Wipro Limited Q1 FY2026 earnings call

Key Points

• Started the quarter facing macro uncertainty with muted demand, but clients prioritized cost optimization and AI/data modernization. Many AI projects moved to scale and production.
• IT Services revenue for Q1 was $2.59 billion, degrowth 2% CC within guidance; margin 17.3%, up 80bps Y-o-Y.
• Markets: Americas grew 1.5% Y-o-Y CC; APMEA flat; Europe faced headwinds; Capco grew Y-o-Y in Latin America.
• Sectors: BFSI demand strong with AI-led modernization and won 2 mega deals; Consumer/EMR cautious but outsourcing renewals offer opportunities; Tech/Comm investing in AI; Healthcare positive.
• Bookings: $5 billion TCV, +51% Y-o-Y; large deals $2.7B, +131% Y-o-Y; 16 large deals incl. 2 mega deals, driven by vendor consolidation.
• AI focus: Building AI-first enterprise, over 200 AI-powered agents deployed; examples include smarter lending and intelligent claims processing.
• Dividend: Interim dividend of INR 5 per share declared, with plan to pay dividends twice a year.

IT Services revenue for Q1 was $2.59 billion, with a quarter-on-quarter degrowth of 2% in constant currency terms within guidance. IT Services margin was 17.3%, an expansion of 80 basis points year-on-year. In markets, Americas grew 1.5% year-on-year in constant currency, APMEA's revenue stayed flat, Europe faced headwinds, and Capco grew year-on-year driven by Latin America. In sectors, BFSI had strong demand with AI-led modernization, Consumer/EMR was cautious but outsourcing renewals created opportunities, Tech/Comm shifted towards AI investment, and Healthcare continued to do well.

Expects IT Services revenue to be in the range of $2.56 billion to $2.612 billion, translating to a sequential growth of minus 1% to plus 1% in constant currency terms. Cautious on macro but confident due to strong order book, healthy pipeline, and consulting-led AI-powered solutions.

Risks

• Macro uncertainty affecting overall demand.
• Clients focused on cost optimization impacting some spending initiatives.
• Europe continuing to face headwinds.
• Discretionary budgets tight affecting Consumer/EMR sectors.
• Tariffs impacting retail, CPG, and manufacturing.

Q: On an LTM basis, deal TCV growth and ACV growth, A: TCV growing much faster than ACV due to longer tenure deals, mix of cost takeout and new areas like data, AI, modernization Q: On capital allocation, A: Raised capital allocation policy, prefer dividends and buyback, buyback still an option Q: On margins and large deals, A: Some margin pressure from upfront investments for large deals, but focus on execution and operational levers to offset pressures Q: On Capco growth and BFSI sector, A: Capco grew 6% Y-o-Y, BFSI sector has ramp downs but confident in stability and growth from deal wins and client-specific issue resolution Q: On Europe's situation, A: Pipeline strong in Europe, Phoenix deal will contribute, client-specific challenges behind, confident in second half performance