Wipro's Q2FY24 revenue slides to $2.7 billion, marking third consecutive quarterly decline

Last quarter, Wipro's revenues declined 2.8 percent in constant currency terms, falling at the lower end of the company's guidance for the quarter.

Bengaluru-based IT major Wipro saw its revenue decline for the third consecutive quarter, coming in at $2.7 billion for the second quarter of the 2024 fiscal year, a fall of 2.3 percent sequentially, and 2 percent in constant currency, falling at the lower end of the company's guidance for the quarter.

Last quarter, Wipro's revenues declined 2.8 percent in constant currency terms.

The decline in revenue was expected primarily due to the continued weakness in the banking, financial services, and insurance (BFSI) vertical, as well as the company's high exposure to consulting at a time when discretionary spending has plummeted.

Wipro, the fourth largecap IT company to report its results, had the weakest growth among its peers, who all reported their results last week.

For the upcoming quarter, the company expects a revenue decline ranging from -3.5 percent to -1.5 percent.

Operating margins, one of the company’s pain points, was up 10 bps to 16.1 percent from last quarter’s 16 percent. The company will also be rolling out wage increases in Q3, which is expected to impact margins further.

Deal win TCV for the quarter stood at $3.78 billion, marginally up from last quarter’s $3.72 billion. The company had a large deal TCV of $1.27 billion, which it said was the best in 9 quarters.

Speaking to the press after the company announced its numbers, CEO Thierry Delaporte said that for several years, there has been a market of growth, but there has not been the same level of growth in the market as was the case previously, even when there might be a good volume of business.

"Bottomline is there is not the same level of growth in the market that what we had before. For us, it's a fact. We are not growing, that is a reality. What's key for us is to make the right investments and decisions now to make sure that when the market picks up again, we are ready. It's about making the right investments, working on the efficiency model, continuing to invest in and win those larger deals.

He added that the pipeline is healthy. However, the company's active customer base has been reducing. In the last quarter, there was a reduction of 51 clients. The number of new client additions has also dropped sequentially, from 65 in Q1 to 49 in Q2.

Delaporte said this was an active decision to reduce the number of small clients, and grow the number of larger accounts. "Wipro used to have many very small accounts and the cost of investment to grow these accounts was not productive. Our strategy is to focus on large accounts. It's on purpose," he said.

This is also the first earnings under the new Chief Financial Officer, Aparna Iyer, after the former CFO Jatin Dalal to take on the same position at Cognizant.

The company, which has maintained its margins at the 16-percent mark even as its aspirations are in the 17-percent-plus range, may be impacted further as it rolls out wage hikes to its employees this quarter.

"We are likely to remain range-bound in terms of the margins we have delivered over the last few quarters. There are headwinds, guidance reflects a weak revenue environment, there are also furloughs and we are making investments in people. It is a challenging task. But we have several initiatives in place, have enough levers as we move forward," the new CFO said.

The company, which announced its AI suite of offerings as part of which it is investing $1 bn, has seen the company train 1.8 lakh employees on generative AI.