Wipro Ltd (WIT) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Wipro Ltd. Q4 FY26 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded and the duration for today's call will be for 45 minutes. I now hand the conference over to Mr. Abhishek Jain, Vice President, Corporate Treasurer and Head of Investor Relations. Thank you and over to you.

Yashashree, thank you. Warm welcome to our Q4 F526 earnings call. We'll begin the call with the business highlights and overview by Srinivas Paliya, our Chief Executive Officer and Managing Director, followed by updates on financial overview by our CFO, Apanna Iyer. We also have our CHRO, Saurabh Govil, and our Chief Strategist and Technology Officer, Harish Shetty, on this call. Afterwards, the operator will open the bridge for Q&A with our management team. Before Shini starts, let me draw your attention to the fact that during this call, we may make certain forward-looking statements within the meaning of the Private Securities Litigation Reforms Act 1995. These statements are based on management's current expectation and are associated with uncertainties and risk, which may cause the actual results to differ materially from those expected. The uncertainty and risk factors are explained in our detailed filings with the SEC. WIPRO does not undertake any obligation to update the forward-looking statements to reflect events and circumstances after the date of filing. The conference call will be archived and a transcript will be available on our website. With that, I would like to turn over the call to Shini.

Shini, what do you? Thanks, Abhishek. Hello, everyone. Thank you for joining us today. Geopolitical and policy disruptions have become the new normal. Despite these headwinds, IT spending has shown resilience. Continue to attract as they provide infrastructure, spending decisions increasing.

And at Wipro, we continue to make decisive investments to navigate the AI first world.

With that context, let me now turn to our performance in FY 2025. I share IT services revenue for quarter 4 was $2.65 billion, reflecting a sequential growth and degrowth of on a year-on-year basis. It came in at 17.3% basis points, 5 billion, which is a growth of 3.2% sequentially and a degrowth of 13.9% on a year-on-year basis. We had 14 large deals this quarter. Year-on-year degrowth of 1.6% was at 17.2%, an expansion of almost 15 basis points as compared to delivered sequential and year-on-year growth in consumer and communications, seasonality and policy changes. America's two declined sequentially and on a year-on-year basis.

The BFSI sector was impacted by delayed ramp-ups on some large deals that were closed earlier this year.

We see good traction in the UK, specifically we also see traction in the BFSI region, both in performance and bets we continue to make there. A strong example is the strategic deal we announced recently with the Olam Group, expected to exceed $1 billion in contract. This is one of our largest engagements to date in APMEA. In this quarter, several strategic engagements, for example, with global technology leaders who drive AI. In my first example, a leading global technology company has engaged, done and improved its frontier. It will manage the end-to-end operation of these AI models from training, governance and evaluation to domain-specific value. In fact, this engagement will be done with global delivery. These models are more accurate, reliable and safe and managed at scale. In my second example, we have been selected by a leading global semiconductor to provide engineering services that accelerate at locations. We will support the entire engineering lifecycle from two performance testing analyses before final shipment is made by. This will help solution management and improve governance, analytics, and automation. As intelligence becomes industrialized and widely accessible, we are making a deliberate strategy services only model and a distinct or authentic AI to invest in addition to a dual-engine model driving transformation at scale while building AI that differentiates services, enable repeatable, deploy and unlock non-linear growth. In Q1, we are guiding for a sequential growth of minus 2% to 0%. Thank you. I'll now hand it over to Aparna.

