk about technology, when we talk about domain, when we talk about analytics, and when we talk about the fact that as a company we are able to actually deliver transformation and as well as a transition program even in a remote manner in this fashion, it actually augurs very well for us.

The second thing I must say is that anyone who has not dipped their toes in this model, actually, I see them scrambling to actually start test the model and start getting involved with this model. And for those who are mature outsourcers or who have been part of this program for a while, I think a lot of them are looking at when is the next wave likely to hit and what decisions should I take quickly. So in terms of the overall demand environment, I actually think that the demand is very, very solid. It is across all 4 verticals, it is across all geographies, it is across all the offering programs we have. And in terms of conversion from the sales cycle to actual revenue, it depends a lot on the -- what the client actually wants. From our perspective, we've actually found a number of clients that have been pursuing this for the past few months, have converted very quickly and some people who are looking at larger transformational kind of deals are still progressing their programs but moving a little slower at this point in time.

But overall, I'm really positive about the way our pipeline has shaped up and the way our clients and prospects are responding to us. And I must say, at this point in time, the number of large deals that we are interacting around is actually very, very healthy.

[Mayank Tandon, Needham]

That's very helpful. Then as a quick follow-up here. I wanted to go back to the guidance. Should we expect the trajectory on revenue and margins to be fairly linear for the next 3 quarters? Or do you expect any seasonality or any sort of onetime drivers that might skew the growth rate or margins to 1 or 2 quarters. Just want to get a better handle on how the model shakes out now in this stage of the pandemic and some of the headwinds that you called out in some businesses around travel, but less so obviously than what you were seeing before?

[Sanjay Puria, Chief Financial Officer]

So I'll take that. Right now for the guidance, definitely, what we expect is a sequential growth over the next 3 quarters. And this is based on our visibility of the guidance, what we have, which is 95% at this stage to the midpoint of the guidance. And I just want to remind that this still does not include the short-term revenue where we don't have a visibility as well as the possibility from a travel vertical in case it picks up because right now we are only [building] what the client has given the commitment based on that visibility. So we are not expecting any volatility. Because if you recall, earlier the volatility specifically in quarter 3 is to happen around the travel vertical, which right now anyway is based on the minimum commitment our client has given.

[David Mackey]

Yes. Just to add a little bit to that, Mayank. I think when you look at the cadence across the last 3 quarters of the year, good, healthy quarter-over-quarter growth across the last 3 quarters and kind of nothing that we see that's unique or onetime in those numbers today. Obviously, our visibility to next quarter is better than it is on Q4 at this point in time. So hopefully, things continue to firm up as we move across the year. But the seasonality, if it sits today, is pretty even both from a top line expansion as well as from a margin expansion. The one thing I do want to provide a little bit of a caveat on it relative to Q2 earnings, while we do expect revenue to grow and we expect margins to expand a little bit in Q2, we also know that there were some one-timers in terms of interest income and in terms of tax benefits that will not be recurring in Q2. So we do view Q2 at this point in time as having relatively flattish earnings

[Operator]

Our next question comes from Puneet Jain with JPMorgan.

[Puneet Jain, JPMorgan]

So Keshav, you talked about hybrid delivery model going forward last quarter, I think. Will here be opportunity to fundamentally reduce facility expense and operate with higher work-from-home under that model? And can you talk about timing and margin implications for that?

[Keshav Murugesh, Chief Executive Officer]

Sure. So Puneet, I'll start and then we'll have Gautam talk a little about it. So the first thing I must say is that I think the greatest comfort that we have given to our clients as well as a number of prospects is the fact that we can operate in any model. I mean, as opposed to the traditional model where everyone came to the office and operated, we were able to demonstrate how quickly and efficiently we were able to move the bulk of our teams back into the -- to homes and still deliver a great experience to all our clients. I actually think as a result of this, it will actually be very salutary to WNS in terms of the revenue line. I think a lot of processes that clients traditionally have kept in their back pocket or kept closer to themselves at the head office, they are far more comfortable with handing over to us.

Now in terms of the hybrid delivery model that we spoke about, now clearly what we are doing is working with governments across the globe to make sure that some of the relaxations that they provided during the pandemic are made permanent. Now as long as the pandemic remains and as long as these relaxations are available, we are extremely comfortable operating in a model which is predominantly driven from home. But I want to mention one thing. The first and foremost at this point in time, India has relaxed after the pandemic. They have not made final decisions on what the model will be in terms of the OSP regime as well as in terms of labor loss from a permanency point of view. We'll have to wait and see how that actually works out before we make final calls on this. Second thing is because we very mission-critical kind of work, now it will be different for different companies. We believe that our need to bring people back into the office as far as is possible, provided normalcy resumes, and to keep building on the culture of the company, as well as the innovative culture of this company is critical, and that can be done predominantly when people are working in the office.

So I will say that maybe at this point in time, it is safe to assume that 20% to 30% should -- will work from home, the rest over a period of time will come back to the office in terms of normalcy. But the company is prepared to work in any model and has demonstrated this very well to clients. And even as we speak, all through this pandemic, we have kept rationalizing costs. We have kept focusing on our infrastructure costs as well as tightening our belt in terms of new facilities and things like that. So that is something that will always continue.

