Wipro Limited

Good day and welcome to the Q4 FY22 earnings call of Wipro Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Aparna Iyer, Vice President and Corporate Treasurer. Thank you, and over to you, ma'am.

Thank you, Margaret. Warm welcome to our Q422 earnings call. We will begin the call with business highlights and overview by Thierry Delaporte, our Chief Executive Officer and Managing Director, followed by a brief overview on our latest acquisition, Rising by Rajan Kohli, Managing Partner Ideas Business Line, and then a financial overview by our CFO, Jatin Dalat. We also have with us as a part of the management, Stephanie Trotman, our Chief Growth Officer, and Saurabh Govil, our Chief Human Resources Officer. After the initial comments from the management, the operator will open the bridge for Q&A. Before theory starts, let me draw your attention to the fact that during the call, we may make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act 1995. These statements are based on management's current expectations and are associated with uncertainties and risks, which may cause the actual results to differ materially from those expected. The uncertainties and risk factors are explained in our detailed filings with ACC. WIPRO does not undertake any obligation to update the forward-looking statements to reflect the events and circumstances after the date of filing. The conference calls will be archived and the transcript will be made available on our website. Over to you, Thierry.

Thank you, Aparna. And good evening, everyone. Thank you all for joining us today. To those of you joining us from the U.S., good afternoon. Fridays are often known to bring good news, so today is no different, at least for us. In my opening remarks, some of the year that has gone by I'll elaborate on the demand environment, provide details on sectors, markets, service offerings, and share a business outlook for the quarter ahead. Let's start by acknowledging that we've had an outstanding year. We delivered revenues of $10.4 billion at an industry-leading growth of 27% plus in constant currency terms. Crossing $10 billion of revenue is a significant landmark for us, and we are now aiming higher. Revenue growth has been our fastest ever in absolute terms. We've added one-fourth of our revenue just this year. Our order bookings in annual contract value terms grew 30% year-on-year, and we are finishing off the year with the highest ever pipelines. Through the year, we've made significant investments, both organic and inorganic, in strengthening our solutions, our go-to-market, the leadership team, as well as the broader talent pool. We have added over 45,000 new employees on a net basis, which is also the highest ever. We also continue to invest in our internal transformation, We know this will bring agility into our processes and help us serve our customers better. Operationally, we delivered 17.7% operating margins, which is ahead of our stated range. Finally, our net income in absolute terms is the highest ever, which grew by over 13% year-on-year, and EPS expanded by 17% year-on-year. No doubt, it has taken a tremendous amount of discipline and determination to remain resolute in our pursuit of growth and execution excellence. I'm proud of what we've been able to achieve. Now, on to our Q4 performance and the demand environment. Our revenue growth during the quarter was at 3.1% in constant currency terms and 28.5% year-on-year. Look at it, we've been consistently growing at or over 3% for six quarters now. Our growth continues to be broad-based across all our key markets, service offerings, and in most of our sectors. During the quarter, we had a net addition of over 11,000 colleagues, which sets us up well for future growth. Business environment itself is fantastic. still very good. The demand for IT services is strong, propelling our business forward. This is reflected in the state of our pipeline, our order bookings, and our overall growth rates. In fact, look at the order book. This quarter has grown 38% year-on-year in terms of annual contract value. We continue to close large transformation deals and see Rapid expansion in small and mid-sized deals as well. This represents growth in our existing accounts as well as the expansion of our market portfolios. Equally notable is the pivot to high growth services as we help our clients transform and digitize their businesses. We've had significant wins that put design at the center of the experience. and combines our I-Core and ID's capabilities to reimagine IT, to reimagine back office and customer experiences. There's continued focus on our hyperscale partners. This will not only help us win more in the market together, but it's also providing the alignment and investments we need to scale talent, assets, and industry solutions for the future. For example, our industry alignment with Microsoft has strengthened our partnership dramatically. We work closely with Microsoft to define and take to market solutions that are focused on established priority scenarios that align with Microsoft industry cloud vision. We've chosen to prioritize BFSI, retail, and the energy and utilities where we will have a sharper focus. Ultimately, delivering faster time to value, rapid digital transformation, and a simplified Microsoft customer relationship, of course. A similar approach with ServiceNow has led to Wipro being recognized in their partner maturity index at the far upper right hand of the quadrant. In the joint industry solution space, Continue to explore areas that combine novel, first-of-its-kind solutions with broad industry-leading partners or coalitions to create innovative, impactful platforms. A great example of this is the cloud car platform for software-defined vehicles, which we announced earlier this year at the Mobile World Congress. In there, we've brought together Wipro's full-stride cloud services and engineering capabilities with more than 40 different partners to deliver an integrated