Categories: Business Wire India Technology

Wipro Limited Announces Results for the Quarter ended December 31, 2019 under IFRS

Business Wire India

  • IT Services Revenue for the quarter grew by 2.2% QoQ
  • IT Services Operating Margin at 18.4%

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Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) today announced financial results under International Financial Reporting Standards (IFRS) for its quarter ended December 31, 2019.

Highlights of the Results
Results for the Quarter ended December 31, 2019:

  • Gross Revenue was Rs 154.7 billion ($2.2 billion1), an increase of 2.7% YoY
  • IT Services Segment Revenue was at $2,094.8 million, a sequential growth of 2.2%
  • Non-GAAP2 constant currency IT Services Segment Revenue increased by 1.8% QoQ
  • IT Services Operating Margin3 for the quarter was at 18.4%, an increase of 0.3% QoQ
  • Net Income for the quarter was Rs 24.6 billion ($344 million1), a decrease of 2.2% YoY
  • EPS for the quarter was Rs 4.3 ($0.061) per share and grew 3.2% YoY
  • Wipro declared an interim dividend of Rs 1 ($0.0141) per equity share/ADS


Performance for the quarter ended December 31, 2019
Abidali Z. Neemuchwala, CEO and Managing Director said, “We have delivered a good quarter with secular growth across all business units, geographies and practices. We remain focused on deepening our customer relationships, converting our funnel and winning large deals.”

Jatin Dalal, Chief Financial Officer said, “We expanded operating margins by 0.3% aided by a favorable movement in the currency. Further, we generated strong operating cash flows led by disciplined execution at 124% of our Net Income.”

  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 71.36, as published by the Federal Reserve Board of Governors on December 31, 2019. However, the realized exchange rate in our IT Services business segment for the quarter ended December 31, 2019 was US$1= Rs 72.09
  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

Outlook for the quarter ending March 31, 2020
We expect Revenue from our IT Services business to be in the range of $2,095 million to $2,137 million*. This translates to a sequential growth of 0.0% to 2.0%.

*   Outlook is based on the following exchange rates: GBP/USD at 1.30, Euro/USD at 1.11, AUD/USD at 0.68, USD/INR at 71.28 and USD/CAD at 1.32

IT Services
Wipro continued its momentum in winning large deals globally as described below:

  • Wipro has secured a multi-year managed IT services contract from a leading airport in the Middle East wherein Wipro will leverage its strong domain expertise, digital transformation & innovation capabilities and integrated service delivery model to transform the airport’s IT operations
  • Wipro has won a large strategic deal from a leading European manufacturer of hi-tech components for the automotive industry to consolidate, standardize, and automate their IT operations globally. The engagement will drive operational excellence, enhance user experience and foster innovation. This will be done leveraging the hyper-automation capabilities of Wipro HOLMES™, Wipro’s global delivery model and strong domain & digital expertise
  • Wipro has been awarded a strategic multi-year cyber governance, cloud and infrastructure services transformation engagement by Olympus, a global medtech company headquartered in Japan
  • Wipro has won a multi-year managed services contract from a leading UK-headquartered construction company to run and transform their entire IT operations and enhance user experience
  • A multinational food and drink processing conglomerate has awarded its Platform and Cloud Services contract with Wipro to transform their operations and ensure next-generation service readiness


Digital & Cloud Application Services Highlights
We continue to see increasing traction in digital oriented deals as illustrated below:

  • Wipro has secured a contract from one of the largest US-based integrated healthcare delivery systems to bolster enterprise security and operations, leveraging Wipro’s Security Intelligence as a Service (SIaaS) managed services
  • A US-based healthcare company has awarded Wipro a contract to streamline their enterprise operations and deploy new technologies to enable rapid growth, leveraging Topcoder
  • A European start-up has awarded Wipro Digital a multi-year, multi-million-dollar strategic contract to develop and run a new-age payment and loyalty solution for the hospitality, travel and retail industry, leveraging Topcoder
  • Wipro has secured a strategic contract from a global supplier of semiconductors and infrastructure software products to accelerate their product development
  • A multinational financial services company has awarded Wipro Digital a contract to reimagine and redesign its investment platform


Analyst Accolades and Awards

  • Wipro positioned as a Leader in Gartner Magic Quadrant for Application Testing Services, Worldwide, Gunjan Gupta et al., 25 Nov 2019
  • Wipro positioned as a Leader in IDC MarketScape Worldwide Business Process Outsourcing for AML and KYC 2019 Vendor Assessment (Doc #US44398519, December 2019)
  • Wipro recognized as a Leader and Star Performer by Everest Group in Enterprise Blockchain services PEAK Matrix™ Assessment 2020
  • Wipro recognized as a Leader and Star Performer by Everest Group in Application Transformation Services PEAK Matrix™ Assessment 2020
  • Wipro recognized as a Leader and Star Performer in Everest Group Application and Digital Services in Capital Markets – Services PEAK Matrix™ Assessment 2020

  • 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.

