Wipro Ltd (WIPRO) Q4 FY23 Earnings Concall Transcript

Wipro Ltd (NSE:WIPRO) Q4 FY23 Earnings Concall dated Apr. 27, 2023.

Corporate Participants:

Dipak Kumar Bohra — Senior Vice President, Corporate Treasurer & IR

Thierry Delaporte — Managing Director, Chief Executive Officer

Jatin Dalal — Chief Financial Officer

Stephanie Trautman — Chief Growth Officer

Amit Choudhary — Chief Operating Officer

Analysts:

Sudheer Guntupalli — Kotak Mahindra Asset Management — Analyst

Sandeep Shah — Equirus Securities — Analyst

Mukul Garg — Motilal Oswal Financial Services — Analyst

Surendra Goyal — Citigroup — Analyst

Manik Taneja — Axis Capital — Analyst

Girish Pai — Nirmal Bang Institutional Equities — Analyst

Dipesh Mehta — Emkay Global — Analyst

Gaurav Rateria — Morgan Stanley — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Wipro Limited Q4 FY ’23 Earnings 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. [Operator Instructions] I now hand the conference over to Mr. Dipak Kumar Bohra, Senior Vice-President, Corporate Treasurer, and Investor Relations. Thank you and over to you sir.

Dipak Kumar Bohra — Senior Vice President, Corporate Treasurer & IR

Thank you Yashasvi. Warm welcome to our quarter four FY ’23 earnings call. We will begin the call with the business highlights and overview by Thierry Delaporte, our Chief Executive Officer 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 of 1995. These statements are based on management 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 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. Thank you. Over to you Thierry.

Thierry Delaporte — Managing Director, Chief Executive Officer

Dipak thank you. Hello, everyone. Thank you for joining our quarterly earnings call. Joining me from Bangalore today is our CFO, Jatin; our Chief Growth Officer, Stephanie; our Chief Human Resource Officer, Saurabh; and our Chief Operating Officer, Amit. So on this call we want to share with you the details of our annual results, as well as our fourth-quarter performance. I will share highlights for our sectors, markets, service offerings, and an overview of the demand environment. And finally, our business outlook for the quarters ahead.

Of course happy to also take on any questions you have for us. Starting on FY ’23. We closed FY ’23, with the strongest ever bookings recorded in a year. Our bookings in total contract value terms grew over 28% year-on year. We finished the year with two consecutive quarter of total bookings of over $4.1 billion each. Our revenues grew 11.5% year-on year in constant-currency terms, putting our full-year revenue at $11.2 billion. Our operating margin for the year was 15.7%. The cash conversion was 115% of net income versus 91% in the previous year. Our transformation journey continued in FY23.

We made several strategic investments and acquisitions and we’ve added new capabilities [indecipherable] our account strategy the large deal approach for all sector and market mix gives a clear and obvious difference between the Wipro pre-2020 and the Wipro of today. Our top accounts are bigger in size. We have a more diversified pipeline and we continue to make bold investments in talent to support our future growth. Now coming to Wipro’s performance in the fourth-quarter. Total bookings for the quarter were $4.1 billion. In total contract value terms quarterly bookings grew by 47% year-on year. In the Americas one strategic markets [indecipherable] 33% year-on year in Europe.

The revenue for the fourth-quarter was up by 6.5% year-on year in constant-currency terms. Sequentially, revenue declined by 0.6%. This is mainly due to the uncertainty in the market and the resulting slowdown in discretionary spending. Our operating margin for the quarter was 16.3%, that is 60 basis-points higher than the full-year margin of 15.7%. Our IT services profit was highest-ever in absolute terms. Our CEO team under Amit’s leadership has brought in new rigor to the way we approach operations where we and then[phonetic] delivery drive client experience and efficiencies and we are already seeing the impact.

Utilization rates improved to 81.7% in Q4 from 79.7% in the previous quarter. Looking at earnings per share, EPS is expanded for the third consecutive quarter. We reported EPS of INR5.61 for the quarter. Now turning to our sectorial performance, all four of our strategic market units recorded over 10% revenue growth for the full-year FY ’23. In Americas one, revenue grew 6% in Q4 and 13% for the full-year in FY ’23. Their growth was led by healthcare and medical devices at 10% followed by consumer goods and life sciences at 8%. Americas two market grew 4% year-on-year in Q4 and 10% for the full-year as well. Energy and utility revenues grew 8% during the quarter. Securities, Capital Markets, and Insurance grew 7% during the quarter.

