Wipro Limited Announces Results for the Quarter ended September 30, 2019 under IFRS

Operating Margin4 at 18.1%

EPS for the quarter grew by 36.7% YoY

BANGALORE, India & EAST BRUNSWICK, N.J.–(BUSINESS WIRE)–#EPS–Wipro Limited (NYSE: WIT) (BSE: 507685) (NSE: WIPRO) today announced financial results under International Financial Reporting Standards (IFRS) for its quarter ended September 30, 2019.

Highlights of the Results

Results for the Quarter ended September 30, 2019:

  • Gross Revenue was Rs. 151.3 billion ($2.1 billion1), an increase of 4.0% YoY
  • IT Services Segment Revenue was at $2,048.9 million, an adjusted2 increase of 2.5% YoY
  • Non-GAAP3 constant currency IT Services Segment Revenue increased by 1.1% QoQ. Adjusted2 Non-GAAP3 constant currency IT Services Segment Revenue grew 3.8% YoY
  • IT Services Operating Margin4 for the quarter was at 18.1%, an increase of 3.1% YoY
  • Net Income for the quarter was Rs. 25.5 billion ($361.4 million1), an increase of 35.1% YoY
  • EPS for the quarter was Rs. 4.3 ($0.061) per share and grew 36.7% YoY

Performance for the quarter ended September 30, 2019

Abidali Z. Neemuchwala, CEO and Managing Director said, “We had a good in-quarter execution on both revenues and margins. The overall growth was broad based with 6 out of 7 industry verticals growing on a YoY basis and we signed a large deal in India aligned to our strategy of taking global offerings to India customers.”

Jatin Dalal, Chief Financial Officer said, “We delivered operating margins in a tight range after absorbing the impact of two months of wage hike. Growth remains our priority and we remain invested for future. We also successfully completed the Share Buyback program in September, which saw strong participation from our investors.”

Outlook for the Quarter ending December 31, 2019

We expect Revenue from our IT Services business to be in the range of $2,065 million to $2,106 million*. This translates to a sequential growth of 0.8% to 2.8%.

* Outlook is based on the following exchange rates: GBP/USD at 1.23, Euro/USD at 1.11, AUD/USD at 0.68, USD/INR at 70.59 and USD/CAD at 1.32

Share Buyback Update

In the quarter ended September 30, 2019, the Company has concluded the buyback of 323.1 million equity shares as approved earlier by the Board of Directors at their meeting held on April 16, 2019. This has resulted in a total cash outflow of Rs. 105 billion ($1.49 billion1).

IT Services

Wipro continued its momentum in winning large deals globally as described below:

  • Wipro has secured a multi-year engagement with a top North America based global bank to provide DevOps services which will enable the bank to launch new products swiftly and go-to-market faster at an optimal cost.
  • Wipro has won a transformation deal with a leading digital media and broadcasting company to digitize their enterprise processes to deliver better stakeholder experience.
  • A large US-based healthcare company has renewed its contract with Wipro to automate its claims process and improve efficiency, leveraging the capabilities of Wipro HOLMES™.
  • A UK-based global software company has awarded Wipro a contract to build, test, and transform its IT operations across core business applications including finance, sales and customer relationship management.
  • A major European industrial manufacturing company has renewed and expanded its existing contract with Wipro for workplace digitalization and service desk support.

Digital & Cloud Application Services Highlights

We continue to see increasing traction in digital oriented deals as illustrated below:

  • A global e-commerce and internet company has chosen Appirio to streamline the customer relationship management process for its employees by migrating to a cloud-based customer service platform.
  • A leading US-based medical technology company has chosen Wipro to automate its key business processes for enhanced user experience and cost optimization.
  • A multinational publication and media company has selected Wipro to implement a newly launched digital subscription management product, enabling seamless integration of its various internal functions as well as transform the client’s user experience.
  • A large telecommunications company has awarded Wipro a multi-year deal to provide network test automation and crowdsourcing engagement services leveraging Topcoder.
  • A US-based university has chosen Appirio to help migrate to a new cloud-based system, which will enable the institution to centralize their data and derive sharper insights.