Good evening, everyone. Let me share a quick update and then we can open it up for Q&A. Our IT services revenue for Q4 grew 0.2% sequentially in constant currency terms and 0.6% in reported currency. Our revenues declined 0.2% on a year-on-year basis in constant currency terms. For the full year, FI26, IT services revenues declined by 1.6% in constant currency. Our operating margins for the quarter was at 17.3%, a contraction of 0.3% over Q326, and a 0.2% contraction on a year-on-year basis. With this, our full year operating margin stands at 17.2%, an expansion of 15 basis points year-on-year. We maintained the margins within an Arab bank, even after absorbing two incremental months of DTS harming. And we also rolled out salary increases effective first March. As we move into Q1, we will have the headwinds of two months of salary increase and a few large deals if you want, and the volatility could be there in our quarterly performance. However, having said that, our endeavor would be to maintain these margins in a narrow band in the medium price. Net income for the quarter was at Rs. 35 billion. Adjusted for the impact of labor code changes, our net income increased 3.7% sequentially. For the full year, our net income increased 2.2% year on year. This was after absorbing the impact of restructuring charges in both Q1 and Q3 of last year. EPS for the quarter was at Rs. 3.3 and Rs. 12.6 for the full year. Moving on to our strategic market unit and sector performance, all the growth numbers that I will be sharing will be in constant currency. America's 1 grew 0.3% sequentially and grew 2.9% on a year-on-year basis America's 2 declined 2.6% sequentially and 6.7% on a year-on-year basis Europe grew 2% sequentially and was flat on a year-on-year basis ACMEA grew 3.1% sequentially and 8.8% on a year-on-year basis Moving on to sector performance BFSI declined 1.3% sequentially and 0.5% year-on-year. Health declined 4.4% sequentially and was flat year-on-year. Consumer grew 1.7% sequentially and declined 2.9% year-on-year. Technology and communication grew 5.3% sequentially and 10.4% year-on-year. EMR grew 1.1% sequentially and declined 5.9%. year on year. Let me share some other key financial metrics. Our operating cash flow continues to be higher than the net income and stood at 112.6% of net income for FI26. Our gross cash including investments was at 5.9 billion. Accounting yield on average investments held in India was at 7.3%. Our ETR was at 23.5%. In terms of guidance to reiterate what Shaney said, we expect our revenue from IT services business segment to be in the range of $2.597 billion to $2.651 billion. This translates through a sequential guidance of minus 2 to 0 in constant currency terms. Lastly, I'd like to share that in our recently concluded board meeting, the board of directors have announced and approved a buyback of 15,000 crores at a price of $2.50 per share. This is the largest buyback that Wipro has announced, and we expect to buy back 5.7% of the paid-up capital. The buyback is expected to complete in Q127, subject to shareholder approval. Our endeavor has always been to return substantial portion of the cash generated through our operations back to our shareholders. In FI26 alone, we distributed dividends of $1.3 billion, taking our total payout ratio for three-year block ending FI26 to about 88%, which is significantly higher than the minimum threshold of 70% that we have as per our capital allocation policy. With that, I will hand it over for Q&A.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We will take our first question from the line of Pratik Maheshwari from HSBC Securities. Please go ahead. I'm sorry, his line is disconnected. We move on to the next question from the line of Sandeep Shah from Equirus Securities. Please go ahead.

Yeah, hi. Thanks. Thanks for the opportunity. Sir, the first question is there has been a good large deal win which has happened only one inch as well as fourth quarter of last year. And we kept on telling about delay in these large deals which were expected to come in Q3, then we said Q4, then we said it will come in Q2, but the guidance does not show that. Despite the nature of the deal being cost, takeout, reduction, consolidation, why this delay?

Let me just quote a four performance in the context of the four SMUs we had. Three out of the four SMUs, America, Swan, Europe and AFMEA. Having said that, specifically, and this is specific to the BFS sector there. This has been a combination of both the reasons for the delays but we see that will give us the growth in that particular account and that particular...

Okay, and do you believe second quarter onwards there could be a delayed ramp up can actually pull up the growth or do you believe client-specific issue because of the geopolitical issue and macro may continue?

So, as far as this particular client is concerned, it will end in quarter one, Sandeep, and there is no further, any client demonstrating any specific. And also, if you reflect on the pipeline that we have across the markets, including countries, and across the sectors, a very strong pipeline. And of course, it's a very competitive landscape and the competition and the way we have gone ahead with the Olam deal, which is very transmission, also taking their entire IT, second one that we announced, the kind of deals that are coming off are very different, but very strategic and we are staying focused quarters ahead.

Perfect. And this last two, there has been a notable decline in a top client. What is the reason for this aid? And second, can you give us the inorganic growth contribution you have factored in the first quarter growth guidance?

You know, these two deals that we've announced in this month, Sandeep, are part of our guidance. At the midpoint, we've assumed both these deals to start yielding revenues for one and a half months, halfway through the quarter. To your point on the top account growth, it's a sequential decline, but from a year-on-year standpoint, it continues to have grown. And we are very confident that it will continue to come back as we go through the quarters.

Is it possible to quantify inorganic growth in the guidance?

They are not inorganic. They are actually strategic deal win. If you look at it, is a strategic deal win with a relationship that has committed revenue. And even the other one that we announced, was a part of the vendor consolidation strategy for one of our top clients and we continue to participate in these kind of deals and both will be a part of our numbers and our guidance range.

Okay. We'll come in the follow-up. Thanks. All the best.

Thank you. Thank you, Sundi. Next question is from the line of Ravi Menas from Access Capital. Please go ahead.

Hi, thanks. an opportunity. Beyond the top customer where we see a sharp decline, top two to five customers also decline slightly. The top customer decline, although you said it's temporary, it's a very sharp decline. Can we talk a bit about what led to this and what gives you confidence that this will be temporary?

