News

Wipro Limited (WIT) Q3 2024 Earnings Call Transcript

Wipro Limited (WIT)

Q3 2024 Earnings Conference Call

Company Participants

Dipak Bohra - Senior Vice President, Corporate Treasurer and Investor Relations

Thierry Delaporte - Chief Executive Officer and Managing Director

Amit Choudhary - Chief Operating Officer

Aparna Iyer - Chief Financial Officer

Saurabh Govil - Chief Human Resources Officer

Conference Call Participants

Moshe Katri - Wedbush Securities

Girish Pai - Nirmal Bang Equities

Sudheer Guntupalli - Kotak Mahindra Asset Management

Abhishek Kumar - JM Financial

Dipesh Mehta - Emkay Global

Anmol Garg - DAM Capital

Presentation

Operator

Ladies and gentlemen, good day, and welcome to Wipro Limited Q3 FY '24 Earnings Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Dipak Bohra, Senior Vice President, Corporate Treasurer and Investor Relations. Thank you, and over to you, sir.

Dipak Bohra

Thank you, Yashashri. Warm welcome to our quarter three FY '24 earnings call.

We will begin the call with the business highlights and overview by Thierry Delaporte, our Chief Executive Officer and Managing Director; followed by updates on operations and delivery by Amit Choudhary, our Chief Operating Officer; and finally, financial overview by our CFO, Aparna Iyer. Afterwards, the operator will open the bridge for Q&A with our management team.

Before Thierry starts, let me draw your attention to the fact that during the call, we may make certain forward-looking statements within the meaning of Private Securities Litigation Reform Act 1995. These statements are based on management's current expectations and are associated with uncertainties and risks, which may cause the actual results to differ materially from those expected. The uncertainties and risk factors are explained in our detailed filings with the SEC. Wipro does not undertake any obligation to update the forward-looking statement to reflect events and circumstances after the date of filing.

The conference call will be archived, and a transcript will be available on our website.

Over to you, Thierry. Thank you.

Thierry Delaporte

Dipak, thank you. Hello, everyone. Thank you for joining us today. Team, very glad to have you here, and of course, here to wish you a great year 2024.

So, I'll begin today's earning call with, as always, an overview of our third quarter results, details of our sectoral performance, the demand environment, of course, and then, direction for the coming quarter.

Earlier today, we reported our numbers to the market and our Board, and I'm pleased to share with you that we're starting to see some healthy indicators for growth. One, our IT Services revenue for the quarter is at the top-end of the guidance. Our revenue stands at $2.66 billion in reported currency.

We've continued to book deals at a healthy pace, although Q3 is typically a shorter quarter due to the year-end holidays. Order booking, total contract value terms, stand at $3.8 billion. From that, our large deals TCV for the quarter was just over $900 million. On a year-to-date basis, it actually shows a 20% growth. We booked 14 deals this quarter in the greater than $30 million TCV range. By comparison, we had 11 of such deals in the third quarter of last year.

Next point is on net income for the quarter that where we've expanded margin by 1.8% sequentially. On operating margin, we stood at 16% despite, I would say, seasonal furloughs and the annual salary increases for our employees. On a year-to-date basis, our margin have actually improved by more than 60 basis points.

As you know, we have consistently invested in our people, in our processes and organizational efficiencies over the last several quarters. These investments are paying off. We are seeing it every day. Our results demonstrate at a fundamental level, Wipro is increasingly, I would say, more streamlined, proactive and efficient. This has boosted our clients' trust in our teams. This has improved our win rate. And this has -- and the type of deals we are winning, this is visible in that way. That is more of a complex transformation deals is what we are seeing.

Wipro is not only benefiting from vendor consolidation, but we're also adding new logos, while we are continuing to grow our business with existing clients, of course. In fact, our clients tell me that they are seeing a more confident and united effort from us, One Wipro. We're leveraging the depths and the breadths of expertise and diversity inside Wipro. Contributions from our acquired firms such as Capco, Rizing, Designit, you know them, are more prominent and well received.

