- IT Services Revenue for the quarter grew by 2.2% QoQ
- IT Services Operating Margin at 18.4%
Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) today announced financial results under International Financial Reporting Standards (IFRS) for its quarter ended December 31, 2019.
Highlights of the Results
Results for the Quarter ended December 31, 2019:
- Gross Revenue was Rs 154.7 billion ($2.2 billion1), an increase of 2.7% YoY
- IT Services Segment Revenue was at $2,094.8 million, a sequential growth of 2.2%
- Non-GAAP2 constant currency IT Services Segment Revenue increased by 1.8% QoQ
- IT Services Operating Margin3 for the quarter was at 18.4%, an increase of 0.3% QoQ
- Net Income for the quarter was Rs 24.6 billion ($344 million1), a decrease of 2.2% YoY
- EPS for the quarter was Rs 4.3 ($0.061) per share and grew 3.2% YoY
- Wipro declared an interim dividend of Rs 1 ($0.0141) per equity share/ADS
Performance for the quarter ended December 31, 2019
Abidali Z. Neemuchwala, CEO and Managing Director said, “We have delivered a good quarter with secular growth across all business units, geographies and practices. We remain focused on deepening our customer relationships, converting our funnel and winning large deals.”
Jatin Dalal, Chief Financial Officer said, “We expanded operating margins by 0.3% aided by a favorable movement in the currency. Further, we generated strong operating cash flows led by disciplined execution at 124% of our 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 71.36, as published by the Federal Reserve Board of Governors on December 31, 2019. However, the realized exchange rate in our IT Services business segment for the quarter ended December 31, 2019 was US$1= Rs 72.09
- 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, 2020
We expect Revenue from our IT Services business to be in the range of $2,095 million to $2,137 million*. This translates to a sequential growth of 0.0% to 2.0%.
* Outlook is based on the following exchange rates: GBP/USD at 1.30, Euro/USD at 1.11, AUD/USD at 0.68, USD/INR at 71.28 and USD/CAD at 1.32
IT Services
Wipro continued its momentum in winning large deals globally as described below:
- Wipro has secured a multi-year managed IT services contract from a leading airport in the Middle East wherein Wipro will leverage its strong domain expertise, digital transformation & innovation capabilities and integrated service delivery model to transform the airport’s IT operations
- Wipro has won a large strategic deal from a leading European manufacturer of hi-tech components for the automotive industry to consolidate, standardize, and automate their IT operations globally. The engagement will drive operational excellence, enhance user experience and foster innovation. This will be done leveraging the hyper-automation capabilities of Wipro HOLMES™, Wipro’s global delivery model and strong domain & digital expertise
- Wipro has been awarded a strategic multi-year cyber governance, cloud and infrastructure services transformation engagement by Olympus, a global medtech company headquartered in Japan
- Wipro has won a multi-year managed services contract from a leading UK-headquartered construction company to run and transform their entire IT operations and enhance user experience
- A multinational food and drink processing conglomerate has awarded its Platform and Cloud Services contract with Wipro to transform their operations and ensure next-generation service readiness
Digital & Cloud Application Services Highlights
We continue to see increasing traction in digital oriented deals as illustrated below:
- Wipro has secured a contract from one of the largest US-based integrated healthcare delivery systems to bolster enterprise security and operations, leveraging Wipro’s Security Intelligence as a Service (SIaaS) managed services
- A US-based healthcare company has awarded Wipro a contract to streamline their enterprise operations and deploy new technologies to enable rapid growth, leveraging Topcoder
- A European start-up has awarded Wipro Digital a multi-year, multi-million-dollar strategic contract to develop and run a new-age payment and loyalty solution for the hospitality, travel and retail industry, leveraging Topcoder
- Wipro has secured a strategic contract from a global supplier of semiconductors and infrastructure software products to accelerate their product development
- A multinational financial services company has awarded Wipro Digital a contract to reimagine and redesign its investment platform
Analyst Accolades and Awards
- Wipro positioned as a Leader in Gartner Magic Quadrant for Application Testing Services, Worldwide, Gunjan Gupta et al., 25 Nov 2019
- Wipro positioned as a Leader in IDC MarketScape Worldwide Business Process Outsourcing for AML and KYC 2019 Vendor Assessment (Doc #US44398519, December 2019)
- Wipro recognized as a Leader and Star Performer by Everest Group in Enterprise Blockchain services PEAK Matrix™ Assessment 2020
- Wipro recognized as a Leader and Star Performer by Everest Group in Application Transformation Services PEAK Matrix™ Assessment 2020
- Wipro recognized as a Leader and Star Performer in Everest Group Application and Digital Services in Capital Markets – Services PEAK Matrix™ Assessment 2020
- 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.
All product names, logos, and brands are property of their respective owners.