But we are seeing some softness in the banking and financial services space, No doubt and in consulting, due to the current macroenvironment. The bookings in terms of total contract value grew 27% in Q4. These are all year-on year comparison figures of course. Third market our Europe market unit delivered a year-on year revenue growth of 9% in Q4 12% for the full-year. Growth in Europe was led by Southern Europe and Germany, which grew over 30% and 20% in Q4 respectively. Finally, revenues for the APMEA market unit grew at 8% year-on-year in Q4 and 10% for the full-year. There Southeast Asia grew about 25% year-on-year and Middle-East is growing in double-digits as well.

For the full-year, bookings in TCV terms are looking healthy with 20% year-on-year growth. Also have ambitious growth plan for India, in fact you should know that we have significantly improved our quality of revenue in our [indecipherable] enterprise segment over the last couple of years. With that, we have decided to merge that segment with our IT Services segment, starting Q1 ’24. Now let’s look at the performance from service offering standpoint.

Our ideal global business line grew 7% year-on-year in Q4 and 14% for the full-year. Most of the service lines showed a healthy year-on-year revenue growth led by cloud transformation, which grew 22% year-on-year and absent data grew 18% year-on-year. Our iCORE global business line grew by 6% year-on-year in Q4 and 8% in the year of ’23 — fiscal year ’23. Digital operations and platform-led growth was 7% year-on year for the quarter. Against a weakening macro-environment our results underscore the efficiency and the effectiveness of our transformation and growth strategy and how far we’ve come in just under three years. We are not only winning at a higher-rate in the market, but the nature of the deals we are winning is changing.

Today we have 19, $100 million accounts compared to 11 in fiscal year of 2021. We are winning large transformation deals, benefiting from the consolidation in the marketplace and expanding our relationships with existing clients. As an example we expanded our long-term relationship with the multinational insurance company, show[phonetic] a strategic transformation initiative. The growth-oriented initiative will enhance customer experience, simplify and digitize operations, and lower the cost-to-serve as part of a 10-year partnership. In another example Wipro was selected by a leading global professional staffing services provider to help them transform into a shared services product platform operating model.

The new operating model will help accelerate the simplification of technology, applications, infrastructure and risk management. Here again, leveraging cloud as a key enabler for business scalability and agility. In many of these deals, we are bringing one Wipro capabilities together in brand-new and innovative ways including introducing a product platform mindset and combining expense platforms and operations to drive business outcomes. Further, as market conditions softened we are deploying advanced technologies to help clients better manage cost and anticipate risks. We are building resiliency here and efficiency for our clients’ businesses.

For example. We’ve been selected by a leading North American financial institutions as a strategy partner for their data as a service platform to accelerate their cloud migration. We will leverage our data analytics and artificial intelligence accelerators to expedite this journey and bring cost benefits. Our partnership strategy is yielding good results as we continue to build capabilities jointly with our strategic partners and drive large complex deals. The share of partner bookings as a percentage of our total bookings rose from 25% in FY20 to 44% in FY23. We believe our new organizational model of four strategic market units and four global business lines will further improve our market position.

Organizing around our strategy priority areas, cloud, enterprise technology, engineering, consulting will give us the agility to adapt to changing market conditions but also innovate even faster. One, Wipro FullStride Cloud is a significant growth driver for us no doubt. Now as a dedicated global business it will accelerate growth, innovate with partners and clients, and deliver on the promise of cloud via differentiated, futuristic capabilities. Our new enterprise[phonetic] global business line will combine our enterprise technology platforms and enable digital operations and security. By leveraging data and artificial intelligence, as well as immersive technologies these GBL will build a distinctly forward-looking view into our client’s operational, and technology needs.

Let me now turn to our most important asset, our people. In a highly dynamic business and technology environment, building the right skills across organization is more important than ever. Over the past year, we’ve trained over 50,000 employees in [indecipherable] skills. NextGen associates formally called freshers continued to be a critical part of our talent strategy. The remaining of this group of colleagues is actually a reflection of the value to our business and of our commitment to their success. We hired over 22,000 NextGen associates in FY23. Here again, the highest-ever in our history. Our talent transformation efforts are yielding results. In Q4 we were recognized by top employers Institute as 2023, top employer in 11 countries. Actually even securing a top three ranking in five of those countries.