All product names, logos, and brands are property of their respective owners.

IT Products

  • IT Products Segment Revenue for the quarter was Rs 2.6 billion ($36.1 million1).
  • IT Products Segment Results for the quarter was a loss of Rs 0.14 billion ($1.96 million1).


India State Run Enterprises (ISRE)

  • India SRE Segment Revenue for the quarter was Rs 1.8 billion ($25.9 million1).
  • India SRE Segment Results for the quarter was a loss of Rs 0.53 billion ($7.4 million1).


Please refer the table on page 8 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 tables on page 8 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 December 31, 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 7:15 p.m. Indian Standard Time (8:45 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=WIPRO2010114.
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.



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 December 31, 2019
Convenience translation into US dollar in millions  Refer footnote 1
ASSETS
Goodwill 116,980 123,706 1,734
Intangible assets 13,762 14,632 205
Property, plant and equipment 70,601 78,552 1,101
Right-of-use assets - 15,706 220
Financial assets
Derivative assets 173 - -
Investments 6,916 9,045 127
Trade receivables 4,373 4,373 61
Other financial assets 5,146 4,790 67
Investments accounted for using the equity method 1,235 1,291 18
Deferred tax assets 5,604 5,943 83
Non-current tax assets 20,603 12,412 174
Other non-current assets 15,872 11,652 163
Total non-current assets 261,265 282,102 3,953
Inventories 3,951 2,063 29
Financial assets
Derivative assets 4,931 1,352 19
Investments 220,716 164,256 2,302
Cash and cash equivalents 158,529 186,637 2,615
Trade receivables 100,489 100,622 1,410
Unbilled receivables 22,880 24,663 346
Other financial assets 14,611 9,538 134
Contract assets 15,038 14,553 204
Current tax assets 7,435 3,459 48
Other current assets 23,086 21,999 308
571,666 529,142 7,415
Assets held for sale 240 - -
Total current assets 571,906 529,142 7,415
TOTAL ASSETS 833,171 811,244 11,368
EQUITY
Share capital 12,068 11,426 160
Securities premium reserve 533 1,179 17
Retained earnings 534,700 503,167 7,051
Share-based payment reserve 2,617 2,203 31
Other components of equity 18,198 21,679 304
Equity attributable to the equity holders of the Company 568,116 539,654 7,563
Non-controlling interest 2,637 1,580 22
TOTAL EQUITY 570,753 541,234 7,585
LIABILITIES
Financial liabilities
Long - term loans and borrowings 28,368 22,299 312
Derivative liabilities - 4
Lease liabilities - 10,632 149
Other financial liabilities - 5 -
Deferred tax liabilities 3,417 3,522 49
Non-current tax liabilities 11,023 11,549 162
Other non-current liabilities 5,258 6,152 86
Provisions 2 2 -
Total non-current liabilities 48,068 54,165 758
Financial liabilities
Loans, borrowings and bank overdrafts 71,099 72,380 1,014
Derivative liabilities 1,310 1,573 22
Trade payables and accrued expenses 88,304 80,570 1,130
Lease liabilities - 6,389 90
Other financial liabilities 644 604 8
Contract liabilities 24,768 21,153 296
Current tax liabilities 9,541 13,903 195
Other current liabilities 18,046 18,749 263
Provisions 638 524 7
Total current liabilities 214,350 215,845 3,025
TOTAL LIABILITIES 262,418 270,010 3,783
TOTAL EQUITY AND LIABILITIES 833,171 811,244 11,368

