Q3 2025 Wipro Ltd Earnings Call
Speaker Change: [music].
Ladies and gentlemen, and welcome to the throne.
Unknown Shareholder: Welcome to Wipro Limited Q3 FY25 Earnings Conference As a reminder, all participant lines and there will be an opportunity for you to ask questions after the break.
Earnings Conference call.
As a reminder, all participant lines will be in the listen only mode and have you been unfortunate for you to ask questions. After the presentation concludes.
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Unknown Shareholder: Need assistance during the conference call?
Unknown Shareholder: Thank you for watching it.
Star then zero on your touch doing food.
Please note that this conference is being recorded.
Unknown Shareholder: I now hand the conference over to...
Mr.: I now hand, the conference over to Mr.
Florida Senior Vice President corporate.
Unknown Shareholder: Corporate Treasurer and Thank you.
Speaker Change: <unk> Investor Relations. Thank you I know what you said.
Srinivas Pallia: Thank you Yashashree Warm welcome to our quarter 3 financial year 25 earnings call.
Speaker Change: Thank you Sir.
Speaker Change: One then come two or more to see generically do you favor one each school.
Srinivas Pallia: We will begin the call with business highlights and overview by Srinivas Pallia, our Chief Executive Officer and Managing Director, followed by updates on financial overview by our CFO Aparna Iyer. We also have our CHRO Saurabh Govil on this call.
Speaker Change: To begin the call with business highlights kind of what do you see.
Speaker Change: The basketball, yet, our chief Executive Officer, and managing director.
Speaker Change: Yes.
Speaker Change: One thing I did something actually in all of your body else CFO, but not yet.
Speaker Change: We still have all the Chr it'll sort of little bit on this call.
Unknown Shareholder: Afterwards, the operator will open the bridge for Q&A with our management team.
Speaker Change: Afterwards, the operator will open the bridge for Q&A, the top management team.
Unknown Shareholder: Before Srini 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 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 SEC. Wipro does not undertake any obligation to update the forward looking statements to reflect events and circumstances after the date of filing.
Speaker Change: Before they restock.
Speaker Change: Draw your attention to the fact that during this call we may make certain forward looking statements.
Speaker Change: At the meeting.
Speaker Change: Litigation Reform Act 1985.
Speaker Change: These statements are based on management's current expectations and that are associated with uncertainties and risks.
Speaker Change: Which may cause the actual results to differ materially from those expected.
On Saturdays and respected isolating out detailed filings with the FCC.
Speaker Change: <unk> does not undertake any obligation to update these forward looking statements to reflect events and circumstances. After the date of filing.
Unknown Shareholder: The conference call will be archived and a transcript will be available on our website.
Speaker Change: The conference call.
Speaker Change: And it's gone script will be available on our website.
Unknown Shareholder: With that I would like to hand over the call to Thank you, Deepak.
Speaker Change: With that I would like to hand over to Paul Sidney.
Paul Sidney: Thank you Deepak.
Unknown Shareholder: Hello everyone. Thank you for joining us today. Our best wishes for the New Year.
Paul Sidney: Hello, everyone.
Paul Sidney: Thank you for joining us today.
Paul Sidney: Oh, that's for sure what the new year.
Paul Sidney: Where do you what do you for.
Srinivas Pallia: 2024 was marked by macroeconomic challenges.
Paul Sidney: Mark by macroeconomic challenges.
Srinivas Pallia: 2025 looks more hopeful and resilient.
Randy: Randy could you fly looks more hopeful and resilient.
Paul Sidney: Offline.
Srinivas Pallia: All clients and this Krishna Responding. Slowly coming back. We expect significant growth in AI spending. We are committed to driving innovation for our clients.
Paul Sidney: Or cautiously optimistic.
Paul Sidney: And discretionary spending is slowly coming back.
Paul Sidney: While cost optimization remains key.
Paul Sidney: We expect significant growth in spending.
Paul Sidney: <unk>.
Paul Sidney: Yeah.
Paul Sidney: Two driving innovation product lines.
Paul Sidney: By liberating.
Srinivas Pallia: by liberating Transmissive Power of AI Let me now turn to the financial highlights of the quarter. All the group numbers I share will be in constant currency. Our IT services revenue for quarter 3 was $2.63 billion. Reflecting a sequential growth of 0.1% and D Group of 0.7%. on a year-on-year basis. This text is slightly above the upper end of our guidance. We ended the quarter with a TCV of $3.5 billion in bookings. Our Operating Margin An expansion of 0.7% quarter on quarter. and 1.5% year-on-year.
Paul Sidney: What would you ballpark yeah.
Speaker Change: Let me now turn the financial highlights of the quarter.
Speaker Change: All the group number I fear will be in constant currency.
Speaker Change: Oh, I see services revenue for quarter three.
Speaker Change: Dollar 2.63 billion.
Affecting a sequential drop off like one more thing.
Speaker Change: B groh.
Speaker Change: One 7%.
Speaker Change: Well on a year on year basis.
Speaker Change: This takes it slightly older I'll put it out for guidance.
Speaker Change: We ended the quarter with a D C D. All.
Speaker Change: Got up 3.5 billion in bookings.
Speaker Change: Our operating margin.
Speaker Change: Give me back 17 points like bullshit.
Speaker Change: And the expansion of one 7% quarter on quarter.
Speaker Change: And one point quite close then you don't need it.
Unknown Shareholder: This is a dual water high.
Speaker Change: This is it.
Speaker Change: It worked out fine.
Srinivas Pallia: I like one too. Take this opportunity to thank our delivery team. for driving execution trigger. Our Capco business Continue to see improved demand. Order book grew by 9% year on year and revenue grew 11% year on year. In our strategic market unit performance We saw steady growth in demand across America. While Europe and Apnea remained soft for us. America's won grew 3.9% sequentially and 3.7% on a year-on-year basis. Growth was primarily led by health and technology and communication sectors. America's and Guru 1.2% on a year-on-year basis. Led by BFSI sector Europe decreased 2.7% sequentially and 4.6% on a year-on-year basis.
Speaker Change: I want to.
Speaker Change: Take this opportunity to thank God delivery teams.
Speaker Change: Driving execution to go.
Speaker Change: Our capital business.
Speaker Change: Continued to see improved demand.
Speaker Change: Order book grew by 9% year on year.
Speaker Change: And revenue grew 11% year on year.
Speaker Change: You know, it's tragic market unit performance.
Speaker Change: We saw citigroup.
Speaker Change: Mike.
Speaker Change: Growth of America.
Speaker Change: Euro and that's yeah.
Speaker Change: Meg soft photos.
Speaker Change: Americas grew three 9% sequentially and three 7% on a year on year basis.
Growth was primarily led by Heather I'm technology and communication sectors.
Speaker Change: Americas too.
Speaker Change: He grew 6% sequentially.
Speaker Change: Andrew 1.2 for certain.
Speaker Change: On a year on year basis led by defense I pick up.
Speaker Change: Europe decreased 2.7% sequentially and four points split things on a year on year basis.
Srinivas Pallia: Apnea, Degroo, 2.1% sequentially and 8% on a year-on-year basis.
Speaker Change: I do.
Speaker Change: Good point and 1% sequentially.
Speaker Change: 8% on a year.
Speaker Change: On your basis.
Speaker Change: Moving on.
Srinivas Pallia: Moving on, three of our five industry sectors. Recorded year-on-year group. Reflecting the progress across key areas. Health maintained its momentum, growing 6.7% sequentially. and 4.5% year-on-year. While BFSI de-grouped by 1.9% quarter on quarter. The sector grew 3.4% year on year. Consumer de-group by 0.9% quarter on quarter and group 0.4% Uranium Energy, Manufacturing and Resources grew 0.4% quarter on quarter and declined 8.7% year on year. Technology and Communications, DGroup and 5.3% year on year.
Speaker Change: Three or four or five sectors.
Speaker Change: Recorded year on year the group.
Speaker Change: Lifting the progress across key areas.
Speaker Change: <unk> maintained its momentum growing six 7% sequentially.
Speaker Change: And 4.5% year on year.
Speaker Change: While.
Speaker Change: We grew by one 9% quarter on quarter.
Speaker Change: Our sector grew three 4% year on year.