Finally, our attrition rates have been steadily declining throughout FY ’23, we ended the quarter with 14.1% ratio. Now looking ahead the macro-environment continues to be challenging. Our clients, our industry and many sector impacted by the prolonged uncertainty in difficult and weak environment. These headwinds are impacting our business and projections as well. For the next quarter we are giving a sequential guidance of minus three to minus 1% in constant-currency. On margins, we expect to be in the similar range that we delivered in recent quarters. So to summarize FY ’23, we closed the year with the strongest ever bookings recorded in the year.

Our revenues grew 11.5% year-on-year in constant-currency terms, taking our full-year revenue to $11.2 billion. Finally, our IT Services operating profit is the highest-ever at $1.7 billion for the year. By most accounts, we’ve closed our fiscal year at a significantly improved place than where we began. We are getting stronger operationally taking a more futuristic approach to our solutions. We have the growth mindset, and the right organizational structure and talent, giving us the resiliency for long-term success. With that let me turn it over to Jatin for his comments. Thank you.

Jatin Dalal — Chief Financial Officer

Thank you, Thierry. Good evening, good morning. Thank you all for joining this call. Let me start with the revenue growth for fiscal 23, we grew 11.5% in constant-currency terms. Our operating profit is as Thierry mentioned was highest at $1.7 billion and that was a growth of 1.2% year-on-year. In-quarter four our net profit was INR30.7 billion which was 0.7% sequential. We continue to have a very strong cash conversion for FY 23, we converted operating cash flows were at 115% of our net income. We exited the year with $4.9 billion of cash, gross of debt and $3.1 billion, net of debt. As we exited the year we had $3.8 billion of forex hedges and in-quarter four, the realization rate was 81.63.

I quickly talk about buyback details as we have shared in our press release the buyback quantum is INR12,000 crores including taxes approximately INR14,800 which translates to $1.8 billion. Buyback price has been set at 445 and this is subject to shareholder approval that we will duly undertake. As Thierry mentioned, we have also brought ISRE segment as part of the IT Services segment and our guidance for quarter one includes ISRE, both in the base for quarter-four and the growth which we are projecting. The performance of quarter four was excluding ISRE, the guidance was given as such and we have delivered within the guidance range excluding ISRE in-quarter four.

With that, we’re happy to take your questions.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We have our first question from the line of Sudheer Guntupalli from Kotak Mahindra Asset Management. Please go-ahead.

Sudheer Guntupalli — Kotak Mahindra Asset Management — Analyst

Yeah, good evening, everyone. Jatin, firstly on the guidance of minus three to minus 1% in constant-currency so what are the underlying assumptions here between the growth rates of our consulting book of business and the services book of business. I know maybe a little difficult to [indecipherable] it very precisely, but broadly if you can give some indication as to what is the declines we’re expecting in consulting and ex of that let’s say what is the rate we are expecting in services.

Jatin Dalal — Chief Financial Officer

Yes, so Sudheer as you — as you know, we don’t — we will not be able to break this down between consulting and rest of the business, but I would request Thierry to give a color on overall business.

Thierry Delaporte — Managing Director, Chief Executive Officer

Absolutely. So Sudheer so you know let’s look at different elements. First is, you know what is the performance in bookings. What do we learn when we look at what we’ve done in Q4, Q3, two very strong quarter of bookings. Among the highest one, actually highest on large deals. Very strong performance. Significant growth, 27% growth year-on-year, so this is clearly showing that we are continuing to see opportunity in the business that we win and that we are growing our backlog for the quarters to come.

Second is no doubt that there is if we look at some sector trends. There are sectors that I’ve seen a little bit both headwinds or you have seen some more macro uncertainties. Banking and insurance, technology are sectors where we have seen slowdown or cut in discretionary spend over the last weeks. But fundamentally, we remain positive given the volume of business that we are delivering. We are possibly waiting for the uncertainty to clear, but the current guidance we are showing for the quarter reflects really the view. On one-side you know other sectors where there is growth, those sectors where discretionary spend is being cut and the performance on bookings. From — you ask questions about consulting, so I will — I will say the following.

Yes, we have increased the percentage of our revenue coming from the consulting business over the last years, we’ve done it for strategic reason. The strategic reasoning behind this decisions hasn’t changed and indeed the acquisitions we have made have absolutely allowed us to have to transform to change the game in our interaction with clients in those fields, whether it is in the security space, the SAP space or in financial services and by the way, all these acquisitions in the consulting space have delivered performance that we have go-ahead of the plan, built at the time of the acquisition. Having said that, and I think it’s in-line with what we’ve said a quarter ago we know that those business are early cycle and typically failing first, a reduction in discretionary spend, but also the ones bouncing back the fastest and that’s in line with — with this prediction.

