Wipro Ltd (WIPRO) Q3 FY22 Earnings Concall Transcript

Wipro Ltd  (NSE:WIPRO) Q3 FY22 Earnings Concall dated Jan. 12, 2022

Corporate Participants:

Aparna C Iyer — Vice President & Corporate Treasurer

Thierry Delaporte — Chief Executive Officer & Managing Director

Jatin Dalal — Chief Financial Officer

Stephanie Trautman — Chief Growth Officer

Analysts:

Sandeep Shah — Equirus Securities — Analyst

Vibhor Singhal — Phillip Capital — Analyst

Moshe Katri — Wedbush Securities — Analyst

Diviya Nagarajan — UBS — Analyst

Sandip Agarwal — Edelweiss — Analyst

Sumeet Jain — Goldman Sachs — Analyst

Presentation:

Operator

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. [Operator Instructions] 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 C Iyer — Vice President & Corporate Treasurer

Thank you, Stanford. 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 the call we may make certain forward-looking statements within the meaning of the 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 a transcript will be made available on our website.

Over to you, Thierry.

Thierry Delaporte — Chief Executive Officer & Managing Director

Aparna, thank you very much. Good evening, everyone. Thank you for joining us today.

First, I’d like to really wish you whole a 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 variance of the COVID-19 virus are spreading rapidly. This wasn’t unexpected, but it’s a damper now, nonetheless. As I say to all our colleagues at Wipro, mask up, take your vaccines and let’s help stop the spread of this virus.

Now despite the pandemic, we have delivered the fifth consecutive quarter of excellent performance. Strong growth in revenues, acceleration in bookings, sustained operating margin 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 their health and wellbeing, while continuing to serve our clients who is integrated 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 at 28% year-on-year, this is nearly 6 times faster than the average growth rate we’ve had in the last 10 years. We’ve been consistently growing at or 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 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 a net basis in the past nine months. To give you a sense of proportion and base, we actually have added in three quarters what took us 11 quarters in the past.

Now looking forward, the demand environment continues to be robust, our growth rate, 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 also continue to see rapid expansion in small and mid-sized deals, which really represents growth in our existing accounts, as well as expansion of our market portfolios. Order books, which is frankly the best measure of the demand environment, have grown 27% on a year-to-date basis in terms of annual contract value. In fact, our bookings have been the highest ever.

And in Q3, we saw a 50% year-on-year improvement in the total contract value order booking for deals in the $10 million to $30 million range. What I feel stands out is that our win rate in the market has improved dramatically. For this year, our win rate has expanded 300 basis point. This is clearly a reflection of our strategy, the cultural shift we’ve be pressuring, as well as the services we are now being recognized for. And I think 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, in engineering services, data, digital transformation and security. Our clients are continuing to place their trust in us towards them turning to digital businesses.

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

The second acquisition that we completed was LeanSwift Solutions, a US-headquartered system integrator of Infor product, whose service capabilities include ERP, e-commerce, digital transformation, supply chain, warehouse management system, business intelligence and, of course, integrations. This acquisition will expand the capabilities of Wipro’s FullStride Cloud Services. So we are very excited about these acquisitions, and we welcome so many new colleagues from Edgile and LeanSwift into Wipro essentially.

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

I will now provide some final details on market, on service offerings and sectors, right, 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 Lifesciences grew 25%, Healthcare and Medical Device 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, and this was led by good overall bookings in the bucket of $10 million 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 of several large deals above the $100 million range. We are frankly confident about how they are 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 order booking in TCV terms are looking healthy, with 37% year-on-year growth, excluding acquisitions, of course. And in my mind, this should definitely support the growth agenda in this market in the coming quarters.

But one of our key pillars of our strategy is to grow our existing large account and deepen the relationship. Now 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 bracket. This is, I believe, a significant shift, one that we believe will continue.

From a service offering standpoint, we have two big global business line, our iDEAS global business line grew 37% year-on-year, most of the SAP practices showed a 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 SAP practices grew in double-digits on the year-on-year basis still. 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. 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. We probably are, therefore, more visible in the market because of this.