Cause if you might be grew by one 9% quarter on quarter.
Speaker Change: And group.
Tanya: White football Thank you Tanya.
Speaker Change: Yeah.
Speaker Change: Energy manufacturing and resources group, one 4% quarter on quarter.
Speaker Change: Eight 7% year on year.
Speaker Change: Technology and communications.
Speaker Change: We grew.
Speaker Change: One 6% quarter on quarter.
Speaker Change: And five point people think you hit on it.
Speaker Change: I would now like to share some updates on our strategic priorities that we had called out.
Srinivas Pallia: I would now like to share some updates on our strategic priorities that we had called out. In quarter three We closed 17 large deals with a total value of $1 billion across markets and sectors. I would like to give you two examples in this context. We won a vendor consolidation deal with a leading American retail and distribution company. As a strategic partner, We will transform their merchandising, sales and supply chain functions. Our AI-led approach across engineering, digital, My second example is a leading airline in the Middle East. that has partnered with us. for end-to-end technology modernization.
Speaker Change: In quarter three.
Speaker Change: Victor 17 large deals with a total value of.
Speaker Change: Dollar 1 billion across markets and sectors.
Speaker Change: I would like to give you two examples in this context.
Speaker Change: We wonder if when they can.
Speaker Change: Holiday shouldn't be the leader.
Speaker Change: American retail and distribution company.
Speaker Change: I've just got to keep popping up.
They've been transformed.
Speaker Change: Dicey field and supply chain functions.
Speaker Change: In fact.
Speaker Change: Yeah, I like our approach.
Good evening.
Speaker Change: Digital in.
Speaker Change: Plus it should and application services.
Speaker Change: Well, it's a cruise ship and helping us win this deal.
Speaker Change: My Second example is the leading airline in the Middle East.
Speaker Change: That has partnered with us.
Speaker Change: Or is.
Speaker Change: Technology modernization.
Srinivas Pallia: As part of a long-term contract. We will design and implement. A customized cloud-based solution. and Resource Utilization. Again, using AI forward industries. We will enhance employee productivity and customer experience for them. We continue to focus on our large accounts in our Co-Markets and Priority Sectors. In Quarter 3 We achieved a sequential growth of 7.3% in our top account. Top 5 and Top 10 accounts grew 3.7% and 1.8% We remain committed to investing and scaling our logic out. and expanding into new lines of business.
Speaker Change: As part of a long term contract.
Speaker Change: It was designed.
Speaker Change: Thank goodness.
Speaker Change: Customized cloud based solution.
Speaker Change: Doing through operational agility.
Speaker Change: And we're supposed to utilization.
I cant using yeah, I saw walking district solutions.
Speaker Change: And enhance employee productivity and that's the most expedient for that.
Speaker Change: We continue to focus on our larger accounts in our core markets in fact, they picked us.
Speaker Change: In quarter three.
Speaker Change: Yeah.
Speaker Change: 7.3% topical.
Speaker Change: Top five and top 10 accounts grew 3.7, plus thing and 1.8 booking.
Speaker Change: That's affecting you.
Speaker Change: We remain committed to investing and scaling our larger college.
Speaker Change: Amongst treating clients increasingly.
Speaker Change: By driving greater value.
Speaker Change: Wallet share.
Speaker Change: And expanding into new business new lines of business.
Speaker Change: Yeah.
I'd like to give you an example of this.
Srinivas Pallia: I would like to give an example of... A global technology company has selected us Silicon Platform for its Mixed Reality Product. We will work with the client to develop a silicon chip.
Speaker Change: A global technology company that selected us.
Speaker Change: To create and scale it.
Speaker Change: Cutting it.
Silicon platform.
Mixed reality products.
Speaker Change: He will work with the plank.
Speaker Change: A lot of silicon chip.
Speaker Change: To deliver.
Speaker Change: Performance at <unk>.
Well what consumption.
Speaker Change: You can integrate.
Srinivas Pallia: We will integrate. Advanced features like AI SensorFusion and Stunning Graphics To enhance end-user experience.
Speaker Change: Advanced features like yeah.
Speaker Change: Sensor fusion and stunning graphics.
Speaker Change: To enhance end user experience.
Srinivas Pallia: This is one of Wipro's largest... We have made good progress in our consulting-led, AI-powered, industry and cross-industry solutions. We had several successes across our industry solutions, including Wealth AI and Software Defined Vehicles. In addition, we also secured multiple cross-industry ventures. with our next-gen managed services. At Wipro, we continue to invest in AI education. 50,000 of our employees now hold advanced AI certification. Beyond Skilling We are also investing in AI tools and platforms across the software development cycle. and our own internal process. At Wipro, we are early adopters of agentic AI, which is which will be delivering impactful results for our clients.
Speaker Change: This is one of good lots.
Largest.
Speaker Change: Of course that he couldn't get anything big.
Speaker Change: We have made good progress in our consulting Nik you applewood industry and crossing to seek solutions.
Speaker Change: This quarter.
Speaker Change: We had several successes across our industry solutions.
Speaker Change: Including.
Speaker Change: They had in their books.
Speaker Change: Well P I.
Speaker Change: And software defined where he could.
Speaker Change: Additionally, we also secured multiple girlfriend excuse me.
Speaker Change: We got Nextgen managed services.
Speaker Change: So that's what she did offering.
Speaker Change: I agree.
Speaker Change: We continue to invest in education.
Speaker Change: 50000 authority in place now the whole advanced <unk> certification.
Speaker Change: We are scaling.
Speaker Change: We are also investing in AI tools and platforms.
Speaker Change: What was the software development cycle.
Speaker Change: And all the internal processes.
I can read through when they adopt it it didn't P I.
Speaker Change: Which is.
Speaker Change: Which will be delivering impactful visits for our clients.
Speaker Change: This technology goes beyond traditional productivity at this stage.
Srinivas Pallia: This technology goes beyond traditional productivity assessment. While many of these applications are still experimental, We see use cases emerging in areas like customer service and supply chain management.
Speaker Change: While many of these applications are still experimenting.
Speaker Change: We see use cases and watching and idiots like.
Speaker Change: Customer service and supply chain management.
Speaker Change: Building talent good skin.
Srinivas Pallia: Building talent at scale. is a key strategic priority for us. We remain focused in building a globally diverse While we are promoting strong internal talent, we are also bringing in top external talent. We are investing significantly in leadership development. in a fight 25. Wipro Leadership Institute would have trained Over 600 leaders. and programs curated with leading global institutes.
Speaker Change: He is a key strategic priority for us.
Speaker Change: We remain focused in building a globally diverse team.
Speaker Change: With a high performance culture.
Speaker Change: While we are promoting strong internal talent.
Speaker Change: Also bringing in top external talent.
Speaker Change: We are investing significantly in leadership development.
Speaker Change: And that's why I guess why.
Speaker Change: With broad leadership Institute without pain.
Speaker Change: What 600 liters.
Speaker Change: Through a combination of in house leadership sessions.
Speaker Change: And programs to Richard with leading global institutes.
Speaker Change: Finally.
Srinivas Pallia: I want to recognize the dedication of our employees during the holiday season in delivering business critical programs. Thanks for watching.
Speaker Change: I want to recognize the dedication of our employees during the holiday season in delivering critical programs.
Speaker Change: That's really for our clients.
Srinivas Pallia: Now a note on guidance before I wrap up. For the next quarter. We are guiding for a sequential growth of minus one percent. Constant Currency Terms Let me turn it over to Aparna for a detailed overview of our financial plan.
Speaker Change: Now a note on guidance before I wrap up.
Speaker Change: Well the next quarter.
Speaker Change: I think for a sequential growth of minus 1%.
Plus one plus thing in.
Speaker Change: Constant currency terms.
Speaker Change: With that.
Speaker Change: Nick Mcdonough nickel kept putting up for a detailed overview of our.
Speaker Change: Financial.
Aparna Iyer: Thank you. Aparna, over to you.
Speaker Change: Thank you.
Speaker Change: Or do you.
Aparna Iyer: Thank you, Srini.
Speaker Change: I guess hany.
