Q1 2023 Wipro Ltd Earnings Call
Ladies and gentlemen, good day and welcome to the Q1 FY 'twenty three earnings calls 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.
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Please note that this conference is being recorded.
I now hand, the conference over to Mr. <unk>.
Yeah, Vice President and corporate Treasurer.
You and over to you Matt.
Thank you and Bob a very warm welcome to our Q1, if I 23 earnings call. We will begin the call with business highlights and overview by T 80, teleport <unk>, Chief Executive Officer, and managing director followed by financial overview by our CFO , Jeff didn't it up afterwards, the operator will open the Batesville Q&A with our management team.
Before he starts let me draw your attention to the fact that during this call. We may make certain forward looking statements within the meaning of private Securities Litigation Reform Act 1995. These statements are based on management's current expectations and are associated with unfortunate ease and risks, which may cause the actual results to differ materially from.
Those are expected to be in such entities and risk factors are explained in our detailed filings with ACC Metro.
Does not undertake any obligation to update forward looking statements to reflect events or circumstances. After the date of filing.
The conference call will be archived and the transcript will be made available on our website or what do you T D.
Thank you Hello, everyone and absolutely good evening, Thank you for.
Joining our Q1 earnings call.
Let me first tell you that as I speak to you today to show financial performance I'm, both humbled and excited humble.
Humbled to have had the honor of leading this incredible company.
Exactly two years now and excited for what lies ahead of us.
As always I didn't share with you our view on the demand environment and we should show some detail some sectors markets service offerings.
As windows business, our two for the quarter.
Despite the uncertainties of the macroeconomic environment.
If I look at the pipeline order bookings.
And the discussions we are having with our customers there has been no slowdown or pullback of suspense for us.
The demand for our services is robust.
And I must say I'm thankful for that.
Our overall pipeline is actually in fact at an all time high and it continues to be renewed.
As we are winning deals, but a pretty good pace.
Hi Girls services like cloud like did you done like engineering services or cyber security are seeing definitely strong interest from our clients.
Led by our.
Full stride cloud services more than half of our bookings today.
I'll, let you be table to these strategies focus areas.
And we believe this rotation to high growth areas.
He's going to accelerate.
Bookings in cloud are up 35%, John you and engineering services bookings literally doubled.
Well the all no bookings for the quarter were very solid.
Our bookings in total contract value to C V tubes grew at 30% plus year on year.
And in annual contract value Tomey C V. It grew 18% year on year.
Shree.
Of the four markets grew upwards of 25% John you're only in D. C V terms.
I've shared this with you in the past the large transformative deals are a key pillar of our gross well they provide it.
We know that excellent opportunities to showcase all kept liabilities and scale.
But I'll tell you I'm pleased to share that our large deals bookings.
We are nearly 1.5 billion this quarter, which is almost <unk> of what we did for example last quarter and.
The majority of these are new.
Our revenue growth during the quarter wasn't too to point to 1% at constant currency terms and 17, 2% year on year.
We grew.
15% and plus your own yo across all markets.
We are investing heavily in talent to support our ambitious growth plans for do you.
We added that such 15000 net new tenant during the quarter.
Yeah.
In line with our strategy to reinforce our Claude and consulting capabilities.
You probably remember we.
Quiet and we completed the acquisition of phrasing last quarter raising fees.
He is a global Asap consulting firm one of the leading strategic partners in the world for ACP re.
<unk> will become a critical extension, if we peruse ACP cloud practice, but also we brought full stride cloud services.
Oh Q1, Tmall genes as anticipated were lower at 15%.
This is because.
We are investing in solutions and capabilities for us to further strengthen our position as the strategy partner for our clients.
But we've also exited rates he does truck shoulder transformation by investing in <unk> in particular and in our.
<unk> that will help drive operational efficiency and at G. D D.
The inorganic bets, we made to accelerate our growth are presently diluting our margin by two 3% as a as a reference and at 15%.
We believe we have bottomed out right.
I will now provide some final details on market service offerings and on sectors.
All markets grew double digits with the Amerigas in Europe , our top two markets growing at 18% and 16% for the quarter and year on year constant currency tubes.
Let's.
Go through each of these regions in details.
In America is one of them.
We grew 20% Joanne you end the quarter with all sectors showing strong rose during the quarter.
Technology products and platforms grew 37%, John you and communications media and information services grew 26%.
Now, let's look at Amerigas too.
We grew 17% join you in Q1.
Financial services and manufacturing those two sector led to performance recording a growth of nearly 30% each year on year.
