Wipro Limited Q4 FY2025 earnings call

• Won two mega deals, with strong large deal bookings in FY25. - Clients responding well to consulting-led AI-Powered Industry and Cross-Industry Solutions. - Invested in people skilling for AI, saw improvement in Client Satisfaction Scores. - Realigned global business lines effective April 1st. - Focused on five strategic priorities, including large deals: closed 17 large deals in Q4 with $1.8B total value, 63 large deals in FY25 with $5.4B total value (17.5% Y-o-Y growth). - Highlighted specific wins like a global tech leader transformation program and partnership with a global food distributor leveraging AI. - Moved top performers into client-facing roles and launched sponsorship program for talent development.

IT Services revenue for Q4 was $2.6 billion, sequential decline of 0.8% and 1.2% Y-o-Y; for FY2025, $10.51 billion, Y-o-Y degrowth of 2.3%. Strategic Market Units: Americas 1 grew 0.2% Q-o-Q and 6% Y-o-Y; Americas 2 degrew 1% Q-o-Q and 1.8% Y-o-Y; Europe degrew 2.5% Q-o-Q and 6.9% Y-o-Y; APMEA grew 1% Q-o-Q and degrew 4.9% Y-o-Y. Industry Sectors: BFSI degrew 0.5% Q-o-Q and grew 0.8% Y-o-Y; Healthcare degrew 3.1% Q-o-Q and grew 0.1% Y-o-Y; Consumer degrew 1.3% Q-o-Q and was flat Y-o-Y; Technology & Communication degrew 0.9% Q-o-Q and 1.1% Y-o-Y; Energy, Manufacturing and Resources grew 1.1% Q-o-Q and degrew 7% Y-o-Y; Capco grew 6.5% Q-o-Q and 11.5% Y-o-Y.

Expect IT Services Business segment revenues to be in range of $2.505B to $2.557B, translating to sequential guidance of negative 3.5% to negative 1.5% in constant currency terms. Based on current visibility, guiding for sequential growth of minus 3.5% to minus 1.5% in constant currency terms for Q1 FY2026.

Global industry environment uncertain, recent tariff announcements adding to uncertainty. Clients approaching tech reinvention more cautiously, focused on cost, speed, and AI-led efficiency. Macro-economic environment putting downward pressure on revenues, with uncertainties in tariff situation and client spending decisions affecting business.

Q: Which verticals are seeing the highest impacts?

A: Sectors like consumer, manufacturing (automotive and industrial) impacted directly, with most sectors seeing indirect impact due to economic uncertainty and tariff increases.

Q: How is BFSI thinking about things in US and Europe?

A: Good traction in US and APMEA, but headwinds in Europe BFSI; however, strong pipeline and deal momentum exist.

Q: What's driving poor conversion of book-to-bill to revenue?

A: Timing differences in deal ramp-up; large deals take time to ramp up, and some clients are cautious with discretionary spend and project spend.

Q: What's driving pressure in Europe and dragging margins?

A: Europe has a new leadership team, strong pipeline, and a large deal (Phenix Steel) to start kicking off; Capco has done well, but other factors like ramp downs and non-Capco business impact margins.

Q: Will FY26 be a year of revenue decline?

A: No full year guidance, but recent macro developments and tariff situation are closely monitored; large deals like Phenix Steel expected to ramp up in H2 to help uplift revenues.

Q: What's the impact of macroeconomic issues on Q4 and guidance?

A: Tariff situation and economic uncertainty led to pausing/delaying large transformation projects, client budget reviews, and cost pressures in certain sectors, impacting Q4 and guidance.

Q: How do margins remain resilient and what about utilization?

A: Margins aim to stay in narrow band; levers include managing bench costs, driving higher productivity in fixed price programs, optimizing fixed spends; utilization is one lever but multiple factors at play.

Q: What about sales and marketing spend and market share?

A: Investing in sales and marketing for growth, rationalizing non-client facing roles; not cutting S&M, especially sales, and investing in consulting, AI, etc.

Q: Impact of TCV decline on revenue conversion?

A: Booking includes large deals increasing, but smaller/medium-sized deals not growing fast enough; larger deals take longer to convert, but smaller deals' growth could impact conversion.

Q: AI impact on revenues, margins, and new opportunities?

A: No significant impact on revenues/margins yet; using AI to free up client budgets, get incremental work, and create new revenue streams like partnership with NVIDIA on Sovereign AI and AI-based solutions in tourism and infrastructure.