Wipro Q3 profit up by 29.6%

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Gross Revenue at INR 150.6 billion ($2.2 billion1) and grew 3.6% q-o-q and 10.2% y-o-y

Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) today announced financial results under International Financial Reporting Standards (IFRS) for its quarter ended December 31, 2018.

As stated in our last quarter’s earnings release, we have carved out the India State Run Enterprises (ISRE i.e. Public Sector Undertakings and Government business in India) from our IT Services segment into a separate segment effective quarter ended December 31, 2018.

Highlights of the Results for the quarter ended December 31, 2018

  • Gross Revenue was Rs 150.6 billion ($2.2 billion1) and grew 3.6% QoQ and 10.2% YoY
  • Non-GAAP3 constant currency IT Services Segment Revenue grew by 2.4% QoQ. Adjusted2 Non-GAAP constant currency IT Services Segment Revenue grew 7.0% YoY
  • IT Services Segment Reported Revenue was at $2,046.5 million and grew 1.8% QoQ
  • IT Services Operating Margin4 for the quarter was at 19.8% and expanded by 480bps QoQ and 496bps YoY
  • Net Income for the quarter was Rs 25.1 billion ($360.8 million1) and grew by 29.6% YoY
  • EPS for the quarter was Rs 5.57 ($0.081) per share and grew 38.2% YoY
  • Wipro declared an interim dividend of Rs 1 ($0.011) per equity share/ADS
  • Wipro’s Board of Directors recommended issue of bonus shares to shareholders (including stock dividend to ADS holders) in the ratio of 1:3 (One equity share for every Three equity shares held), subject to approval of shareholders.

Performance for the Quarter ended December 31, 2018

Abidali Z. Neemuchwala, CEO and Executive Director said, “Our strategic investments, backed by strong client relationships and client spends towards enterprise modernization and digital transformation have enabled us to deliver a very satisfying quarter.”

Jatin Dalal, Chief Financial Officer said, “Relentless focus on the quality of revenues and operational improvements have led to the expansion of IT Services Operating Margins to 19.8%. Our Operating Cash flows grew by 19.5% on YoY basis and was at 142% of Net Income.”

  • For the convenience of the readers, the amounts in Indian Rupees in this release have been translated into United States Dollars at the certified foreign exchange rate of US$1 = Rs 69.58, as published by the Federal Reserve Board of Governors on December 31, 2018. However, the realized exchange rate in our IT Services business segment for the quarter ended December 31, 2018 was US$1= Rs 71.66.
  • YoY growth rates for Q3’19 have been computed by adjusting revenues for Q3’18 for the impact from the divestment of our hosted data center services business.
  • Constant currency revenue for a period is the product of volumes in that period times the average actual exchange rate of the corresponding comparative period.
  • IT Services Operating Margin refers to Segment Results Total as reflected in IFRS financials.

Outlook for the Quarter ending March 31, 2019

We expect Revenue from our IT Services business to be in the range of $2,047 million to $2,088 million*. This translates to a sequential growth of 0.0% to 2.0%.

* Outlook is based on the following exchange rates: GBP/USD at 1.27, Euro/USD at 1.14, AUD/USD at 0.72, USD/INR at 71.11 and USD/CAD at 1.32

IT Services

Wipro continued its momentum in winning large deals globally as described below:

  • A leading foods distribution company has selected Wipro as its technology modernization and digital transformation partner. Wipro will provide a range of services that will include digital, data science and infrastructure services
  • An Australasian government agency has selected Wipro as its cloud transformation partner. The engagement, which will leverage Wipro’s cloud migration expertise and the Wipro HOLMESTM artificial intelligence and automation platform, will migrate the client’s existing applications to hybrid cloud, and provide applications development and infrastructure support
  • A leading global financial services firm has chosen Wipro to be its workplace modernization partner. This multi-year engagement will leverage Wipro’s VirtuaDeskTM solution and partner ecosystem and will help the client enhance their user experience in an outcome-based model
  • Wipro has won an end-to-end managed security services contract from a leading American global telecommunications company

Digital & Cloud Application Services Highlights

We continue to see increasing traction in digital oriented deals as illustrated below:

  • As banks recognize the opportunity to turn large volumes of data within their organization into actionable insights, Wipro has been chosen as the exclusive partner by a global financial services company to improve decision making and customer and employee experience by tightly integrating data across their IT stack and within a full portfolio of applications
  • The strength of our technology expertise, digital framework for transformation and experience-led design has been recognized by a North American healthcare provider who has hired Wipro Digital to enable the design, development and launch of their new healthcare marketplace. We are their partner for a new brand, platform and service, bringing agility and new ways of working to them
  • Wipro Digital has been selected by a Middle Eastern telecommunications company to improve the customer experience of their digital self-service channels
  • A North American chemicals company has selected Wipro Digital to develop an artificial intelligence-based search solution that will transform decades of digitized information into actionable insights for their plant operations
  • A North American telecommunications company has awarded an IT development engagement to Appirio, which will leverage Appirio’s strengths in user experience, applications and testing services