Analyst Accolades and Awards

  • Wipro was positioned as a Leader in The Forrester Wave™: Application Modernization And Migration Services, Q3 2019
  • Wipro positioned as a Leader in Gartner Magic Quadrant for Data Center Outsourcing and Hybrid Infrastructure Managed Services, Asia/Pacific, DD Mishra, To Chee Eng, Claudio Da Rold, 24 Jul-2019
  • Wipro was positioned as a Leader in The Forrester Wave™: AI Consultancies, Q3 2019
  • Wipro was positioned as a Leader in IDC MarketScape: Worldwide Professional Services Firms for Utilities Customer Experience 2019 Vendor Assessment. (Doc #US43251618, July 2019)
  • Wipro was positioned as a Leader and Star Performer in Everest Group Banking BPS – Service Provider Landscape with Services PEAK Matrix™ Assessment 2019
  • Wipro was positioned as a Leader in Everest Group Life Sciences Digital Services – Service Provider Landscape with Services PEAK Matrix™ Assessment 2019
  • Wipro positioned as a Leader in multiple quadrants in ISG Provider Lens™ Network – Software Defined Solutions & Services, Global, UK & Nordics

Disclaimer: Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

IT Products

  • IT Products Segment Revenue for the quarter was Rs. 3.2 billion ($45.8 million1).
  • IT Products Operating Margin4 for the quarter was 4.6%.

India business from State Run Enterprises (SRE)

  • India SRE Segment Revenue for the quarter was Rs. 2.1 billion ($29.3 million1).
  • India SRE Operating Margin4 for the quarter was –8.5%.

Please refer to the table at the end for reconciliation between IFRS IT Services Revenue and IT Services Revenue on a non-GAAP constant currency basis and adjustments for divestment.

All product names, logos, and brands are property of their respective owners.

About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures within the meaning of Regulation G and Item 10(e) of Regulation S-K. Such non-GAAP financial measures are measures of our historical or future performance, financial position or cash flows that are adjusted to exclude or include amounts that are excluded or included, as the case may be, from the most directly comparable financial measure calculated and presented in accordance with IFRS.

The tables at the end provide IT Services Revenue on a constant currency basis, which is a non-GAAP financial measure that is calculated by translating IT Services Revenue from the current reporting period into U.S. dollars based on the currency conversion rate in effect for the prior reporting period. We refer to growth rates in constant currency so that business results may be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of our business performance. Further, in the normal course of business, we may divest a portion of our business which may not be strategic. We refer to the growth rates in both reported and constant currency adjusting for such divestments in order to represent the comparable growth rates.

This non-GAAP financial measure is not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, the most directly comparable financial measure calculated in accordance with IFRS and may be different from non-GAAP measures used by other companies. In addition to this non-GAAP measure, the financial statements prepared in accordance with IFRS and the reconciliation of these non-GAAP financial measures with the most directly comparable IFRS financial measure should be carefully evaluated.

Results for the quarter ended September 30, 2019, prepared under IFRS, along with individual business segment reports, are available in the Investors section of our website www.wipro.com

Quarterly Conference Call

We will hold an earnings conference call today at 07:15 p.m. Indian Standard Time (09:45 a.m. U.S. Eastern Time) to discuss our performance for the quarter. The audio from the conference call will be available online through a web-cast and can be accessed at the following link- https://links.ccwebcast.com/?EventId=WIP20191015

An audio recording of the management discussions and the question and answer session will be available online and will be accessible in the Investor Relations section of our website at www.wipro.com

About Wipro Limited

Wipro Limited (NYSE: WIT) (BSE: 507685) (NSE: WIPRO) is a leading global information technology, consulting and business process services company. We harness the power of cognitive computing, hyper-automation, robotics, cloud, analytics and emerging technologies to help our clients adapt to the digital world and make them successful. A company recognized globally for its comprehensive portfolio of services, strong commitment to sustainability and good corporate citizenship, we have over 175,000 dedicated employees serving clients across six continents. Together, we discover ideas and connect the dots to build a better and a bold new future.