Last if we are looking at the performance of these business compared to the market — the consulting market I think those business are holding pretty well as well. So that’s — that’s what — that’s the color I would give you on our guidance for Q1.

Sudheer Guntupalli — Kotak Mahindra Asset Management — Analyst

Yeah, thanks. Thanks very much Thierry for that. And just one follow-up if I may. So there is a question in the last quarter also as to why the strength in bill bookings is not necessarily converting into revenue and forward-looking outlook. So does that also have to do with the fact that, let’s say, some of these consulting book of business is where which is more discretionary in nature, that’s where we are seeing a bigger paying especially in the current macro backdrop and then given the geographies that some of these entities we are operating in.

Thierry Delaporte — Managing Director, Chief Executive Officer

What is clear Sudheer is that we — I don’t — we don’t have any client situation, any one event, any cancellation, any loss of client delivery issue or anything that would have played in this projection. So this is not that, it’s really that on one-side, you have the intense activity of the sales team driving wins and allowing us to obviously expand our position in those accounts. And on the other side you have decisions, very short-term often time from clients to cut discretionary spend because we know that this is what they’re doing in time of uncertainty and so that’s what we are observing, but so on one-hand, we see the consequence of that, indeed leading to the guidance we show for Q1, but also give us quite good confidence in our ability to rapidly bounce back in the following months.

Sudheer Guntupalli — Kotak Mahindra Asset Management — Analyst

Yeah. Got it Thierry. Thank you very much for the very insightful comments and all the best.

Thierry Delaporte — Managing Director, Chief Executive Officer

Thank you.

Operator

Thank you. We have a next question from the line of Sandeep Shah from Equirus Securities. Please go-ahead.

Sandeep Shah — Equirus Securities — Analyst

Yeah, thanks for the opportunity. The question is follow-up to what Sudheer had asked, I fail to understand why such a low correlation of high book-to-bill ratio, which we have in December 22 at 1.5x, March 22 at 1.5 x, so is it fair to say that the discretionary portfolio or project-based portfolio in the book has increased materially that it is not helping us to convert the [indecipherable] because Q3 was disappointing, Q4 was disappointing, Q1 guidance is disappointing, while the order book in all these three periods have been really heartening.

Jatin Dalal — Chief Financial Officer

Yeah, so Sandeep thanks for your question. I will — I will try and articulate this. You know there are — there are clearly two engines or two legs to our revenue performance. The first is the new deals and the large deals that we sign every quarter and as we have shared that growth has been very robust that growth has been for FY23 across geographies, the largest was upwards of 30%, but even the smaller of the three was 27%. So across geographies the growth has been very robust. And the deals that we have won is converted into — converting into revenues. But the fact that our growth is also a lot of discretionary work, which continues to happen in project extension mode from our customers in an ongoing manner and as we articulated that is a pause in some of the discretionary work.

This discretionary pause is around re-prioritization of where the customers want to spend their money in a changing macroeconomic backdrop which is quite — I would say, which is quite common in our industry and that is having an impact for us in quarter one and that’s sort of a quarter of adjustment that we see and that’s what it is. I would argue that in fact the deal wins that we have had in last two quarters in fact, increases our ability to withstand some of these volatilities, which has been coming through the discretionary side and our focus will remain, to continue to push whatever we can do to improve our deal win trajectory.

Lastly, if I see the backlog that we’re carrying is definitely reflective of the success in the deal wins that we had in last few quarters.

Sandeep Shah — Equirus Securities — Analyst

So Jatin is it fair to say 1Q will be the last quarter or you believe it all depends, about how macro shapes up and if macro continues to remain muted post 1Q this phenomenon may continue where pause on discretionary will keep impacting us despite we are firing on TCV numbers.

Jatin Dalal — Chief Financial Officer

Yes, so. So Sandeep, the fact remains that the macro remains reasonable as all of us know, it is not in a very adverse scenario especially in US, you see that the employment rate continues to be good. Inflation continues to come down, there is a reasonable growth assumption for 2023 and 2024, the interest rates have potentially peaked, it may go a little more up, but they’re certainly not another three percentage point increase that we are seeing on the horizon so macro-environment remains reasonable. Now what has happened in previous quarter is that there has been certain events which has led to a greater cautiousness in client spending than what it was existing before beginning of quarter four and we have to see how does this situation pan out for next couple of quarters. If there is no more — no more situation of an adverse nature I think that the growth could come back.

