Wipro Limited (NYSE: WIT ), a global leader in information technology, consulting, and business process services, has reported its financial performance for the fourth quarter of fiscal year 2024. During a conference call led by Srinivas Pallia, the company’s CEO, Wipro announced a modest 0.1% sequential increase in IT services revenue for Q4, along with large deal bookings valued at $1.2 billion. For the entire fiscal year, Wipro achieved a revenue of $10.8 billion and increased its margins to 16.1%. Despite a challenging macroeconomic environment, the company experienced a 5.2% growth in net income and earnings per share (EPS) for the quarter, while full-year EPS grew by 0.8%. Wipro’s cash flow remained robust, with $626 million generated in Q4 and $2.1 billion for the full year. The company anticipates a sequential growth of -1.5% to +0.5% in constant currency for the first quarter of 2025, with IT Services business segment revenue projected to range between $2.617 billion and $2.670 billion.
Key Takeaways:
* Wipro’s IT services revenue increased marginally by 0.1% sequentially in Q4.
* The company secured large deals worth $1.2 billion and reported full-year revenue of $10.8 billion.
* Margins expanded to 16.1% for the full year, representing a 235 basis point improvement.
* Net income and EPS for Q4 increased by 5.2%, while full-year EPS grew by 0.8%.
* Cash flow was strong, with $626 million in Q4 and $2.1 billion for the full year.
* Wipro expects a sequential growth of -1.5% to +0.5% in constant currency for Q1 ’25.
Company Outlook:
Wipro estimates its IT Services business segment revenue for Q1 2025 to be between $2.617 billion and $2.670 billion. The company remains cautious due to the overall demand environment and sector-specific weakness. Focus areas include accelerating large deal momentum, streamlining the operating model, and leveraging Capco’s BFSI consulting capabilities.
Bearish Highlights:
* Wipro faces challenges due to high discretionary spending in the BFSI sector.
* Communication and high-tech sectors are experiencing weaker performance.
* Conversion of large deal total contract value to revenue is lower as a result of discretionary spending and slower buoyancy in smaller deals.
Bullish Highlights:
* Positive growth in the BFSI and healthcare sectors.
* Strategic acquisitions and the introduction of the Wipro Enterprise Artificial Intelligence Ready Platform with IBM are expected to drive business growth.
* Capco’s performance has shown improvement, resulting in synergy gains and revenue acceleration.
Missed Expectations:
* The company’s modest sequential increase in IT services revenue for Q4 reflects a challenging macroeconomic climate.
Q&A Highlights:
* Wipro plans to mitigate churn levels by providing growth opportunities and investing in internal talent development.
* The company aims to improve win rates by actively creating pipelines and customizing deals to specific industries and clients.
* Historically, Wipro has generated between 85% and 110% of free cash flow as a percentage of net income and plans to enhance cash flow generation in the future.
