WIPRO Q4 Call Highlights: Bookings Boom, Margin Battles and Client Caution!

Wipro Ltd, a global technology company, providing IT, consulting, and business process services, in its Q4 earnings call highlighted significant challenges and strategic responses, with the management highlighting how economic uncertainties and tariff concerns have prompted clients to pause transformation projects, particularly in consumer and manufacturing sectors, while BFSI shows relative resilience. Despite strong deal bookings including the Phoenix deal that’s expected to boost H2 performance, the company forecasts a sequential revenue decline of 1.5-3.5% for Q1 FY26, potentially leading to a third consecutive year of revenue decline. Management also noted that maintaining margins will be challenging due to weak revenue environment and pricing pressure from cost takeout deals, while emphasized that company’s AI strategy involves both integrating GenAI into existing services and developing new revenue streams through partnerships like the NVIDIA Sovereign AI collaboration.

Wipro reported Q4FY25 results with contrasting performance. The company reported a robust 25.9% year-on-year increase in consolidated net profit and minimal revenue growth of 1.33%. For the full fiscal year, profits surged 18.9% despite a slight 0.74% annual revenue decline. The company issued guidance for revenue de-growth for Q1 FY26, forecasting a sequential revenue decline of 1.5-3.5% in constant currency terms due to macroeconomic uncertainties, with the management noting increased client caution regarding transformational deals. Despite these challenges, Wipro reported strong Q4 bookings of $3.96 billion, up 13.4% quarter-over-quarter, with large deal bookings increasing 48.5% year-on-year to $1.76 million, maintained its operating margin at 17.5%, a 110 basis points expansion year-on-year, and marginally increased its workforce to 233,346 employees.

Continue Reading: Unearth the Vital Insights from Wipro Ltd’s Earnings Call!

Financial/Operational Metrics:

• Revenue: INR22,504 crore, up 1% YoY.
• Operating Profit: INR4,624 crore, up 6% YoY.
• Net Income: INR3,588 crore, up 26% YoY.
• EPS: INR3.41, up 26% YoY.
• Large Deal Bookings: $1.76 billion, up 48.5%
• LTM Voluntary Attrition Rate: 15%.
• Headcount: 233,346, up 614.

Q1 Outlook:

• IT Services Revenue: $2.505-2.557 billion.
• Sequential Growth: -3.5% to -1.5% in constant currency.

Analyst Crossfire:

• Sector Impacts and Client Caution, BFSI Sector Trends (Nitin Padmanabhan – Investec)? Company noted significant impacts from tariff increases on consumer and manufacturing sectors, particularly automotive and industrial, with clients across industries adopting a cautious approach and engaging in scenario planning due to economic uncertainty. WIPRO highlighted strong traction in BFSI in the U.S. and APMEA, driven by apps and IT infrastructure modernization, cybersecurity, and AI-powered solutions, despite headwinds in Europe. Clients remain cautious on discretionary spending, with some decisions slowing down (Srinivas Pallia – CEO).

• Europe Performance and Margins (Manik Taneja – Axis Capital)? Company acknowledged Europe’s revenue degrowth, but highlighted a new leadership team, a strong deal pipeline, and the Phoenix Steel deal as drivers for future positive momentum. Also non-Capco business ramp-downs impacted Europe margins, despite Capco’s recovery (Srinivas Pallia – CEO, Aparna Iyer – CFO).

• Macro Weakness and FY26 Outlook, Margin Resilience and Headwinds (Vibhor Singhal – Nuvama Equities)? Q4’s lower-end guidance is attributed to late-quarter macroeconomic and tariff-related sentiment shifts, impacting sectors variably, and emphasized close monitoring without providing FY26 growth guidance, noting the Phoenix deal’s H2 ramp-up. Margins would face pressure from weak revenue and competitive pricing in cost-takeout deals, but Wipro aims to maintain margins in a narrow band through tight bench cost management, higher productivity, and optimized fixed spends without cutting critical investments (Srinivas Pallia – CEO, Aparna Iyer – CFO).

• Macroeconomic Impact on Guidance (Kumar Rakesh – BNP Paribas)? The weak Q1 guidance, despite strong bookings and Capco performance, reflects macroeconomic uncertainty, softness in consumer and manufacturing sectors, and continued weakness in Europe. Srinivas Pallia noted clients are pausing large transformation projects and reviewing budgets due to tariff-related cost pressures, with a strong pipeline offering hope for future recovery (Aparna Iyer – CFO, Srinivas Pallia – CEO).

• Guidance Assumptions and Macro Normalization, TCV Decline and Revenue Conversion (Gaurav Rateria – Morgan Stanley)? Q1 guidance reflects current visibility, with the upper end assuming demand stabilization or improvement and the lower end factoring in potential worsening. Company also noted unprecedented rapid changes in analyst forecasts, underscoring uncertainty around tariff impacts. Wipro confirmed a year-on-year TCV decline to $14.3 billion, driven by slower growth in smaller and medium-sized deals, while large deals increased. There is no direct causal link between deal size and conversion speed but suggested growth in smaller deals could boost revenue (Srinivas Pallia – CEO, Aparna Iyer – CFO).

• Margin Levers, AI Impact on Contracts and New Opportunities (Gaurav Rateria – Morgan Stanley, Ankur Rudra – JP Morgan)? Company emphasized multiple levers to maintain margins in a narrow band, including sustaining or improving utilization, enhancing fixed-price project productivity, and rationalizing G&A and overheads, despite potential Q1 utilization pressures from revenue declines. There’s no significant AI-driven revenue or margin impacts, with GenAI benefits freeing client budgets for incremental work. Company highlighted new AI-driven revenue streams, citing partnerships like NVIDIA’s SIAM.AI in Thailand and predictive maintenance for a European city’s infrastructure (Aparna Iyer – CFO, Srinivas Pallia – CEO).