Wipro Limited Announces Results for the Quarter Ended June 30, 2021 Under IFRS

Rhea-AI Summary

Wipro Limited (NYSE: WIT) reported strong financial results for the quarter ending June 30, 2021, with gross revenue of Rs 182.5 billion ($2.5 billion), marking a year-over-year increase of 22.4%. IT Services segment revenue reached $2,414.5 million, a 25.7% rise YoY. Net income increased by 35.2% YoY to Rs 32.3 billion ($434.8 million), with earnings per share up 41.0% to Rs 5.92 ($0.081). The company issued its first dollar-denominated bond of $750 million. However, IT Services operating margin slightly decreased by 29 basis points YoY to 18.8%. Wipro anticipates revenue growth of 5.0% to 7.0% for Q3 FY2022.

Positive

• Gross Revenue increased 12.4% QoQ and 22.4% YoY.
• IT Services segment revenue rose 12.2% QoQ and 25.7% YoY.
• Net Income grew 35.2% YoY to Rs 32.3 billion ($434.8 million).
• Earnings Per Share increased 41.0% YoY to Rs 5.92 ($0.081).
• Operating Cash Flow at Rs 33.5 billion ($451.1 million), 103.7% of Net Income.
• Successful debut bond offering of $750 million.

Negative

• IT Services Operating Margin decreased by 29 bps YoY to 18.8%.

Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) today announced financial results under International Financial Reporting Standards (IFRS) for the Quarter ended June 30, 2021.

Highlights of the Results

Results for the Quarter ended June 30, 2021:

• Gross Revenue was Rs 182.5 billion ($2.5 billion¹), an increase of 12.4% QoQ and 22.4% YoY
• IT Services Segment Revenue was at $2,414.5 million, an increase of 12.2% QoQ and 25.7% YoY
• Non-GAAP² constant currency IT Services Segment Revenue increased by 12.0% QoQ and 21.3% YoY
• IT Services Operating Margin³ for the quarter was at 18.8%, a decrease of 29 bps YoY
• Net Income for the quarter was Rs 32.3 billion ($434.8 million¹), an increase of 35.2% YoY
• Earnings Per Share for the quarter was at Rs 5.92 ($0.08¹), an increase of 41.0% YoY
• Operating Cash Flow was at Rs 33.5 billion ($451.1 million¹), which is 103.7% of Net Income
• Our IT Services workforce crossed the milestone of 200K, closing headcount at 209,890
• In June 2021, we issued our first ever dollar denominated bond offering of $750 million with a 5-year tenor

Performance for the quarter ended June 30, 2021

Thierry Delaporte, CEO and Managing Director said, “Despite the severe onslaught of the pandemic, we delivered our best-ever quarter, with secular growth across all SMUs, Sectors and GBLs. Our sequential revenue growth of 12.2% was well ahead of the top-end of our guidance range, both organically and with Capco. Though in the early days yet, I am pleased with the way we have collaborated with Capco to build our joint go-to-market offerings and strategy. We remain focused on deepening our customer relationships, investing in talent & capabilities for the future, and winning market share.”

Jatin Dalal, Chief Financial Officer said, “We delivered a robust growth in EPS of 41% YoY even as we continued to invest for growth. At 103.7% of our net income, our operating cash flows for the quarter remained healthy. I am also pleased to share that we have successfully issued our debut bond offering in the international markets for $750 million.”

Outlook for the quarter ending September 30, 2021

We expect Revenue from our IT Services business to be in the range of $2,535 million to $2,583 million*. This translates to a sequential growth of 5.0% to 7.0%.

Wipro signed an agreement to acquire Ampion on April 1, 2021, and we previously announced that it will be closed during Q1’22. However certain regulatory approvals are still pending and the transaction is now expected to be closed in Q2’22.