This order book in total contract value terms grew nearly 30% join you in Q1.
Now, let's look at Europe .
Our European business delivered a year on year growth of 16% in the quarter gone by.
UK and Ireland.
Sales in Europe , and Benelux grew at or over 20% join you.
The pipeline here is robust.
And we have won many large deals in the market.
Oh Auto book in total contract value terms grew at 40% year on year.
Yeah.
Finally, our Mi business.
At 15% join you in Q1.
The regions that need them.
Particularly well during the quarter, where it was trailing Oh and southeast Asia.
But he also overhaul you order bookings in total contract value terms were very robust growing at 60% year on year.
We said, we said it you know as part of our strategy continuing to strengthen client relationships remains a top priority.
We have crazy segmentation strategy to grow in key markets by.
Not only deepening our relationships with our existing clients, but also bringing on new clients.
Who are looking for a strong business and technology transformation partner to help them D G ties them business.
I as I mentioned earlier, we are pivoting our go to market investments to allow us to do this.
As a result.
Our top five clients grew 26% jonjo.
And our top 10 clients grew 22% join your booth.
Constant currency terms.
If we look now in the last 24 months, we have doubled our clients in more than 100 million DAU segment to 20, so from 10 to 20.
We also added eight clients in the more than 50 medium segment just in the last winter 12 months.
No.
From a service offering standpoint.
Ideas.
Global business line grew 21% year on year in Q1.
This growth was led by one digital experience 25 per cent join you.
Two domains and consulting which grew over 45% John you and Sri Engineering services, which grew 18% join you.
And then our Sigma and global business line, Oh, I call G. P. L grew 11% in Q1.
You will certainly appreciate that this performance comes against a backdrop of accelerated rotation of portfolios to to the new to the high growth areas I talked about earlier.
And.
You know cyber security services led growth with 34% year on year in Q1.
Improved customer and employee expands song.
Definitely fueling these girls United co.
Our customers want us to re imagine.
What I would call traditional services, such as end user computer computing services too.
Oh and human resource outsourcing.
Yeah.
Oh, leading with business solutions has been one of our key differentiator our role.
As the cloud ecosystem market, Stratus, which we prefer stride allows us to increase opportunities to grow our business last months.
We hosted our first ever full stride sales and partner Summit, featuring 23 of our club partners to give though joined.
During several days, we strategize around newer bulky disease and committed to working together to help Oh.
Clients transform into cloud there.
There was tremendous energy across all teams and in a market where back nearing closely with Microsoft for example to help one of our large healthcare clients transform their legacy infrastructure to Microsoft cloud.
Now our engineering services has grown at a compounded growth rate of 4% over the past four quarters, which is showing the consistency in gross.
Given the depth of our services and kept that easier.
I can proudly say that we are a true leader in engineering services.
And this week.
We have launched we pull engineering edge, all fully stocked portfolio of engineering services.
We know this will enable our clients to innovate at scale. This also.
Extends our engineering eight H by combining capability such as cloud five G AI industry for that zero Iot and Silicon design.
Engineering age he is already having an impact in the market for example.
Leading mobility technology company has chosen wipro as an extension of their global engineering team to support them.
On the development of software defined vehicle applications.
High demand, Iran is D V. These days.
We also won a multiyear engagement with a leading U S based semiconductor corporation to provide VLSI and system design services.
Across a variety of products globally.
It will help meet the quality standards required of semiconductor chips used in applications such as.
High performance computing.
Self driving cars design and visualization deep learning AI.
Oh sure.
Couple of examples before I move on Wipro as one team.
Every strategy engagement to assist in the digital transformation journey of a leading U S based fund administrator.
Who will provide a range of services, including digital contract management.
Cloud migration, we as we profile stride cloud services.
Quality and process engineering as well as create a talent transformation roadmap for the clients' workforce.
Wipro has also entered in a multiyear strategic agreement with one of the worlds, leading energy technology companies Yeah.
We will re imagined the employee experience for the firm's 70000 plus employees across 75 countries.
I'll now share.
If you of our talent and escape.
You May remember I had shared earlier about a shift in our talent strategy towards fresher intake.
In line with that we have on boarded more than 10000 Freshers in Q1.
No.
Why do we are on the subject of talent I want to share that our attrition has continued to moderate right that street consecutive quarter of improvement in employment.
Retention.
In Q1.
It was down to 23% on the trailing 12 months basis.
And we expect for Zumba duration I hate them all.
Talent investments I believe are paying off that's what he would say is if you recall.
We announced moving to our quarterly promotion cycle, which will be effective actually July 2022, and salary increases for all those eligibility in September of this year.