If there is something else, you know it could get closer. Right now I would say it would be too early to call that Q1 would be the last quarter. Like you, we will also watch what happens very close.

Sandeep Shah — Equirus Securities — Analyst

And just the last question, in the opening remarks the Delaporte has said that we would like to continue with current margins in a range going-forward, so is it the commentary for 1Q or for the whole of FY 24 and don’t you expect that current level of margin is still lower on a Y-o-Y basis, so there could be more upside potential on a Q-on-Q basis on margins or that is too optimistic to assume looking at the soft growth year in FY 24.

Jatin Dalal — Chief Financial Officer

So Sandeep, you are right, it is — it is the revenue volatility, which is of importance right now and given the current revenue volatility. We have said we will keep it around the ranges that we have seen in previous few quarters. And that would be our endeavor but our focus would be to get back to a growth momentum as early as we can.

Sandeep Shah — Equirus Securities — Analyst

Okay, thanks and all the best.

Operator

Thank you. We have our next question from the line of Mukul Garg from Motilal Oswal Financial Services, please go-ahead.

Mukul Garg — Motilal Oswal Financial Services — Analyst

Yes, hi. I hope I’m audible.

Operator

Yes sir, please go-ahead.

Mukul Garg — Motilal Oswal Financial Services — Analyst

Thank you. Gentlemen I just wanted to deeply understand has there been any change in thought process in terms of how much cash on book US will be holding. The buyback quantum has been quite substantial, and you guys, if I look at how much cash you will probably be left with, including incremental cash which will be generated. It will be a bit lower than the employee expenses you guys incur on a quarterly basis. While this used to be one of the difference maybe a few years ago and might not be really well, but with this kind of a buyback you know how the overall thought process is over the next few years in terms of either business investments or inorganic acquisition.

Jatin Dalal — Chief Financial Officer

Yeah, so, Mukul as you rightly called out we will by the time we complete this buybacks, we will still have $1.5 billion of cash, net of debt on the balance sheet. Also as you know, we continue to generate healthy cash flows every quarter anywhere between $300 million to $350 million so we will continue to generate cash even as we go. The reason the buyback is at a particular size is to make sure that we align with our payout strategy that we have articulated, which is 45% to 50%. We are broadly aligned with that number. Also the fact that we are doing it at an interval of roughly two years, and 1/4 and that the fact that buyback is lumpy by design and you can’t have it at frequent intervals, we felt this was the right sizes to go.

Mukul Garg — Motilal Oswal Financial Services — Analyst

Right, so Jatin just to again clarify on this you don’t think that the thought process about holding a certain amount of cash on books to either take care of expenses or inorganic investments is something which is not valid in this environment and then just also trying to understand, given that the macro-environment is relatively tougher this also would imply that down the line, your ability to kind of go with a similar sort of cash return to shareholders will also be bidded[phonetic]. So how should we think about this, the capital allocation from next year onwards.

Jatin Dalal — Chief Financial Officer

So our strategy for capital allocation remains what we have articulated, which is 45% to 50% of our net income over a block of three years and we feel we will be comfortable with that. We of course have evaluated the cash position at the end of this buyback and the need for us either for expenses or for inorganic opportunity which could come in our way. I think we would be well-covered with the capacity that we would have and okay I would just reiterate, saying this is — this is — this is lumpy and I can’t have it at frequent intervals and hence we have gone for the size that we have gone[phonetic].

Mukul Garg — Motilal Oswal Financial Services — Analyst

Understood. One question for Thierry and again here on the consulting side while the business obviously will rebound once demand picks up. In the meanwhile is there some portion of that business, which is relatively more resilient in nature or do you think, if demand environment remains weak, you can see continued moderation in the consulting revenues over next maybe one or two quarters.

Thierry Delaporte — Managing Director, Chief Executive Officer

Yes, I think the — we are observing — we are observing the evolution of the consulting business, there is a lot of activity on the consulting side for deals around you know transformational deal, cost optimization deals where the — where we are building business case and so on for clients. I think this is quite a bit of activity. We are seeing also a very significant demand in some area. I mentioned security in you know in SAP for example, where we’ve made an acquisition was rising few months ago, we have a very significant demand and the business continued to be good in some sectors. You know, in particular, you know banking, financial services and technology. There is — there’s a more — there’s more slowdown coming from reduction of discretionary spend.

