tiprankstipranks
Trending News
More News >
Advertisement
Advertisement

Wipro’s Earnings Call: Strong Deals Amid Revenue Challenges

Wipro’s Earnings Call: Strong Deals Amid Revenue Challenges

Wipro Limited ((WIT)) has held its Q1 earnings call. Read on for the main highlights of the call.

Elevate Your Investing Strategy:

  • Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.

Wipro Limited’s recent earnings call painted a picture of resilience amidst challenges, with a strong focus on deal bookings and margin improvements. The sentiment was generally positive, highlighting significant advancements in AI and modernization, although tempered by concerns over revenue declines in Europe and key sectors due to macroeconomic uncertainties.

Strong Deal Bookings

Wipro reported an impressive $5 billion in total contract value for the quarter, marking a 51% year-on-year growth. Large deal bookings were particularly noteworthy, reaching $2.7 billion, which is a 131% increase year-on-year. This included 16 large deals and 2 mega deals, underscoring the company’s robust market position.

IT Services Margin Expansion

The IT Services margin expanded to 17.3%, an increase of 80 basis points compared to the previous year. This improvement reflects Wipro’s effective cost management and operational efficiency strategies.

Net Income Growth

Despite facing a one-time restructuring cost of INR 246 crores, Wipro achieved a net income growth of 10.9% year-on-year. This demonstrates the company’s ability to maintain profitability even amidst restructuring efforts.

Free Cash Flow

Wipro’s free cash flow generation was robust, amounting to 115% of net income. This strong cash flow performance highlights the company’s solid financial health and ability to generate cash from operations.

Interim Dividend Declaration

The Board of Directors declared an interim dividend of INR 5 per share, with cash distributions exceeding $1.3 billion over the last six months, reflecting Wipro’s commitment to returning value to shareholders.

AI and Modernization Initiatives

Wipro is placing a significant emphasis on AI-first initiatives and modernization, which are becoming essential across industries. This strategic focus is expected to drive future growth and operational efficiencies.

Revenue Decline

The company faced a 2% sequential and 2.3% year-on-year decline in IT Services revenue in constant currency terms, indicating challenges in maintaining revenue growth.

Europe Revenue Challenges

Revenue in Europe declined by 6.4% sequentially and 11.6% year-on-year, with ongoing headwinds impacting performance in this region.

Decline in Key Sectors

Key sectors such as BFSI, Consumer, and Energy, Manufacturing, and Resources experienced sequential declines of 3.8%, 4%, and 0.7% respectively, reflecting sector-specific challenges.

Macro Uncertainty Impact

Significant macroeconomic uncertainties are affecting demand, leading Wipro to adopt a cautious outlook with potential growth projected between -1% to +1% for the next quarter.

Restructuring Costs

The quarter included a one-time restructuring cost of INR 246 crores, which was absorbed without significantly impacting the overall financial performance.

Forward-Looking Guidance

Wipro provided financial guidance for Q1 FY26, projecting IT Services revenue to range between $2.56 billion and $2.612 billion, implying a sequential growth of -1% to +1% in constant currency terms. Despite a 2% quarter-on-quarter decline in IT Services revenue, the company remains within its guided range. Wipro is optimistic about the second half of the year, driven by a strong pipeline and strategic focus on consulting-led AI-powered solutions.

In summary, Wipro’s earnings call highlighted a blend of strong deal bookings and margin improvements, offset by revenue challenges in Europe and key sectors. The company remains focused on AI and modernization to navigate macroeconomic uncertainties, with a cautiously optimistic outlook for the future.

Disclaimer & DisclosureReport an Issue

Looking for investment ideas? Subscribe to our Smart Investor newsletter for weekly expert stock picks!
Get real-time notifications on news & analysis, curated for your stock watchlist. Download the TipRanks app today! Get the App
1