Aparna Iyer: Good evening, everybody, and wish you all a terrific New Year. Let me cover the financial highlights for this walk-on. in a few key points. As a result of the strong in-quarter execution, we deliver above the top end of our revenue guidance range, growing 0.1% quarter on quarter in constant currency. To our operating margins are at a 12 quarter high of 17.5%. This marks an expansion of 0.7% quarter on quarter and 1.5% year on year. Let me also add that this was achieved after absorbing two months of incremental wage revision. With this, the wage revision impact that we did as of September 24 is fully behind us.
Speaker Change: We thank everybody and wish you all a terrific New York.
Speaker Change: Let me talk about the financial highlights for the smartphone.
Speaker Change: And if you can keep on one.
Speaker Change: Well, there's lots of their strongest quarter execution.
Speaker Change: We deliver about the top end up sort of in your guidance range.
Speaker Change: Once the same quadrant from Gartner.
Speaker Change: <unk>.
Speaker Change: Although operating margins are at or close to like a high.
Speaker Change: 17, 5%.
Speaker Change: If not for an expansion of one 7% quarter on quarter and 1.5% year on year.
Speaker Change: And also what that this was a cheap.
Speaker Change: Absorbing two months of incremental.
Speaker Change: But that's the way they should in fact, if you data as of September 24 is fully behind us.
Aparna Iyer: As we move into Q4, we are confident of staying in the narrow band. EPS and net income grew 24% year-on-year and 5% sequentially. This was led on the back of the margin expansion and therefore the EBIT growth, there are treasury returns and a stable ETR of 24%.
Speaker Change: Moving to Q4, we are confident that staying in and out of that.
Speaker Change: G R E T Insomniac com.
Speaker Change: <unk> 24 per thank you, Danielle and 5% sequentially.
Speaker Change: Nick on the back of the margin expansion and this will be a big growth, but occasionally they thought I know Stephen the ETR of 24%.
Aparna Iyer: Fourth, I am pleased to share with you that the Board of Directors have approved Increasing the payout percentage to 70% or above of the net income cumulatively on a block of 3 year period. This is effective FY26. The board has also declared an interim dividend of Rs 6 per share.
Speaker Change: I'm pleased to share with you that the board of directors have approved.
Speaker Change: Crazy, but they also cengage 70.
Speaker Change: 70% got about well beneath income accumulate gives me on a black block off to your PD.
Speaker Change: Effectively a FIFO or anything.
Speaker Change: Along with this.
What has ultimately.
Speaker Change: I mean could even dividend hippies, especially Europe.
Aparna Iyer: You note that this is substantially... Higher in terms of the quantum of dividend payout compared to what we have done in the previous Finally, in terms of guidance, I want to reiterate the guidance stated by Srinivas Palli. Our guidance for Q4 is minus 1% to plus 1% and therefore dollar terms will be $2.602 billion to $2.655 billion.
Speaker Change: You'll note that this is substantially.
Speaker Change: In terms of the quantum on dividend payout and back to work he has done in the previous year.
Speaker Change: Finally in terms of guidance I Wonder if you take the guidance stated by Xiaomi.
Speaker Change: Our guidance for Q4 is minus 1%.
Speaker Change: Block one per se I'm, therefore lived ones it'll be $2.60 billion to $1 billion to $2 55 5 billion.
Unknown Shareholder: This is in constant currency terms. We can open it up for Q&A.
Speaker Change: This is in constant currency.
Speaker Change: Chuck.
Speaker Change: We can open it up for Q&A.
Speaker Change: Thank you very much.
Unknown Shareholder: We will now begin the question and answer session.
Speaker Change: We will now begin the question and answer session.
Unknown Shareholder: Anyone who wishes to ask a question may press star and 1 on the touch screen. If you wish to remove yourself from the question queue, you may press star and Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the questions are being asked.
Speaker Change: Anyone who wishes to ask a question May press star and one on the Dutch Jordan.
Speaker Change: If you wish to remove yourself from the question queue, you May press star two.
Speaker Change: <unk> had a question this way.
Speaker Change: I'll ask a question.
Speaker Change: Ladies and gentlemen, we will wait for a moment when the question.
Speaker Change: Okay.
Yes.
Speaker Change: Yeah.
Speaker Change: We'll take our first question from the line of LIBOR single from Nomura.
Vibhor Singhal: We will take a first question from the line of Vibhor Singhal from Nuwamish Yeah, hi, thanks for taking my question. And congrats on a solid performance, especially in the margin. Shini, my question was on the deal wins. The deal wins were definitely up on a Y-on-Y basis, close to a billion dollars in terms of the large deal wins, and TCV has consistently stayed above the $3.5 billion mark. How do you see this trajectory helping us achieve higher Y-on-Y growth rate? Our execution on the past few quarters has been super solid, but at the end of the day, when do you think, or what is the number that you believe is what can take us closer to a mid-single-digit kind of a Y-on-Y growth rate?
Speaker Change: Please go ahead.
Speaker Change: Yeah, Hi, Thanks for taking my question.
Speaker Change: Congrats on the solid performance, especially on the margins from excuse me My question was on <unk>.
But even what are definitely up on a Y on Y basis close to $1 billion and that's what this large deal wins and D. C. We have consistently stated about a three point $500 a month.
Speaker Change: How old are you can see this helping us achieve higher by one way go tape alright, just a question on the policyholder has been super solid, but I mean at the end of the day I mean, when do you think or what is the number that you believe is what.
Speaker Change: Can take us through a.
Speaker Change: Closer to a mid single digit kind of along the way as well.
Vibhor Singhal: Or maybe higher than that? And do you see the pipeline for us to be able to achieve that in coming quarters? And how soon or how early can we reach it?
Speaker Change: Well it may be higher than that and do you see the pipeline what is to be able to achieve that in coming quarters.
Speaker Change: How soon.
Speaker Change: Oddly can with each phase.
Srinivas Pallia: Thank you, everyone. Let me reflect on your question. Our current large-scale pipeline is robust. and we are seeing good traction across geography. I have to put an industry lens to this. Our strongest fraction in large deals remain in BFSI and EMRF. BFSI is strong in America, Europe and India whereas if you look at EMR, manufacturing is strong in Europe compared to US. And our ENU is robust in America, including US and Canada, followed by our ANZ and Europe. In terms of health care, consumer and tech incomes, we are seeing more traction. in the medium to large size around 50 to 100 meters.
Speaker Change: Thank you for your board.
Speaker Change: Let me reflect on your question.
I'll correct lots deal pipeline is robust.
Speaker Change: And we are seeing good traction across geographies.
But if you have to put it in there.
Speaker Change: As it relates to this.
Speaker Change: Oh awesome gets traction in large deals remain in before you have to say I need a modest segment.
Speaker Change: The if I say, it's strong in Americas, Europe and India.
Speaker Change: Whereas if you look at your Mark.
Speaker Change: Manufacturing is strong and euro compared to U S.
Speaker Change: I know you're new is robust.
Speaker Change: Not very cuts, including U S and Canada, followed by our ANZ and Europe.
Speaker Change: In terms of health care it can do more than they can comps we are seeing more traction.
Speaker Change: In the medium to large size on for Peter.
Speaker Change: $200 million.
Srinivas Pallia: Now if you look at our quarter 3, our large scale TCV has been at 1 billion, which is still up 6% year on year by value. and up by 3 deals by cow. So I wouldn't read too much into it. Laaj Seals, as you know, are lumpy and there is also a seasonal element to them. If you recollect, we had a record quarter to 25 and we now have a good foreclosure, so we don't see it as a cause for concern.
Speaker Change: Well, if you look at our quarter three odd lot Street D. C. D has been at the 1 billion, which is still up 6% year on year by value.
Speaker Change: Bye bye.
Speaker Change: So I wouldn't read too much into it.
Speaker Change: Lots of students as you know are lumpy and there's no. There's also seasonality banks again.
Speaker Change: If you didn't if you recollect, we had a record quarter 45.
Speaker Change: And you don't have a good funnel for closure. So we don't see it as it was the cause for concern.
Speaker Change: Yeah.
Vibhor Singhal: Got it, got it. In terms of this, we should we spend outside of Capco also? Are we seeing tailwinds in terms of clients willing to put the spend back on the anvil?
Speaker Change: Got it got it and then let me speak to the spend outside.
