Wipro guides for flat to lower revenue in December quarter as large deals drop 59%

Wipro expects its main IT services business to bring in between $2,571 million and $2,625 million in the October to December quarter, a range that allows for revenue to shrink. In constant currency terms, the forecast works out to anything from a 1.5% fall to a 0.5% rise from the September quarter.

The midpoint of the range, about $2.598 billion, was below the analyst consensus of $2.608 billion. Wipro’s American depositary shares fell in pre-market trade in New York on Thursday after the release and were still about 1% lower after the open.

The forecast came with the full results the Bengaluru company released on Thursday, after it reported a 1.4% fall in net profit to ₹3,200.6 crore in the afternoon.

A standstill quarter

IT services revenue for July to September was $2,611.5 million, down 0.1% from the June quarter and up just 0.3% from a year earlier. In constant currency it was flat on the quarter and up 0.6% on the year.

Profitability held up better. The operating margin of the IT services business rose 0.5 percentage points from the June quarter to 16.5%, and operating cash flow jumped 61.3% to ₹5,300 crore, equal to 165.8% of net income. Voluntary attrition over twelve months was 13.8%.

“Our operating margin for the quarter was 16.5%, an expansion of 0.5% sequentially,” said Aparna Iyer, chief financial officer.

Orders dry up

The weak spot was new business. Total bookings came to $2,595 million, down 22.9% from the June quarter in constant currency. Large deal bookings, contracts worth $30 million or more, fell 58.6% to $674 million.

Chief executive Srini Pallia struck an upbeat note. “The strategic investments we have been making are beginning to deliver results,” he said. “We see AI as a long-term growth driver that will expand the addressable market for technology and business transformation.”

How it compares

The guidance was slightly better than some brokers had feared. Emkay and Nuvama had expected Wipro to forecast a range of minus 2% to zero, citing furloughs during the holiday season, weak discretionary spending and pricing pressure as clients adopt AI.

It still leaves Wipro behind its larger peers this results season. HCLTech raised its revenue guidance for the year on Monday, and Tech Mahindra on Thursday reported 7.2% constant-currency growth from a year earlier along with a 1:1 bonus issue.

Wipro’s shares closed 1.6% higher at ₹173.70 on the BSE on Thursday. Friday’s trading will show how Indian investors take the outlook.