We are driving proactive solution developments and campaigns with our partners on both horizontal 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 together with our partners grew 40% year-on-year. This is the highest ever. Our cloud ecosystem revenues also grew and grew at an accelerated pace of 30% on the year-to-date basis.

Now let me give you a sense of the kind of deals we’re winning. One, we won a strategic ServiceNow implementation engagement from a large Brazil-based oil and gas company to transform their IT processes, increase their GDP and quality of services to business areas, leveraging Wipro FullStride Cloud Services, this is a significant ServiceNow implementation in the Latin American market.

Second, a US-headquartered financial services institution has awarded us a contract to transform the core banking functionality of their retail portfolio. Wipro here will leverage its domain and technology transformation capabilities to bringing design thinking methodologies, improve agility and obviously increase business value for the client.

Now more examples we’re sharing, but I’d like to now focus on our biggest success factor, talent. Our focus on building world-class talents remains more than ever. We have worked very hard to ensure that scale is never constraint for growth. We’re, of course — we are on course to on-board over 70% more fresh talents from the campus in FY22 versus the previous year. I will not surprise you, if I say that, the attrition is reality across almost all industries, it’s been no different for us. I had shared with you last quarter that we expect attrition to slow down only after a few more quarters. However, we now feel more confident of having stabilized our attrition rate in Q3 and expect it to moderate next quarter.

When we embarked on our transformation in 2020, we had committed to creating a vibrant, diverse and a more local leadership team. We’ve made progress on every count. Our leadership has moved closer to clients. The presence of senior leadership in locations outside India has improved by 13 percentage points. It’s also relevant to note that nearly 50% of our leadership hires have been in the growth of these and in the customer-facing global account executive floors, which are strengthening our frontline and sell.

Over the last 18 months, we have improved ethnic diversity in our senior leadership by 20 percentage points. And gender diversity in the leadership has nearly doubled. Without a doubt, we’ve more work to do here, but I am pretty proud of those change wee are seeing in Wipro thus far. Now we are committed to being a company that respect diversity, walk the talk on the inclusion and is a beacon for change within our industry, it’s very clear.

And even more current and urgent topic, I’d like to reaffirm that the health and safety of all our employees remain our top most priority. With the rapidly spreading Omicron variant of the COVID-19 virus, we remain very vigilant. As a proactive measure, we have decided to close our offices globally for the next four weeks. It’s of some relief to us, as 90% of our employees globally are now vaccinated with one dose of the vaccine and over 65% are fully vaccinated with the recommended two doses. Our plans to return to office even in a hybrid model for our fully vaccinated employees will be calibrated in the context of the evolving situation, keeping both our employee safety and client preferences in mind. That said, of course, we are continuing to service our clients with dedication and agility as always.

Staying with topics of great urgency, our sustainability efforts have continued with great momentum. You may know, Wipro has been included in the Dow Jones Sustainability Index again for the 12th time in a row, a testament to our consistent ongoing efforts in this area. Climate change in our ecological and carbon footprint is something we take very, very seriously.

Finally, on to our outlook for the next quarter, we have guided for a revenue growth of 2% to 4%, which will translate into a full year growth of 27% to 28%.

To summarize, the demand environment continues to be robust and our growth path over the last few quarters reflects this. We will stay on course with the strategic priorities I had shared with you in November. And I’m confident of sustaining the growth momentum we have so far displayed, right.

On that note, let me welcome Jatin for his comments on the financials. Jatin, over to you.

Jatin Dalal — Chief Financial Officer

Thank you very much, Thierry, and thank you all for joining our earnings call.

I will quickly summarize the financial details. As you know, we have grown 28.5% on a year-on-year basis on a rupee — in rupee terms. Our margins have remained constant or stable between quarter two and quarter three in a narrow range. Our effective tax rate, or ETR, has actually improved from 22% to 21.3% in quarter three. Overall, our earnings per share has grown at 4.2% on a year-on-year basis.

We have had a strong performance in cash collection, as well as a strong performance in billing. And as a result, both our unbilled revenue as percentage of revenues have improved and our DSO days have also improved. Our operating cash flows were 101% of our net income. At the end of quarter three, we had $4.6 billion of gross cash and $2.8 billion of net cash. We had $3.4 billion of forex hedges as of 31st December, and we realized an exchange rate of INR76.12 for quarter three.