Speaker Change: Outside of capital also RBC payments in terms of planes are willing to.
Speaker Change: Put that spending back on the island.
Srinivas Pallia: Or do you believe there is still some time to be able to reach that? If you look at from a discretionary lens perspective alone... We did talk about Capco where both the bookings and revenue we had a good year on year growth in quarter 3. Having said that, The discretionary spend in America is definitely we see a positive sign in basis of segment. which is good news for us, we also see some level of tigging coming up in certain sectors but it's not secular at this point in time. Also, this is a month where many of our customers are in the process of budgeting and we are working with them to understand where the spend is going.
Speaker Change: Do you believe there is still some time to be able to well at least that's H.
Speaker Change: If you look at the.
Speaker Change: From a discretionary perspective alone.
Speaker Change: But did you talk about capital where both the bookings and revenue we had a good.
Speaker Change: Who do year on year growth in quarter three.
Speaker Change: Having said that.
Speaker Change: The discretionary spend in the Americas, It's definitely we see a positive side can be a pause I think Mike.
Speaker Change: It's a I don't which is the good news for us.
Speaker Change: We also see some some level of digging coming up in certain sectors, but it's not a secured at this point in time.
Speaker Change: Also this is a month, where many of our customers are in the process of budgeting.
Speaker Change: We are working with them to understand where the spend is going to be.
Srinivas Pallia: But if you, if I were to actually extend your question to the overall demand environment, you know, we see America's very strong and the demand continues to pick up, while, you know, if you look at our bookings into 1 to 5 and 5 to 10 million range has been very strong.
Speaker Change: But if you if a vehicle actually extend your question to the overall demand environment.
We see America is very strong and the demand continues to pick up.
Speaker Change: Why would you do if you look at our bookings into 125, I don't know five to 10 million range has been very strong.
Srinivas Pallia: However, in Europe, while the economies are challenged, we all know what's happening in Germany, UK or France. You know, actually this has put some pressure on some of our clients and some of the companies out there to trim their costs and become more efficient and we see this as an opportunity going forward and just to conclude, the overall pipeline is healthy and has remained at the same level over the last Got it, got it.
Speaker Change: Although better than usual no while the economies that chatter.
Speaker Change: It all we all know what's happening in Germany U K oar friends.
Speaker Change: Actually it does put some pressure on some of our clients and some other companies out there a good.
Speaker Change: <unk> costs and become more efficient and we see this as an opportunity going forward.
Speaker Change: And.
Speaker Change: And just to conclude all pipeline is healthy and has remained the same level or the last year.
Speaker Change: Got it got it thanks for that.
Vibhor Singhal: Thanks for that detailed explanation.
Aparna Iyer: Just one question for Aparna. So Aparna, I think margins in this quarter were rock solid. We were able to expand margins despite two-month wage hike. So could you basically press upon or reflect upon some of the levers which we managed to use this because our gross margins have also expanded in this quarter on a quarter-on-quarter basis despite the wage hike.
Speaker Change: Just one question for the partner So opened I think margins in this quarter was a solid b, but able to expand margins. Despite a two month lead time.
Speaker Change: So could you basically oh.
Speaker Change: That's upon us.
Speaker Change: Picking up on some other deals, which we managed to use this because our gross margins also expanded in this quarter on a quarter over quarter basis, Despite doesn't change.
Aparna Iyer: And related question, what would now be our, let's say, target band of margins given that we're already in the 17 and a half percent range. In the near to medium term, where do we expect these margins to be, let's say, in the next three to four quarters?
Speaker Change: They did a question what would now be over let's say a good band of margins given that you had already been in the house with some change in the near to medium term, where do you expect these margins to be Uh huh.
Speaker Change: In the next two.
Two quick ones.
Aparna Iyer: Yes, the margin expansion has come. If you look at what were the factors in Q3, we started the quarter with two incremental months of salary wage hike to absorb. We also had a seasonally weak quarter in terms of the furloughs. A lot of the improvements have been in action consistently over the last few to four quarters. Some of that played out. A lot of the improvement that we did to offset the increase and also expand the margin came on the back of improved execution rigor both in our core and in the consulting business. If you look at rising Capco and the core business, all of that has done very well.
Speaker Change: Well the board, Yes, you know the.
Speaker Change: Margin expansion has come if you look at what are the factors in Q T. V had we started the quarter with two in Cleveland.
Speaker Change: Myself funny, they tried to shop deals.
Speaker Change: We also had a seasonally weak quarter in terms of definitely.
A lot of the Harbin and auction consistently over the last three to four quarters. Yeah. Some of that played out a lot of the improvement.
Speaker Change: He did to offset the increase in wholesale funding margin came from the bar on tobacco.
Speaker Change: Through execution rigor both in our core I'm in the consulting business like you know if you.
Speaker Change: Look at raising capital and the core business all of that has gotten where is it now we had affect us leave us because traditionally in terms of the utilization offshoring and the fixed price productivity that paid off yesterday.
Aparna Iyer: Now, we had a set of levers which are traditional in terms of the utilization, offshoring, and the fixed price productivity that played out.
Speaker Change: That's a conscious reduction it comes up all overhead.
Speaker Change: We didn't do any today so despite the wage hike and everything you will see those numbers coming down and ease our conscience reductions I think Joe and then I'm also.
Joe: The margin improvement.
Aparna Iyer: Where do I look at? Is there a revised aspirational band? Nothing that we would like to share at the moment. We've got to 17.5% that we had shared, and it's a 12-quarter high. So, in some sense, we are very conscious that we should sustain it. So 17.5% plus minus could be the aspirational value now. Yeah, yeah, at least for now.
Where do I look at is that our device activation of the dam.
Joe: Nothing that I'd really like to shape at the moment, you've got 17 out of hospice in the future.
It's a 12 quarter high so in something.
Joe: Yeah really conscious that he should sustain it.
Joe: And therefore for Q4, we are seeing that he will.
Speaker Change: We are confident of getting the narrowband and I'll take.
Joe: They get someday.
Speaker Change: So 17 in to help us and plus minus could be that aspiration.
Joe: Yeah, Yeah at least for now.
Vibhor Singhal: Thank you so much for taking my questions and wish you all the best. Thank you so much.
Speaker Change: Got it okay. Thank you so much for taking my questions and I wish you all the best.
Joe: Thank you so much.
Speaker Change: Thank you.
Abhishek Kumar: Please take our next question from the line of Abhishek Kumar. Yeah, good evening. Thanks for taking my question. Congratulations on a very good performance. So my first question is on growth and related to that is on guidance. Last two quarters we have now been coming closer to the top end of guidance which is not happening in quarters prior to that. I just wanted to understand you know what has changed are the mid-quarter negative surprises kind of abating and that is helping us hit the top end or you know that demand environment has been improving so that is you know on the performance and related to that on guidance Next quarter, despite the fact that furloughs will be absent, etc., at the midpoint, we are still looking at a flattish growth, similar to 3Q.
Speaker Change: We'll take our next question from the line of Alicia Kumar from JM Financial. Please go ahead.
Yeah, Hi, good evening.
Speaker Change: For taking my question congratulations on a really good performance.
Speaker Change: So my first question is on goodwill and related to that is on the guidance last two o'clock does we have now been coming closer to the top enough on guidance, which is not happening quarter size of that but just wanted to understand you know what has changed.
Speaker Change: The mid quarter negative surprises.
Speaker Change: I end up at the meeting and that is helping us.
Speaker Change: Uh huh.
Speaker Change: The demand environment has been improving.
Speaker Change: That is oh.
Speaker Change: On on the Oklahoma and are related to back on guidance.
Speaker Change: Next quarter. Despite the fact that those will be out soon.
Speaker Change: The mid point yesterday, we're still looking at a flattish growth.
Speaker Change: It seemed like the TQ, but.
Abhishek Kumar: So, some of the puts and takes, you know, for our 4Q guidance. Thank you.
Speaker Change: So some of the puts and takes you know, Florida with two great. Thank you.
Speaker Change: Yeah.