[Puneet Jain, JPMorgan]

Understood. And can you also talk about your exposure to high-tech or e-commerce clients that grow at fast rate? Could you share like what percentage of revenue stems from such clients and how much they grew at for you?

[David Mackey]

Sure. Let me take that, Puneet. I think we've spoken in the past about some of the progress that we've made along the lines of acquiring these clients and growing these relationships. I think we continue to do that. We continue to see that we've got a really good reputation in the high-tech space in terms of our ability to connect with these types of clients. If you looked at last fiscal year, we were at 17% of overall company revenue that came from digital disruptors or companies that were born digital, if you will. And we continue to see that number in terms of what we had here in the fiscal first quarter. So both in terms of the names and the logos that we've been able to add and the growth and the expansion within those, we're very pleased with our overall reputation in the space, and more importantly, how our reputation in the Internet space helps us, help our traditional brick-and-mortar clients compete with the digital disruptors because that's really what they're looking for. That's what's driving transformation and digitization, it is the need to be more competitive with these types of clients, and we certainly believe that we have a unique perspective to offer clients.

[Gautam Barai]

So just to add to what Dave mentioned, beyond the traditional high-tech companies, we have been working very strongly over the past 2 to 3 years with some of the largest fintechs, insurtechs and healthtechs across the board, which have been extremely heavily funded.

[Operator]

Our next question comes from Vincent Colicchio with Barrington.

[Vincent Colicchio, Barrington Research]

Yes. Curious what has to happen to hit the high end of the revenue outlook for the year?

[Sanjay Puria, Chief Financial Officer]

So I think it was in the prepared remarks, as I said that, one, the short-term revenue is not baked in still in the guidance. It is based on the visibility, what we have is 95%. Second, travel. Again, the client has given the conservative commitment at this stage. As the travel sector opens up, so there's a good opportunity definitely to really increase the revenue for the year as well as some of the quick sales conversion and the transformation deal what Keshav was talking about can definitely help us to drive the high end of the guidance.

[Vincent Colicchio, Barrington Research]

And curious, is any of the current unrest in South Africa having any impact on your operations or demand trends?

[Keshav Murugesh, Chief Executive Officer]

I think I'll take that. Yes. So I think what the unrest obviously is disturbing and we are really sorry for all the people who are impacted as a result of this. At this point in time, we've not actually been impacted from an operations point of view, but we are watching the situation very, very closely.

[Gautam Barai]

And I'll just add, as Keshav said, specifically because work from home, what we are driving across the globe and where major -- 85% of the people are working from home, and that has really held the operation not to get impacted even in this untoward incident.

[Operator]

Our next question comes from Dave Koning with Baird.

[David Koning, Robert W. Baird]

I guess my first question, the banking vertical for a long time was kind of running $9 million, $10 million a quarter. And then the last couple of quarters kind of ramped to 11% and then 13% and now it's at like 15%. So I guess, maybe what's happening there? Is that one big client that's just all of a sudden ramping? And maybe is there a lot of ramps still come? Or are we kind of at a $15 million kind of level now for a while?

[Gautam Barai]

What we are seeing is across the board, multiple clients starting to ramp up. And this is especially because of our strategy about a couple of years. We're going to focus on the fintech and the regionals and the super-regional players who are starting to expand quite significantly for us. So almost every client that we have won in the last 2 years are seeing significant growth.

[David Mackey]

I think, Dave, this is an area where the strategy to focus on the parts of the banking financial services space, that were significantly underpenetrated or that were evolving in nature really has paid off for us. And obviously, the very large global banks have pick partners and they've outsourced quite a bit over the years. And that's an area where we would struggle to make an impact. But to Gautam's point, when you look at regional banking, when you look at super-regional banking, when you look at fintechs, these are all areas that have been underserviced or emerging, certainly a place where we think we can play a meaningful role and we're starting to see that traction within banking and financial services vertical.

[David Koning, Robert W. Baird]

And then on the workforce. I think it's interesting in the last couple of quarters, a lot of times you hear about it's hard to find people, there's higher attrition. Your attrition is back to kind of normal levels, but you've hired actually faster than revenue growth. I would imagine that's in preparation, this quarter 7% sequential growth is the biggest headcount growth in years, right? And so I guess maybe that's a question. And then I guess, part of it, too, is the Philippines -- in particular, the Philippines is a huge place. India, normally, that was good. But the rest of the regions didn't grow that much. Maybe just talk about region by region, why certain ones have grown a ton; others, not quite as much?

[Gautam Barai]

Yes. As likely said, in terms of this quarter, we've had to hire quite a large workforce. This is in anticipation for the ramps that are happening with our travel clients, in fact, the confirmed volumes that we have received, which requires about 6 to 12 weeks in terms of hiring and training. So that's the anticipated ramp-ups that we are seeing in the Philippines. A large chunk of the Philippines growth is centered around our OTA clients, and some of our financial services and a few of our healthcare clients, and that's all expanding in that particular region. So is the case within our India headcount where we see a growth happening from our analytics side of the business, the digital services that we need to provide to a multitude of our clients and our financial services clients.