The Board of Directors has recommended an interim dividend of INR1 per share, as you would have read in the press — in our press release. And our guidance for quarter four is 2% to 4% in the constant currency at the exchange rates which are mentioned in the press release.

We’ll be very happy to take your questions here. Thank you.

Questions and Answers:

Operator

Thank you very much, sir. [Operator Instructions] We take our first question from the line of Moshe Katri from Wedbush Securities. Please go ahead. Moshe Katri, your line is unmuted, please unmute the line from your side and proceed. Moshe Katri from Wedbush Securities, your line is unmuted, please unmute from your side and proceed with your question. As there’s no response, we move to the next question from the line of Sandeep Shah from Equirus Securities. Please go ahead.

Sandeep Shah — Equirus Securities — Analyst

Yeah. Thanks for the opportunity. Just a question in terms of last two quarters, we have actually exceeded the upper end of the guidance. And I do agree that’s a high base. While this quarter, we are at midpoint of the guidance as a whole. So is it fair to say, is it a high growth? Was it some deceleration in a small tenure, faster conversion, deal rates, deal wins are a bit decelerating as a whole, which is impacting the growth? And even if I look at the current quarter guidance, on an organic basis, it looks like 1.3% to 3.3% as a whole. So —

Thierry Delaporte — Chief Executive Officer & Managing Director

No. Sandeep, this is Thierry, hi. So I really do not see any deceleration of our growth. I think what we’ve done for the last few quarters is we’ve guided between two and four, and we’ve been consistent in guiding that. Sometimes you go a little up, you go a little down, but there’s no real trend that would go down by any mean. We haven’t lost clients, we haven’t terminated abruptly any deal or so on. We continue to grow, we’ve done fabulously in bookings, frankly, with the best performance ever. And that gives us the confidence that we can continue to guide on 2% to 4% for the next quarter.

Keep in mind also because, obviously, we are tracking performance on a quarterly basis. This is 28% growth over last year. So imagine the company — the transformation of the company in four quarters. If you go back five quarters, we actually have added a third of the Wipro revenue of that time to the overall base. So the company has increased by 30 — by a third in five quarters. And I think it is the kind of growth that we’ve had, and we continue to see the same trend going forward, frankly.

Sandeep Shah — Equirus Securities — Analyst

Yeah. This is helpful. And we also acknowledge that the growth journey of Wipro has really turned around. Just a question further to that in this era, when Wipro has successfully turned around the organic growth, why are we depending on too much of inorganic growth as a whole? So because in one of your media interviews, Thierry, you also mentioned that we may be open for another large size acquisitions. And in terms of smaller acquisitions, we are keep doing that as a whole. Why not focus in terms of improving the margins, improving the return ratios, when the time has come where organic growth is easy to come rather than be difficult with efforts, which are already being taken by you in terms of turning around the organic growth? That’s it.

Thierry Delaporte — Chief Executive Officer & Managing Director

Yeah, Sandeep, it’s two different things. We are not mixing our organic growth strategy with the inorganic strategy. Those are two different tracks. M&A will never be seen as a way to compensate for organic growth. The focus on the market on the business is to drive organic growth. And every of our business units are driving growth and focusing on that. The M&A strategy is to help us accelerate and gain and accelerate in speed to make jump in some strategic areas. When we do an acquisition like Edgile, okay, Edgile brings expertise — consulting expertise in cybersecurity area. We have a strong cybersecurity practice. We have a good business that is growing very well, led by a very strong leader, Tony Buffomante. We feel that by adding this consulting business, it will allow us to have and be able to have a bigger impact in this market. And so that’s really how we are seeing M&A. It’s strategic, it’s to reinforce and bring expertise we don’t have and compress time. But it is not to compensate for organic growth.

Sandeep Shah — Equirus Securities — Analyst

Yeah, thanks. And just the last question to Jatin in terms of margins. I think even in this quarter, if we look at EBITDA margin, the decline has been 45, 50 bps versus last quarter being close to 70 bps. So the question is in terms of the margin outlook. Are we continuing the band of 17%, 17.5% which may continue over the next four, six quarters, which we call out as a medium-term? Or we believe now there could be tailwinds because of growth, as well as pressure addition which you may doing, the band has upside potential rather than a downside potential?