To your point, we consider that this is temporary and that will — it will bounce back rapidly because in most of my interaction with our clients it becomes more-and-more evident that they have a lot of programs that they still want to drive, they have been able to postpone or wait a little bit while to better understand the evolution of the macro environment, but there’s also some pricing need from the market and from the business sorry, so I think we should see a rebound.

Mukul Garg — Motilal Oswal Financial Services — Analyst

Sure, thanks for the clarifications. Thank you.

Thierry Delaporte — Managing Director, Chief Executive Officer

You are welcome.

Operator

Thank you. We have our next question from the line of Surendra Goyal from Citigroup. Please go-ahead.

Surendra Goyal — Citigroup — Analyst

Yeah, thanks. Good evening, everyone. So just wanted some insight on how the Jan, Feb, March quarter progress. We did get worse towards the end-of-the quarter, which prompted you to have unusually low first-quarter guidance and also any vertical nuances[phonetic] within the broad comment. Any insights would really be appreciated.

Jatin Dalal — Chief Financial Officer

So on the first question, Surendra no I don’t think we can say that it has gotten any worse in the quarter, we believe that is it’s the opposite. And so that’s for the trend, frankly, clear that it certainly did not get worse towards the end-of-the quarter. Sector-wise, I mentioned it, right this is you know our financial services market. This is technology market. Actually, two markets where technology is key, where investments are required where you know there is always been demand and where I would say talent is always in need. So, you know, to balance with the temporary slowdown on discretionary spend again.

Surendra Goyal — Citigroup — Analyst

[Technical issue] things were stable to getting better than [indecipherable] how do we reconcile the unusually low first-quarter guidance? Because again just to kind of maybe put it in context, the two businesses that you have added on the discretionary side, my sense is that they wouldn’t be more than 10% to 12% of revenues. So are we saying that those businesses are totally falling 15%, 20% sequentially. Is that what it is, and again I know you won’t share numbers, but any thoughts would be appreciated.

Jatin Dalal — Chief Financial Officer

Yeah, so Surendra there is always the lack of intimation versus revenue reduction in our business. So, while you continue to get intimation through the quarter, but the impact really flow-through as quarter comes to an end and you are seeing it now more profoundly I would say, than what you saw in quarter four, because it’s not that [indecipherable] see a reduction in revenue you get an intimation about a pause and after 15 or 21 days, two to three weeks is when you see the actual effect of the post[phonetic].

Surendra Goyal — Citigroup — Analyst

Thanks, Jatin[Phonetic]. Since I have you, could you just share some color on what percentage of your portfolio in the fourth-quarter would be consulting oriented that you would have added in the last couple of years and the reason I ask that is that part of the portfolio would obviously have seen some pressure over the past few quarters. Again broad thoughts I know you won’t share the numbers, but any broad thought.

Thierry Delaporte — Managing Director, Chief Executive Officer

You know Surendra, I don’t think you should draw any conclusion that the discretionary spend are coming from consulting only. I don’t think it’s the case at all. Again as I was saying there is some areas of consulting where we are growing really well. I can tell you there is a real nice growth in the security space, for example. So there’s nice growth in consulting SAP business, we acquired and so on. So this is not and even in financial services, we have areas where we are growing well. And so there is discretionary spend also across the organization it is the reality.

Surendra Goyal — Citigroup — Analyst

Got it, got it Thierry. Thanks, Thierry and Jatin. Very helpful.

Thierry Delaporte — Managing Director, Chief Executive Officer

You’re welcome.

Operator

Thank you. We have our next question from the line of Manik Taneja from Axis Capital. Please go-ahead.

Manik Taneja — Axis Capital — Analyst

Great, thank you for the opportunity. My question was an extension to what Suren just asked, unlike some of the peers we have seen some weakness in our revenue growth from Europe. So, is that largely a function of the consulting piece or is it something — something else as they[phonetic].

Jatin Dalal — Chief Financial Officer

No. So, Manik. The answer is no, in fact, first, our Europe business is actually holding pretty well. Okay, so we’ve done a solid quarter. This is good business going on again, I would be a little more cautious on the BFSI side, but most of the sectors are holding well. If we look at the deals we’ve closed in Q4, very solid performance from our European business as well. So, no, don’t draw any conclusion between consulting business and [technical issue] gross.

Manik Taneja — Axis Capital — Analyst

Sure. Thank you and all the best for the future.

Jatin Dalal — Chief Financial Officer

Thank you.