No, Ravi, if you look at it, our top client has been producing a healthy growth for a fairly long time. This kind of one-off quarter, volatility is not something that we are unduly concerned about. The relationship remains very strong and you should continue to see it bounce back.

Thank you. And the unbilled revenue has grown this quarter from over $80 million and then we also see some long-term unbilled revenue. Could you talk a bit about what's led to this and how should you see that trend?

No, so I don't think, see the unbilled revenues that have gone up is more a quarterly aberration. It should correct itself from a quarter on, I mean from a year on year standpoint actually our DSO has remained slattish. Like I said, our operating cash flows has remained 112% of net income. We are not seeing any large exposures or pile up of our unbuild in our balance sheet. From a long term unbuilt standpoint as well, I think it's fairly contained and we've shown consistent improvement. Yes, some of the larger deals as they pick up, we are open to, you know, they will come with some amount of balance sheet leverage, but nothing that's unduly different than what we do as business as usual. Ravi.

Thanks for the slides.

Thank you. Next question is from the line of Dipesh Mehta from MK Global. Please go ahead.

Yeah, thanks for the opportunity. A couple of questions. First, in the clarification part, you said DFSI weakness was because of two factors. One is client-specific and second is delay in ramp-up. And one of the question-answer you indicated about some of the issues likely to be ending by quarter one. Which part you are indicating why Q1 is today?

We have said that the client-specific issue that we have seen in one of our clients in America too has had an impact in both Q4 and Q1. And there won't be a continuing impact of that going forward.

And what about the delayed rental part?

Yes. So if I have to characterize, see, we've had several large deal bookings, right? Now, the one that we announced on Phoenix, it is fully ramped up to plan. There is no delay. If you look at the other three mega deals that we spoke of, one of them is on plan and we are continuing to ramp up. We are seeing challenging one of those large deals that we spoke about where we are seeing a delayed ramp up, which is, in particular, impacting the growth rate of that particular sector and that particular market unit. Outside of that, BFSI growth rates are pretty good in Europe and Atmea. As that climb comes back and, you know, we start to ramp up, you will see those growth rates improving. That is our thought.

Can you give some sense about, let's say, what factor is leading to delay in ramp-up, whether, so if you can provide some details around it, qualitatively, what is leading to some of those delay. Second question which I have is, if I look, let's say, the couple of transits in which we close or in the process of closing, we include it in the guidance.

If let's say any delay in the, some of those closures, do you see risk to that guidance kind of thing? you know we guide in a range there is like I said we guide in a range and there is a midpoint and we have some cushion both on the downside and on the upside and for now we are comfortable within that guidance range on the first point Zipesh Shini here on the first point this is a very client specific related but having said that we have the clear

visibility going forward It's about the matter of timing, when and how much, and that should help.

And last question from myself. Just want to get some sense about how Capco is playing down.

Capco is the tip of the spear. They are definitely doing well. And if you look at, and also in the year-on-year, both have been very positive. And in fact, Capco is making a big difference in terms of the whole AI advisory and consulting and the way shaping the client's thought process in terms of the whole geopolitics and in terms of the trade and tariff.

Thank you. Next question is from the line of Vibhore Singhal from Nuwa My Committee. Please go ahead.

Yeah, hi. Thanks for taking my question. And congrats, Sleemi and Wanda for the buyer announcement finally. I know the market parts have been waiting for this one for quite a while.

Two questions from Matt.

One is... Vibor, I'm sorry. You're sounding muffled.

I'm so sorry. Just give me a second.

Are you on your handset mode? Can you use your handset mode?

Switch to the handset now. Yes, it is clear now. Please go ahead. Sorry for that. So, a couple of questions from my side. Speaking on the energy and utility vertical, this has been a vertical in which we've been very strong for quite a while. Just wanted to pick as to what are the conversations that you're having with the clients at this point of time because of the Gulf War that is going around. Will the crude prices and the volatility in it impact our business in this vertical, either positive or negative? Any conversation that you've already started on that is required, or is it too early to call out any impact of that on the segment?

And both manufacturing, particularly auto and industrial, have seen an impact otherwise on the reason for tariffs. Now, coming specifically in the context of geopolitics, I think some of the clients are waiting and watching, but having said that, they have not dramatically changed their strategy. For example, what they are trying to do, especially in the manufacturing sector, if you will, they are looking at how do you secure the supply chain, make it more visible and more dynamic going forward. And that's some of the opportunities that we are looking at in the context of AI that can actually help. So that's the trend that we are seeing. Auto industry, obviously, you know, they are also looking at how the markets are going and it varies from country to country in terms of how the business is going. And the third is in terms of overall manufacturing, we have not seen any clear change. but they have been constantly under pressure because of tariff-led deceptions that they are going through and they are also looking at what kind of consumer demand they can have and also they are keeping a close watch on the input costs because that will also impact their final product cost.