Jatin Dalal — Chief Financial Officer

So Sandeep, Jatin here. We’ve maintained that we will — there could be quarterly variations, but this is a range that we think margins are sustainable for our business. And there is no change to it. This year is going to be like previous two years is going to be a year of its own pattern and pressure points and excitement, and we should remain pragmatic and dynamic with the changing scenarios on the ground. So there is no change. Fundamentally, we have always said that the first priority for us is growth. And alongside, very clearly, is talent.

And as we walk through these two, we also try and maintain the margin in the band that we’ve spoken about, and we have done a decent job around it in current quarters, despite two months impact of wages and that we have invested a little bit in additional flexibility and utilization. As you can see, it’s about 2.5% change from previous quarter, which gives us some additional headroom for growth in quarter four and beyond. Despite these two sort of investments on cost side, we have been able to remain in a narrow range on operating margin. So I would say the — it’s going to be a year — dynamic year will need to manage every quarter as it comes, but our mid-term sort of range remains.

Sandeep Shah — Equirus Securities — Analyst

Okay. Thanks and all the best.

Operator

Thank you. The next question is from the line of Vibhor Singhal from Phillip Capital. Please go ahead.

Vibhor Singhal — Phillip Capital — Analyst

Yeah. Hi, good evening, sir. Thanks for taking my question. So Thierry, my question was on the deal flow and the overall demand environment that we are seeing. We are hearing a lot of news, and I think the anecdotal evidence also suggests that the large deals that we have seen in the last calendar year in CY20 in fact, there have been very few and far between those kind of deals in the last six to nine months. And what we’re hearing is that clients are breaking those deals into smaller size deals with smaller size and tenure as well. So are we also seeing similar kind of a pattern in the deal flow? And how does that impact our ability? I mean, is there more competition, more difficult to win those deals? How does that basically impact our overall strategy to grow over the next couple of years? And after that, I have a follow-up for Jatin. Thanks.

Thierry Delaporte — Chief Executive Officer & Managing Director

Okay. So I’ll take that one on the overall structure of the large deal. So one is obviously, the clients are — in every industry, clients at the moment are driving very actively execution of large transformation program, okay. So it’s not — they’re not in the design phase, they’re not building road maps, they are getting it done. So they are progressing and they want to see the results. And so it’s not uncommon indeed that clients feel that rather than going for lengthy legal negotiation or building a three years road map, a five years road map, let’s go ahead with six months, 12 months and see how things are going and will adjust along the line.

And so oftentimes, when we see clients indeed having a large transformation program in mind, but willing to contractualize through chunks as opposed to having a big one. It doesn’t mean it’s not going to happen. It’s — we are observing that at times, they like to be pragmatic and go with a phased approach as opposed to a big bang. That’s all fine for us. It doesn’t really change as long as we are able to structure the way we are developing and driving our solution the same way. But it’s okay. It’s okay. Frankly, at the end of the day, if you sign five times $100 million deal with a client or a $500 million deal with this client, it’s about the same.

Vibhor Singhal — Phillip Capital — Analyst

Got it. So in terms of effort as well, do you — you don’t believe that maybe chasing smaller, but more number of deals would be, let’s say, a higher — let’s say a pressure on our sales and marketing cost, and it could be probably more difficult to compete with the smaller companies, which probably aren’t present there in large deals anyhow?

Thierry Delaporte — Chief Executive Officer & Managing Director

No, I don’t think so, frankly. I believe that when we are going for a deal of five or seven years, it just gives you a little bit more perspective and a little bit of time to really define the way you’re going to project your investments. But frankly speaking, our clients are very mature, and they know that well as well. And so when we are building and structuring the phase one or phase two of a larger transformation program, we are able to structure it in a way that it’s in the context of bigger and larger plan. So at the end of the day, I think it’s not dramatically changing the way we work.

And from a sales standpoint, I think it has its ups and downs, it has its upside and downside. If you sign one deal for five years, then you maybe do not have to come back to the negotiation table a year later. But when you do it regularly, you are able to adjust to the needs that are possibly changing over time, a little bit also. So it drives more flexibility that can play for the client like for the partners. So I think I’m not too concerned at all about that. I tend to look at those deals, whether they are sold in ones or in chunks as big deals. And I’m expecting our teams to work on it with the same mindset.