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 December 31, Nine months ended December 31,
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 150,595 154,705 2,168 435,782 453,122 6,350
Cost of revenues (103,971) (109,673) (1,537) (306,091) (321,952) (4,512)
Gross profit 46,624 45,032 631 129,691 131,170 1,838
Selling and marketing expenses (11,889) (11,030) (154) (33,516) (32,612) (457)
General and administrative expenses (6,978) (7,496) (105) (29,282) (22,142) (310)
Foreign exchange gains/(losses), net 911 727 10 2,899 2,176 30
Other operating income - - - 2,798 749 10
Results from operating activities 28,668 27,233 382 72,590 79,341 1,111
Finance expenses (1,627) (1,844) (26) (4,845) (5,675) (80)
Finance and other income 5,362 5,370 75 15,695 19,174 269
Share of net profit /(loss) of associates accounted for using the equity method 7 34 - (26) 16 -
Profit before tax 32,410 30,793 431 83,414 92,856 1,300
Income tax expense (6,966) (6,164) (86) (18,178) (18,594) (261)
Profit for the period 25,444 24,629 345 65,236 74,262 1,039
Profit attributable to:
Equity holders of the Company 25,103 24,558 344 65,198 73,958 1,035
Non-controlling interest 341 71 1 38 304 4
Profit for the period 25,444 24,629 345 65,236 74,262 1,039
Earnings per equity share:
Attributable to equity share holders of the Company
Basic 4.18 4.31 0.06 10.86 12.58 0.18
Diluted 4.17 4.30 0.06 10.83 12.55 0.18
Weighted average number of equity shares
used in computing earnings per equity share
Basic 6,006,062,585 5,692,132,118 5,692,132,118 6,006,193,456 5,879,588,157 5,879,588,157
Diluted 6,020,671,301 5,703,265,041 5,703,265,041 6,020,140,129 5,892,966,906 5,892,966,906



Particulars Three months ended Nine months ended Year ended
December 31, 2019 September 30, 2019 December 31, 2018 December 31, 2019 December 31, 2018 March
31, 2019
Audited Audited Audited Audited Audited Audited
Revenue
IT Services
BFSI 46,612 45,760 45,979 137,767 129,219 175,262
Health BU 19,799 18,981 19,241 57,651 55,793 75,081
CBU 25,443 23,530 22,875 71,339 65,646 89,313
ENU 19,553 18,888 18,996 56,873 54,202 72,830
TECH 18,584 19,148 19,104 56,392 58,189 76,591
MFG 12,450 11,886 11,981 35,672 34,945 46,496
COMM 8,565 8,368 8,480 25,387 24,394 32,680
Total of IT Services 151,006 146,561 146,656 441,081 422,388 568,253
IT Products 2,576 3,233 3,145 8,218 9,553 12,312
ISRE 1,847 2,069 1,713 6,059 6,757 8,544
Reconciling Items 3 (16) (8) (60) (17) (49)
Total Revenue 155,432 151,847 151,506 455,298 438,681 589,060
Other operating Income
IT Services - 50 - 749 2,798 4,344
Total Other Operating Income - 50 - 749 2,798 4,344
Segment Result
IT Services
BFSI 8,246 8,407 9,095 25,988 24,182 33,831
Health BU 3,186 2,863 1,973 8,978 6,698 8,638
CBU 4,725 3,952 5,291 12,183 12,112 16,828
ENU 3,130 3,084 3,613 8,410 4,294 7,081
TECH 3,256 3,624 4,177 10,406 12,885 15,916
MFG 2,385 2,439 2,391 6,916 6,065 8,327
COMM 1,444 1,044 1,578 4,006 3,411 4,396
Unallocated 1,360 1,044 976 3,124 1,981 3,142
Other Operating Income - 50 - 749 2,798 4,344
Total of IT Services 27,732 26,507 29,094 80,760 74,426 102,503
IT Products (140) 149 212 (398) (954) (1,047)
ISRE (528) (177) (686) (1,341) (1,054) (1,829)
Reconciling Items 169 256 48 320 172 283
Total 27,233 26,735 28,668 79,341 72,590 99,910
Finance Expense (1,844) (2,247) (1,627) (5,675) (4,845) (7,375)
Finance and Other Income 5,370 6,857 5,362 19,174 15,695 22,923
Share of net profit/ (loss) of associates accounted for using the equity method 34 (2) 7 16 (26) (43)
Profit before tax 30,793 31,343 32,410 92,856 83,414 115,415

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

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

Reconciliation of Non-GAAP Constant Currency IT Services Revenue to IT Services Revenue as per IFRS ($MN)

          Three Months ended December 31, 2019

IT Services Revenue as per IFRS                                                                 $     2,094.8
Effect of Foreign currency exchange movement                            $           (9.1)

Non-GAAP Constant Currency IT Services Revenue based on               $   2,085.7
previous quarter exchange rates                                                         

         Three Months ended December 31, 2019
IT Services Revenue as per IFRS                                                                 $    2,094.8
Effect of Foreign currency exchange movement                                      $          8.4
Non-GAAP Constant Currency IT Services Revenue based on               $    2,103.2
exchange rates of comparable period in previous year

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