So they are trying to sharpen their budgeting, I would say tightening at this point.

Got it. My second question was basically on again sorry to harp on the Q1 guidance once again. As Panna mentioned we are taking around one and a half months of contributions on the new deals. That would approximately come to around 0.7-0.8% of revenue. Then another 0.7-0.8% from the one month incremental of R1 integration.

That I'm sorry Vibor, you're sounding muffled again.

Can you repeat the last part please? okay now it's fine please go ahead yes oh i'm so sorry for the connectivity uh yeah so as i said i think the two deals will contribute to uh one and a half months of revenue that's around 0.7 0.8 percent of revenue uh harman acquisition one incremental month in q1 again that's another maybe 0.7 0.8 so around one and a half percent dose is coming from these three factors so these aside, I think the remaining business seems to be quite a sharp decline in Q1. You mentioned one of the client specific issues which you will continue to face in Q1. But are there any other significant client rampdowns or any other delays that we are seeing because of which this Q1 growth, organic growth, if I can call the growth beyond D3, seems to be so weak?

You know, DTS, Harman is fully in our Q4 numbers. But in Q4, that was only two months. so on Q1Q this will add another month in Q1 no no 4 was all 3 months oh all 3 months yeah so that is not that is the only inorganic piece and our growth for Q1 is you know yes there are these 2 deals that we have spoken about which will be there and it will add to our revenues in Q1 and we have assumed that they will start yielding revenues mid-quarter.

Mid-quarter. Got it, got it.

I was, as an organic growth, are the strong strategies taken? Yes.

Very much, very much point taken. Just my last question, but on the margins, I think very strong performance on the margins in this quarter, despite wage hike and hormone integration as well. Do we believe these margins are sustainable, neck in the coming quarters as well, given that we'll have a couple of these deals, cost-tick-out deals also that we will be factoring in. Do you believe we will be able to maintain their margins around the current levels as we have always maintained, as we have always stated that this is our target range?

Yeah, there are three areas where we are going to be investing in. We've already rolled out the wage hikes effective first March. So we will have two months incremental impact which will have to be absorbed right, in Q1. Two, we are winning some of these large deals, and they are, one, in a competitive environment. They will come with their share of, you know, lower margins, especially as we start these deals, right? Second, there is, you know, certainly around capabilities, we've acquired the the DTA, common, the connected services piece, which is also putting pressure on margins. And as I look ahead, we will continue to actually accelerate investments, especially around Wipro Intelligence, the platform unit that we have announced. And it will need a lot of investments that we will work through and share with you transparently as we go through the process, as we, you know, form our strategy around it. That will also be an area of focus for investment. Given all this, we will have to drive operational improvement. That is a continuous process, as you know. And like I said, maybe we see some quarter-on-quarter volatility, but our endeavor is going to be that in medium term, we continue to drive that productivity and cost takeout and deliver on the promise of, you know, actually AI helping us to deliver our enterprise programs better. And we continue to optimize all other overheads. And as we do that, hopefully we are able to keep our margins on a medium term in narrowback.

Great. Thank you so much for taking my questions and I wish you all the best.

Thank you. We'll take our next question from the line of Prateek Maheshwari from HNBC Securities. Please go ahead.

Hello. Thank you for the opportunity. So, I've seen about a couple of questions. So, I'm sorry for harping again on Americas 2. I understand that there is a client specific issue that you guys have faced in the fourth quarter and you face in the first quarter as well. However, if I look at America's tools over a one-year period or a three-year period, it seems that there's been a consistent there have been multiple client-specific issues that have happened. So, just one day I understand your thoughts on this, if it is a mere coincidence or what are your thoughts basically on this. And this second question from our side is around the AI partnerships. So, we are seeing or larger peers have have announced their participants probably front-end models like Onzepec, Machine AI and OpenAI but we haven't heard a lot from you guys so just wanted to understand how you guys are planning around this and if you guys are planning for GTM around it these models as well.

You're right.