Vibhor Singhal — Phillip Capital — Analyst

Got it. Thanks for answering that question in detail. Jatin, just one quick question. You mentioned, we have around $4.6 billion of cash on our balance sheet. Any, basically, outlook on basically enhancing shareholder returns either by buybacks or increasing dividends in future per se?

Jatin Dalal — Chief Financial Officer

Sure. So we have articulated that over a block of years, we will continue to, for sure, return 50% of our net income to the shareholders. You know that over last few years, we have returned even higher amount. For the current quarter, the Board of Directors have gone ahead with the recommendation of dividend INR1 per share, as I spoke about it. Our approach to any other action or decision on cash distribution is really based on two aspects. The quantum of cash on the balance sheet; and second is around the need that we see over next few quarters from our strategic use and investment standpoint. And whenever we feel that we don’t need an additional cash beyond 50% of the net income, we have come to you all with the proposal for buyback. But right now, there is no such proposal under active consideration. Otherwise, you would have heard about that. Right now, we have announced the dividend — interim dividend of INR1 per share.

Vibhor Singhal — Phillip Capital — Analyst

Great. Got it. Thanks a lot, guys. Thanks for taking my questions, and wish you all the best.

Thierry Delaporte — Chief Executive Officer & Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Moshe Katri from Wedbush Securities. Please go ahead.

Moshe Katri — Wedbush Securities — Analyst

Hey, thanks for taking my question. Happy New Year to you, Thierry.

Thierry Delaporte — Chief Executive Officer & Managing Director

Thank you, Moshe.

Moshe Katri — Wedbush Securities — Analyst

A couple of things. First, you mentioned a 27% increase in TCV. Is there a way to slice it by new logos versus renewals? That’s number one. And obviously, this is important, just we wanted the renewal piece to be higher because it will drive growth. And then the other part of my question is focusing more on Capco. So maybe you can talk a bit about where are we in terms of integrating Capco, focusing on the cross-selling initiative that’s going to be a big deal? And what happens to growth when it normalizes, i.e., fiscal 2023, you are annualizing the contributions from Capco? So is mid-teens a good number to focus on from a big picture perspective? Obviously, we’re not talking about guidance, but maybe from a long-term perspective? Thanks for the color.

Thierry Delaporte — Chief Executive Officer & Managing Director

Sure, okay. So Moshe, so I’ll ask Stephanie to go on question one around the type of deals we’ve closed. I’ll take question two on Capco and question three on margin projection, okay. Stephanie, do you want to go to number one?

Stephanie Trautman — Chief Growth Officer

Yes, Thierry. Yeah, sure. Thank you. So we’re really seeing a mix of renewals, but also new logos and also new areas within existing clients. So I’m energized by the mix of growth that we’re seeing. We see a lot of new clients placing their trust in Wipro on major transformation initiatives. And as Thierry described, some of that is in initial smaller chunks and in some cases, it’s large transformation deals. So I think it’s a healthy mix of adding new clients, as well as renewing existing business. So clients continue to place their trust in us to continue to transform. But also they’re bringing us into new parts of the organization. So that’s what’s driving a lot of our growth in our existing accounts, but also adding new logos. Thank you, Thierry.

Thierry Delaporte — Chief Executive Officer & Managing Director

Thank you, Stephanie. Moshe, on the Capco question, what I can say is that now it’s been, what, eight months since the acquisition of Capco and frankly, it’s actually been a wonderful first year. The teams are working well. We have aligned — we have built common governance on the large accounts. We have worked on opportunities with Capco and Wipro, BFSI together. We have really won some very nice deals. And we had a nice area of deals shaping up in the previous quarter, this quarter. Beginning of this quarter, we really won a very significant transformation deal that typically we would have never won without the other. So I’m pleased with, really, the attention of the Capco team to the market. I’m very pleased with the performance of Capco team.