Forward-Looking Statements

The forward-looking statements contained herein represent Wipro’s beliefs regarding future events, many of which are by their nature, inherently uncertain and outside Wipro’s control. Such statements include, but are not limited to, statements regarding Wipro’s growth prospects, its future financial operating results, and its plans, expectations and intentions. Wipro cautions readers that the forward-looking statements contained herein are subject to risks and uncertainties that could cause actual results to differ materially from the results anticipated by such statements. Such risks and uncertainties include, but are not limited to, risks and uncertainties regarding fluctuations in our earnings, revenue and profits, our ability to generate and manage growth, complete proposed corporate actions, intense competition in IT services, our ability to maintain our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which we make strategic investments, withdrawal of fiscal governmental incentives, political instability, war, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our business and industry. Additional risks that could affect our future operating results are more fully described in our filings with the United States Securities and Exchange Commission, including, but not limited to, Annual Reports on Form 20-F. These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company’s filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statement that may be made from time to time by us or on our behalf.

  1. For the convenience of the readers, the amounts in Indian Rupees in this release have been translated into United States Dollars at the certified foreign exchange rate of US$1 = Rs. 70.64, as published by the Federal Reserve Board of Governors on September 30, 2019. However, the realized exchange rate in our IT Services business segment for the quarter ended September 30, 2019 was US$1= Rs. 71.56.
  2. YoY growth rates for Q2’20 have been computed by adjusting revenues for Q2’19 for the impact from the divested Workday and Cornerstone on Demand business.
  3. Constant currency revenue for a period is the product of volumes in those period times the average actual exchange rate of the corresponding comparative period.
  4. Operating Margin refers to Segment Results Total as reflected in IFRS financials.

WIPRO LIMITED AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(Rs. in millions, except share and per share data, unless otherwise stated)

 

 

As at March 31, 2019

As at September 30, 2019

 

Convenience translation into

US dollar in millions

(Refer Footnote 1)

ASSETS

 

Goodwill

 

116,980

119,674

1,694

Intangible assets

 

13,762

14,870

211

Property, plant and equipment

 

70,601

75,190

1,064

Right-of-use assets

 

16,223

230

Financial assets

 

Derivative assets

 

173

129

2

Investments

 

6,916

8,276

117

Trade receivables

 

4,373

4,373

62

Other financial assets

 

5,146

4,258

60

Investments accounted for using the equity method

 

1,235

1,248

18

Deferred tax assets

 

5,604

5,969

84

Non-current tax assets

 

20,603

11,128

158

Other non-current assets

 

15,872

11,994

170

Total non-current assets

 

261,265

273,332

3,870

Inventories

 

3,951

2,681

38

Financial assets

 

Derivative assets

 

4,931

3,485

49

Investments

 

220,716

145,717

2,063

Cash and cash equivalents

 

158,529

180,441

2,554

Trade receivables

 

100,489

96,871

1,371

Unbilled receivables

 

22,880

25,948

367

Other financial assets

 

14,611

11,732

166

Contract assets

 

15,038

16,475

233

Current tax assets

 

7,435

2,847

40

Other current assets

 

23,086

22,996

326

 

571,666

509,193

7,207

Assets held for sale

 

240

Total current assets

 

571,906

509,193

7,207

 

TOTAL ASSETS

 

833,171

782,525

11,077

 

EQUITY

 

Share capital

 

12,068

11,426

162

Securities premium reserve

 

533

1,147

16

Retained earnings

 

534,700

478,515

6,774

Share-based payment reserve

 

2,617

2,328

33

Other components of equity

 

18,198

21,395

303

Equity attributable to the equity holders of the Company

 

568,116

514,811

7,288

Non-controlling interest

 

2,637

1,496

21

TOTAL EQUITY

 

570,753

516,307

7,309

 

LIABILITIES

 

Financial liabilities

 

Long – term loans and borrowings

 

28,368

22,119

313

Lease liabilities

 

10,743

152

Other financial liabilities

 

5

Deferred tax liabilities

 

3,417

3,473

49

Non-current tax liabilities

 

11,023

11,521

163

Other non-current liabilities

 

5,258

5,948

84

Provisions

 

2

10

Total non-current liabilities

 

48,068

53,819

761

Financial liabilities

 

Loans, borrowings and bank overdrafts

 

71,099

72,159

1,022

Derivative liabilities

 

