Wipro(US:WIT)2023-04-28 00:56Financial Data and Key Metrics Changes - The company recorded the strongest ever bookings in FY 2023, with total contract value bookings growing over 28% year-on-year [8] - Revenues grew 11.5% year-on-year in constant currency terms, totaling $11.2 billion for the full year [8] - Operating margin for the year was 15.7%, with cash conversion at 115% of net income compared to 91% in the previous year [9] - For Q4, total bookings were $4.1 billion, with revenue up 6.5% year-on-year in constant currency terms, but a sequential decline of 0.6% [11] - Operating margin for Q4 was 16.3%, which is 60 basis points higher than the full year margin [12] - Earnings per share (EPS) for Q4 was INR 5.61, marking the third consecutive quarter of EPS expansion [13] Business Line Data and Key Metrics Changes - All four strategic market units recorded over 10% revenue growth for FY 2023 [14] - In the Americas, revenue grew 6% in Q4 and 13% for the full year, driven by healthcare and medical devices [14] - Europe market delivered 9% revenue growth in Q4 and 12% for the full year, with Southern Europe and Germany showing significant growth [16] - APMEA market unit grew 8% year-on-year in Q4 and 10% for the full year, with Southeast Asia growing about 25% [16] - Cloud transformation services grew 22% year-on-year, while Applications and Data grew 18% year-on-year [18] Market Data and Key Metrics Changes - The Americas saw a 47% year-on-year growth in total contract value bookings for Q4, while Europe saw a 33% increase [11] - The company noted softness in the banking and financial services space due to the current macro environment [15] - The share of partner bookings as a percentage of total bookings rose from 25% in FY 2020 to 44% in FY 2023 [25] Company Strategy and Development Direction - The company is focusing on a growth plan for India and has merged its step enterprise segment with IT Services starting Q1 2024 [17] - The organizational model of four strategic market units and four global business lines aims to improve market position and agility [25] - The FullStride Cloud is identified as a significant growth driver, with a dedicated global business to accelerate growth [26] Management's Comments on Operating Environment and Future Outlook - The macro environment remains challenging, impacting business and projections, with guidance for the next quarter indicating a sequential decline of 3% to 1% in constant currency [30] - Management remains positive about the volume of business and backlog despite the current uncertainties [40] - The company expects to maintain margins similar to recent quarters, focusing on revenue stability before addressing margin challenges [54] Other Important Information - The company plans a buyback of INR 12,000 crores (approximately $1.8 billion), with a buyback price set at $4.45, subject to shareholder approval [35] - The company trained over 50,000 employees in demand-driven skills over the past year, with a focus on talent transformation [28] - Attrition rates have been steadily declining, ending the quarter at 14.1% [29] Q&A Session Summary Question: What are the underlying assumptions for the guidance of -3% to -1% in constant currency? - Management indicated that the guidance reflects the performance in bookings and macro uncertainties affecting sectors like banking and insurance [37][40] Question: Why is there a low correlation between high deal bookings and revenue? - Management explained that while deal wins have been strong, discretionary spending cuts by clients are impacting revenue conversion [48][49] Question: What is the outlook for margins going forward? - Management stated that while they aim to maintain current margins, the focus is on achieving revenue stability first [54][97] Question: How is the consulting business performing amid current market conditions? - Management noted that while there is some slowdown in discretionary spending, certain areas within consulting are still seeing demand [65][74] Question: What is the company's strategy regarding cash allocation post-buyback? - Management confirmed that they will maintain a healthy cash position post-buyback, continuing to generate cash flows for future investments [60][62]