IT Products
- IT Products Segment Revenue for the quarter was Rs 2.6 billion ($36.1 million1).
- IT Products Segment Results for the quarter was a loss of Rs 0.14 billion ($1.96 million1).
India State Run Enterprises (ISRE)
- India SRE Segment Revenue for the quarter was Rs 1.8 billion ($25.9 million1).
- India SRE Segment Results for the quarter was a loss of Rs 0.53 billion ($7.4 million1).
Please refer the table on page 8 for reconciliation between IFRS IT Services Revenue and IT Services Revenue on a non-GAAP constant currency basis.
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 tables on page 8 provide 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. Further, in the normal course of business, we may divest a portion of our business which may not be strategic. We refer to the growth rates in both reported and constant currency adjusting for such divestments in order to represent the comparable growth rates.
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, 2019, 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 7:15 p.m. Indian Standard Time (8:45 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- https://links.ccwebcast.com/?EventId=WIPRO2010114.
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 175,000 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.
| WIPRO LIMITED AND SUBSIDIARIES
|
|||||||
| INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION | |||||||
| (Rs in millions, except share and per share data, unless otherwise stated) | |||||||
| As at March 31, 2019 | As at December 31, 2019 | ||||||
| Convenience translation into US dollar in millions Refer footnote 1 | |||||||
| ASSETS | |||||||
| Goodwill | 116,980 | 123,706 | 1,734 | ||||
| Intangible assets | 13,762 | 14,632 | 205 | ||||
| Property, plant and equipment | 70,601 | 78,552 | 1,101 | ||||
| Right-of-use assets | – | 15,706 | 220 | ||||
| Financial assets | |||||||
| Derivative assets | 173 | – | – | ||||
| Investments | 6,916 | 9,045 | 127 | ||||
| Trade receivables | 4,373 | 4,373 | 61 | ||||
| Other financial assets | 5,146 | 4,790 | 67 | ||||
| Investments accounted for using the equity method | 1,235 | 1,291 | 18 | ||||
| Deferred tax assets | 5,604 | 5,943 | 83 | ||||
| Non-current tax assets | 20,603 | 12,412 | 174 | ||||
| Other non-current assets | 15,872 | 11,652 | 163 | ||||
| Total non-current assets | 261,265 | 282,102 | 3,953 | ||||
| Inventories | 3,951 | 2,063 | 29 | ||||
| Financial assets | |||||||
| Derivative assets | 4,931 | 1,352 | 19 | ||||
| Investments | 220,716 | 164,256 | 2,302 | ||||
| Cash and cash equivalents | 158,529 | 186,637 | 2,615 | ||||
| Trade receivables | 100,489 | 100,622 | 1,410 | ||||
| Unbilled receivables | 22,880 | 24,663 | 346 | ||||
| Other financial assets | 14,611 | 9,538 | 134 | ||||
| Contract assets | 15,038 | 14,553 | 204 | ||||
| Current tax assets | 7,435 | 3,459 | 48 | ||||
| Other current assets | 23,086 | 21,999 | 308 | ||||
| 571,666 | 529,142 | 7,415 | |||||
| Assets held for sale | 240 | – | – | ||||
| Total current assets | 571,906 | 529,142 | 7,415 | ||||
| TOTAL ASSETS | 833,171 | 811,244 | 11,368 | ||||
| EQUITY | |||||||
| Share capital | 12,068 | 11,426 | 160 | ||||
| Securities premium reserve | 533 | 1,179 | 17 | ||||
| Retained earnings | 534,700 | 503,167 | 7,051 | ||||
| Share-based payment reserve | 2,617 | 2,203 | 31 | ||||
| Other components of equity | 18,198 | 21,679 | 304 | ||||
| Equity attributable to the equity holders of the Company | 568,116 | 539,654 | 7,563 | ||||
| Non-controlling interest | 2,637 | 1,580 | 22 | ||||
| TOTAL EQUITY | 570,753 | 541,234 | 7,585 | ||||
| LIABILITIES | |||||||
| Financial liabilities | |||||||
| Long – term loans and borrowings | 28,368 | 22,299 | 312 | ||||
| Derivative liabilities | – | 4 | |||||
| Lease liabilities | – | 10,632 | 149 | ||||
| Other financial liabilities | – | 5 | – | ||||
| Deferred tax liabilities | 3,417 | 3,522 | 49 | ||||