1,310

1,477

21

Trade payables and accrued expenses

 

88,304

83,484

1,182

Lease liabilities

 

6,231

88

Other financial liabilities

 

644

601

9

Contract liabilities

 

24,768

18,463

261

Current tax liabilities

 

9,541

10,604

150

Other current liabilities

 

18,046

18,790

266

Provisions

 

638

590

8

Total current liabilities

 

214,350

212,399

3,007

TOTAL LIABILITIES

 

262,418

266,218

3,768

 

TOTAL EQUITY AND LIABILITIES

 

833,171

782,525

11,077

WIPRO LIMITED AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENT OF INCOME

(Rs. in millions, except share and per share data, unless otherwise stated)

 

Three months ended September 30,

Six months ended September 30,

 

2018

2019

2019

2018

2019

2019

 

Convenience

translation into US

dollar in millions

(Refer Footnote 1)

Convenience

translation into US

dollar in millions

(Refer Footnote 1)

Revenues

 

145,410

151,256

2,141

285,187

298,417

4,224

Cost of revenues

 

(101,770)

(108,006)

(1,529)

(202,120)

(212,279)

(3,005)

Gross profit

 

43,640

43,250

612

83,067

86,138

1,219

 

Selling and marketing expenses

 

(10,814)

(10,629)

(150)

(21,627)

(21,582)

(306)

General and administrative expenses

 

(13,696)

(6,527)

(92)

(22,304)

(14,646)

(207)

Foreign exchange gains/(losses), net

 

1,217

591

8

1,988

1,449

21

Other operating income

 

269

50

1

2,798

749

11

Results from operating activities

 

20,616

26,735

379

43,922

52,108

738

 

Finance expenses

 

(1,569)

(2,247)

(32)

(3,218)

(3,831)

(54)

Finance and other income

 

5,136

6,857

97

10,333

13,804

195

Share of net profit /(loss) of associates accounted for using the equity method

 

20

(2)

(33)

(18)

Profit before tax

 

24,203

31,343

444

51,004

62,063

879

Income tax expense

 

(5,347)

(5,731)

(81)

(11,212)

(12,430)

(176)

Profit for the period

 

18,856

25,612

363

39,792

49,633

703

 

Profit attributable to:

 

Equity holders of the Company

 

18,889

25,526

362

40,095

49,400

700

Non-controlling interest

 

(33)

86

1

(303)

233

3

Profit for the period

 

18,856

25,612

363

39,792

49,633

703

 

Earnings per equity share:

 

Attributable to equity share holders of the Company

 

Basic

 

3.15

4.30

0.06

6.68

8.27

0.12

Diluted

 

3.14

4.29

0.06

6.66

8.25

0.12

 

Weighted average number of equity shares

 

used in computing earnings per equity share

 

Basic

 

6,004,741,881

5,936,393,069

5,936,393,069

6,004,824,115

5,975,454,269

5,975,454,269

Diluted

6,017,936,849

5,948,113,661

5,948,113,661

6,018,044,619

5,986,683,086

5,986,683,086

Particulars

Three months ended

Six months ended

Year ended

September 30, 2019

June 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018

March

31, 2019

Audited

Audited

Audited

Audited

Audited

Audited

Revenue

IT Services

BFSI

45,760

45,395

43,246

91,155

83,240

175,262

Health BU

18,981

18,871

18,352

37,852

36,552

75,081

CBU

23,530

22,366

22,176

45,896

42,771

89,313

ENU

18,888

18,432

18,107

37,320

35,206

72,830

TECH

19,148

18,660

19,581

37,808

39,085

76,591

MFG

11,886

11,336

11,717

23,222

22,964

46,496

COMM

8,368

8,454

8,203

16,822

15,914

32,680

Total of IT Services

146,561

143,514

141,382

290,075

275,732

568,253

IT Products

3,233

2,409

2,876

5,642

6,408

12,312

ISRE

2,069

2,143

2,391

4,212

5,044

8,544

Reconciling Items

(16)

(47)

(22)

(63)

(9)

(49)

Total Revenue

151,847

148,019

146,627

299,866

287,175

589,060

 

Other operating Income

IT Services

50

699

269

749

2,798

4,344

Total Other Operating Income

50

699

269

749

2,798

4,344

 