*Outlook is based on the following exchange rates: GBP/USD at 1.40, Euro/USD at 1.21, AUD/USD at 0.77, USD/INR at 73.79 and CAD/USD at 0.81

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 74.33, as published by the Federal Reserve Board of Governors on June 30, 2021. However, the realized exchange rate in our IT Services business segment for the quarter ended June 30, 2021 was US$1= Rs 74.75

2. Constant currency revenue for a period is the product of volumes in that period times the average actual exchange rate of the corresponding comparative period

3. IT Services Operating Margin refers to Segment Results Total as reflected in IFRS financials

IT Services

Wipro continued its momentum in winning large deals with our customers as described below:

• Wipro has won a multi-year engagement with a leading US-based communication services provider to deliver end-to-end quality engineering (QE) services for their applications, accelerating software release velocity and improving QE maturity. Additionally, the customer has selected Wipro to support database operations in a managed services model. Wipro will drive migration to new age databases and enhance operational efficiencies through automation
• A US based oil field services company has awarded Wipro a strategic IT outsourcing contract to provide applications, infrastructure, & cybersecurity services. Wipro will also assist the customer in digital transformation projects including modernizing the IT operations, reducing IT operating cost, and improving IT services experience for end users to enable scalable services in a changing energy industry
• A European multinational pharmaceutical company has awarded Wipro a multi-million-dollar engagement to personalize end user services leveraging digital interventions to ensure superior consumer experience for their employees globally
• Wipro has won a large digital workplace contract from a US-based health insurance company to transform and manage their end user services globally to improve customer experience centered around a digital-first theme
• A leading multinational electric and gas utility provider has awarded Wipro a global strategic IT infrastructure contract. The engagement will enhance the customer’s digital transformation journey, leveraging integrated managed services and consolidating multiple data centers to next-generation hosting services, through Wipro’s Boundaryless Enterprise solutions

Digital Services Highlights

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

• A leading US-based distributor of plumbing supplies has selected Wipro to support its cloud transformation journey by embedding quality engineering in the development lifecycle encompassing CRM implementation, data migration, and legacy applications. Additionally, Wipro will provide managed services for Cloud ERP covering multiple business functions, resulting in improved business agility and enhancing customer experience across more than 1,400 store locations
• A global shipping and logistics company has engaged Wipro for the digital transformation and modernization of its integrated shipping portfolio. The engagement will make it easier for the end customers to integrate their services, while providing improved reliability and speed, thus enabling the client to compete in the global e-commerce market
• Wipro has won a strategic engagement with a leading US-based financial services company to accelerate their digital transformation journey by implementing an outcome-based high velocity software engineering model enabled by multi-skilled agile teams deployed globally
• A globally integrated energy company has selected Wipro’s crowdsourcing platform Topcoder to design their next-generation customer-centric experience for promotion and loyalty management. Topcoder’s on-demand community will help accelerate product development, applying experience design to enable scale and expansion of the digital product globally
• A leading US-based medical devices original equipment manufacturer (OEM) has selected Wipro to build and launch a global patient engagement platform encompassing their cardiac rhythm management portfolio of devices

Analyst Recognition

• Wipro was positioned as a Leader in IDC MarketScape: Worldwide Supply Chain SAP Ecosystems Services 2021 Vendor Assessment (Doc #US47537120, Mar 2021)
• Wipro was positioned as a Leader in IDC MarketScape: Worldwide Smart Manufacturing Service Providers 2021 Vendor Assessment (Doc #EUR147689021, Jun 2021)
• Wipro was positioned as a Leader in IDC MarketScape: Worldwide Artificial Intelligence Services 2021 Vendor Assessment ( Doc #US46741921, May 2021)
• Wipro was recognized as a Leader in Everest Group’s IT Managed Security Services PEAK Matrix® Assessment 2021
• Wipro was recognized as a Leader and Star Performer in Everest Group’s Life Sciences Operations Services PEAK Matrix® Assessment 2021
• Wipro was positioned as a Leader in Everest Group’s Application and Digital Services in Banking PEAK Matrix® Assessment 2021
• Wipro was rated as a Leader in ISG Provider Lens™ ServiceNow Ecosystem Partners 2021: Implementation & Integration Services and Managed Services Providers – US
• Wipro was rated as a Leader in ISG Provider Lens™ Microsoft Ecosystem 2021: Managed Services for Azure, SAP on Azure, Dynamics 365 and Office 365 Modern Workplace – US
• Wipro ranks among the Top Service Providers in Customer Satisfaction Category in Whitelane & PA Consulting UK IT Outsourcing Study 2021

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 1.3 billion ($17.6 million¹)
• IT Products Segment Results for the quarter was a loss of Rs 0.1 billion ($0.7 million¹)

India business from State Run Enterprises (ISRE)

• India SRE Segment Revenue for the quarter was Rs 1.9 billion ($26.1 million¹)
• India SRE Segment Results for the quarter was a profit of Rs 0.5 billion ($6.4 million¹)

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.

