Wipro : Transcript Conference Call(PDF)

Wipro Limited

Q3 FY 2022 Earnings

Conference Call

January 12, 2022

wipro.com

Management

Thierry Delaporte

Chief Executive Officer & Managing Director

Jatin Dalal

Chief Financial Officer

Saurabh Govil

President & CHRO (Human Resources)

Stephanie Trautman

Chief growth officer

Aparna Iyer

Vice President & Corporate Treasurer

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Moderator:Good day ladies and gentlemen, we wish you all a very Happy New Year. Welcome to the Wipro Limited Q3 FY22 Quarterly 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 this conference call, please signal an operator by pressing "*" then "0" on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Aparna Iyer - Vice President and Corporate Treasurer. Thank you and over to you.

Aparna Iyer:Thank you. Wish you all a terrific 2022 and a very warm welcome to our Q3 Earnings Call. We will begin the call with Business Highlights and overview by Thierry Delaporte - our CEO and Managing Director followed by Financial Overview by our CFO - Jatin Dalal. Afterwards, the operator will open the bridge for Q&A with our Management Team.

Before Thierry starts, let me draw your attention to the fact that during this call, we may make certain forward-looking statements within the meaning of Private Securities Litigation Reform Act 1995. These statements are based on management's current expectations and are associated with uncertainties and risks which may cause the actual results to differ materially from those expected. The uncertainties and risk factors are explained in our detailed filings with 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 the transcript will be made available on our web site.

Over to you, Thierry.

Thierry Delaporte: Aparna, thank you very much. Good evening, everyone. Thank you for joining us today. First, I would like to really wish you whole Happy New Year at Wipro we are starting this year with hope and a lot of momentum and purpose. And we would like to wish health and success to every one of our friends in the analyst and investor community.

Across the globe, the new variants of the COVID-19 virus are spreading rapidly. This wasn't unexpected, but it's a damper now, nonetheless. We say to all our colleagues at Wipro mask up, take your vaccines and let's help stop the spread of this virus. Despite the pandemic, we have delivered the fifth consecutive quarter of excellent performance, strong growth in revenues, acceleration in bookings, sustained operating margins, and solid operating cash flow. I want to thank every one of our employees who helped us achieve this. These results reflect the passion; the dedication and inventiveness I must say I was really glad to see that our colleagues have taken the time to attend to the health and wellbeing while continuing to serve our clients with integrity and zeal.

Looking at our financials, our revenue growth during the quarter was at 3% in constant currency terms, and 27.5% year-on-year. In the first nine months of this year, we have grown up 28% year- on-year. This is nearly six times faster than the average growth rate we've had in the last 10 years. We've been consistently growing up for over 3% for five quarters now. And frankly, this is because of our improved execution abilities and followed through on our business strategy that was

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established in November 2020. Our growth continues to be broad based across all our key markets, service offerings, and most of our sectors. We have added about 34,000 new employees on the net basis in the past nine months. To give you a sense of proportion and pace. We actually have added in three quarters, what took us 11 quarters in the past.

Now, the demand environment continues to be robust. Our growth rates, our pipeline and our order bookings all reflect that. Our pipeline in fact shows a healthy mix of medium and large deals across all our business lines. We'll also continue to see rapid expansion in small and mid-sized deals, which really represent growth in our existing accounts, as well as expansion of our market portfolios.

Order book, which is, frankly the best measure of the demand environment has grown 27% on a year-to-datebasis in terms of 'Annual Contract Value'. In fact, our bookings have been the highest ever. And in Q3, we saw a 50% year-on-yearincrease in the 'Total Contract Value' order booking for deals in the $10 to $30 million dollar range.

What I think stands out is that our win rate in the market has improved dramatically. For this year our win rate has expanded 300 basis points. This is clearly a reflection of our strategy, the cultural shift we've been pursuing, as well as the services we are now being recognized for. And I feel it's also a reflection of our impact on our clients' business.