Aparna Iyer: Yeah, sure. So, Abhishek, if you look at it, our guidance, when we guide, there's no change to the philosophy of guidance. We guide based on the visibility we have closer to the midpoint, and then we guide and arrange. The fact that in the last two quarters, we are able to come, you know, above the midpoint is because of both a stronger execution in quarter to also, you know, the demand environment is improving, right? It does show that the stability, right, that we are able to draw at the start of the quarter to when we finish is better.
Speaker Change: Yeah sure so.
Speaker Change: L. A V shaped guy if you look at as a beta in Sydney, a guy there is no change to the philosophy of guidance. We guide based on the visibility we have closer to the midpoint and then you're guiding that age are the fact that in the last two quarters, yet either to come you know about.
Speaker Change: My point is because of our strong execution in quarter two also yeah.
Speaker Change: Well I mean, he is going to be right. It does show that the stability fake a that'd be unable to drive just got into quark until then be finished is better. So it is a reflection of that is reflected in the fact that some of our.
Aparna Iyer: So, it is a reflection of that.
Aparna Iyer: It's reflected in the fact that some of our consulting businesses are doing well. CACO, like we highlighted, has grown 11% year on year. Bookings are up 9% year on year. So, that's a good sign, and it's also a reflection of that. But otherwise, there's no change.
Speaker Change: Consulting businesses are doing re tackle a likelihood highlighted include 11% yield on your bookings are up 9% year on year. So that's a good sign and it's also a reflection of that.
Speaker Change: Yep.
Aparna Iyer: As we look at Q4, it is a better guidance if you have to compare it to the guidance we gave for quarter three, and that's what we have the present visibility for Abhishek.
Speaker Change: But otherwise there's no change as you look at Q4, it is a bit elevated if you'll have to compare it to the guidance you gave for quantity.
Speaker Change: And that's what we have if they hadn't visibility falls.
Speaker Change: Vichy.
Abhishek Kumar: Sure. Okay, maybe one question on margin.
Speaker Change: Sure. Okay, maybe one question on margin, but not you know there was a sharp decline in depreciation this quarter.
Aparna Iyer: Aparna, you know, there was a sharp decline in depreciation this quarter. So is that now a more normalized level as far as depreciation is concerned? Or was there any one-off there that we should be aware of? Thank you. I don't think there are any one-offs, you know, it's likely to sustain, you can model it at the same.
Speaker Change: Is that a more normalized level.
Speaker Change: F N b, we shouldn't depend on was there any one off bad debt and we shouldn't be in it.
Speaker Change: I don't think that I need one L. A you know it's likely to sustain you can modulate or the same.
Abhishek Kumar: Alright, thank you and all the best. Thanks.
Speaker Change: Alright, thank you and all of them.
Bill: Thank you Bill.
Abhishek Bhandari: We will take our next question from the line of Abhishek Bhandari from Thank you and good evening to the management. I had, you know, a question on growth and the guidance again. So, Srini, if I look at your growth for this quarter, you know, it was broadly led by healthcare, partly by manufacturing. But in banking, you know, we had a negative number. Is it more because of the furlough?
Speaker Change: We'll take our next question from the line of Abhisheka Mondavi from Nomura. Please go ahead.
Speaker Change: I'm doing good evening to be 90% I had one question on the guidance again.
Speaker Change: If I look at your own good work for this what are you doing.
Speaker Change: You bet.
Speaker Change: Okay, bucking banking and it'll be hard to do.
Speaker Change: Is it because they'll be struggle.
Srinivas Pallia: And if you could talk about your outlook specifically for banking and healthcare businesses, given that, you know, some of your peers are talking about increased, you know, caution amongst healthcare clients given uncertainty around policy, and optimism in banking, given that there could be dereg and other stuff happening, which could increase. I, Abhishek, let me give you some color to this. If you look at the BFSI, it was impacted by furloughs in Q3. However, the sector has grown 3.4% year-on-year. This is clearly a combination of discretionary spend led by CAPCO, which Aparna just talked about it, which is a consulting work, and also non-discretionary fees in some of the large and mid-sized which are more on the themes of, you know...
Speaker Change: If you could talk about the.
Speaker Change: Specifically for banking and bad businesses given.
Speaker Change: Given that you can some of your peers like.
Speaker Change: Do you see you know caution amongst help gateway and given and so did you get on part D. C D waves.
Speaker Change: It doesn't mean that there could be do you think another stuff happening.
Speaker Change: You can reach a business.
Speaker Change: Oh I appreciate though let me give you some color to this.
Speaker Change: Okay.
Speaker Change: The if I say it wasn't factored by far most important suite.
Speaker Change: Although its a sector it has grown to be one 4% year on year.
Speaker Change: This is really a combination of discretionary spend like black capsules become one.
Speaker Change: And I just talked about it he says the consulting work and also non discretionary season at all some of the Nokia in big size. These.
Speaker Change: Because I have more of them the team itself and all.
Srinivas Pallia: Vendor Consolidation, Cost Taker If you look at the AFSR budgets going forward, we feel there will be an uptick on the budget. Well, as health care budgets will continue to grow, albeit maybe slower than what it was in the past.
Speaker Change: And that consolidation cost takeout.
Speaker Change: Okay.
Speaker Change: If its up budgets screening going forward, though we think we feel there'll be an uptick on the budget.
Speaker Change: But as healthcare budgets will continue to grow, albeit maybe slower than what it was in the past, but that's that's my take on both health care it would be for say.
Srinivas Pallia: So that's my take on both healthcare and BFI. Got it.
Speaker Change: Got it.
Srinivas Pallia: And, you know, Srin, second and last question is again on, you know, guidance part, given that, you know, we had a great execution this quarter, we exited more than the top end, we are talking about some return of the stationary demand, furlough would be absent, as you know, Abhishek also asked, and, you know, there will be some tailwind coming from the execution of the projects in the near past. So I'm still curious, you know, why have a negative number from a, you know, guidance perspective, when most of the things are actually positive? So, like Aparna said, we are given the quarter 4 guidance based on the current visibility we have.
Speaker Change: Okay, and then last question, if you don't mind and spike get them exactly going to be hard to upgrade execution discipline there'll be.
Speaker Change: More than the topping.
Speaker Change: We are talking about something they don't know if this patient the Barton well.
Speaker Change: No. It would be up 10 days, you know I'll be shake out to us.
Speaker Change: You know David Beach, some tailwind coming from.
Speaker Change: Yeah.
Speaker Change: There are projects and do it in years past.
Speaker Change: I'm curious to know why I wasn't negative number.
Speaker Change: You know guidance suspected but most of the things that I keep all that took place.
So like Oh, I'm upset you given the quarter four guidance based on the visibility cutting visibility do you have.
Srinivas Pallia: Having said that, we are seeing a gradual recovery happening. And the sectors that I talked to you about just now, BFSR and Healthcare, clearly are doing well. And some of the sectors for us, both EMR, which is Energy Manufacturing Resources, and Consumer, still need to recover.
Speaker Change: Having said that we are seeing a gradual recovery happening.
Speaker Change: And are the sectors that I talked to you about just now with a sudden health kit clearly are doing well.
Speaker Change: Some of the factors for us both to the ear market, which is our energy manufacturing resources and come through but.
Speaker Change: They'll still need to have a cooler.
Unknown Shareholder: However, if you look at it on the Geo side... See Video Description For More Information.
Speaker Change: How about if you look at on the Geo side.
Speaker Change: We see momentum building up.
Speaker Change: Americas, why you'd hope it knocked me out he made.
Speaker Change: So for us.
Speaker Change: Got it now, especially you mentioned you know now that you have the B C.
Unknown Shareholder: Got it.
Unknown Shareholder: And last question, now that we have raised the return of capital to shareholders to around 70%, how should we think the mode of return? And you have mentioned blocks of three years, so could it again be lumpy if you decide to use the buyback route, or do you want to make it more like an annual setup?
Speaker Change: Got a big Blue chip.
Speaker Change: 70%.
Speaker Change: How should we think the model.
Speaker Change: And then Phil you had mentioned blocks of two years, so could it be lumpy to decide to use the buyback route or did you want to be.