Before I close I will share an outlook for the next quarter, we have guided for a revenue growth of 325%.
You too, which will translate to growth of <unk> to be precise 11 point seeks to.
17.8% on year on year.
Constant currency terms.
With this guidance for Q2 <unk>.
Let's be clear, we will very comfortably grow in double digits for fiscal year 2023.
In summary.
All of our markets are growing.
We have double dollar 100 minions strategy clients.
Order bookings are strong.
Our pipelines at the an all time high.
I must say I'm very optimistic about the rest of the year.
With that I'll hand, it over to jetty now for his comments. Thank you. Thank you Terry I'll share some data points as you know we grew 17.2% your own yard in constant currency terms.
We delivered a net profit of $25 6 billion Indian rupees.
All our ETR for the quarter was 23, 7% as you know that's our industry leading E D.
We had hedges of 3.9 billion dollar the exchange.
Exchange rate realization.
For quarter, one was 77.81.
On a trailing 12 month basis via converted 68% of our net income into operating cash flow.
And at the end of the quarter, we had $3 $9 billion of gross cash on the balance sheet and $1 $7 billion of net cash on the balance sheet.
As Terry mentioned, we are given a robust revenue guidance.
All three to five per cent saltwater too at the exchange rates, which I mentioned in our press release.
And we'll be very happy to take your question from here.
Yeah.
Thank you very much.
Ladies and gentlemen.
Begin the question and answer session.
Anyone who wishes to ask a question you May press star.
And one.
California.
If you wish to remove yourself from the question queue.
You mean.
Q.
Participants are requested.
<unk>.
No question.
Anyone who has a question you May press Star then one.
Ladies and gentlemen.
One other question.
My first question is from the line of.
From Wedbush Securities. Please go ahead.
Hey, Thanks, and congrats on a doing a great job on attrition here.
Terry just a big picture question for you now that the <unk> anniversary.
We speak.
So at this point, you're not going to get the contribution from capital that you've had.
Do we try to fill in that gap down. The road. Then obviously you spoke about some of the different areas that you're focusing on in terms of high growth initiatives. Maybe you can get some color on that in some detail on strategy. Thanks a lot.
Moshe I.
Hi, and I Hope I will answer your equation you. Your voice came in Lisle muscle. So I hope I I I I got that but I I I certainly understood you were asking about copco, who actually cap co acquisition was a finding that was about a year ago right. We celebrated our one year of KEPCO in do we profamily.
A few weeks ago I can tell you one thing is being a absolute.
Success abuse. He always early to say after only one year, but frankly the way the team is integrated.
And maintained the focus on the market. The way. This team has continued to play this role and starting to connect with.
Do we pro V F S I business to us.
Develop you know come on go to market strategy with our key clients has been a.
Really remarkable.
Kept cool spell formed a quarter after quarter. The gross has been extremely strong.
KEPCO has not seen Amy.
Consideration increase financing of attrition.
After the acquisition.
KEPCO us very.
Very much involved into all deals and frankly, we are not seeing a slowdown in.
<unk> the gross off copco the performance in bookings in the last two quarters of KEPCO has been solid.
Disgruntle again the pipeline is strong. So you know we know that are you know typically sometimes consulting business are more exposed when there is a slowdown but this is not what we are seeing and I think it comes from one aspect one it's the quality of the relationship built.
By KEPCO with six clients.
<unk>.
Second the fact that it's truly connected to their digital transformation.
And so you know I see they are on the right two pekin answered.
You know we are seeing a sudden shift sometime off I'm not of the volume of opportunity, but the type of football G. DS of clients, who are still looking to transform but with the ability to drive more productivity coolants and KEPCO he's very much Gil.
To address.
These challenges as well so at the end of the day mushy. It you.
You know KEPCO is going well.
And he's a very solid contributor to our performance.
So again, just as a follow up now that you're Anniversarying that acquisition are you comfortable that you're going to be able to sustain the growth that you've seen and I'm talking more about the year over year growth comps that seem to be I guess moderating in Q2 versus Q1, thanks a lot.
The answer is yes.
Alright, Thanks Darren.
You're welcome.
Thank you.
Our next question from the line of.
Financial services. Please go ahead.
Yeah, Hi, good evening.
Teddy I would no kind of add onto probably a garter consulting piece.
If you you know you lost two years you have you ever heard of you know quite a chunky bit of consulting.
Revenue to April given the recent macro environment. What are the risks you are preparing for in this business because you know the deposit experience or just all of us that advisory work generally slows down at a faster pace compared to the demand which is out there for her are the cost cost optimization piece no.