As expected, we are seeing the benefit of Capco's consulting edge in our large deal pipeline. We are now winning in cloud transformation, engineering services, data, digital transformation and security. Our clients are continuing to place the trust in us towards them turn into digital businesses.

On the M&A front, we have continued to grow aggressively on our strategic fits. We announced the completion of two acquisitions in Q3. The first one is Edgile, transformational cyber security consulting provider that focuses on risk and compliance, information and cloud security and digital identity. Edgile is definitely recognized by security and risk leaders for its very unique business aligned cyber security capability. For their deep understanding of the changing regulatory environment and enabling cloud transformations that help secure the modern enterprise.

The second acquisition that we completed was LeanSwift Solutions, a U.S. headquartered Systems Integrator of Infor Products, whose service capabilities include ERP, e-commerce, digital transformation, supply chain, warehouse management systems, business intelligence and integrations. This acquisition will expand the capabilities of Wipro's FullStride Cloud Services. We are very excited about these acquisitions. And we've welcomed so many new colleagues from Edgile and LeanSwift into Wipro recently.

On operating margins, at 17.6% in Q3 we are ahead of our stated range of 17% to 17.5%. These margins were delivered after an incremental two months' impact of salary increases in September 2021 that covered 80% of our colleagues globally and an equity grant for our senior colleagues. We will continue to invest heavily in our business across sales transformation, capabilities and talent.

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I will now provide some finer details on markets, on service offerings and sectors as always. Americas and Europe, our top two markets grew a 28% and 38% respectively for the quarter in year-on-year terms.

In Americas 1, we grew 23% year-on-year and 5.2% sequentially. With all sectors showing strong growth, Communications Media, Information Services grew 30%. Consumer goods and Life Science grew 25%, Healthcare and Medical Devices grew 16% year-on-year.

Now, looking at Americas 2, we grew 33% year-on-year with a strong growth across BFSI and Manufacturing.

Order book in terms of annual contract value grew over 47% year-on-year, partly this was led by good overall bookings in the bucket of $10 to $30 million.

Our European business has delivered an outstanding year-on-year growth of 38%. Germany, the largest market in Europe, has almost doubled, Benelux grew 24% and our UK business grew 40% year-on-year. The momentum on deal wins have accelerated this quarter and our pipeline has several large deals above the $100 million range. We are frankly confident about how they're shaping up as well. I'm sure you know where we were with our European business a year ago. So, it's a great turnaround story here.

Finally, our APMEA market grew at 13% year-on-year. All our major markets are growing sequentially. Overall, the other booking in TCV terms are looking healthy, with 37% year-on-year growth, excluding acquisitions. This should definitely support the growth agenda in this market in the coming quarters. But one of our key pilots of our strategy is to grow our existing large accounts and deepen the relationship. So let's look at that. Our top five customers grew 36% year-on-year, our top 10 customers grew 37% year-on-year. In the last 12 months we've added seven customers in the more than $100 million bracket. And nine new customers in the more than 50 million brackets. This is I believe a significant shift, one that we believe will continue.

From a service offerings standpoint,

Our iDEAS global business line grew 37% year-on-year, most of the sub practices show the healthy growth. Our engineering business grew over 26% year-on-year in Q3 and grew at a compounded quarterly growth rate of over 6% in the last four quarters. Our iCORE Global business line grew by 17% year-on-year. Again, most sub-practices grew in double digits on the year-on- year basis too. Digital operations and platform led the growth with 18%.

We also continue to invest in and strengthen our partnership with hyperscalers and industry leading platform players. We're in fact expanded our go to market approach with cloud and with application partners now, resulting in us driving leading edge solutions in the market. Wipro is therefore more visible in the market because of this. We are driving proactive solution development and campaigns with our partners on both horizontally and vertical solutions. All of this resulting in an increasing number of multi partner wins. Our order bookings that were a result of going to market