Wipro Limited (WIT) Q1 2025 Earnings Call Transcript

Wipro Limited recently held its Q1 FY25 earnings conference call, which provided insights into the company's financial performance, strategic priorities, and market outlook. The call was led by Srinivas Pallia, CEO, and Aparna Iyer, CFO, who shared updates on the company's business highlights, financial overview, and operational strategies.

Business Highlights

The first quarter of FY25 witnessed mixed results for Wipro, with the IT services revenue for the quarter standing at $2.63 billion, reflecting a sequential decrease of 1% in constant currency. The operating margin was reported at 16.5%, marking a 0.1% increase from the previous quarter.

In terms of market performance, the Americas 1 segment delivered a sequential growth of 0.4%, driven by strong demand in the health and technology sectors. Conversely, Europe and APMEA showed sequential declines of 1.4% and 4.2%, respectively. Among industry sectors, the banking and financial services sector showed positive momentum, with growth for two consecutive quarters, while manufacturing and energy and nutritive sectors experienced sequential declines of 3% and 6.3%, respectively.

Strategic Priorities

Wipro's strategic priorities for the year include prioritizing large deals, strengthening relationships with major clients and strategic partners, developing AI-powered industry solutions, and building talent at scale. The company has seen success in its large deal creation efforts, with a robust pipeline for large deals and multiple significant wins, including a five-year contract with a U.S.-based communication services provider and a deal in the automotive segment.

Additionally, Wipro is focusing on strengthening its relationships with major clients and strategic partners, investing in established strategic accounts and high potential accounts. The company is also actively collaborating with hyperscalers and strategic partners to co-innovate and develop unique propositions for clients.

Financial Overview

The financial overview for Q1 FY25 showed a decline in IT services revenues, but with an expansion in IT services margins. The company generated strong cash flows, with a cash balance of $5.4 billion and a cash flow of $479 million in Q1. The net income for the quarter stood at INR30 billion, with a growth of 6% sequentially and a 10% year-on-year increase in EPS.

Investor Questions

During the Q&A session, investors raised questions about the company's performance, strategic initiatives, and market outlook. Key questions included inquiries about the impact of the telco deal on Q2 revenue, deal wins and their impact on revenue, and the company's approach to margin expansion and cost optimization. The management team provided detailed responses, highlighting the company's strategic focus on large deals, collaboration with strategic partners, and investment in talent and technology.

Future Outlook

Looking ahead, Wipro is guiding for a sequential revenue growth of minus 1.0% to plus 1.0% in constant currency for Q2 FY25. The company remains confident in its ability to sustain margins and is focusing on delivering operational efficiency and client centricity. With a strong pipeline of large deals and strategic initiatives, Wipro is well-positioned for growth in the coming quarters.

Conclusion

Wipro's Q1 FY25 earnings call provided a comprehensive overview of the company's financial performance, strategic priorities, and market outlook. Despite a challenging demand environment, the company remains focused on its strategic initiatives and is optimistic about its future prospects. With a strong pipeline of large deals and strategic partnerships, Wipro is poised for growth in the coming quarters.