Generally gets highlighted during during weaker times. So if you can just you know highlight both from a cost aspect as well as and how you are managing Oh I'm looking forward to the growth in the consulting business over the next one year it would be great.
I also had a question for Japan.
Yeah then.
So how should we see these we'd say could play out.
After the shift to the quarterly promotion cycle I think you just Terry just mentioned that the beach Oh hikes had been pushed out to Q3 is that the right assumption and you know besides utilization what other limited.
Immediately was do you have which can help you.
Pick up the margins over the next two quarters.
So Michael So let me take the first question and then you know I'll I'll pass the mic to to Genting.
So you know.
I suspect your question was specific to consulting, but broadly looking at the different consulting component of the business at Wipro, we really have a consulting business that is really very much connected without technology business right. So you know, it's it's not uncommon to proportion of our business that actually combined can.
<unk> and technology capabilities is important okay. You significant so those are not standalone consulting business are just selling to you know different type of clients and I think can change a lot the landscape because no hurry to use debt.
As you as you say that.
You know.
Companies I mean, like you well, let's let's let's start with you know what we hearing I mean like you. We are listening to you know what do and at least with the market what you know.
John at East have to say about the macro environment and you know when we hear that we obviously get.
We pay attention to potential implications for for our business.
But Dan you know important ease the connection with our clients right I'm speaking to clients every single day every single day.
And you know discussions about macro environment again, they are like US seen all those same signs you know between you know who are on the side on one side of the world inflation, you know interest rates are.
Then children clouds are on on the economy in a given country or another but.
They also I've learned over the last two use that technology.
When I say the afternoon.
Either the new way to if they have you know this.
Every fall and reinforced our conviction during the last two years that technology is not a cost center is a drive of transformation now what might have happened or might happen now mckool is down in some cases, where company we're driving program to drive you know.
To develop new business models are.
Improve experience I seem they are placebo <unk> more and more focus on drive productivity gains and reduce the cost of running the business, but that's completely feeding with wiese, our capabilities and solutions that we have we are indeed, helping them leveraging technology.
G to drive.
You know the transformation and improve their profit they're there they're a threat TVT. So at the end of the day consulting and E. S. A.
Integral part of our of our go to market strategy. They are working with our technology teams are developing opportunities in the pipeline deal we winning deals together.
If you look at the rising business, we already have a several leads Ah well the rising team into S. A P. T. Mo if we pulled working together if.
If we talk about capital you know the first question was on capital we.
We have had more than 60 joined wins.
In the last 12 months and so this is really what's driving the growth. So at the end of the day.
I confirm today, we are on the one and I don't want to be arrogant I want to us to continue to stay vigilant and to observe the market and C and B O a D to react when there are different sites. Okay that we cannot predict all words, but what I'm, telling you is that as we speak right.
Now.
You know.
Booking performance solely to for Q1, I should say, even extremely sodium pipeline all time high.
And extremely good engagement with our clients so the level of confidence on our crews going for what it is.
Solid.
Chatting on question two.
Yeah. Thanks City, So I will let me.
Let me articulate.
The levers that can help us improve margins from here on.
IC seeks to us.
The first is is clearly utilization.
As you know and it is visible in the data sheet before.
Including trade shows I, excluding ratios you would see at one 5%.
Okay from what are the peak utilization. So so that's first.
Second subcontractors as as borders and travelers are difficult all of us and particularly us have accumulated certain amount of sub contractors, which we will be able to moderate every quarter going forward and that should provide additional levo because the cost of subcontract that is typically about 30% higher than Daniel.
Daniel unemployed so they didn't take it.
Third and most important lever is the pyramid and fresher improvement as you know we.
Higher in FY 'twenty to double more than double of ratios that via higher in FY 'twenty, one and if I 'twenty three we will hire.
I know there are more than double which means that our ability to connect up the dummy true.
Our consistent improvement of the base and moving people up to the bit Amit would be a big structural lever in fact that is the only lever which can reduce the cost pressure that we have seen in last 18 months.
The fourth lever is pricing power.
The accretion on one hand.
And.
Our ability to position ourselves very differently.
Example, the agile acquisition puts us in a very different space of consulting in cyber security and the rates that reflect very differently than what you would see in a traditional managed services business of April so pricing for right services clouded another area, where we have invested heavily in our ability to command price debt.
He's definitely much better than the traditional areas.
Okay. So that's helpful.
