Wipro(US:WIT)2024-01-12 16:37Financial Data and Key Metrics Changes - IT Services revenue for Q3 FY '24 is reported at $2.66 billion, at the top-end of guidance [7] - Net income for the quarter is INR 26.9 billion, an increase of 1.8% quarter-on-quarter [45] - Operating cash flows reached $576 million, which is 177% of net income and the highest in the last five quarters [44] - Operating margin improved by 1.8% sequentially, standing at 16% despite seasonal furloughs and salary increases [9] Business Line Data and Key Metrics Changes - Consulting business, particularly Capco, reported double-digit sequential growth in order bookings, indicating strong performance [13] - Revenue in the Americas 1 market unit grew 2% sequentially, led by healthcare, which grew 9% [14] - Revenue in the Americas 2 market unit saw a 1.3% drop, but total contract value for order bookings increased by 46% sequentially [15] - Revenue from Europe decreased by 4.3% sequentially, despite winning four large deals worth nearly $300 million [16] - APMEA revenues declined 5.4% quarter-on-quarter, but margins rose 240 basis points to 13.8% [17] Market Data and Key Metrics Changes - The demand environment remains cautious, with clients focusing on efficiency and returns on investment [12] - There are signs of stabilization and a slight pickup in discretionary spending, particularly in the consulting sector [51][52] - The energy and utilities (ENU) market is expected to see significant investment, particularly in AI and GenAI [78] Company Strategy and Development Direction - The company is focusing on vendor consolidation and adding new clients while growing existing relationships [11] - Investments in AI and automation are central to the company's strategy, with AI components now included in long-term large deals [22][31] - The restructuring of low-margin businesses is ongoing, with a focus on higher-value transformation projects [17][37] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the market, noting green shoots of recovery but emphasizing the need for continued monitoring [51] - The company expects a sequential growth guidance of -1.5% to +0.5% in constant currency terms for the next quarter [33] - Management highlighted the importance of investing in people and processes for future growth, even as margins are expected to improve with returning growth [72][73] Other Important Information - The company declared an interim dividend of INR 1 per equity share [44] - The total contract value for order bookings in Q3 was $3.8 billion, with large deals over $30 million increasing from 11 to 14 compared to the previous year [8] Q&A Session Summary Question: Outlook for the industry and visibility on pipeline - Management noted that while the market has been slow, there are signs of stabilization and a potential increase in discretionary spending [50][52] Question: Performance metrics for Capco - Capco's performance is material for the organization, with strong bookings reported despite previous slowdowns [58] Question: Growth guidance and cautiousness - Management explained that the guidance reflects a cautious level of optimism, considering the current market conditions [65] Question: Trends in deal wins - The majority of large deals are net new, indicating a positive trend in client acquisition [84] Question: Demand trajectory for ENU and manufacturing sectors - Both sectors are expected to see growth, with significant investments being made in AI and GenAI [78][79]