Willis Towers Q3 Earnings Beat Estimates on Lower Expenses

Core Insights - Willis Towers Watson (WTW) reported third-quarter 2025 adjusted earnings of $3.07 per share, exceeding the Zacks Consensus Estimate by 2.3% and reflecting an 11% year-over-year increase [1][9] - The company's third-quarter results were bolstered by strong revenue from the Risk & Broking segment, improved operating margins, increased adjusted operating income, and reduced expenses, although this was partially offset by lower revenues in the Health, Wealth & Career segment [1] Financial Performance - WTW's adjusted consolidated revenues for Q3 2025 were $2.3 billion, unchanged year-over-year on a reported basis, with a 5% increase on an organic basis but a 1% decline on a constant currency basis, beating the Zacks Consensus Estimate by 0.5% [2] - Total costs of providing services decreased by 38.7% year-over-year to $1.8 billion, attributed to lower operating expenses, depreciation, and amortization, with adjusted operating income rising 13% year-over-year to $467 million [3] - Adjusted EBITDA was $515 million, an 8% increase year-over-year, with the adjusted EBITDA margin expanding 160 basis points to 22.5% [4] Segment Performance - In the Health, Wealth & Career segment, total revenues were $1.2 billion, down 5% year-over-year, although it showed a 6% increase on a constant currency basis and a 4% increase on an organic basis, surpassing estimates [5] - The Risk & Broking segment reported total revenues of $1 billion, a 7% year-over-year increase, with organic growth driven by new business and project-based placements [7][8] Operational Metrics - The operating margin for the Health, Wealth & Career segment expanded by 390 basis points to 28.6%, primarily due to the sale of TRANZACT [7] - Cash and cash equivalents as of September 30, 2025, were $1.9 billion, a slight increase of 0.2% year-over-year, while long-term debt decreased by 10.3% to $4.7 billion [11] - Cash flow from operations for the first nine months of 2025 was $1 billion, a 10% increase from the prior year, with free cash flow rising 15.7% to $838 million [12] Future Outlook - WTW anticipates cash outflows in 2025 related to the Transformation program, which concluded in 2024, and expects share repurchases of $1.5 billion, contingent on market conditions [13] - The company projects a foreign currency tailwind on adjusted diluted earnings per share of approximately $0.15 in Q4 2025 and about $0.10 for the full year [14]