Segment Result

IT Services

BFSI

8,407

9,335

7,867

17,742

15,087

33,831

Health BU

2,863

2,929

2,649

5,792

4,725

8,638

CBU

3,952

3,506

4,214

7,458

6,821

16,828

ENU

3,084

2,196

(2,050)

5,280

681

7,081

TECH

3,624

3,526

4,644

7,150

8,708

15,916

MFG

2,439

2,092

2,276

4,531

3,674

8,327

COMM

1,044

1,518

1,074

2,562

1,833

4,396

Unallocated

1,044

720

310

1,764

1,005

3,142

Other Operating Income

50

699

269

749

2,798

4,344

Total of IT Services

26,507

26,521

21,253

53,028

45,332

102,503

IT Products

149

(407)

(426)

(258)

(1,166)

(1,047)

ISRE

(177)

(636)

(257)

(813)

(368)

(1,829)

Reconciling Items

256

(105)

46

151

124

283

Total

26,735

25,373

20,616

52,108

43,922

99,910

Finance Expense

(2,247)

(1,584)

(1,569)

(3,831)

(3,218)

(7,375)

Finance and Other Income

6,857

6,947

5,136

13,804

10,333

22,923

Share of net profit/ (loss) of associates accounted for using the equity method

(2)

(16)

20

(18)

(33)

(43)

Profit before tax

31,343

30,720

24,203

62,063

51,004

115,415

IT Services: The IT Services segment primarily consists of IT Service offerings to customers organized by industry verticals.

The industry verticals are as follows: Banking, Financial Services and Insurance (BFSI), Health Business Unit (Health BU), Consumer Business Unit (CBU), Energy, Natural Resources & Utilities (ENU), Manufacturing (MFG), Technology (TECH) and Communications (COMM). Key service offerings to customers includes software application development and maintenance, research and development services for hardware and software design, business application services, analytics, consulting, infrastructure outsourcing services and business process services.

IT Products: The Company is a value-added reseller of desktops, servers, notebooks, storage products, networking solutions and packaged software for leading international brands. In certain total outsourcing contracts of the IT Services segment, the Company delivers hardware, software products and other related deliverables. Revenue relating to the above items is reported as revenue from the sale of IT Products.

India State Run Enterprise segment (ISRE): This segment consists of IT Services offerings to entities/ departments owned or controlled by Government of India and/ or any State Governments.

The Chairman of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by IFRS 8, “Operating Segments.” The Chairman of the Company evaluates the segments based on their revenue growth and operating income.

Assets and liabilities used in the Company’s business are not identified to any of the operating segments, as these are used interchangeably between segments. Management believes that it is currently not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation of the available data is onerous.

Reconciliation of Non-GAAP Constant Currency IT Services Revenue to IT Services Revenue as per IFRS ($MN)

 

 

Three Months ended September 30, 2019

 

IT Services Revenue as per IFRS

$

2,048.9

Effect of Foreign currency exchange movement

$

12.1

Non-GAAP Constant Currency IT Services Revenue based on

$

2,061.0

previous quarter exchange rates

 

 

 

Three Months ended September 30, 2019

 

IT Services Revenue as per IFRS

$

2,048.9

Effect of Foreign currency exchange movement

$

27.1

Non-GAAP Constant Currency IT Services Revenue based on

$

2,076.0

exchange rates of comparable period in previous year

 

Reconciliation of Non-GAAP Adjusted IT Services Revenue to IT Services Revenue as per IFRS ($MN)

 

 

Three Months ended September 30, 2018

 

IT Services Revenue as per IFRS

$ 2,009.5

Effect of divestment of Workday & Cornerstone business

$ 9.7

Adjusted IT Services Revenue

$ 1,999.8

 

Contacts

Contact for Investor Relations
Aparna Iyer

Phone: +91-80-6142 7139

iyer.aparna@wipro.com

Abhishek Kumar Jain

Phone: +91-80-6142 6143

abhishekkumar.jain@wipro.com

Contact for Media & Press
Vipin Nair

Phone: +91-80-6142 6450

vipin.nair1@wipro.com

Author: dmnnewswire