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 table at the end provides 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 June 30, 2021, 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=WIPRO210415

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 200,000 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.

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, 2021		As at June 30, 2021
						Convenience translation into US dollar in millions Refer footnote 1
ASSETS
Goodwill		139,127		223,485		3,007
Intangible assets		13,085		43,029		579
Property, plant and equipment		85,192		86,720		1,167
Right-of-Use assets		16,420		19,804		266
Financial assets
Derivative assets		16		17		^
Investments		10,576		11,024		148
Trade receivables		4,358		4,392		59
Other financial assets		6,088		8,248		111
Investments accounted for using the equity method		1,464		709		10
Deferred tax assets		1,664		2,743		37
Non-current tax assets		14,323		11,099		149
Other non-current assets		15,935		11,795		159
Total non-current assets		308,248		423,065		5,692
Inventories		1,064		945		13
Financial assets
Derivative assets		4,064		2,458		33
Investments		175,707		167,034		2,247
Cash and cash equivalents		169,793		140,617		1,892
Trade receivables		94,298		104,377		1,404
Unbilled receivables		27,124		33,663		453
Other financial assets		7,245		8,670		117
Contract assets		16,507		20,052		270
Current tax assets		2,461		4,587		62
Other current assets		24,923		25,966		349
Total current assets		523,186		508,369		6,840
TOTAL ASSETS		831,434		931,434		12,532
EQUITY
Share capital		10,958		10,958		147
Share premium		714		740		10
Retained earnings		466,692		498,003		6,700
Share-based payment reserve		3,071		3,884		52
SEZ Re-investment reserve		41,154		42,297		569
Other components of equity		30,506		33,785		455
Equity attributable to the equity holders of the Company		553,095		589,667		7,933
Non-controlling interests		1,498		1,095		15
TOTAL EQUITY		554,593		590,762		7,948
LIABILITIES
Financial liabilities
Loans and borrowings		7,458		55,392		745
Lease liabilities		13,513		15,862		213
Other financial liabilities		2,291		3,349		45
Deferred tax liabilities		4,633		14,367		193
Non-current tax liabilities		11,069		11,083		149
Other non-current liabilities		7,835		10,082		136
Provisions		2		1		^
Total non-current liabilities		46,801		110,136		1,481
Financial liabilities
Loans, borrowings and bank overdrafts		75,874		60,105		809
Derivative liabilities		1,070		1,218		16
Trade payables and accrued expenses		78,870		88,941		1,197
Lease liabilities		7,669		8,811		119
Other financial liabilities		1,470		4,091		55
Contract liabilities		22,535		21,153		286
Current tax liabilities		17,324		18,088		243
Other current liabilities		24,552		27,450		369
Provisions		676		679		9
Total current liabilities		230,040		230,536		3,103
TOTAL LIABILITIES		276,841		340,672		4,584
TOTAL EQUITY AND LIABILITIES		831,434		931,434		12,532
^ Value is less than 1

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 June 30,
		2020			2021			2021
								Convenience translation into US dollar in millions Refer footnote 1
Revenues		149,131			182,524			2,456
Cost of revenues		(103,700	)		(127,567	)		(1,716	)
Gross profit		45,431			54,957			740
Selling and marketing expenses		(9,789	)		(13,017	)		(175	)
General and administrative expenses		(10,006	)		(10,530	)		(142	)
Foreign exchange gains/(losses), net		1,205			1,160			16
Other operating income/(loss), net		97			2,150			29
Results from operating activities		26,938			34,720			468
Finance expenses		(1,299	)		(746	)		(10	)
Finance and other income		5,281			4,619			62
Share of net profit of associates accounted for using the equity method		31			7			^
Profit before tax		30,951			38,600			520
Income tax expense		(6,838	)		(6,225	)		(84	)
Profit for the period		24,113			32,375			436
Profit attributable to:
Equity holders of the Company		23,902			32,321			435
Non-controlling interests		211			54			1
Profit for the period		24,113			32,375			436
Earnings per equity share:
Attributable to equity holders of the Company
Basic		4.20			5.92			0.08
Diluted		4.19			5.90			0.08
Weighted average number of equity shares
used in computing earnings per equity share
Basic		5,693,348,171			5,462,996,981			5,462,996,981
Diluted		5,703,168,248			5,476,992,662			5,476,992,662
^ Value is less than 1