Now again, we have not seen any untoward pressure in terms of our hiring capabilities. There are a few selective skills that are always in demand across the board depending on the macroeconomic conditions. So we have seen the largest growth happening in these 2 regions. And the other regions are kind of static at the moment where we are seeing incremental growth.

[David Koning, Robert W. Baird]

Right. And just to follow up on that, Dave. I think as Keshav mentioned in his prepared remarks, the massive hiring this past quarter was really for 3 reasons. Some of it was in preparation for the growth in the OTA space, which Gautam alluded to. Some of it was for the new logos and the expansions that have taken place over the last couple of quarters. But we also had hiring in India from a COVID disaster recovery business continuity perspective because that's where we saw the big impact from the spike. So we had to hire additional resources just to make sure we were able to deliver for our clients and when we carried some of that cost as well. So were the really 3 drivers for that massive headcount spike. And now we certainly hope to leverage that as our top line grows.

[Keshav Murugesh, Chief Executive Officer]

Hey, Dave, I just want to add one perspective here, and it is on the fact that you complemented us on the large-scale hiring. I mean, it once again demonstrates how talent looks at WNS as a great company to work for, as a company where they get unique experiences and in a market which is quite hot and where there is a war for talent, the fact that they appreciate that this is a learning company for them. So actually, I really thank you for the question because it once again demonstrates that all the investments that we have made in our business and particularly around HR and talent is resonating extremely well with the workforce of the model.

[Operator]

[Operator Instructions]. Our next question comes from Ashwin Shirvaikar with Citi.

[Ashwin Shirvaikar, Citigroup]

I think let me start with -- you commented a few times on the call that visibility is based on minimum commitment, which is not different than how you've done it before, but the question really is has the tendency from the client side been to exceed minimum commitments coming out of the pandemic here? And maybe a related question. It's, with more of your growth coming outside your top 20, is there sort of a different pattern or behavior that we should expect from maybe a different client base?

[Sanjay Puria, Chief Financial Officer]

So I'll take that. So right now, other than our travel vertical, travel clients, as we mentioned, as they have been a little bit conservative because they don't have to see the visibility beyond a point, we are not seeing any conservative commitment from the client unless and until it is contractual because now is that if they give the commitment, then that much -- the volume of the billing is always done, right? So that is where they become conservative. But other than that, travel, we've not seen any particular pattern or a different behavior from a client perspective in providing the commitment. And that is the reason, if you recall, in the last call, we did say that this time the productivity and the ramp is -- was higher than the usual watch and despite that we are providing 11% at the midpoint from a constant currency growth perspective based on that visibility.

[David Mackey]

And I do think though, Ashwin, we have seen -- last year, we were talking about how -- what was happening with clients were forecasting declining volumes. And as a result, what was happening is they were beating those numbers based on the fact that they were being conservative and didn't want to get stuck with excess resource or excess cost. That's clearly moved to a situation now when you look at the hiring patterns to where not only are they forecasting flat volumes, but they're forecasting increase in volumes. And the reality is it's not a forecast for them. They need those resources today. The problem that they have is they didn't forecast that or committed to it 3 months ago, 6 months ago. So now we've got to go through the whole fulfillment cycle to make sure that they're able to get those resources. If they do continue to move in that direction, there's certainly upside going forward. The question will be how quickly can we hire and frame to that accelerating volume. So some of this is what's going on with respect to the commitments, but you have to understand the back side of it, which is once a client is willing to commit to that, how quickly can WNS then go find those resources and train those resources, so that they're ready to deliver for the client.

[Ashwin Shirvaikar, Citigroup]

Understood. And then the second question is on cash and use of cash. Was anything onetime driving the free cash flow trend in the quarter, the higher unbilled rev? Is there something changing as it relates to contractual terms? Or is it more timing related? And the use of cash part of it is the -- you repurchased $85 million. I think that's the biggest one that you've ever done in a quarter in your history. Again, is that very opportunistic? Or are you -- I mean, should we expect a step up?

[Sanjay Puria, Chief Financial Officer]

So specifically, first, let me start with quarter one. That's a typical year. A low cash generation quarter because we have a bonus payout, we have a wage inflation. And what -- as well as with the expansion and the growth our accounts receivable has gone up a little bit, including some contract renewals, what we had last contract renewal and there was just a onetime change from a billing perspective just a couple of days, which has just fall into the next month. That's a onetime impact what we have in quarter one. And from a utilization of the cash perspective, yes, share buyback program that we have completed with $85 million in the quarter as well as our inorganic plans are in place. We continuously keep on actively pursuing the opportunities and the prospects from a strategic area perspective, which are in the tuck-in acquisitions on the capability side. It's just about the right assets, the right time and the right price, that will be the utilization of the cash as we move forward from inorganic growth plan perspective.

[Operator]

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