• IT Services Revenue: $2.66 billion, sequential growth of 0.6% in constant currency.
• Operating Margin: 16.8%, an expansion of 35 basis points quarter on quarter and 71 basis points year on year.
• Total Bookings: $3.6 billion, an 8.4% increase quarter on quarter.
• Capco Business Growth: 3.2% quarter on quarter and 6.9% year on year.
• Net Income Growth: 21.3% year on year.
• EPS: INR6.14, a 6.8% sequential increase.
• Operating Cash Flow: $510 million, 132% of net income.
• Cash and Investments: $6.2 billion at the end of Q2.
• Large Deals Booked: 19 deals with a TCV of $1,489 million, 29% sequential growth.
• Guidance for Q3 Revenue: Expected sequential growth of -2% to 0% in constant currency.

• Warning! GuruFocus has detected 8 Warning Sign with WIT.

Release Date: October 17, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Wipro Ltd (NYSE:WIT) met its expectations for revenue, bookings, and margins in Q2 FY25, demonstrating strong business performance.
• The company achieved a sequential growth of 0.6% in IT Services revenue, reaching $2.66 billion, which is near the upper end of their guidance.
• Operating margins expanded by 35 basis points quarter on quarter and 71 basis points year on year, reaching 16.8%.
• Total bookings increased by 8.4% quarter on quarter, amounting to $3.6 billion, with significant growth in large deals.
• Wipro Ltd (NYSE:WIT) has trained and certified over 44,000 employees on advanced AI, aligning its workforce with emerging AI opportunities.

Negative Points

• Europe experienced a sequential decline of 0.1% due to weak demand and client-specific issues, impacting overall growth.
• The Energy & Utilities sector saw a sequential decline of 3.7%, indicating ongoing challenges in this segment.
• Guidance for Q3 indicates a potential revenue decline of up to 2% due to seasonal furloughs and fewer working days.
• Client-specific challenges in Europe and the Energy & Utilities sector continue to pose risks to growth.
• Despite strong deal wins, the conversion to revenue has been slower, affecting immediate financial performance.

Q & A Highlights

Q: Is the guidance for the next quarter affected by furloughs or client-specific challenges? A: Srini Pallia, CEO, explained that the guidance is influenced by seasonal furloughs, fewer working days, and some slowdown in Europe due to client-specific issues. However, there is good momentum in the deal pipeline across the Americas and APMEA regions.

Q: Are there ongoing client-specific challenges in the Energy & Utilities sector? A: Aparna Iyer, CFO, mentioned that there are opportunities for vendor consolidation and cost takeout in the energy sector. The focus is on converting these opportunities into wins to improve performance in Energy & Utilities.

Q: What are the drivers helping to offset wage increases and revenue headwinds? A: Aparna Iyer, CFO, highlighted traditional levers like utilization and offshoring, along with G&A optimization and synergy benefits from acquired entities. These efforts are contributing to margin improvements.

Q: How is Wipro positioned in vendor consolidation exercises? A: Srini Pallia, CEO, expressed excitement about vendor consolidation opportunities, noting that Wipro has won several deals in this area. The company is focused on leveraging its strengths to displace competitors and secure new business.

Q: How is Wipro addressing challenges in the manufacturing and energy sectors? A: Srini Pallia, CEO, acknowledged the slow growth in these sectors but emphasized the focus on specific segments like automotive and SAP S/4HANA transformations. The company is working to double down on these areas to bring growth back.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.