I am pleased with the way the leaders are engaging with the larger Wipro organization and sensing there is a great — I would say, there’s a warm feeling for the Capco team and the Wipro team. To me, it is a success and not one single day I’ve been doubting about the decision we made, and I think it will continue to deliver results. So I would say, obviously, it’s difficult to reflect after eight months. You will want to have more perspective, but frankly, it is very promising. And again, solid performance from Capco every month.

Your third point on margins, see, if I understood well, because at some point in time, your — at least for me, your voice broke up. But it’s a question about you want to know where we go in terms of margin. You mentioned yourself the fact that we are not guiding yet for fiscal year 2023. What I would say is that, if you look at our margins, we have been pretty consistent over the last six quarters, guiding about — we guided around 19%. And then came Capco. We announced Capco’s impact on margin was between 1.6% and 2%. And we’ve guided ever since on our band between 17% and 17.5%. And we have maintained our focus and our attention to this level of margin. So from that standpoint, Moshe, I would not be expecting anything changing from where we are now.

Moshe Katri — Wedbush Securities — Analyst

And also in that respect, in fiscal 2023, the annual revenue contributions from capital annualized, so growth rate will normalize. And the question here is whether we should use mid-teens growth rate for fiscal 2023 and beyond is the right kind of range because the fact that it annualizes?

Thierry Delaporte — Chief Executive Officer & Managing Director

Growth rates?

Moshe Katri — Wedbush Securities — Analyst

Exactly.

Thierry Delaporte — Chief Executive Officer & Managing Director

Growth rate. Look, again, we’ve been communicating, we’ve been guiding on 2% to 4% growth quarter-after-quarter for the last quarters. Obviously, Capco has already normalized, it’s not impacting those numbers anymore. I can tell you that we are maintaining this guidance for Q4. As you know, we have made it as a practice to communicate on the quarter-after-quarter. So you’ll have to be a little patient. But again, read us, we are saying we are going for 2% to 4% this quarter, and we are not seeing major change in the market, and we are performing.

Moshe Katri — Wedbush Securities — Analyst

Understood. Thank you very much.

Thierry Delaporte — Chief Executive Officer & Managing Director

You’re welcome.

Moshe Katri — Wedbush Securities — Analyst

Thank you. Good luck.

Operator

Thank you. The next question is from the line of Diviya Nagarajan from UBS. Please go ahead.

Diviya Nagarajan — UBS — Analyst

Thanks for taking my questions, and wish you all a happy New Year. Thierry, I think you’ve kind of answered this question in different parts, but let me try and comment it from a different angle. So if you look at the last three — the quarter that you just reported, I think some of your peers have seen pretty strong surprises or is it a seasonally weak quarter. We don’t really see those kind of surprises. So I was just wondering, in your — from Wipro’s perspective, why didn’t those surprises come through? Was it a mix issue? Or is it that we had some ramp ups that are already behind us? How should we think about this? Because we have seen at least so far in the earnings season fairly broad-based revenue beat from many of the peers so far.

Thierry Delaporte — Chief Executive Officer & Managing Director

Yeah. Diviya, in some ways, I feel that because when you’re guiding on a certain level, you’re giving a bracket, right. It’s between 2% and 4%, and we’ve been guiding between 2% and 4% for three, four quarters. If you’re hitting the top end of the guidance, then the next market is expecting that you’ll do the same. The reality is that when we are managing our business, we are looking at our portfolio, and we are looking at the trend, and we are trying to guide really reflecting what we are seeing at the beginning of a quarter. And so at the end of the day, I cannot be unsatisfied with the fact that when I guide 2% to 4% and I do 3%, I cannot be more accurate.

Diviya Nagarajan — UBS — Analyst

I think I was coming more from the point of view is, I think with some of the others, the surprise seems to have come from demand during the quarter.

Thierry Delaporte — Chief Executive Officer & Managing Director

Yeah. Demand hasn’t changed.

Diviya Nagarajan — UBS — Analyst

I was wondering if there’s anything in the portfolio that kind of innovative Wipro from taking advantage of such a demand surprise?