cloud-native solution. This is helping automakers innovate faster and at a lower cost, while keeping software-defined vehicles digitally relevant for years to come, but decoupling previously integrated software and hardware. Our full-strike cloud services has had an impressive year since its launch in June 2021. Our cloud ecosystem revenues also grew at an accelerated pace of over 31% in the fiscal year 22. On the EM&A front, we have continued to pursue strategic fits pretty aggressively. Our more recent acquisition, in particular Capco, we are celebrating today you know the first anniversary of the acquisition are performing very well we're very pleased to report that capco has had a very healthy double dg growth this year they're ahead of plan and together we have had over 60 synergy wins across markets most of you will know we've announced also two more acquisitions in the last few days The first one is Convergence Acceleration Solutions, or CAS Group. They are a US-based consulting and program management company focusing on the communication sectors. They specialize in driving large-scale business and technology transformation. CAS Group's deep client relationships and strong domain expertise Combined with Wipro's execution capabilities, we'll deliver an end-to-end professional services solution, but also immediate impact on clients. We can now provide our clients with services ranging from strategy development and planning to execution and implementation. Second acquisition that we announced just earlier this week is Rising, a global SAP consulting firm One of the leading strategic partners in the world for SAP, Rising will become a very critical extension of Wipro's SAP Cloud Practice and Wipro Full Stride Cloud Services. Ajahn Kohli is on the call today. He will share more details on the deal. On to the operating margins now. We delivered profitability of 17% in Q4, adjusted for Capco, our largest acquisition. This will be well above the pre-pandemic margin levels. I will now provide some finer details on markets, service offerings, and sectors. All our markets grew double-digit, but the Americas and Europe, our top two markets, grew at 28% and 36% year-on-year, respectively, in Q4. and 26% and 39% year-on-year in FY22. Let's look at the different market units. In America as one, we grew 22% year-on-year in Q4, with all sectors showing strong growth. For the full year, we grew 21% year-on-year. Communications, media, and information services grew 28%. Consumer goods and life science grew 26%. Healthcare and medical devices grew 17%. While technology products and platforms actually grew 34% year-on-year in the quarter. In Americas too now, it grew 34% year-on-year in Q4 and 30% in FY22. Here also there was broad-based double-digit growth across all sectors in the quarter. The order book, in terms of annual contract value, grew over 56% year-on-year in Q4. Now let's look at Europe. A European business has delivered an outstanding year-on-year growth of 36% in Q4 and 39% for the full year. Germany and South-South Europe have grown over one and a half times in size. Benelux grew 23% and our UK business grew 39% year-on-year. Finally, our Apmea market grew at 14% year-on-year in Q4 and 9% in the year 22. Australia, New Zealand, and Southeast Asia are growing in double digits year-on-year for the quarter as well. The order booking, again in annual contract value terms, are looking healthy with 22% year-on-year growth. Remember, customer relationships remain top priority. Our top five customers grew 35% year-on-year. Our top 10 customers grew 34% year-on-year. In the last 12 months, we have added eight customers in the more than 100 million bracket and 10 customers in the more than 50 million bracket. Now, from a service offering standpoint, our ID's global business line grew 39% year-on-year in Q4 and 35% in FY22. Most of the sub-practices showed a healthy double-digit year-on-year growth, led by domain and consulting, which literally tripled in size. The engineering services business grew 26% year-on-year in Q4, which is a compounded quarterly growth rate of 6% over the last four quarters. Now, I-Corps, our I-Corps global business line, grew by 15% year-on-year in Q4 and 17% in FY22. Most sub-practices grew in double digits on a year-on-year basis, too. Digital operations and platforms led the growth with 18% year-on-year for the full year. The kind of deals we are winning are very promising. For example, a global on-demand education platform has selected DesignIt as its campaign and media strategy partner. DesignIt will help them with new ways of engaging on its digital channels to deepen brand recognition in global markets. Another interesting example is with a leading U.S.-based food service distributor. They selected WePro As a strategic partner to drive profitable market share, anchored on omni-channel initiatives, a next-generation service platform, and best-in-class insights and analytics. Some more examples worth sharing, but I'd like to now focus on talent and our go-to-market strategy. Pleased to report that in line with what I had shared with you last quarter, Our quarterly annualized attrition rate have moderated by 500 basis points. We doubled our fresher intake for FY22 when compared to the previous year, and our plan is to double this in FY23 as well. Further, we have decided to increase the frequency of promotion cycles for 70% of our colleagues in junior bands to now a quarterly basis. No doubt, leadership oversight is now deeper. The presence of senior leadership in locations outside India has improved by 16 percentage points. It's also relevant to note that nearly 50% of our leadership hires have been in the gross office and in the customer-facing global account executive roles. This means we are strengthening our front lines and sales teams. For the last 21 months, we have improved ethnic diversity in our senior leadership by 24 percentage points, and gender diversity in the leadership has nearly doubled.