Analyst Accolades and Awards

  • Wipro was recognised as a Leader and Star Performer by Everest Group in Digital Services – PEAK Matrix™ Assessment and Market Trends 2019
  • Wipro was recognised as a Leader by Everest Group in Cloud Enablement Services – Market Trends and Services PEAK Matrix™ 2019
  • Wipro was recognized as a Leader in IDC MarketScape: Worldwide DevOps Services 2018 Vendor Assessment, Doc #US41235417, November 2018
  • Wipro was ranked among the HFS Top 10 Digital Change Management Providers & Digital Technology Strategy and Consulting Services 2018
  • Wipro was recognised as a Leader and Star Performer by Everest Group in IT Security Services- Market Trends and PEAK Matrix TM Assessment 2019
  • Wipro was recognized as a Leader in Magic Quadrant for Application Testing Services, Worldwide by: Gartner, Magic Quadrant for Application Testing Services, Worldwide, Susanne Matson et al, 21 November 2018

Disclaimer: Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

IT Products

  • IT Products Segment Revenue for the quarter was Rs 3.1 billion ($45.2 million1).
  • IT Products Operating Margin for the quarter was 6.7%.

India business from State Run Enterprises (SRE)

  • India SRE Segment Revenue for the quarter was Rs 1.7 billion ($24.6 million1).
  • India SRE Operating Margin for the quarter was –40.0%.

About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures within the meaning of Regulation G and Item 10(e) of Regulation S-K. Such non-GAAP financial measures are measures of our historical or future performance, financial position or cash flows that are adjusted to exclude or include amounts that are excluded or included, as the case may be, from the most directly comparable financial measure calculated and presented in accordance with IFRS.

The table at the end of the release provides IT Services Revenue on a constant currency basis, which is a non-GAAP financial measure that is calculated by translating IT Services Revenue from the current reporting period into U.S. dollars based on the currency conversion rate in effect for the prior reporting period. We refer to growth rates in constant currency so that business results may be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of our business performance.

This non-GAAP financial measure is not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, the most directly comparable financial measure calculated in accordance with IFRS and may be different from non-GAAP measures used by other companies. In addition to this non-GAAP measure, the financial statements prepared in accordance with IFRS and the reconciliation of these non-GAAP financial measures with the most directly comparable IFRS financial measure should be carefully evaluated.

Results for the quarter ended December 31, 2018, prepared under IFRS, along with individual business segment reports, are available in the Investors section of our website www.wipro.com

Quarterly Conference Call

We will hold an earnings conference call today at 07:15 p.m. Indian Standard Time (08:45 a.m. U.S. Eastern Time) to discuss our performance for the quarter. The audio from the conference call will be available online through a web-cast and can be accessed at the following link- http://services.choruscall.eu/links/wipro190118.html

An audio recording of the management discussions and the question and answer session will be available online and will be accessible in the Investor Relations section of our website at www.wipro.com

About Wipro Limited

Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) is a leading global information technology, consulting and business process services company. We harness the power of cognitive computing, hyper-automation, robotics, cloud, analytics and emerging technologies to help our clients adapt to the digital world and make them successful. A company recognized globally for its comprehensive portfolio of services, strong commitment to sustainability and good corporate citizenship, we have over 160,000 dedicated employees serving clients across six continents. Together, we discover ideas and connect the dots to build a better and a bold new future.

Forward-Looking Statements

The forward-looking statements contained herein represent Wipro’s beliefs regarding future events, many of which are by their nature, inherently uncertain and outside Wipro’s control. Such statements include, but are not limited to, statements regarding Wipro’s growth prospects, its future financial operating results, and its plans, expectations and intentions. Wipro cautions readers that the forward-looking statements contained herein are subject to risks and uncertainties that could cause actual results to differ materially from the results anticipated by such statements. Such risks and uncertainties include, but are not limited to, risks and uncertainties regarding fluctuations in our earnings, revenue and profits, our ability to generate and manage growth, complete proposed corporate actions, intense competition in IT services, our ability to maintain our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which we make strategic investments, withdrawal of fiscal governmental incentives, political instability, war, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our business and industry. Additional risks that could affect our future operating results are more fully described in our filings with the United States Securities and Exchange Commission, including, but not limited to, Annual Reports on Form 20-F. These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company’s filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statement that may be made from time to time by us or on our behalf.