IT major Wipro has reported a sequential decline in both revenue and profit metrics and further narrowed the guidance as uncertain macros have resulted in lower discretionary spending and slower deal conversion.
For the second quarter, profits stood at ₹2,667.3 crore, sequentially down by 7.5 per cent, and almost flat on a year-on-year (y-o-y) basis. Revenue from operations stood at ₹22,515.9 crore, a decline of 1.38 per cent on a quarter-on-quarter (q-o-q) basis and almost flat on a y-o-y basis. In constant currency terms, revenue dipped for the third consecutive quarter, by 2 per cent, below market expectations.
Thierry Delaporte, CEO and Managing Director, said, “The market remains uncertain as clients take a rigorous look at investments and focus on the efficiency and optimisation of existing investments. Lower discretionary spending is a reality, conversion of order book has become slower, and transformation programs are being replaced at a slower pace, impacting topline.”
Revenue guidance
Wipro’s outlook for the quarter ahead remains bearish. It has further narrowed its sequential guidance to -3.5 to -1.5 per cent from -2 to 1 per cent last quarter. The company is seeing the impact of the slowdown on multiple verticals such as consumer goods, communications, technology, and more so in BFSI. Its high exposure to consulting too is being killjoy. Albeit, the CEO noted that improvement in the demand environment could be seen in the next two quarters.
Total bookings stood at $3.8 billion, with large deal bookings of $1.3 billion, marginally higher than $3.7 billion and $1.2 billion respectively in the last quarter. Margins remained flattish sequentially at 16 per cent, up by 10 basis points from the last quarter.
Aparna C. Iyer, Chief Financial Officer, said, “We will likely remain range bound going forward. We have various initiatives and levers in place such as fixed price productivity, usage of AI, and pyramid improvement among others to expand margins.”
Attrition this quarter further moderated to 15.5 per cent from 17.3 per cent last quarter. Headcount in Q2 reduced by 5051 employees from 2,49,758 last quarter to 2,44,707 this quarter.
Saurabh Govil, Chief Human Resources Officer, said the company will first honor all the job offers already made, and then look at campus hiring. In terms of variable pay, 80 per cent will be rolled out for the quarter, subject to performance and level.
Omkar Tanksale, a Research Analyst at Axis Securities, said, “The conversion of deals is low for the company, and it is a laggard in terms of execution, in comparison to other bluechip peers. The guidance too indicates that it might not be able to ramp up or bill the deals they have won in the near term, given the macros. As Wipro is going through organisational changes, it will still take time for those integrations to help perform better.
Published on October 18, 2023
