Yahoo Finance Wipro Limited (NYSE:WIT) Q4 2024 Earnings Call Transcript
Wipro Limited (NYSE:WIT) Q4 2024 Earnings Call Transcript April 19, 2024
Wipro Limited reports earnings inline with expectations. Reported EPS is $0.07 EPS, expectations were $0.07. WIT isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Ladies and gentlemen, good day and welcome to Wipro Limited Q4 FY '24 Earnings Conference 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 four FY'24 earnings call. We will begin the call with the business highlights and overview by Mr. Srinivas Pallia, our Chief Executive Officer and Managing Director; followed by updates on financial overview by our CFO, Aparna Iyer. Afterwards, the operator will open the bridge for Q&A with our management team. In this call, we also have our CHRO, Mr. Saurabh Govil on the call. Before Srini starts, let me draw your attention to the fact that during this call we may make certain forward-looking statement within the meaning of Private Securities Litigation Reform Act 1995. These statements are based on management 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 filing with the SEC. Wipro does not undertake any obligation to update the forward-looking statements 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. With that, I would like to hand over the call to Srini. Thank you.
Srinivas Pallia: Thank you, Dipak. Good evening and good morning, everyone. Thank you for being here today. I'm honored to be here as a CEO of this remarkable organization. My memories of joining Wipro in February, 1992 straight from the Indian Stock Science Campus are still fresh in my mind. I have been with Wipro for more than 30 years. I'm proud to say that it's such a unique company. The way it has combined profits and purpose, very strong global brand present in over 60 countries leading in technology and committed to sustainability, diversity and inclusivity. As you know, I’ve been in the CEO's role for about two weeks now. Through internal and external conversations and the press reports I've read, I'm aware of the high expectations for my role.
Despite my extensive experience as a business leader, stepping into the CEO's role for the first time feels profound, especially when it comes to leading this iconic institution. As I go through the many emotions of this transition, one thing stays strong, my unwavering belief in Wipro, our values, our people, our clients and of all our resilience. Last year, post big challenges for the whole industry. It has affected Wipro's performance too. The economic environment is still uncertain and there might be more challenges in the short-term. However, the opportunity before us is limitless. We are on the brink of a major technological shift, every client I talk to across all industries is eager to leverage AI to shape the future of their business.
And at Wipro, we have been gearing up for this moment, we have made substantial investments to strengthen our capabilities across the organization. We have a global and diverse team. We have made bold moves in M&A, acquiring companies like Capco and Rizing, which have boosted our consulting capabilities and we have simplified our operating model. The building blocks are firmly in place and I'm committed to expanding on this even more, while I remain optimistic about the long-term, it's important to be transparent. There's still a consider amount of work ahead of us. Our immediate priority is to accelerate growth. Before diving into the financial performance for Q4 and the full year, I want to discuss the five focus areas we will concentrate to revitalize the company.
One, accelerate large deal momentum by working closely with clients and partners. Two, strengthen relationships with large clients and partners and further invest in accounts that are has a potential to grow into large accounts. Three, focus on industry specific offerings and business solutions led by consulting and infused with AI. Four, we'll continue to build talented scale, which is now AI ready and able to deliver industry specific business solutions. And finally, continue to simplify our operating model and focus on execution rigor with speed. As you see, the core tenets of our strategy remain unchanged. What's important is how we build on these five priorities and adapt as necessary to accommodate technological shifts and market conditions.
My years of experience in the markets have taught me that integrating strategy with rigorous execution yields tangible results and that's where our focus will remain this year. Now, let me turn to our financial performance for quarter four and the financial year ending March 2024. In Q4, our IT services revenue grew sequentially by 0.1% in reported currency. If you recall last quarter, we had talked about seeing green shoots in our consulting business. That traction continued in quarter four, reflected in Capco's sequential revenue growing by 6.6% and order bookings growing by 43.6%. Now talking of order bookings in quarter four, total order booking stood at $3.6 billion and for the full year it was $14.9 billion. Coming to large deals, in Q4, we won 18 large deals against 14 large deals in the previous quarter.
In TCV terms, our large deal bookings for quarter four was $1.2 billion. For financial year 2024, we recorded large deal bookings, TCV of $4.6 billion. This was a growth of 17.4% as compared to the previous year. For FY’24, our revenue was $10.8 billion in reported currency. We continued to increase the percentage of revenue from our top five and top 10 clients. Also, we added three more clients with $100 million plus bracket in FY‘24. Six out of our top 10 accounts grew on a sequential as well as on a year on basis in quarter four. Moving on to margins, in quarter four, we saw a further expansion to 16.4%. This is a 40 basis points improvement over last quarter. We closed FY‘24 with a margin of 16.1% and expansion of 50 basis points for FY‘23.