| Non-current tax liabilities | 11,023 | 11,549 | 162 | ||||
| Other non-current liabilities | 5,258 | 6,152 | 86 | ||||
| Provisions | 2 | 2 | – | ||||
| Total non-current liabilities | 48,068 | 54,165 | 758 | ||||
| Financial liabilities | |||||||
| Loans, borrowings and bank overdrafts | 71,099 | 72,380 | 1,014 | ||||
| Derivative liabilities | 1,310 | 1,573 | 22 | ||||
| Trade payables and accrued expenses | 88,304 | 80,570 | 1,130 | ||||
| Lease liabilities | – | 6,389 | 90 | ||||
| Other financial liabilities | 644 | 604 | 8 | ||||
| Contract liabilities | 24,768 | 21,153 | 296 | ||||
| Current tax liabilities | 9,541 | 13,903 | 195 | ||||
| Other current liabilities | 18,046 | 18,749 | 263 | ||||
| Provisions | 638 | 524 | 7 | ||||
| Total current liabilities | 214,350 | 215,845 | 3,025 | ||||
| TOTAL LIABILITIES | 262,418 | 270,010 | 3,783 | ||||
| TOTAL EQUITY AND LIABILITIES | 833,171 | 811,244 | 11,368 | ||||
| WIPRO LIMITED AND SUBSIDIARIES | |||||||||||||
| INTERIM CONDENSED CONSOLIDATED STATEMENT OF INCOME | |||||||||||||
| (Rs in millions, except share and per share data, unless otherwise stated) | |||||||||||||
| Three months ended December 31, | Nine months ended December 31, | ||||||||||||
| 2018 | 2019 | 2019 | 2018 | 2019 | 2019 | ||||||||
| Convenience translation into US dollar in millions Refer footnote 1 | Convenience translation into US dollar in millions Refer footnote 1 | ||||||||||||
| Revenues | 150,595 | 154,705 | 2,168 | 435,782 | 453,122 | 6,350 | |||||||
| Cost of revenues | (103,971) | (109,673) | (1,537) | (306,091) | (321,952) | (4,512) | |||||||
| Gross profit | 46,624 | 45,032 | 631 | 129,691 | 131,170 | 1,838 | |||||||
| Selling and marketing expenses | (11,889) | (11,030) | (154) | (33,516) | (32,612) | (457) | |||||||
| General and administrative expenses | (6,978) | (7,496) | (105) | (29,282) | (22,142) | (310) | |||||||
| Foreign exchange gains/(losses), net | 911 | 727 | 10 | 2,899 | 2,176 | 30 | |||||||
| Other operating income | – | – | – | 2,798 | 749 | 10 | |||||||
| Results from operating activities | 28,668 | 27,233 | 382 | 72,590 | 79,341 | 1,111 | |||||||
| Finance expenses | (1,627) | (1,844) | (26) | (4,845) | (5,675) | (80) | |||||||
| Finance and other income | 5,362 | 5,370 | 75 | 15,695 | 19,174 | 269 | |||||||
| Share of net profit /(loss) of associates accounted for using the equity method | 7 | 34 | – | (26) | 16 | – | |||||||
| Profit before tax | 32,410 | 30,793 | 431 | 83,414 | 92,856 | 1,300 | |||||||
| Income tax expense | (6,966) | (6,164) | (86) | (18,178) | (18,594) | (261) | |||||||
| Profit for the period | 25,444 | 24,629 | 345 | 65,236 | 74,262 | 1,039 | |||||||
| Profit attributable to: | |||||||||||||
| Equity holders of the Company | 25,103 | 24,558 | 344 | 65,198 | 73,958 | 1,035 | |||||||
| Non-controlling interest | 341 | 71 | 1 | 38 | 304 | 4 | |||||||
| Profit for the period | 25,444 | 24,629 | 345 | 65,236 | 74,262 | 1,039 | |||||||
| Earnings per equity share: | |||||||||||||
| Attributable to equity share holders of the Company | |||||||||||||
| Basic | 4.18 | 4.31 | 0.06 | 10.86 | 12.58 | 0.18 | |||||||
| Diluted | 4.17 | 4.30 | 0.06 | 10.83 | 12.55 | 0.18 | |||||||
| Weighted average number of equity shares | |||||||||||||
| used in computing earnings per equity share | |||||||||||||
| Basic | 6,006,062,585 | 5,692,132,118 | 5,692,132,118 | 6,006,193,456 | 5,879,588,157 | 5,879,588,157 | |||||||
| Diluted | 6,020,671,301 | 5,703,265,041 | 5,703,265,041 | 6,020,140,129 | 5,892,966,906 | 5,892,966,906 | |||||||
| Particulars | Three months ended | Nine months ended | Year ended | |||
| December 31, 2019 | September 30, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | March 31, 2019 |
|
| Audited | Audited | Audited | Audited | Audited | Audited | |
| Revenue | ||||||
| IT Services | ||||||
| BFSI | 46,612 | 45,760 | 45,979 | 137,767 | 129,219 | 175,262 |
| Health BU | 19,799 | 18,981 | 19,241 | 57,651 | 55,793 | 75,081 |