Thierry Delaporte — Chief Executive Officer & Managing Director

Yeah. Diviya. One thing that’s clear is that typically when you sign a mega deal, one quarter — it’s not uncommon that one quarter or another, you have certainly a massive in your revenue. And so, if you do not have this mega deal, you do not necessarily have this one shop, big bump that maybe some also have, but that we’ve had in some quarters. So if you look at the difference, let’s say, we’ve done a strong performance in sales. The difference with — for example, the performance we did exactly a year ago in Q3 of last year, it was a little lower than what we’ve done this year.

But it had a $1 billion deal inside with Metro. So actually, it was coming to more or less the same number, a little lower, but a comparable number on the TCV standpoint. But coming from a large deal — and therefore, the performance outside of this large deal was very different. I think we’ve turned the engine into a way that we have more recurring type of deals every quarter, so that the mega deal comes from top, right. And what’s comforting is that, if you look at the performance in sales, even without mega deal, with $2.85 billion of ACV, we’ve done probably 25% more than what we used to do on a given quarter a year ago.

Diviya Nagarajan — UBS — Analyst

Fair enough. Just a question on attrition. I think you have discussed it again, but do you feel like from here on, you’re at the point where your — you find that attrition will be more manageable, and eventually take that to come off these types?

Thierry Delaporte — Chief Executive Officer & Managing Director

Yeah. First of all, on this topic Diviya, I tend to be cautious because the decision lies with our employees and with the other employees of the market. But what I believe — what we are seeing is that, definitely, the level of attrition will moderate in Q4, which is rather good news. Again, I don’t want to claim victory on it. And I think we’ll continue to stay very focused on it and keep really an eye or two on the situation of our employees in the organization and continue to connect as much as we can with them. But when a quarter ago, I was saying, I think it’s yet to last, I feel that this might actually stabilize, if not slightly improve. So I’m a little more optimistic that it was I quarter ago on that.

Diviya Nagarajan — UBS — Analyst

Perfect. Thank you. And wish you all the best for the year.

Thierry Delaporte — Chief Executive Officer & Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Sandip Agarwal from Edelweiss. Please go ahead.

Sandip Agarwal — Edelweiss — Analyst

Yeah. Hi, good evening, everyone, and thanks for taking my question. I would like to start with wishing everyone a happy New Year and good health. So Thierry, I have a very, very simple question. When you see the current environment, when you engage with your clients, where do you see the transformation journey towards digital for the clients have reached — when we do our channel check, when we speak to global technology consultants and all, what we understand is that everyone is very excited to — for the transformation journey. They want to link more and more of their revenues to technology, generate more revenues through technology and platform, but that journey has just started. What is your sense in that? How do you see that? Do you think that the journey has already been 30% behind or 50% behind? Number one.

Number two, if the journey has just begun or even if it is at 30%, what is your sense that how long before this matures, it will be three years, four years, five years? Or you think that going forward, the technology trains will keep continuing? So what is your sense on that front? So I’m asking more of a five, 10 year strategic thought process on how do you see the technology spend for clients will be?

Thierry Delaporte — Chief Executive Officer & Managing Director

Sandip, the theme I have is that technology services spend is critical to the transformation of every industry at the moment. And there are multiple topics that I have seen your attention today. The cloud journey is the best example, because I remember even three, four years ago, Sandip, cloud discussions were happening with the CIO. The CEO would not focus much on it, because it was considered to be an infrastructure discussion and that was a back office, perceived as back office issue.

Today, cloud is a way for organizations to be agile, to drive, to be able to generate more opportunities, to be inventive, to develop solutions, connect with new clients. And it is across organizations. So I don’t think I’ve seen yet a company that can say that it has reached 50% of the cloud transformation. I think it’s — obviously, I’m not going to be able to give a percentage, but my feel is that, we are still in the early stage of the cloud transformation across industries. And so it is a massive wave ahead of us.

To a point that today, when I look at the big hyperscalers, who play a big role in cloud, the Microsoft, the Google, AWS, ServiceNow, SAP, they are coming at us because they need us to help them develop vertical solutions on their platforms or on the cloud. And I think it is very clear that the model, the more opportunities they are behind. That’s what the cloud. And the growth in the cloud will be massive over the next five years at least, okay.

Then we have the whole world of data. And we know that we are producing billions of data, and we’re leveraging very little the power of this data, turning them into insight to try faster decisions, companies have started to work on it, but it’s very complex because it requires alignments of processes and systems and policies in those companies. And there’s still a lot of level of complexity. And so the way we are helping companies to develop to become data-driven organizations is a huge topic for us.