Operator

Thank you. We have our next question from the line of Girish Pai from Nirmal Bang Institutional Equities. Please go-ahead.

Girish Pai — Nirmal Bang Institutional Equities — Analyst

Yeah, thanks for the opportunity. Now so I think today if you look out into the rest of FY 24, do you see growth picking up in the second-half.

Jatin Dalal — Chief Financial Officer

Yeah, so Girish thanks for the question. One would — one certainly hope that the growth picked up in the second-half but you know we don’t guide for the full-year and environment continues to remain uncertain. So we are not calling out that specifically but I spoke about this, the macro are miserable and current cautiousness are led by events and it all depends on how the next few months go.

Thierry Delaporte — Managing Director, Chief Executive Officer

Yeah, agree with this. Girish my view on that sharing my perspective on this. Obviously in-line with what Jatin says is, again, look at the performance in bookings. This is real stuff, this is real deals that we’ve won and you know it’s several quarters where we are performing well. We have also a very good outlook in bookings for this quarter. So we are positive. You know, just assuming that you know the cut in discretionary spend will slow-down, growth will be back. Hold on Girish, we have also our Chief Growth Officer, Stephanie with us. Few words on the — on what you’re seeing in the market.

Stephanie Trautman — Chief Growth Officer

I think, Thierry after two very strong quarters of bookings as we look into this fiscal year we continue to have a very robust pipeline. We still have a lot of very large deals in the pipeline. So I’m still very bullish that our growth strategy will continue to work and once our clients start spending more on discretionary spend we’ll see — we’ll see that growth flow-through.

Thierry Delaporte — Managing Director, Chief Executive Officer

Thank you, Stephanie.

Girish Pai — Nirmal Bang Institutional Equities — Analyst

Yeah, on the discrete you kept referring to discretionary spending put off and outside of consulting what constitutes discretionary spend, if you can give some examples in BFSI or some other sectors.

Jatin Dalal — Chief Financial Officer

So, Girish I will give some example, certainly on our application side, some of the feature development or extension of digital work that the customer has already carried out and would rather wait for the next steps to perform than pursue it. As if there was no change in environment those extension would have gone through. We are seeing a pause on that, it’s not customer is not wanting to pursue it. It’s just a pause before they decide where they want to spend their budget for ’23.

Girish Pai — Nirmal Bang Institutional Equities — Analyst

Lastly, salary increases could the quantum be the same and the timing be the same as you you did in FY 23.

Thierry Delaporte — Managing Director, Chief Executive Officer

Girish, we gave our last salary increase in September in Q2. So we’ll be looking at the salary increase in Q2 and it is too early for us to comment on actual increase. We’ll keep you posted.

Girish Pai — Nirmal Bang Institutional Equities — Analyst

Thank you.

Operator

Thank you. We have our next question from the line of Dipesh Mehta from Emkay Global. Please go-ahead.

Dipesh Mehta — Emkay Global — Analyst

Yeah, couple of questions, first of all the divergence between deal intake and revenue. I think earlier participant also tried to get [technical issue] whether we are seeing any material delay in project stock or subsequently restructuring in bill sizes and whether we do let’s say any restructuring or [indecipherable] when we report next quarter deal intake whether we let it off or we don’t let it off. Second question is about EBIT margin-related outflow. Now if I look your utilization also [indecipherable] been in last few quarters. Utilization also seeing[phonetic] improving. So I want so look your EBIT margin outlook and how one should build optimal level of utilization ultimately[phonetic]. Thanks.

Jatin Dalal — Chief Financial Officer

Yes, so I will respond to the first question and I will request Amit our Chief Operating Officer to speak on the utilization. We do have a process whereby we systematically look at when if a fixed-price project has got restructured or has got extended early that we reduce the booking which was earlier cover or shown at booked before we book the new bookings through that. So there is an adjustment that we — that we make for [indecipherable].

Amit Choudhary — Chief Operating Officer

On the utilization what I would like to add is as for our strategy, we want to continue to spend on internal build up talent as opposed to buy up talent. And as a result we had hired talent, including the NextGen associates and the focus in the current quarter and future quarters will be to make sure that whenever the demand comes in, we first give priority to internal fulfillment and while we have already seen some improvement on utilization. We will keep pushing it more aggressively to get much more out of it and start[phonetic] project from inside.

Dipesh Mehta — Emkay Global — Analyst

So broadly I just wondered what would be the optimal target range which, let’s say, company is trying to achieve from utilization perspective and also whether you still believe it is for the scope for expansion.