Aparna Iyer: Thank you. You know, in terms of mode of return, we continue to prefer both dividends and buybacks, and, or even special dividend as appropriate, you know, we will, the board will make a decision. You know, we want this to be more consistent, but we've continued given that, you know, we, one cannot rule out a buyback, we've said that you should continue to measure this over a block of three years. We will assess and, you know, if at some point in time we want to make this annual, we will, but for now we will continue to measure this as a block of and we prefer both by back end.
Speaker Change: Thank you.
Speaker Change: You know in terms of what else are they telling me continuing to fulfill both dividends on boardwalk and.
Speaker Change: And at even especially given it was up to a peak.
Speaker Change: The board made the decision.
Speaker Change: You know we want this to be more consistent but we continue giving back it'll be one cannot rule out the buyback you said that you should continue to measure disorder Blotto no coffee.
You heard us say and.
Speaker Change: It always saw at some point in time do you want me to.
Speaker Change: Oh, I know what diseases, but for now we've all continued to measure this as a blockbuster yours, and therefore, both buyback and dividends.
Abhishek Bhandari: Thank you and all the best for Calendar 2020. Thanks. Thanks, Abhishek.
Speaker Change: Thank you and all the best book hasn't been taken place.
Speaker Change: Thanks, Thanks, probably shake thank you.
Speaker Change: Next question is from the line of D J.
Speaker Change: I filled institutional equities. Please go ahead.
Unknown Shareholder: Thank you.
Speaker Change: Yes. Thank you just one question around you know.
Rishi: Just one question around, you know, overall environment to become better, how are we preparing ourselves to ensure that when some of those opportunities come we are able to hunt better as the decline in non-top 10 seems to be a lot higher than what we generally see in industry peers. Rishi, there is no change to the philosophy. We would like to continue to hunt and mine. We do look at mining our top 10 clients or top 25 or top 50 as a show of strength and that's something that we've focused on. The reduction that you're seeing in our active client portfolio, we report that number on a trailing 12 months.
Speaker Change: Mining, but even the non top 10 clients. They tell all basically even looking Florida hunting opportunities. So if you look at you know.
Speaker Change: <unk> done reasonably well when it comes to our you know grew 10 top 10 client. So it's up 15% year on year does it is it takes us back to our revenues are still declining or two 5% G. SIB.
Speaker Change: Just wanted to understand Ah you know outside of the top 10 planes mining.
Speaker Change: Given that it's the overall environment were to become better how would be debating all says to ensure that does in some of those opportunities come we're able to Uh huh.
Speaker Change: Uh huh.
Speaker Change: Declining non top 10 seems to be a lot higher than what we generally see an industry peers. Thank you.
Speaker Change: She there's no change to the philosophy that you would like to continue to Hum online like we do look at mining our top 10 clients talk to any thoughts off the theater sure Shane and that's something that he's focused on the.
Speaker Change: The reduction that you've seen there not a active client portfolio you know either.
Speaker Change: That number on a trailing 12 months. So that is a weaker revenue environment that also shows up in the number of active clients.
Srinivas Pallia: If there is a weaker revenue environment, that also shows up in the number of active clients. There's also the furloughs and the cross-currency impact that's also playing out a little bit this quarter. But there is certainly, in terms of the strategic priorities that Srini spoken about, hunting remains a very, very key lever for us and we are very, very focused on winning. So there is absolutely no de-prioritization on that count.
Speaker Change: It also will find those and you know the cross currency impact that's also playing out a little bit this quarter.
Speaker Change: But that.
Speaker Change: That is certainly a.
In terms of the strategy CRT P that you need.
Speaker Change: Talking about <unk>.
Speaker Change: Hunting it means a very ready.
Speaker Change: A key lever for now and when they do they do.
Speaker Change: D a.
Speaker Change: Real quick on a windy.
Speaker Change: So mark telecom so.
Speaker Change: There's absolutely no deep aortic position on that issue.
Speaker Change: Sure.
Unknown Shareholder: Okay, thank you so much.
Speaker Change: Okay. Thank you so much.
Speaker Change: Yeah. Thank.
Speaker Change: Thank you.
Unknown Shareholder: Next question is from the line...
Moderator: Next question is from the line of Ravi Menon from Macquarie. Please go ahead.
Unknown Shareholder: Hi, thank you for the opportunity. You know, this quarter, even without any aid, the margins have been incredible. So, actually, I'm a bit surprised that you talked about keeping it in an hour.
Ravi Menon: Alright, thank you for the opportunity.
Speaker Change: Although this corner.
Speaker Change: Without any aid the Muslims have been sort of a car.
Speaker Change: So that's a bit surprised that you talked about keeping him Mr.
Unknown Shareholder: Mr. Menon, can you use your handset mode, please? Your audio is not very clear. Hello. Yeah, margins have been pretty good. So surprised that you're talking about keeping it a narrow range. Are there any headwinds in the coming quarter that you're thinking about? Because it looks like, you know, at least the rupee seems to be depreciating. So how should we think about margins for, you know, what the headwinds and tailwinds next quarter? Yeah, the rupee has been depreciating. We'll have to keep a watch on it. It has remained volatile in the last few weeks. We will, Allah has to play in.
Mr minutes can you use your handset please.
Speaker Change: Not really clear.
Speaker Change: Hello.
Speaker Change: Yes. Please go ahead.
Speaker Change: Yeah, I will let you know the margins have been pretty good so surprised that you're talking about keeping it in that range are there any headwinds in the coming quarters that you're thinking about because it looks like at least a little thing seems to be depreciating them. So how should we think about modern school Oh, you know what the headwind someday lids. Thanks Walter.
Speaker Change: Yeah, I think it'd be a has been depreciating real help to people watch on it. It has remained volatile in the last few weeks even.
Speaker Change: A lot has to clean this up and hedge book, there's also a certain amount of hedges that would be Patty said it would be a function of block I don't think deny any particular headwinds at least ask you folks in.
Aparna Iyer: There are also certain hedge books. There's also a certain amount of hedges that we carry. So it'll be a function of that. I don't think there are any particular headwinds as we start Q4. In, you know, a lot like, you know, the salary increase and everything is behind. It is going to be a lot of business as usual and... So, you know, there are not particularly headwinds that I would like to call.
Speaker Change: You know a lot like and it'll be salary increases and everything is behind us it is going to be a lot of business as usual.
And.
So you don't get unlocked, particularly hate doing that I'd like to call out.
Unknown Shareholder: Thank you.
Speaker Change: Thank you.
Srinivas Pallia: And Sridhi, healthcare, you know, seasonally, this is actually normally a good quarter for health plan services. So is that what helped you or are there any other segments within healthcare that you're seeing good traction in? If you look at healthcare for us, it's a combination of payers, providers. So the growth that we see has been across these four sub-industries, Ravi. So extremely broad-based, you can say.
Speaker Change: Sydney Healthcare you know seasonally this is actually a number of good colorful have Glenn so is this.
Speaker Change: That will help you or are there any of the segments within health care that you're seeing good traction.
Speaker Change: Okay.
Speaker Change: If you look at the it's good for US it's a combination of for payers providers.
Fatima: Fatima in medical devices companies, so the growth that we see.
Speaker Change: Of course these are for.
Fatima: Industry so.
No that'd be.
Fatima: Alright, so extremely broad based can say.
Okay.
Ravi Menon: Thanks so much and best of luck. Thanks Ravi.
Thanks, so much and best of luck.
Fatima: Thank you.
Speaker Change: Well take our next question from the line of from Morgan Stanley. Please go ahead.
Gaurav Rateria: You can take our next question from the line of Gaurav Rateria from Mogadishu. Hi, congrats on great execution on margins. My first question is on the large deals. Have you seen any change in the average tenor of these deals and hence the conversion of these deals into revenues? You know, in some sense, Gaurav, our large E-bookings are down sequentially, but our TCB bookings are not as down, right? So the quantum of small and medium-sized deals have picked up this quarter, which also means our AECB growth was particularly good after several quarters. There is still one quarter.
Speaker Change: Hey, Hi, congrats on a good execution on margins. So my first question is on the large Tvs have you seen any change in India, which earn dinner with these deals and hence the conversion of our D C into revenues.
Speaker Change: You know are in some sense, but all of them.
Speaker Change: The bookings are down sequentially.
Speaker Change: D C V bookings or not I don't think so the quantum on small and medium sized deals not pick up this quarter, which also means I ACD growth was particularly good after several quarters.