50 that attrition it says because one of the biggest impact on our cost structure is when you are simply replacing a similar scale and similar capability in similar experience, but you are paying premium to our letter of 25, 30% as we spoke about and as you are aware that accretion.
And is moderating and that should certainly give us Leila and finally, the operating leverage as we walk through where the growth comes back not all cost structure should go up in line with that Oh wait.
The growth of the revenue so that I leave us I do not want to <unk> for a second believe that theyre not theyre not sufficient lever in our business to get back to.
Our structure superior position Oh from the margins too.
Thank you just if you can clarify on the we take part of the shifting to the quarterly promotion cycle. That's one from my side. Thank you.
We are not making any shift via haven't saved we will give our wage increases on first September N V O given the promotions from fourth of July and these are the areas of investment for quarter two.
Okay.
Thank you.
Thank you.
Question is from the line of.
Please from BNP.
Please go ahead.
Hi, Good evening and thank you for taking my question. My first question was on your earlier commentary on margin in previous quarters.
Youre welcome margin guidance of 70 to 75 per cent for foreseeable future.
And below that for the next couple of quarters, So where do we stand on those coming Chi and specifically about the band of 17.
Question when do we expect our business to get back in the context of potential macro headwinds.
Yeah.
So that geisha. Thanks for your question you are absolutely right. We are we in the beginning of last quarter, we say that they will be away from the range of 17 and in 17 and a half for a few quarters.
That was all also purposeful because veeva planning to invest in the business apart from the fact that some of the operating expenses water coming back like travel and facilities and those investments have been made you know roughly after two percentage 0.1 in hospitals and <unk>.
Point comprises all 20 basis 0.44 that I think acquisition dilution for a month or so but more.
And more importantly, a nearly 1.3 person is is on three areas, our utilization, which I spoke about before a subcontractor.
And some of the internal investments that we've made in I T, who make ourselves five or more efficient agile and productive or a period of time.
The investments have been made.
We say this is the bottom.
And from here on our endeavor would be to come back to the the guided range that we spoke about before however, we will calibrate. It every quarter, we are not giving a time window to when they then will come back up for quarter. Two specifically I spoke before that we will have to invest.
In intelligent so what are the efficiency gains we are making it will get invested back into the business in quarter two.
And beyond that we will we will talk at the end of quarter, two rather than making a comment beyond that today.
Thanks for that.
My Shimoga under Democratic physician.
<unk> had a decline.
Moscow acquisition was that it will give us the scale and be.
And also the.
EBIT from fixed capital should help us and start delivering strong growth.
Okay, great over the last few quarters.
<unk>.
It's been going reasonably good I think.
I mean the industry.
So are these still seeing the benefit yet to accrue from that acquisition.
Ace or is it something which we are happy with what you have achieved so far.
Okay.
Okay ish you know we always are expecting auto is more in term of crews, but the reality is that they'll be emphasize business today is growing 24% year on year and I think what he is.
Barry.
Vesey Booth and consulting for us is that not only we've driven growth in terms of you know into before you. If you like but also in terms of positioning in those client in those accounts. We have increased the number of larger accounts, we have increased the <unk>.
Nature, we have changed the nature of our relationship with our clients and.
And we are a lot more able to work.
Work with them on more strategy can you shed you then we went in the past. So I think it's absolutely certainly we can do more and we will continue to do more we have continued.
Continued to reinforce our setup if you like to to trigo, even more impact on the larger accounts, but frankly I you know I think we can say after one year that it's really a success 24% year on year is not a is a decent growth I would say.
[laughter].
Thank you. Thank you for that add more questions, but that's probably back in the queue. Thank you.
Thank you. Our next question is from the line of Sandeep Shah.
Securities. Please go ahead.
Yeah, Thanks for the opportunity.
If I just look at one <unk>.
When you brought them on.
On a lot basis.
Bound by Olson.
Yes.
Hi, David.
Revenue from acquired capital rising.
Hey, Nigel.
So what are the reason for the same all <unk> utilization has gone down.
<unk> 5 billion Mark for me.
Or.
Is it some.
The business has a higher pricing.
No.
So hyphen deep.
Let me answer that question, if you see the overall offshoring trend offshoring trend continues to be very favorable to wipro and when the offshoring trend. It's the rebel pro you would realize that I mean realization is one third in India. So that has definite.
He played out in terms of <unk> services.
Play realization are coming down.
I am not seeing from a pricing power standpoint are any concern.
There we are giving away price discounts are in fact, I would think it could be a little bit of portfolio play in fact, I would believe that if you just put all showed you will see a strength that because we have added KEPCO. We are added agile I did rising VITAS cigna.