AI is two quarters back where it launched Wipro Intelligence which is a combination of industry and cross-industry and functional platforms and solutions. And this quarter, rather, last quarter, EI native business and platform unit. The reason why we are doing it in the last two quarters is based on our experience, both in terms of industry platforms and the delivery platforms, which is Wings for Run and Operate and Vega for our DST lifecycle, which is more on the change and transform side, we have seen a very good traction. The clients feel very comfortable with the way we have put the guardrails, making sure we align the technology to what they are actually using, making sure it is secure, reliable, and responsible as well. Also, in terms of the productivity benefits that we can offer to them, both on the existing engagement and also the new engagements we plan to do. And we will continue to invest in this. And I think Aparna called out as well that the pro-intelligence and the new AI native business and platform unit is going to be – is going to – while we continue to deliver the services to our clients, this should help us platform model. We already saw some success with our platforms, be it in healthcare, be it in banking, insurance, telecom. So, we want to see that because the clients are actually feeling very comfortable with the fact that the whole platform is AI native, which is AI powered and it's able to well integrate into their domain with the kind of agent and agentic operations we're trying to bring in. So, that investment will continue.

First question, if you could share also on America's 2. So the question was that there have been multiple client-specific issues over the years. I just want to understand what your thoughts are on that.

Yes, I think this quarter, rather than last quarter, it was something that we called out as well very specifically for the two reasons like you mentioned in your question itself. that one is the specific client ramp-up that has not happened upon our talk in detail about that. But we feel, and I also answer that question, we feel fairly confident the client come back because there was some directional change and they wanted to pause before they had the clarity around that. The second one was something that, you know, the account-specific issue that happened, which impacted for us in addition to quarter four. So having said that, we continue to stay focused on our top accounts with a very clear account management strategy. And in fact, many of our clients are asking us to come back and help them in terms of AI advisory and consulting in terms of how to navigate in this AI world. So what's important for our account scheme is to be very proactive and leverage pro-intelligence and platforms and solutions and kind of help the client through this disruption process.

So, Sini, if you could allow me to squeeze one more question. I just wanted to ask, you said that you have a positive view on BSI in Acmea and also in Europe. So, I just wanted to ask, outside of the client-specific issue that you may face in the first quarter, do you have a positive view on the U.S. BSI as well?

Pratik, in your question, is the kind of pipeline that we have. And I did talk about having a very secular pipeline across industries and across markets. And your question specifically to BFSI, if you were to look at Americas and Europe and APMIA, and also the Capco, the question that came up, we continue to see very good traction.

We continue to see very good pipeline.

And some of this, what the kind of work that Capco does is very consulting-led and advisory-led. And we also want to see how those implementations for the clients can happen. and for me very clearly the client wants to invest in authentic workflows and you know while they continue to optimize but the spend in this specific area around AI data and cloud continues thank you thank you we'll take our next question from the line of Abhishek Chindarkar

from Ingrid Research please go ahead hi thanks for the opportunity yeah can you hear me yes yeah hi thanks for the opportunity The first question is regarding the contribution for Harman. So when we gave the guidance last time, in the third quarter, the 0.8% was the contribution and incrementally two months was assumed when we gave the fourth quarter guidance. Can you just quantify what would have been the contribution for this quarter or if you can just quantify the, you know, organic growth for us. That's the first question. And I'll just ask the second one later.

So your question is around how much did the Harman acquisition contribute in Q4? Is that your question?

Yes.

You know, we actually made a stock exchange filing around the revenues of the organization. You can assume, you know, the quarterly run rate around that much.

That's helpful. The second thing is on, you know, the top client, and maybe it has been asked, but not just the top, but if I look at the top five, and if I look at the client metric and the attrition across some of the larger accounts, Do you foresee this kind of stopping or halting in the next quarter, or we may continue to see some challenges in the accounts, larger accounts, even in the next quarter? Thank you for taking my question.

I think overall growth rates also tend to reflect in our top client metric growth rates as well, right? That said, if you have to look at the year-on-year performance of our top client, it's been largely slattish, year-on-year constant currency. Top five actually has grown on a year-on-year constant currency by 0.2%. And top 10 has grown a positive 1.5% on year-on-year constant currency. And therefore, you know, are we unduly worried about the top relationships that we have? No, we're not worried about it. That said, you know, our constant endeavor is to continue to win with our largest clients in the market. and some of the wins that we have announced even this month are towards that. So you will continue to see us growing and expanding this because this is the way in which our growth will come from. It's our number one strategic priority. We will work with large clients and that is the end of all.

Thank you. Super helpful. Thank you for taking my question.

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to Mr. Abhishek Jain for closing comments. Over to you, sir.

Thank you all for joining the call. In case we could not take any questions due to time constraints, please feel free to reach out to the Investor Relations. Have a nice day. Thank you.

Thank you. On behalf of Wipro Ltd., that concludes this conference. Thank you for joining us and even now disconnect your lines.