Wipro Limited Q3 FY2025 earnings call

• 2024 was marked by macroeconomic challenges, but 2025 is more hopeful with clients cautiously optimistic and AI spending expected to grow. - IT Services revenue, TCV, and operating margins were highlighted. - Closed 17 large deals worth $1B across markets and sectors. - Growth in top accounts, with top account seeing sequential growth of 7.3%. - Progress in consulting-led AI-powered industry and cross-industry solutions. - 50,000 employees hold advanced AI certification; investment in AI tools and platforms. - Focus on building a globally diverse team with high-performance culture and investing in leadership development.

IT Services revenue for quarter 3 was $2.63 billion, with sequential growth of 0.1% and degrowth of 0.7% year-on-year. Capco business had order book growth of 9% year-on-year and revenue growth of 11% year-on-year. In strategic market units: Americas 1 grew 3.9% sequentially and 3.7% year-on-year; Americas 2 degrew 0.6% sequentially but grew 1.2% year-on-year; Europe degrew 2.7% sequentially and 4.6% year-on-year; APMEA degrew 2.1% sequentially and 8% year-on-year. Industry sectors: Health grew 6.7% sequentially and 4.5% year-on-year; BFSI degrew 1.9% sequentially but grew 3.4% year-on-year; Consumer degrew 0.9% sequentially but grew 0.4% year-on-year; Energy, manufacturing and resources grew 0.4% sequentially but declined 8.7% year-on-year; Technology and Communications degrew 0.6% sequentially and 5.3% year-on-year.

• Next quarter guidance: sequential growth of minus 1% to plus 1% in constant currency. - Board approved increasing payout percentage to 70% or above of net income over a 3-year block, effective FY '26. - Declared interim dividend of INR6 per share.

Uncertainties from forward-looking statements based on management's current expectations, which may differ materially from actual results. Macroeconomic challenges, currency fluctuations, and potential impact on client spending and business operations.

Q: Congrats on a solid performance, especially on the margin front. My question was on the deal wins. The deal wins were definitely up on a Y-on-Y basis, close to $1 billion in terms of the large deal wins, and TCV has consistently stayed above the $3.5 billion mark. How do you see this trajectory helping us achieve higher Y-on-Y growth rate or execution in the past few quarters has been super solid? But I mean, at the end of the day, I mean, when do you think -- or what is the number that you believe is what can take us to -- closer to a mid-single-digit kind of a Y-on-Y growth rate or maybe higher than that? And do you see the pipeline for us to be able to achieve that in coming quarters? And how soon or how early can we reach there?

A: Thank you, Vibhor. Let me reflect on your question. Our current large deal pipeline is robust and we are seeing good traction across geographies. Now if you have to put an industry lens to this, our strongest traction in large deals remain in BFSI and EMR segment. BFSI is strong in Americas, Europe and India, whereas if you look at EMR, manufacturing is strong in Europe compared to U.S. And our E&U is robust -- I mean, Americas, including U.S. and Canada, followed by our ANZ and Europe. In terms of health care, consumer and tech and comps, we are seeing more traction in the medium to large size around $50 million to $100 million. Now if you look at our quarter 3, our large deal TCV has been at $1 billion, which is still up 6% year-on-year by value and up by 3 deals by top. So I wouldn't read too much into it. Large deals, as you know, are lumpy, and there's also a seasonal element to them. If you recollect, we had a record quarter 2 '25, and we now have a good foreclosure. So we don't see it as a cause for concern.

Q: In terms of discretionary spend outside of Capco also, are we seeing tailwinds in terms of clients willing to put the spend back on the anvil or do you believe there is still some time to be able to reach that stage?

A: So if you look at the -- from a discretionary lens perspective alone, we did talk about Capco, where both the bookings and revenue, we had a good year-on-year growth in quarter 3. Having said that, the discretionary spend in Americas, definitely, we see positive signs in BFSI segment, which is a good news for us. We also see some level of coming up in certain sectors, but it's not secular at this point in time. Also, this is a month where many of our customers are in the process of budgeting, and we are working with them to understand where the spend is going to be. But if you -- if I were to actually extend your question to the overall demand environment, we see Americas very strong and the demand continues to pick up. While if you look at our bookings into $1 million to $5 million and $5 million to $10 million range has been very strong. However, in Europe, while the economies are challenged, whether we -- we all know what's happening in Germany, U.K. or France. Actually, this has put some pressure on some of our clients and some of the companies out there to trim their costs and become more efficient. And we see this as an opportunity going forward. And just to conclude, overall pipeline is healthy and has remained at the same level over the last year.