Speaker Change: But it's kind of one quarter, we will wait and watch to see if this is a deterministic trend that the email.
Srinivas Pallia: We'll wait and watch to see if this is a deterministic trend that plays out. But as far as the overall texture of deals when we see in the pipeline, I think there are quite a few large deals as well, both in terms of cost take-out, vendor consolidation, efficiency length. So in some sense, the large deal pipeline continues to remain robust.
Speaker Change: But as far as the overall fixture of deals when we see in the pipeline.
Speaker Change: I think there are quite a few large deals as.
Speaker Change: Both in terms of offtake all vendor consolidation.
Speaker Change: Okay. So you shouldn't see less so and sometimes a large deal pipeline continues to remain good but if I look at the pipeline.
Srinivas Pallia: If I look at the pipeline, It seems to be very similar to what it has been in the last few quarters, but bookings in Q3 are definitely, the deal tenor has come back.
Speaker Change: It seems to me a very similar to walk and talk the last few quarters, but our bookings in Q T I D.
Speaker Change: Definitively.
These Dino has come down.
Srinivas Pallia: What are the portfolio interventions you have done in some of the areas where growth has not been so great like EMR vertical, APMA, geography and where are we in terms of these interventions? Are we likely to see any changes in the outcomes?
Speaker Change: The second question is what are the poor flu interventions you have done in some of the yards where growth has not been so great like EMR worthy cause E. P M B a childhood.
Speaker Change: Geography, and where are we.
Speaker Change: In terms of you know these interventions are we likely to see any changes.
Speaker Change: India outcomes. Thank you.
Speaker Change: Sure Let me just.
Srinivas Pallia: Let me just kind of talk about both of them, Africa and Europe where we have been very soft As far as Apnea is concerned, we have the new CEO there and he is building a next level of leadership and we continue to invest in this market across the broad geography that Apnea covers. We also looked at our go-to-market approach with a very defined both account teams as well as the teams that can go after a new load In fact, you know, specifically in APR, specifically each of the countries, we have identified set of accounts and we are also differentiating ourselves with consulting with an AI, which is definitely a different value prop to this market.
Speaker Change: Talk about both of them are you know in Europe, there have been very soft.
Speaker Change: That's what I feel is concerned Oh, we have the news he will there and he's building a mixed level of leadership.
Speaker Change: We continue to invest in this market.
Speaker Change: Across a broad geography to up their cabos.
Speaker Change: We're also in a way.
We looked at our go to market approach.
Speaker Change: The committee and a defined a.
Speaker Change: But like home teams as well as the teams that can go after a new logos.
And in fact, I don't know.
Speaker Change: Specifically in the IPO specific because each of the countries. We have identified a set of accounts and we had also to fix you think off says it's convincing that NDA, which is definitely a different value prop to this market.
Srinivas Pallia: Aparna Iyer, Ankur Rudra, Sandeep Shah, Sudheer Guntupalli, Sandeep Shah, Sudheer Guntupalli, In the Europe, again, very similar.
Speaker Change: But that is busy but.
Speaker Change: P C.
Speaker Change: She took back then are growing and I think it'll be should also continue to execute our vision, where does see a momentum coming back in the IPO.
Speaker Change: In the Europe again very similar.
Srinivas Pallia: We have created a new leadership at an SMU level. We are also making sure we continue to focus on certain sectors and double down on them. While Europe has shown de-growth in Q3, I can definitely tell you pipeline is strong. What we need to do is focus on deal conversion. I think with the consulting teams and the delivery capabilities that we have, I feel we have all the ingredients in place.
Speaker Change: The new leadership.
Speaker Change: I know when I go.
Speaker Change: If you live in.
Speaker Change: It also though.
Speaker Change: Making sure we continue to focus on certain sectors and double down on them a week at all what I meant all while our Europe.
Speaker Change: No it shouldnt be growth in quarter three.
Speaker Change: The food it looks like pretty strong what do you need to do is focus on beauty conversion and I think it all of it.
Speaker Change: Consulting teams and the liquidity that we did it really capabilities that we have.
Speaker Change: You know I feel if you all have to do you have all the ingredients in place now its all about execution.
Srinivas Pallia: Now it's all about execution.
Unknown Shareholder: Thank you so much.
Speaker Change: Thank you so much.
Speaker Change: Thank you.
Speaker Change: We have a next question from the line of <unk> <unk> from <unk>.
Sudheer Guntupalli: We have a next question from the line of Sudheer Guntupalli. Hi Srini, congrats on a good quarter. So couple of questions. Firstly, your prop account continues to see very good traction. So any specific reason behind this? I think for the last several quarters, last few quarters, we had seen that this is steadily increasing in terms of its revenue share.
Speaker Change: Please go ahead.
Paul Sidney: Hi, Sidney congrats on a good quarter.
Paul Sidney: So couple of questions, especially your topic continues to see very good connection.
Paul Sidney: So any specific reason behind this I think for the last seven quarters.
Paul Sidney: A few quarters, we had seen that this is jeremy.
Paul Sidney: And in terms of its revenue share.
Aparna Iyer: You know, I'll just stop. Will give you one fact and then maybe you know, Srini can speak about it in terms of just the top 10 growth, right? The top, top 5, top 10, they've been doing well, even if you had to take in top 25, the growth is pretty good. What's driving this growth, 7 out of our 10 accounts are growing on a Euro and Euro in constant currency terms. So that's something that you know, quite broad based. The sectors that are doing well are adding to it in terms of BFSI, health, so they are adding, those clients in the top ten are doing really well.
Paul Sidney: You know I just saw a.
Paul Sidney: I give you one fact, and then maybe you know she and he can speak about it in terms of just Oh talked and grow the top top five top than they've been doing way, even if you'll have to take in top 25 is always pretty good what's driving the growth. So no real fast Dana com saw growing on a year on year in constant currency.
Dumbest, because that's something that.
Paul Sidney: You know quite well broad based.
Paul Sidney: Hmm.
Paul Sidney: Lucky you don't think though that are doing then aren't adding to it.
Paul Sidney: In terms of E. S. S I and so they are writing those clients into our top 10 are doing really bad and Eyal.
Srinivas Pallia: Yeah, you know. So there you know the context of the deals that I talked about when Gaurav asked the question. Similarly, both in Europe and APMEA, like I said, we have reinforced our teams both on account management as well as delivery and that should actually help us mind these accounts more, especially in this patch of the markets that we are in. And as far as the top 10 accounts that have grown that Aparna has talked about can be the role models for the rest of the accountings as well in terms of what are possible. In fact, it's the top 25 accounts, I would say.
Paul Sidney: Yeah, you know.
Paul Sidney: If you would like.
Paul Sidney: Sure. So you know that's.
Paul Sidney: That's what they didn't know the context of the deals that I talked about I think I forgot to answer the question.
Paul Sidney: Similarly, both in Europe, and that like I said, we have reinforced our teams.
Paul Sidney: Team sports on like automatic spent as well as our delivery and that should actually help us and them.
Paul Sidney: These accounts are more especially can dispatch with the market picked up you got it and as far as the other top.
Paul Sidney: Top 10 accounts have grown picked up a nice talked up what can be the role models for the rest of it that's sort of accounting says nothing comes up foot locker possible.
Paul Sidney: It's the top pretty flat Cogs I would say also that some of these accounts are a little bit of sector specific to four as well.
Srinivas Pallia: Also, some of these accounts are a little bit sector-specific too for us. You know, if you look at like we talked about demand environment, strengthening in BFSI and health, whereas in certain sectors, especially energy and manufacturing for us have been weak. But I see, at least based on the quarter 3, we have seen an uptick in manufacturing that will actually result into the accounts that we are focusing on.
Paul Sidney: If you look at the like we talked about the demand environment strengthening in beef society.
Paul Sidney: Whereas in southern sectors, especially.
Paul Sidney: Energy and you know in manufacturing for us have been weak, but I see a conventional electricity based in the quarter three you'll see the uptick in manufacturing that will actually result into the accounts that we are focusing on.