Like I said earlier, we will continue to make investments in building capabilities and strategic acquisitions. In Q4, we took a majority share in Aggne, a leading consulting and managed services company serving the insurance and insuretech industry. This allows us to strengthen our value proposition in a fast growing part of insurance vertical. Expanding on our substantial investments in AI, in quarter four, we launched the Wipro Enterprise Artificial Intelligence Ready Platform with IBM. It's a new service that will allow clients to create enterprise level, fully integrated and customized AI environment. Let me share one example of a win in quarter four that came from an AI powered solution tailored to our consumer business. A leading global apparel brand chose Wipro as its strategic partner to implement GenAI solutions for driving their digital transformation.
This actually involves implementing large language models to improve search, recommendation engines and enable hyper personalization at scale. All done responsibly. Before I hand it over to Aparna, let me share our guidance for Q1. We are guiding for a sequential growth of minus 1.5% to plus 0.5% in constant currency for Q1 ‘25. We expect margins to stay range bound like in the last few quarters. Here the next few months will be crucial as we steer the company towards growth. As a passionate hiker, I deeply connect with these words from Junko Tabei, the first woman to climb Mount Everest. She said, even if it is hard you can reach the peak, if you climb step by step. Of course, I seek the trust and continued support of all of you, our clients, our associates, partners and media as we move forward.
Thank you. Let me now hand it over to Aparna to share more details on our financial performance. Over to you, Aparna.
Aparna Iyer: Thank you, Srini. Good evening and good morning, everyone. Let me highlight to you our financial performance for Q4 and full year ending March 31, 2024. On IT Services revenue for Q4, we delivered a reported currency growth of 0.1% sequentially and minus 0.3% in constant-currency terms. For the full year -- for the financial year ‘24, IT Services revenue declined 3.8% year-on-year in reported currency terms and 4.4% year-on-year in constant-currency terms. Let me also give you some color on our market unit performance. Please note that all revenue growth numbers are in constant-currency terms. In Americas 1, we continued our momentum of strong booking in Q4. We booked eight large deals in Q4 adding up to a total contract value of $587 million.
For the full year, order bookings in TCV terms in A1 grew by 24.9%. Quarter four revenue for this market declined 1.8% on sequential basis, while the full year revenues grew 0.2% year-on-year. Our healthcare sector grew by 18% in full year -- in FY’24 year-on-year. Americas 2 market unit grew 1.9% quarter-on-quarter on the back of strong performance in Capco, BFSI, high-tech and Canada sectors. On a full year basis, the revenue in this market declined by 6.1% year-on-year. Almost 60% of our revenues in this market comes from the BFSI sector. And as Srini mentioned in his speech, we are starting to see a return to stability in this sector led by Capco. In Europe, revenue decreased 0.1% sequentially in Q4 and decreased by 7% on a full year basis.
While Germany and UK continue to remain impacted due to slowdown in demand environment, we are seeing a recovery in sectors like Switzerland and Southern Europe that grew 1.7% and 1.6% in Q4. Southern Europe, as a sector grew 14.6% year-on-year in FY ‘24. We also continue to see strong traction on the order booking side in Europe. In Q4, we won five large deals and adding to a TCV of more than $300 million. APMEA revenues declined 2.2% quarter-on-quarter and 4.5% for the full year. Our strategy in APMEA has to be -- has been to move towards high value transformation projects and reduce low margin accounts. The success of our strategy is reflecting in our margin improvement of 235 basis points for the full year. In terms of IT Services operating margins, our continued rigor on improving operational excellence has helped us to expand our operating margins by 40 basis points in Q4.
This is after absorbing the impact of two additional months of salary increase in Q4. On a full year basis, our margins are at 16.1%. They've improved by 50 basis points year-on-year. Our net income and EPS for the quarter increase by 5.2%. Despite being impacted by a challenging macroeconomic environment, it is encouraging to note that our EPS for the full year grew by 0.8%. The increase in EPS was after absorbing the one-time restructuring charges of INR6.8 billion during the year. We generated cash flow of $626 million in Q4 and $2.1 billion for the full year, which is at 182.6% of our net income in Q4 and 159% of our net income on a full year basis. This is our highest cash flow in recent years. Our gross cash as a result is at $4.9 billion and net cash was at $3.2 billion.
Both have increased year-on-year, despite completing our largest buyback in July of 2023. In terms of some other important metrics that we've always shared, our ETR is at 24.5% for FY‘24 versus 23% in FY’23. Our hedges continue to be in line with our policy. We had about $3.1 billion of Forex derivative contracts as hedges at the end of Q4. Finally, I would like to reiterate the guidance for Q1 2025 stated by Srini, we expect our revenues from IT Services business segment to be in the range of $2.617 billion to $2.670 billion. This translates through a sequential guidance of minus 1.5%, sequential to plus 0.5% in constant currency terms. With that, I now hand over to the operator for questions.
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