Looking at the demand environment, I'd say, the demand environment overall remains cautious. Clients are still making conservative investments. They are looking for efficiency. They are more focusing on returns on investment and looking for better optimization, I would say, of existing investments. But we are seeing some indicators for growth.

If you remember, we had called out a possible slowdown in the economy as growth in our consulting business slowed. We know that when the market turns, consulting will be the first area to bounce back. With that in mind, I'm pleased to share good performance from our consulting business with Capco reporting a double-digit sequential growth in order bookings, the highest in the last few quarters.

Turning to our strategic market units. Looking at Americas 1 first. We recorded a strong quarter for this unit where we booked half of our 14 large deals this quarter. Revenue in this market grew 2% sequentially, led by healthcare, which grew actually 9% sequentially.

In our Americas 2 market unit, we continue to see some softness. This is -- let's keep in mind, this unit is primarily a BFSI or BFSI and energy and utilities being the large part of these units. They are seeing still some softness and resulting in a 1.3% drop in revenue Q-on-Q. That said, there's strong momentum in order bookings, which in total contract value terms increased 46% sequentially.

In Europe, we won four large deals in the third quarter despite the continuing economic weakness. These four new transformative deals add up to nearly $300 million in bookings. These deals underscore the success of our strategy in this market. Having said that, revenue from Europe decreased 4.3% sequentially in Q3.

Across the board, but more specifically in our APMEA strategic market unit, we have worked on -- and we've reported on that regularly, we have worked on reducing low-margin accounts, while slowly moving towards higher-value transformation projects. So, in APMEA, revenues declined 5.4% quarter-on-quarter. However, the strategy of pivoting towards higher-value business reflects in the margins we delivered in the region. Margins rose 240 basis points sequentially to 13.8% this quarter. That's the highest in the last six quarters. And once again, we are seeing consulting, especially Capco and Rizing, play a big role in the complex deals we're winning in this market.

To continue this rigor, we made some changes to our Growth Office recently, you know that. With the foundational pillars for sales excellence set out by the Growth Office over the last two quarters -- the last two years actually, we moved some of the Growth Office functions inside the strategic market units, thus creating an even tighter integration with the SMUs. With this, we reinforced how we nurture large deals in each geography, and we will respond faster to changing market needs.

Simultaneously, we continued to streamline our operations as per plan. We'll continue to leverage artificial intelligence and automation for efficiency across all functions and business areas. We'll continue to add to that the learning and development and reskilling of our existing talent base and besides optimizing our talent pyramid to better serve clients' needs. Multiple initiatives are in place. I request Amit to share highlights of some of those programs with you today.

What I can say with confidence is that Wipro is a better partner for our clients today. We are more agile, one that is responding to and evolving with our clients and their needs. Amit, by the way, will also share with you highlights of the work done around account delivery and service excellence. This really is the centerpiece of our efficiency play and increased agility. We continue to invest in areas that we know are going to remain, I would say, fundamental for our long-term success.

And let's start with that. People, our most valuable assets. We awarded our colleagues their performance-based annual salary increases recently, as you know. The promotion cycle just closed, and we'll be making the announcement soon. We continue to stress on and offer training and development options and growth opportunities to our employees. This is critical to why people continue to choose to work with and give the best to Wipro. Of course, returning to work more regularly after a few years of fully remote work has absolutely helped energize the culture and the atmosphere in our offices.

Then there's AI. We'd be amiss to not share how we are using AI ourself as an organization and for our clients. AI is now moving from the curiosity and experimentation stage to becoming vital -- I was going to say viral as well, to business strategy. In fact, we can confidently say that every long-term large deal now has an AI component. The substantial portion of our clients are looking for us to develop use cases tied to their business goals. They want us to use AI models to drive tangible results. AI is now embedded across most of our existing solutions and offerings....

Read the full article on Seeking Alpha

]]>

© www.conferencecalltranscripts.org 2020 | Terms of Service