Wipro(US:WIT)2025-10-16 14:32Financial Data and Key Metrics Changes - IT services revenue for Q2 FY26 was $2.6 billion, with a sequential growth of 0.3% in constant currency and a year-on-year decline of 2.6% in constant currency [5][12] - Adjusted operating margin for the quarter was 17.2%, an improvement of 0.4% compared to the same period last year [5][12] - Operating margins contracted by 60 basis points quarter-on-quarter and 10 basis points year-on-year, impacted by a one-off charge due to a client bankruptcy [12][14] Business Line Data and Key Metrics Changes - Americas One grew 0.5% sequentially and 5% year-on-year, while Americas Two declined 2% sequentially and 5% year-on-year [12] - Europe returned to sequential growth of 1.4% but declined 10.2% year-on-year, driven by BFSI [12][13] - Appmea grew 3.1% sequentially and 2.6% year-on-year, with CapCo showing a year-on-year growth of 3.2% [12][14] - BFSI grew 2.2% sequentially but declined 4% year-on-year, while healthcare declined 0.2% sequentially but grew 3.9% year-on-year [13][14] Market Data and Key Metrics Changes - Strong performance in healthcare, technology, and communication sectors in the Americas [5][7] - Tariff uncertainties are impacting consumer, energy, and manufacturing sectors, leading to reevaluation of supply chains [7] - The healthcare sector is undergoing structural changes, with Wipro actively supporting clients through this transition [7][75] Company Strategy and Development Direction - Focus on AI-powered transformations and consulting-led programs, with a strong emphasis on vendor consolidation [8][10] - Introduction of Wipro Intelligence, a unified suite of AI-powered platforms and solutions aimed at enhancing client productivity and efficiency [9][10] - Strategic partnerships, such as with a leading UK financial company and a European distribution firm, to modernize operations and drive growth [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future growth despite current challenges, with expectations for sequential IT services revenue growth of -0.5% to +1.5% in Q3 [11][15] - The company is focused on converting a strong backlog into revenue while maintaining operational discipline [11][15] - Management acknowledged the impact of large deal ramp-ups on margins, with a commitment to maintain margins in a narrow band [22][30] Other Important Information - The acquisition of Harman Digital Transformation Solutions is expected to close in the upcoming quarter, which is not factored into current revenue guidance [15] - Net income and EPS grew 1% year-on-year, with operating cash flows at 104% of net income for Q2 [14] Q&A Session Summary Question: Thoughts on deal to revenue conversion and future growth - Management indicated that large deal wins in BFSI are expected to ramp up in Q3, contributing to future growth [18][19] Question: Outlook on margins - Margins are expected to remain in a narrow band of 17% to 17.5%, with ongoing investments impacting margins [20][30] Question: Growth outlook despite strong deal wins - Management acknowledged the positive momentum from large deal wins but emphasized the need to convert these into revenue [27][28] Question: Client-specific challenges in Europe - Management confirmed that previous client-specific issues are behind them, and they expect growth to continue in Europe [52] Question: Impact of bankruptcy on revenue - No impact on Q2 revenue was reported, with provisions made for bad debts [85]