Significantly higher.
Realization generate new business by design.
Okay, and just in terms of the consulting companies.
Hey, good evening.
The capsule.
Yeah, he's come onboard.
Yes can you hear me.
We lost you for a few seconds Sandeep. We met you we heard cap co and then you have a follow up question.
Yes.
Yeah, well just a follow up question in terms of the content.
Great.
That easy I'll comment.
Michael issue are slightly higher.
So how flexible are you having problems of our cost management.
Working capital.
Hey.
If slowdown happens you believe the margin of these companies slide.
Table manage the model, yes, yes. Please.
Please.
Okay.
You can see we have and the abuse leavers to pull to improve you know the.
The margin of.
Our consulting business in particular kept cool, but also rising we choose to continue to develop the offshore component of this business.
And we have a lot more to do in that Oh. So you know certainly we will do it and for the rest I think we've also trigo, there's certain volume of cost synergies between these business fall kept cool for rising need so you see very very useful.
Nothing for now, but I think you know we get we will continue to work on those aspects as well chatting you want to add something.
Thanks to the only additional point I want to make is does that not small businesses. These are large businesses with the right amount of.
Governance also profitability management that they they have been in existence for a long period of time, they have seen ups and downs that able to carry themselves through one phase to the other that's why we remain quite optimistic.
They are right now, we don't see anything, but even if even if two years down. The line. There is a downturn you know we would be able to manage the cost structure is quite good.
Yeah.
Thank you.
Question is from the line of Nathan.
Please go ahead.
Yeah, Hi, good evening, Thank you for the opportunity.
Yeah.
And we are pretty bullish on our growth etc.
Based on the pipeline and are and the kind of deal wins that you've had.
Just wanted some color on <unk>.
<unk>, that's a big quarter.
Considering that the organic growth rate of just under a percent.
Is it is it the annual productivity benefits like Oh that sort of driven the weakness.
Or is this something that you had anticipated earlier or was it a surprise this broad thoughts and anything from a vertical standpoint.
<unk> honestly speaking.
Four.
If I'm not from Ford.
For six quarters, we are guided every quarter.
Between two and 4% of gross and four six quarters. We've guided we have delivered a north of the midpoint of the guidance and sometimes above the guidance itself.
In early Q1, we said this quarter, we see a little less than two full.
It doesn't necessarily reflect.
The slowdown is just you know sometimes because you have a deal that is you know.
Starting here on the previous call I told you ought to be guilty EDA or just the nature of the type of do you see a little less and so we gave D 123, and we are delivering right in the middle of the guidance.
When we de lever when we guide you don't want to 3% for Q1, what what we said we said two things we said one.
I mean, frankly, we've been delivering north of 3% for six quarters in a row and you could expect that one quarter you have a little less and then another one you have a little more in shogun debt it was not reflecting in a neat.
More profound mode deep trend.
For our business.
And you know that the performance in bookings in Q1 is just confirming this we've done really well in our in the business in our bookings in Q1, the cross the mark to markets.
And across sectors.
And we have a good mix of small deals medium needs in large sheets. We've closed 18 large deals. We've had you know three X into more performance of which we had done a cornerstone ago and I think it's also I would say, it's all the efforts and.
An investment made over the last quarters, the top paying off.
And so when you combine them you know the visibility we have on our backlog. If you like account by account that you add you know do the bookings the full months of the quarter I think that's how we are coming with a guidance that indeed these reza strong for Q2.
A 3% to 5%.
Sure.
Actually the context of the question was that.
Correct me, we have always seen a week.
One part of April and we thought present right.
They should come down with the acquisitions in terms of that seasonality.
It has come down a bit.
But what we are trying to sort of understand what it is here to stay in terms of the seasonality and then towards sort of New Orleans are renewed on a going forward basis for Q1.
I was thinking more from that aspect then trying to nitpick Q1.
Mid teen I'm challenging the seasonality aspect of the gross.
I'm not I don't see there is necessarily a season that E. T. A fertile E T to Q1, I don't see it, especially that Q1 is actually all Q1 is Q2 for some of the companies. So I don't I don't really understand the rationale behind that.
I seen don't don't want to assume that and don't assume that there is any uh huh.
This season.
Game between the Q1 into Q2 I think it's it's the flow of business that all delivered every quarter.
We had done very well in bookings in Q4.
Four but we had said at that time that you know it was mostly driven by small and medium deals we had less large deals. Okay. I see the volume of large you said, we all know that the volume of La <unk> is driving a little more growth.
And that's what we are seeing for for Q2.
Sure that's very helpful.
