Wipro Ltd. Q1 FY2025 earnings call

• Prioritizing large deals: Driving large deal creation systematically, pipeline remains robust with large deal bookings exceeding $1 billion in Q1, with deals like a U.S. communication services provider and automotive OEM. - Strengthening client relationships: Investing in established strategic accounts and high potential accounts, collaborating with hyperscalers and partners. Revenue from top 10 accounts grew 1.3% sequentially and 3.8% year-on-year. - Developing AI-powered solutions: Using consulting-led approach to develop industry and cross-industry solutions, examples include healthcare and wealth management GenAI solutions. - Building talent at scale: Ramping up upskilling efforts, rolling out iAspire AI-powered career development platform, providing training to over 225,000 employees. - Execution rigor: Focusing on innovation in delivery capabilities, using Lab45 AI platform and Wipro Enterprise GenAI studio, incorporating GenAI in software development lifecycle.

Wipro's IT services revenue for Q1 was $2.63 billion, a sequential decrease of 1% in constant currency. Americas 1 delivered a sequential growth of 0.4%. Americas 2 had a sequential decline of 0.7% but BFSI in Americas 2 achieved a sequential growth of 1.4%. Capco saw a sequential growth of 3.4%. Europe and APMEA had sequential declines of 1.4% and 4.2% respectively. In industry sectors, banking and financial services grew 0.5% sequentially, consumer business grew 1.6%, while manufacturing and energy and nutritive sectors declined 3% and 6.3% respectively. IT services revenue contribution is the main segment, with other segments like Americas, Capco, Europe, APMEA contributing based on their performance.

• For Q2, guiding for sequential revenue growth of minus 1.0% to plus 1.0% in constant currency. - Confident of sustaining margins within a narrow band with an upward bias in the coming quarters. - Q1 IT services revenue expected to be in the range of $2.6 billion to $2.652 billion, translating to a sequential guidance of minus 1% to plus 1% in constant currency.

• Cautious client demand and muted discretionary spending. - Softness in certain regions like Europe and APMEA, and sectors like manufacturing and energy. - Uncertainties in the macro environment affecting client spending and business performance.

Q: My first question is on the quarter gone by most of the peers who have reported were kind of positively surprised by the execution during the quarter, while we have reported a number which is within the bank, but it's toward the lower end. So were there any incident in terms of negative surprises for you? Or you think your Q1 performance was in line with what you had anticipated at the start of the quarter?

A: First point I want to talk about is we did give a quarter one guidance range and we were within that guidance range. That's number one. Second, like I said, we're still not seeing a significant change in the demand environment. We see clients still cautious and discretionary spend is low. However, we have seen uptick in Capco, BFSI, consumer business in the U.S., which I called out. Sectors like ENU and manufacturing has been soft for us. Outside of the U.S., we are yet to see momentum buildup in our other two SMUs, specifically Europe and APMEA. We are also still in early stage of the deal that we have signed and deals like this usually take few quarters to realize its full potential. And that's where our quarter two guidance is, between minus 1% to plus 1%.

Q: My second and last question is on the telco deal, what you won in Q1, is it due for full ramp up in Q2 or there'll be a staggered ramp up between Q2 and Q3?

A: Like Srini said, these deals typically take some time to ramp up and it will take a few quarters for it to realize its full revenue potential. Of course, some upside is factored in the quarter two guidance.

Q: Srini first question is on deal wins. Would you be able to provide some color on how average tenure has changed versus last few quarters? And also, has there been any change in the new versus renew mix in the current quarter versus last few quarters?

A: I'll go first and then Srini you can add. See, we don't share that mix between new versus renewable, but you know that the large deal that we had announced was net new. So that should give you some color. On your point on tenure of deal wins, we do see that the TCV bookings continue to be signed for longer tenure. Some of it is also a portfolio of what we win, but that continues to go up. It's something that we've noticed Gaurav. Srinivas Pallia: So just to add to that. Deal tenures are definitely becoming shorter. Three year to five year deals are becoming more common place. The only deals where ten years exceed five years includes optionalities and clients agree only when cost savings are front loaded with potentially financial engineering involved.

Q: Second question is on how are you thinking about implementing GenAI in your internal software development from a delivery point of view? And could you share some color on initial results that you might have seen across different service lines?

A: GenAI is very exciting. And from my perspective, there are three ways where we are deploying GenAI. First, number one, like I said, as Wipro, as a client zero, we are actually implementing GenAI across various process areas within Wipro, across all the units. In fact, we are helping, for example, in the HR segment, the whole employee experience, if you will. Second, the iAspire that I talked about we launched. It's about how do you build career for our employees. They define what career path they want to take and what kind of training programs that we can apply to them in the context of GenAI. So those are the things that we're already doing. And this is also helping our teams kind of build more capabilities and competencies in Gene AI. It's also helping Wipro to be really a truly a GenAI ready company. Second Gaurav is that in fact if I have to really talk about some examples, one of the things that we have done is [vNow], it's actually a conversational digital assistant of interacting with the various corporate systems. As of today we had almost 7.4 million queries resolved in IT, HR and policy and it has almost touched I think 230,000 users. What excites me is the fact that 80% favorability rating from our employees. That actually is significant. Another one which I'm really excited about is Eliza which is AI powered sales assistant, which is supporting almost 3,000 sales force across the globe for us. So there are multiple, what I would say GenAI related solutions that we are implementing within Wipro. I tell people that you got to drink your kool-aid first and I'm very excited that employees are bringing in so much out there with the GenAI. As far as the clients are concerned Gaurav, there are three components to it. One is how do we deploy GenAI in the context of software development lifecycle. We all heard of GitHub Copilot, so how do you not only improve the productivity but also improve the quality in that if you ask me both on the coding side and also on the testing side. And this to me Gaurav, it will continue to improve as we move forward and there is an excitement across our clients and our own employees deploying this, so thereby we can improve the productivity and quality. The second part is how do you infuse GenAI into managed services, both on the infrastructure side and also on the process side. I think that's one area that we are constantly looking at. And how can we leverage GenAI against from a productivity and also experience for our clients. The third piece, Gaurav, what we are trying to do, like I talked about the industry solutions, cross industry solutions that we are building, right? I talked about the telecom, I talked about the OEM manufacturing, I talked about healthcare, I also talked about wealth management in the context of financial services. These are all AI powered industry solutions which are consulting led. So combination of knowing the domain aspects of the client, understand the technology landscape of the client becomes very critical and more so data. So we are also able to help the clients in the context of their entire data strategy, data governance and how do you leverage the enterprise data within a reliable and secure way and implement GenAI. And I feel very excited because of the deals that we have won and now we are out there to execute them and some of these can be replicated across Gaurav.