15 Oct 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.
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.
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.
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.
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 RelationsAparna Iyer
Phone: +91-80-6142 7139
[email protected]
Abhishek Kumar Jain
Phone: +91-80-6142 6143
[email protected]
Contact for Media & PressVipin Nair
Phone: +91-80-6142 6450
[email protected]
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