Just one quick question for Tim If I may.
Devin the wage increase cycle, we have shifted to September it starts September so it's exactly the same as what it would have been if it was if they.
By a quarter, that's the way I should think so.
So October November December would it be a full quarter of impact part of that and the quantum of increase will broadly be the same.
The quantum of increase.
It will be something that soda, a little determined closer to the date.
It is he gauges the their environment.
But you know what I want to remind all of US is that it is I think the wording shifting is little misplaced because you know we had our last Saturday and could even in September of last year. There is two elements from that and we are giving our increases on after 12 months. So it is not a it is not a.
Shift for majority population more than made it a depopulation of the company.
And if I can just build on what Jetson said keep in mind. The fact that you know by now moving from a yearly cycle off promotion to a quarterly cycle of pollution. He times also some some real implication from a compensation standpoint.
Sure that really helps tankers for much longer.
Thank you. Our next question is from the line of.
From Morgan Stanley . Please go ahead.
Hi.
Question. So I have a couple of questions. So I'll go one by one the 18 lot ladies.
Very strong performance how much of that was led by improved win ratio far withdrawal how.
How much just because the market being pretty strong for a lot of good wins in the last quarter and a good question is that.
How should one think of the contractual profitability.
Has anything changed come back on the past.
In terms of gross margins coming down.
Macro things.
I pretty much gave us.
Okay. So gaurav I'll hand, it over to Stephanie Yao, our chief growth Officer.
Thank you Terry and thank you for your questions you know we've seen tremendous.
Momentum in large deals in the quarter and the deals that we closed and also in our pipeline overall.
The market is certainly creating these large opportunities, but we're also winning more so our win rates are up our strategy to invest in the large deal team is paying off.
And we're seeing a lot of momentum in the market in terms of margins.
Are seeing margin pressure on more Commoditized type services.
As we compete for those but a lot of our deals are actually more transformational in nature, where we're delivering on outcomes for clients and therefore.
You know, we can value price our opportunity so it's a bit of a mix right now, but as our as we continue to pivot our portfolio and position ourselves better as an orchestrator for our clients and delivering those outcomes are we anticipate seeing.
Margin improvement as well.
Thank you.
Second question is on Europe , you talked about a couple of regions Lockheed Martin.
Cool.
Europe was.
So there were a couple of regions that really ticked down.
Overall growth.
What were the factors that drove that.
Is this something again related to the external environment already is it tomorrow wipro specific phenomenon.
Okay.
I'm I'm I'm not sure I understood. The I know you it was about Europe , but what was the.
Yes.
Alright.
Let me, let me just chime in yet from a clarification standpoint theory mentioned in today's meeting as well as his opening commentary that Europe remains very strong.
It's a strong region for us. The only reason you are seeing a slightly muted growth is Europe had a fabulous growth in Q1 of last year, which was which was videos from the first episode onwards. So Q I mean, Europe was an extraordinary base to two to climb on and that's the reason you are seeing.
Little muted, but we remain very confident including the deal wins that we have seen in quarter, one as how the Europe will pan out for quarter. Two it go up to Reno I understood. The point. So so when you look at a gross per quarter at the level of the region.
Sometimes slightly misleading because because of a deal like you know metro kicking in one quarter or another U F. Suddenly a step change and therefore, you know the next quarter is compared with a challenging baseline, but if you look at the performance of Europe , two data points I mean, if you look at the performance of Europe you own.
It's 16% growth this quarter so its sunita.
And what we see from from Europe for Q2 in terms of sequential growth you saw it as well.
So you know no.
We had you know we had our board.
Over the last two days.
Or yeah, Oh head of Europe was here.
And we have had the opportunity to discuss with E mail. So he's perception on you know the market in Europe , and so on and he doesn't see signs of slowdown frankly and again.
Quite the opposite given the volume of nice deals new deals that he has won in Q1 two one years in the pipe for Q2, I think there's a good level of optimism.
Mortgage team at the moment four for Q2 and beyond.
Okay. Thank you those are all my questions. Thanks, a lot.
Thank you.
Our next question is from the line of.
Please go ahead.
Thanks for the opportunity and congrats for dividend growth et cetera.
Couple of questions starting with the first clarification I think getting earlier, we indicated by Q4, we should be.
Achieving over a medium term margin expression. So I wasn't sure. What you are one of the question you're answering.
We are maintaining those kind of all global and beg your pardon me sort of a normalized margin trajectory.
That is a question. One second question is about is generally if anything if I look this quarter.
It's interesting we're incredibly weak if you can provide some sense about what played out there.