| CBU | 25,443 | 23,530 | 22,875 | 71,339 | 65,646 | 89,313 |
| ENU | 19,553 | 18,888 | 18,996 | 56,873 | 54,202 | 72,830 |
| TECH | 18,584 | 19,148 | 19,104 | 56,392 | 58,189 | 76,591 |
| MFG | 12,450 | 11,886 | 11,981 | 35,672 | 34,945 | 46,496 |
| COMM | 8,565 | 8,368 | 8,480 | 25,387 | 24,394 | 32,680 |
| Total of IT Services | 151,006 | 146,561 | 146,656 | 441,081 | 422,388 | 568,253 |
| IT Products | 2,576 | 3,233 | 3,145 | 8,218 | 9,553 | 12,312 |
| ISRE | 1,847 | 2,069 | 1,713 | 6,059 | 6,757 | 8,544 |
| Reconciling Items | 3 | (16) | (8) | (60) | (17) | (49) |
| Total Revenue | 155,432 | 151,847 | 151,506 | 455,298 | 438,681 | 589,060 |
| Other operating Income | ||||||
| IT Services | – | 50 | – | 749 | 2,798 | 4,344 |
| Total Other Operating Income | – | 50 | – | 749 | 2,798 | 4,344 |
| Segment Result | ||||||
| IT Services | ||||||
| BFSI | 8,246 | 8,407 | 9,095 | 25,988 | 24,182 | 33,831 |
| Health BU | 3,186 | 2,863 | 1,973 | 8,978 | 6,698 | 8,638 |
| CBU | 4,725 | 3,952 | 5,291 | 12,183 | 12,112 | 16,828 |
| ENU | 3,130 | 3,084 | 3,613 | 8,410 | 4,294 | 7,081 |
| TECH | 3,256 | 3,624 | 4,177 | 10,406 | 12,885 | 15,916 |
| MFG | 2,385 | 2,439 | 2,391 | 6,916 | 6,065 | 8,327 |
| COMM | 1,444 | 1,044 | 1,578 | 4,006 | 3,411 | 4,396 |
| Unallocated | 1,360 | 1,044 | 976 | 3,124 | 1,981 | 3,142 |
| Other Operating Income | – | 50 | – | 749 | 2,798 | 4,344 |
| Total of IT Services | 27,732 | 26,507 | 29,094 | 80,760 | 74,426 | 102,503 |
| IT Products | (140) | 149 | 212 | (398) | (954) | (1,047) |
| ISRE | (528) | (177) | (686) | (1,341) | (1,054) | (1,829) |
| Reconciling Items | 169 | 256 | 48 | 320 | 172 | 283 |
| Total | 27,233 | 26,735 | 28,668 | 79,341 | 72,590 | 99,910 |
| Finance Expense | (1,844) | (2,247) | (1,627) | (5,675) | (4,845) | (7,375) |
| Finance and Other Income | 5,370 | 6,857 | 5,362 | 19,174 | 15,695 | 22,923 |
| Share of net profit/ (loss) of associates accounted for using the equity method | 34 | (2) | 7 | 16 | (26) | (43) |
| Profit before tax | 30,793 | 31,343 | 32,410 | 92,856 | 83,414 | 115,415 |
The Company is organized into the following operating segments: IT Services, IT Products and India State Run Enterprise segment (ISRE).
IT Services: The IT Services segment primarily consists of IT Service offerings to customers organized by industry verticals.
The industry verticals are as follows: Banking, Financial Services and Insurance (BFSI), Health Business unit (Health BU), Consumer Business unit (CBU), Energy, Natural Resources & Utilities (ENU), Manufacturing (MFG), Technology (TECH) and Communications (COMM). Key service offerings to customers includes software application development and maintenance, research and development services for hardware and software design, business application services, analytics, consulting, infrastructure outsourcing services and business process services.
IT Products: The Company is a value-added reseller of desktops, servers, notebooks, storage products, networking solutions and packaged software for leading international brands. In certain total outsourcing contracts of the IT Services segment, the Company delivers hardware, software products and other related deliverables. Revenue relating to the above items is reported as revenue from the sale of IT Products.
India State Run Enterprise segment (ISRE): This segment consists of IT Services offerings to entities/ departments owned or controlled by Government of India and/ or any State Governments
Reconciliation of Non-GAAP Constant Currency IT Services Revenue to IT Services Revenue as per IFRS ($MN)
Three Months ended December 31, 2019
Non-GAAP Constant Currency IT Services Revenue based on $ 2,085.7
previous quarter exchange rates
Three Months ended December 31, 2019
IT Services Revenue as per IFRS $ 2,094.8
Effect of Foreign currency exchange movement $ 8.4
Non-GAAP Constant Currency IT Services Revenue based on $ 2,103.2
exchange rates of comparable period in previous year
