Wipro Q2 FY24: Results Fall Short Of Street Expectations, Net Profit Flat At 0.7%
Wipro on Wednesday reported its financial performance for the second quarter of the fiscal year 2024 (Q2 FY24). While the results unveiled substantial deal wins, the headline takeaway was the company's revenue falling short of street estimates.
The company’s revenue for Q2 FY24 came in at Rs 22,395.8 crore, marking a performance that missed the predictions of market analysts.
Wipro reported a consolidated net profit of Rs 2,667.3 crore for the quarter, up 0.70 per cent year-on-year (YoY).
Deal Wins
One of the key areas of strength for Wipro during the quarter was its ability to secure significant deals. The company reported total bookings of USD 3.8 billion, a notable 6 per cent YoY increase, and large deal bookings surged by a substantial 79 per cent YoY, reaching USD 1.3 billion. These substantial wins underscored Wipro's competitive positioning in the market and its capability to secure substantial contracts. But the deal wins have likely failed to reflect in company’s Q2 earnings.
The Q2 FY24 results also reflected an operating margin of 16.1 per cent, which was in line with market expectations. The margin saw an increase of 10 basis points (bps) on a QoQ basis and 100 bps YoY. This suggests that, despite the revenue miss, Wipro managed to maintain profitability at levels that were anticipated by analysts. The company's EBIT (Earnings Before Interest and Taxes) was reported at Rs 3,606 crore.
“We continue to win in the market despite the uncertain macro environment,” said Thierry Delaporte, CEO and Managing Director. “We ended the second quarter with 22 accounts above the USD 100M range, which is double the number we had in FY’21. Our large deal total contract value reached USD 1.3 billion—highest in the last nine quarters.”
The IT services segment revenue for the quarter stood at USD 2,713.3 million, reflecting a decrease of 2.3 per cent when compared to the previous quarter (QoQ).
The earnings per share for the quarter was Rs 5.06 (USD 0.061), reflecting an increase of 4.1 per cent compared to the same quarter in the previous year.
Attrition
The voluntary attrition rate continued to moderate on a QoQ basis, reaching a 9-quarter low of 13.4 per cent in Q2 FY24.
The company's utilization in Q2 stands at 84.5 per cent.
Headcount in the quarter at Wipro dropped by 5,051.
Revenue Outlook
The company anticipates that revenue from its IT Services business segment will fall within the range of USD 2,617 million to USD 2,672 million. In terms of constant currency, this outlook translates to a sequential guidance of a decrease between -3.5 per cent and -1.5 per cent.
"We expect margins to stay range-bound as we've seen over the last few quarters. As the market starts to turn around on the back of our transformation and efficiency plays, we expect to start seeing improvements in the coming quarters," said Delaporte, during the Q2 FY24 press briefing.
Generative AI
During Wipro's Q2 FY24 press briefing, Delaporte revealed a surge in active Generative AI (GenAI) projects, with the number of these projects doubling in just one quarter.
Wipro has reportedly trained 1.8 lakh employees in basic GenAI principles. Personalised learning pathways have been introduced to nurture specialised talent as well. Moreover, the company has established alliances to bolster AI learning pathways for its workforce.
According to the Wipro CEO, GenAI integration has already started delivering substantial productivity gains across diverse business functions, such as HR, marketing and sales.
“In the HR function, our teams are seeing significant productivity gains by using GenAI for candidate background verification. In marketing, we're using GenAI for content generation and translation – tasks that used to take hours earlier now takes minutes. In sales, we're implementing GenAI to do market research, improve sales collaboration and also generate RFI responses,” said Delaporte.
Also Read: Wipro Active GenAI Projects Have Doubled In Just One Quarter: CEO Thierry Delaporte