And last one is about our record revenue. This quarter. It is greatly is quarter on quarter, Despite cloud cyber security as part of that.
Service right. So if you can provide some sense of what is playing out thanks.
Sure so so.
Let me clarify that I did not say that like water food. It is going to be a particular range that we mentioned before what what they say that they have bottomed out in quarter, two, particularly we will how well do it all operational efficiency gains, we'll get we'll invest back into it.
Into the promotions and the salary increase and from here on will continue to calibrate upwards, but we'll guide you on that on a on a quarterly basis, rather than telling you a particular quarter or timeframe around it. So that goes to the commentary that we've made since our since in press conference as well as in the earlier part.
Earnings call.
Your second question on cash Ah, Yes. It has a it has been a slower quarter from cash standpoint, but we are very confident that we will catch it up in quarter two.
And on your question on I call growth.
Uh huh.
A part of I quoted is also our digital operations business, which is a reasonably large prisons in two lot H P. S business, which sees a great momentum of open enrollment in quarter, four which it did not have it.
Quarter, one and therefore, why cyber security and infrastructure business continued to do well, we had a little bit of moderation through our D. O P business purely on the seasonality off of our open enrollment business.
And that's the reason that there is a slight moderation there.
Thank you.
Thank you.
We will take our next question from the line of.
Sandeep.
Please go ahead.
Could you please on mute your line.
<unk>.
Thanks for the opportunity.
I have one question on the demand side, while you are now.
The.
Exactly yeah.
Leasing left behind.
Behind but.
You said, though just minutes for the equity shelf.
Our outlook doesn't look very exciting though.
Is there some conservatism that youre building in.
You would think that you know it is best to.
Wait and watch and see how things Pan out.
Cause of that.
Out of Seattle, which is bad for the macros that is part one of my question as well.
When you talk to your clients now versus Eylea.
So we get back is that a substantial change in their mindset regarding investing in technology and data.
They believe that Yolanda despite challenges in the macro.
It will be very important for them from a long term perspective to invest in technologies to ask.
<unk> maintained their market share.
Grow their market share going forward or do you think that again the Dod.
<unk> cost beneficial the add on their mind rather than.
Growth.
When it comes to the extent that what is your assessment.
Okay. So sandeep so.
Let me start with a clarification. So you are saying Oh go all guidance, 3% to 5% growth for this coming quarter is conservative and not exciting is what you're saying.
I'm, saying it looks a little conservative when we add Jeff.
I appreciate it.
Sorry for that but you know I think we'll go with this guidance.
And and and for sure Trust Trust, we will do our best.
To to to surprise you okay.
We didn't say Sunday, we didn't say that the worst was behind actually we've never said that.
There was any worse I think we are you know.
Connected with the market every day.
And we.
We are seeing that we are saying that the demand that we have seen the internet quote does continue to be good. So that's what we have said Oh. This is so you can tell.
Some of our market outlook frankly, there is demand for technology.
Expect to use the capabilities talent and you know that in the areas that we are talking about cloud.
Engineering services.
Cyber security T D Tal digital transformation.
We have.
Plenty of opportunities.
Okay. So that is you know again.
I don't think we are neither are being we are trying to be released tiki now our guidance. Okay. We're not trying to be a.
Conserving even though being.
Overly optimistic okay. This is definitely not our way of guiding okay.
Is it okay.
Yeah.
Okay, I just wanted to understand a bit.
More of that how your clients are thinking now.
They got into Mexico.
Our clients.
So it's always difficult to respond in a few minutes to two equation like these because clients of <unk>.
Industries differentially in different markets, but I think whats vesey burda see somebody a week ago I was in London visiting one of the largest insurance company speaking to our CEO .
He has you know.
Absolutely no intention to reduce the spend in technology in fact at no point in time in the discussion did we ever discuss.
You know do concern about the cost of technology.
What they are looking for is really more you know the.
Outcome right. So what is it going to drive so I think that's why I believe that you know.
The way, we all tried to chartering all proposals to our clients.
We are.
Getting their attention when they can see.
He made yet impact of the technology investment into productivity gains he doesn't mean, 100% of the.
Programs are with that in mind, but I think there is a growing focus on this in the current macro environment.
Okay. That's very helpful. Thank you you're welcome.
Thank you.
Ladies and gentlemen.
The last question.
Now I'd like to hand the conference.
For closing comments.
Thank you all for joining the call as always in case, we could not take any question you have to time constraints. Please feel free to reach out to the Investor Relations team have a nice day. Thank you.
Thank you.
Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.