And the last one is — not saying the last one, but just taking a third one, because I realize the clock is ticking. But it is engineering, I mean, the need for organization to invest more in R&D for them to transform their processes and product developments by leveraging technology is immense. So looking forward, I think we have a market that will be driven by talent and will be very, very hot in the next years.

Sandip Agarwal — Edelweiss — Analyst

Thanks for that detailed answer, and best of luck for the current quarter. Thank you, everyone.

Thierry Delaporte — Chief Executive Officer & Managing Director

Thank you, Sandip.

Operator

Thank you. The next question is from the line of Sumeet Jain from Goldman Sachs. Please go ahead.

Sumeet Jain — Goldman Sachs — Analyst

Yeah. Hi, thanks for taking my question, and happy New Year to everyone. First of all, can you split your guidance of 2% to 4% into organic and inorganic, given the recent acquisition what you have already closed?

Thierry Delaporte — Chief Executive Officer & Managing Director

No, we don’t do that. We usually — because no, we don’t do that. Because it’s very difficult to do that, because at the end of the day, these business when they join organization, they are part of the organization, and they’re driving — and we are driving synergies from day one. So we are not reporting — unless those are very large acquisitions, we are not reporting separately. But I think, Jatin, you want to add something?

Jatin Dalal — Chief Financial Officer

Yeah, Thierry. Sumeet, we did share the details about the acquisition when we announced them. So I’m sure it gives you a good indication. From our perspective, both internally and from the way we manage the success in the market, we stay with one number. And hence, the guidance we will not break down into the two competence, but I’m sure you can — you would be able to have some indication around.

Sumeet Jain — Goldman Sachs — Analyst

Right. No, that’s helpful. And secondly, I joined the call a bit late. So have you disclosed your deal win TCV number for this quarter?

Jatin Dalal — Chief Financial Officer

No. Sumeet, we haven’t disclosed that. The number we did speak about the ACV growth number, which is 27% for the first nine months. And we did share the contradictive details around it, which was about $2.8 billion on an aggregate basis for quarter three and that we did in the press conference.

Sumeet Jain — Goldman Sachs — Analyst

So basically, no disclosure for this quarter as such in terms of TCV or ACV?

Jatin Dalal — Chief Financial Officer

Yeah. The number that I just shared was for quarter three. The growth number that we had shared was for the first nine months of the year.

Sumeet Jain — Goldman Sachs — Analyst

Got it. And lastly, if I look at your EBIT margins, your D&A expense as a percentage of sales has been coming down for the last two quarters pretty sharply. So any reasons why? And what kind of D&A expense as a percentage of sales one should expect going forward?

Jatin Dalal — Chief Financial Officer

So the way, Sumeet, you would appreciate is that, when some of the amortization lines are coming to an end of the tenure over which we take those amortization. Then it leads to the reduction which is step-down reduction in the number of amortization. It’s not uniform as you can see. That has happened over last two quarters for some of our prior capitalization. My suggestion is that, you should look at Q4 as a base because we have two more acquisitions, which are getting integrated from 1st of January. So you would see that number stepping up a bit, because they will come with their intangible schedules over — as we do the acquisition accounting for that. So Q4 should be a good base for you to build your model for future.

Sumeet Jain — Goldman Sachs — Analyst

Got it. Thanks a lot, Jatin, and Thierry, and all the best for the future.

Thierry Delaporte — Chief Executive Officer & Managing Director

Thank you.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Ms. Aparna Iyer for closing comments.

Aparna C Iyer — Vice President & Corporate Treasurer

Thank you, Stanford. We understand that it must have been very hectic for many of you as you’ve had to take simultaneously attend multiple results that have been announced today. So thank you all for joining the call. If you have further questions, do not hesitate to reach out to the Investor Relations team. Stay safe and stay healthy, and we’ll see you next quarter. Thank you.

Thierry Delaporte — Chief Executive Officer & Managing Director

Thank you very much.

Jatin Dalal — Chief Financial Officer

Thank you.

Operator

[Operator Closing Remarks]