Wipro revenue rises as bookings weaken & cash flow jumps

Wipro reported second-quarter FY27 results, with gross revenue up 9.1% year on year and IT services operating margin at 16.5%.

The quarter showed mixed trends across the business. Gross revenue rose 1.1% from the previous quarter to ₹247.5 billion. IT services segment revenue slipped 0.1% quarter on quarter to USD $2,611.5 million, though it increased 0.3% from a year earlier.

On a constant-currency basis, IT services revenue was flat sequentially and up 0.6% year on year. Net income fell 4.7% from the previous quarter and 1.9% from a year earlier to ₹32.0 billion. Earnings per share, however, rose 0.9% sequentially and 4.2% year on year to ₹3.23.

Cash flow was one of the stronger elements of the quarter. Operating cash flow reached ₹53.0 billion, up 61.3% from the previous quarter, and amounted to 165.8% of net income.

Bookings were weaker than in the prior quarter. Total bookings stood at USD $2,595 million, down 22.9% quarter on quarter in constant currency, while large-deal bookings fell 58.6% to USD $674 million.

Voluntary attrition over the trailing 12 months was 13.8%.

Management view

Chief Executive Officer and Managing Director Srini Pallia linked the quarter to Wipro's push to expand its consulting and artificial intelligence work as it sought to deepen client relationships and enter new markets.

"The strategic investments we have been making are beginning to deliver results. They are enhancing our ability to win in new markets, add new clients, and grow existing relationships. At the same time, our consulting-led, AI-powered strategy is helping us create larger transformation opportunities. We see AI as a long-term growth driver that will expand the addressable market for technology and business transformation. We are already seeing its potential reflected in the momentum across our AI-Native Unit and AI offerings portfolio," Pallia said.

Chief Financial Officer Aparna Iyer highlighted margins and cash generation.

"Our operating margin for the quarter was 16.5%, an expansion of 0.5% sequentially. We have delivered this improvement even while continuing to invest in our business and people. We remain relentless in driving cash flow conversion. Q2 is yet another quarter where our operating cash flow has been robust and stood at 166% of net income," Iyer said.

Client work

Wipro pointed to a series of client engagements across banking, healthcare, biotechnology, telecoms, consumer goods, industrials, life sciences, energy and financial services. Several of the contracts centred on automation, artificial intelligence, cloud operations, enterprise software and process redesign.

Among the disclosed deals, one of the largest US-based banking institutions selected Wipro to modernise mortgage operations using its NetOxygen lending platform. A global technology company renewed and expanded its work with Wipro on enterprise products and employee experience systems, while a US-based health insurer appointed the group to transform provider services operations.

Elsewhere, a global biotechnology company selected Wipro for post-market quality assurance work, and an Asia-based Fortune 500 conglomerate chose it to establish an artificial intelligence global capability centre. Wipro also won work from a network technology provider to scale mobile network services, a North American public services organisation to modernise enrolment and customer engagement processes, and a beverages company to expand technology operations support.

The quarter also included renewed work with a Europe-based industrial products group on an enterprise resource planning programme, a life sciences company on a supply chain intelligence platform, a Middle Eastern energy company on procurement and finance operations, and a North American financial services institution, working with Capco, on trade exception management.

Outlook

For the quarter ending December 31, Wipro expects revenue from its IT services business to be in the range of USD $2,571 million to USD $2,625 million. That implies sequential guidance of down 1.5% to up 0.5% in constant-currency terms.

The IT products segment remained a small part of the group. Revenue for that unit was ₹1.5 billion, while segment results were negative ₹0.1 billion.

Although revenue growth in the main services arm remained subdued and bookings fell from the previous quarter, Wipro improved margins and delivered strong cash conversion, with operating cash flow at 165.8% of net income.