Jatin Dalal — Chief Financial Officer

Yes, there is further scope for improvement. Yeah, always dangerous to set a precise target for utilization because, Dipesh if you remember, for example, what we did about three-four quarters ago if you remember we had a quarter where we had a lower operating margin, and the reason we did that, is it was the conscious choice because we knew it was an investment for the following quarters. We wanted to develop capacity and then including you know a significant boost of our next generation associates program which we’ve done and so typically, when you do so your utilization is going down on quarter one, and then you are building back up. As we stand right now for sure, you know, we have — we are aware although we are improving utilization as you can see versus previous quarter.

There is still room for higher utilization and so we continue, but we are also making sure that it’s not restraining our ability to grow and acquire.

Dipesh Mehta — Emkay Global — Analyst

Thank you.

Operator

Thank you. We’ll take our last question from the line of Gaurav Rateria from Morgan Stanley. Please go-ahead.

Gaurav Rateria — Morgan Stanley — Analyst

Hi, thank you for taking my questions. So first question is for Thierry. On discretionary spend, the projects that are on pause, what gives the confidence that it would not eventually translate into budget cuts, but will eventually come back. So if you could highlight nature of some of these projects, which gives you confidence that it will eventually come back.

Thierry Delaporte — Managing Director, Chief Executive Officer

Yeah, that’s a good point. That’s a good point. So a couple of — couple of points. One is I think what I’ve always tried to do with Jatin when we are looking at the projection is we really try to keep a very fair. Look at you know, the macro-environment and if you remember back in October, we started to talk about the certain level of volatility that we could fill in the market and I think, let’s be clear, Gaurav, everyone — not[Phonetic] everyone in our industry has felt it, it’s the reality. Right. Look at every growth trajectory. You know there has been a change in the market environment that probably started somewhere in Q3 for us and then materialize in Q4.

Second is as always what do we see in our pipeline and in our deals, one is the pipeline [indecipherable] second are we winning more or less and what kind of deals. And from that standpoint, we get a lot of comfort. Right. We are feeling rather good because frankly we’ve — we’ve won nice deals, large deals and you know, we feel that although until it’s signed it’s not won, but we feel good about what we’re seeing in our pipeline for Q1. And finally is indeed the fact that sometimes discretionary spend may happen more or less unexpectedly if you like and you know, because we have a very close connection with our client, we can we corporately, understand the need they have to do that in some cases.

We feel that the level of uncertainty that we have felt is we don’t see it as deteriorating any — in any way ahead of us and so the perspective is more into a result of some of these program, if you like, or reacceleration. Again, we are in March — in April sorry, in speaking with our clients, they have priorities to deliver, they have targets to deliver, and they are very conscious of the fact that they need talent in order to drive those actions and so that’s how we are reading it Gaurav.

Gaurav Rateria — Morgan Stanley — Analyst

Thanks for the detailed answer. Second, question is for Jatin. So last year, our ability to get the margins back to 17% range got impacted due to supply-side challenges and our investments in building the pressure capacity. So with some of these things already behind us and attrition issues coming down, we’ve kind of covered quite a bit of a journey in our pressure reduction program. Do you think that margins going back to 17% is a reasonable target to assume and will it — will it be more like a fiscal 24 phenomena. Will it be more like a little bit more medium-term target. Thank you.

Jatin Dalal — Chief Financial Officer

So Gaurav as you know we don’t guide on margins for the year or definitely in a range, but we give an indication, the current challenge we have is, you are right, it is not on the supply-side. I think we have done very well in quarter four in terms of improving utilization, improving the way we index our next generate — next-generation associates into our projects. The challenge in quarter one is around the volatility in revenue that will help to mitigate as we work through the margin and therefore we are saying around the range that we have delivered in previous quarters — previous two quarters, but right now, our focus would be to get to revenue stability and hence — and then we could work through the [indecipherable].

Gaurav Rateria — Morgan Stanley — Analyst

Thank you.

Jatin Dalal — Chief Financial Officer

Thank you. As there are no further questions. I would now like to hand the conference back to Mr. Dipak Kumar Bohra for closing comments. Over to you sir.

Dipak Kumar Bohra — Senior Vice President, Corporate Treasurer & IR

Yeah, thank you all for joining the call. If you need any further clarification or information, please feel free to reach out to Investor realations team. Have a nice day. Thank you. Thank you, bye.

Operator

[Operator Closing Remarks]