Additional Information:

Particulars	Three months ended						Year ended
	June 30, 2021		March 31, 2021		June 30, 2020		March 31, 2021
	Audited		Audited		Audited		Audited
Revenue
IT Services
Americas 1	49,683		46,510		42,612		178,091
Americas 2	55,105		46,475		44,194		179,821
Europe	54,461		45,107		38,944		165,441
APMEA	21,232		20,825		20,158		82,462
Total of IT Services	180,481		158,917		145,908		605,815
IT Products	1,311		2,117		2,306		7,685
ISRE	1,937		2,302		2,111		8,912
Reconciling Items	(45	)	4		11		13
Total Revenue	183,684		163,340		150,336		622,425
Other operating income/(loss), net
IT Services	2,150		-		97		(81	)
Total Other operating income/(loss), net	2,150		-		97		(81	)
Segment Result
IT Services
Americas 1	9,379		9,863		6,504		33,040
Americas 2	11,350		10,500		10,422		41,589
Europe	8,325		8,704		7,547		31,673
APMEA	3,066		3,074		2,546		11,476
Unallocated	56		1,257		748		5,153
Other operating income/(loss), net	2,150		-		97		(81	)
Total of IT Services	34,326		33,398		27,864		122,850
IT Products	(53	)	145		123		45
ISRE	475		587		(106	)	1,061
Reconciling Items	(28	)	37		(943	)	(903	)
Total	34,720		34,167		26,938		123,053
Finance expenses	(746	)	(1,122	)	(1,299	)	(5,088	)
Finance and Other Income	4,619		4,447		5,281		20,912
Share of net profit of associates accounted for using the equity method	7		4		31		130
Profit before tax	38,600		37,496		30,951		139,007

The Company is organized into the following operating segments: IT Services, IT Products and India State Run Enterprise segment (ISRE).

IT Services: As announced on November 12, 2020, effective January 1, 2021, the Company re-organized IT Services segment to four Strategic Market Units (“SMUs”) - Americas 1, Americas 2, Europe and Asia Pacific Middle East Africa (“APMEA”).

Americas 1 and Americas 2 are primarily organized by industry sector, while Europe and APMEA are organized by countries.

Americas 1 includes Healthcare and Medical Devices, Consumer Goods and Lifesciences, Retail, Transportation and Services, Communications, Media and Information services, Technology Products and Platforms, in the United States of America and entire business of Latin America (“LATAM"). Americas 2 includes Banking, Financial Services and Insurance, Manufacturing, Hi-tech, Energy and Utilities industry sectors in the United States of America and entire business of Canada. Europe consists of United Kingdom and Ireland, Switzerland, Germany, Benelux, Nordics and Southern Europe. APMEA consists of Australia and New Zealand, India, Middle East, South East Asia, Japan and Africa.

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 the Government of India and/ or any State Governments.

Reconciliation of Non-GAAP Constant Currency IT Services Revenue to IT Services Revenue as per IFRS ($Mn)
Three Months ended June 30, 2021
IT Services Revenue as per IFRS	$	2,414.5
Effect of Foreign currency exchange movement	$	(4.5	)
Non-GAAP Constant Currency IT Services Revenue based on previous quarter exchange rates	$	2,410.0
Three Months ended June 30, 2021
IT Services Revenue as per IFRS	$	2,414.5
Effect of Foreign currency exchange movement	$	(83.8	)
Non-GAAP Constant Currency IT Services Revenue based on exchange rates of comparable period in previous year	$	2,330.6

 

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FAQ

What were Wipro's financial results for Q2 FY2022?

Wipro reported gross revenue of Rs 182.5 billion ($2.5 billion) for the quarter ending June 30, 2021, with a YoY increase of 22.4%.

What is Wipro's outlook for Q3 FY2022?

Wipro expects IT Services revenue to range between $2,535 million and $2,583 million, indicating a sequential growth of 5.0% to 7.0%.

How much did Wipro's net income grow in Q2 FY2022?

Wipro's net income grew by 35.2% YoY to Rs 32.3 billion ($434.8 million).

What was Wipro's earnings per share for the quarter ending June 30, 2021?

Wipro reported earnings per share of Rs 5.92 ($0.081), an increase of 41.0% YoY.

Has Wipro issued any bonds recently?

Yes, Wipro issued its first dollar-denominated bond offering of $750 million in June 2021.