Sudheer Guntupalli: Second question is in terms of headcount, so in the last 10 quarters if I look at it, I think net addition is negative in 7 of them, including the current quarter. Now that we are talking about an improvement in demand and guidance also sort of reflects some amount of growth in the coming quarter.
Paul Sidney: And second question is in terms of her tongue so.
Paul Sidney: In the last 10 quarters, if I look at it I think the net edition is make if they didn't have enough time during the current quarter now that we're talking about are implementing demand and our guidance always just a couple of blocks are some amount of growth in the coming quarter.
Saurabh Govil: I just said for furloughs we are operating at 86 to 88% kind of utilizations, so when should we think that the hiring engine should start ticking again? Saurabh here, the hiring engine has actually kicked off, you know, it's not that it's not there, we have called out that the next fiscal we Going every quarter to campus and hiring about 10-12 companies. Over and above that we will have lateral ironing happening.
Paul Sidney: This makes us mostly at operating at 86% to 88% kind of utilization are so so then should we think that they're hiding in venture stock became again.
Paul Sidney: So I'll get into how do you mean do not actually kicked off and it's not that it's not there.
Paul Sidney: You guys called it out there for the next fiscal we would be going to be quarters in Kansas, adding about 10000 people.
Paul Sidney: What does it look like we'll have left or adding happening.
Saurabh Govil: and we also see attrition coming down in the coming quarter because our net new designations have been coming down so we will look at overall supply chain in terms of utilization demand Thank you sir, all the very best.
Christian: We also see that Christian.
Paul Sidney: Coming down in the coming quarters.
Paul Sidney: The technicians have been coming down so.
Paul Sidney: You wouldn't look at it one supply chain in terms of utilization demand.
Paul Sidney: Attrition.
Paul Sidney: Uh huh.
Speaker Change: I see that you wouldn't be robust from adding as we move forward.
Paul Sidney: And you said all diseases.
Speaker Change: Thank you.
Sandeep Shah: Your line is Mr. Sandeep Shah from <unk> Securities. Please go ahead.
Sandeep Shah: Yeah, thanks for the opportunity and congrats on a good execution. The first question, I think, Srini, you meant that the portfolio-specific issue in energy manufacturing resources and consumer is not behind. So when do you expect that to get behind? Because we have also heard in the earlier calls, it may be more Wipro-specific rather than industry-specific. And I am asking this, this contributes almost 36-38% of the top line and that may provide a hurdle in terms of consistently growing quarter after quarter.
Yeah, Thanks for the opportunity and congrats on a good execution.
Sandeep Shah: The first question I think to me.
Sandeep Shah: That's the portfolio, especially.
Sandeep Shah: That's the manufacturing resources.
Sandeep Shah: What is behind that.
Sandeep Shah: Do I expect that.
Sandeep Shah: The heightened because you have also hard.
Sandeep Shah: It may be more speculative investment.
Sandeep Shah: Specific.
Sandeep Shah: I am asking.
This contributes almost 36, 38, which I felt I felt like adding back vehicles right a hurdle in Belgium, so consistently growing.
Srinivas Pallia: Thanks, Sandeep. Sandeep, if you look at the way, you know, we have the four strategic market initiatives. America's and America's too, we talked about our performance last few quarters. Having said that, we did call out that APMEA and Europe has been soft for us. Now if you embed the industries into those four markets, clearly the industries that we have, the sectors that we see growth and opportunities in the last three quarters talking about has been banking, financial services, and healthcare. Having said that, this quarter we saw three or four sectors grow year on year, and I think that's another positive area.
Sandeep Shah: Thanks, Sandeep. So I think if you look at the.
Sandeep Shah: We have.
Sandeep Shah: The fourth strategic marketing mix.
Sandeep Shah: Clearly subject to the Americas, the Americas too we talked about our performance.
Sandeep Shah: After a few quarters.
Sandeep Shah: Having said that we did call out that have been out in Europe has been soft for us now.
Sandeep Shah: And all of Us who embed.
Sandeep Shah: And this fits into those four buckets you know.
Sandeep Shah: Clearly you know.
Sandeep Shah: The industries that we have are the sectors that could be.
Sandeep Shah: We are.
Sandeep Shah: Should we see growth opportunities or the last three quarters of talking their book I've seen it all banking financial services and healthcare, having said that this quarter we saw.
Sandeep Shah: All three all four sectors grow year on year.
Sandeep Shah: And I think that's how it is there are there are positive.
Sandeep Shah: Uh huh.
Srinivas Pallia: In terms of specifically energy, manufacturing and resources, it has been soft for us. But within that, manufacturing is taking an uptick for us, and you see the numbers that we have talked about. In terms of technology and consumer, it has been a good quarter, quarter three, and I know we have a very strong and robust pipeline around that. I see that we have to just execute into that segment. And finally, if you look at the broad-based, the pipeline is very broad-based across these sectors and across these four SMUs. I think the focus will now be, Sandeep, you know, bringing some of them home.
Sandeep Shah: In terms of specifically energy manufacturing and resources.
Sandeep Shah: It has been soft for us, but we think that manufacturing and always taking in a big for us and you'll see the numbers that the automobile.
Sandeep Shah: The book in terms of.
Technology, and consumer and I think that's been a good quarter quarter, three and I know you have a very strong and robust by putting it on but I see that you know if you have to just execute into that segment.
Sandeep Shah: And finally, if you look at the broad based.
Sandeep Shah: The pipeline is very broad based across these sectors and across these Florida stimulus I think the focus with no big Sunday, bringing some of them hold.
Sandeep Shah: Okay. Thanks, a lot, but not just if I'm not wrong and what can you say it on the capital allocation.
Sandeep Shah: Okay, thanks.
Aparna Iyer: And Aparna, just if I'm not wrong, what you said on the capital allocation, we are more tilted on dividend versus buyback as a matter of choice or am I wrong in understanding? We prefer both dividends and buybacks. That said, you've seen that the dividend that we've declared is substantially higher compared to what we've done in the previous year. The capital allocation that we've committed is 70% and above of the net income over a block of three years. This is effective FY26, so you should look at the block starting FY26 for us to meet that number.
Sandeep Shah: We are more interested on dividend versus buyback.
Or am I wrong in exactly.
Sandeep Shah: You know, we therefore, both dividends and buyback that said you've seen that Oh, they didn't end up being the class is substantially higher compared to what we've done and dusted.
Sandeep Shah: Yeah.
Sandeep Shah: The capital allocation that gave commentary is.
Sandeep Shah: 70% of them all of them they can come up with a block of three years.
Sandeep Shah: The effective if I can use it so you shouldn't look at the block stopping at 526 foot off to meet that.
Sandeep Shah: Nimble.
Aparna Iyer: Like I said, all modes, including dividend, buyback, special dividend, everything will be explored.
Sandeep Shah: But we.
Sandeep Shah: Like I said all modes.
Sandeep Shah: Clothing dividend buyback special dividend everything will be explored.
Unknown Shareholder: Okay, thanks and all the best.
Sandeep Shah: Okay, Thanks, and all the best.
Sandeep Shah: Thank you.
Speaker Change: Before we take the next question I would like to remind participants to Chris Gordon wants to ask a question.
Ashwin: Before we take the next question, we would like to remind Next question is from the line. Hi, thanks for the opportunity and congrats on good results. Aparna, I wanted to get a sense in terms of that despite the wage hikes, our employee cost number in absolute terms does not seem to have changed materially over the last two quarters.
Speaker Change: Next question is from the line of Ashwin Mehta from Ambit capital. Please go ahead.
Speaker Change: Hi, Thanks for their bonuses, if they hadn't gone bad sunglasses Alice.
Speaker Change: And then when you do get Hussain who's in terms of that despite the wage hikes are our employee cost number in absolute terms it.
Does not seem to have changed materially over the last two quarters. So what have been the offsets for that.
Aparna Iyer: So what have been the offsets for that? And the second question is in terms of depreciation, we've seen almost 120 odd benefit on depreciation from a YOI perspective. So what is driving this substantial reduction in terms of depreciation?
And the second question is in terms of depreciation that.
Speaker Change: We've seen almost 100 and Duane D R.
Speaker Change: Benefit on depreciation from O Y O Y perspective, so what is driving the substantial reduction in terms of M. D C.
Aparna Iyer: Actually, Ashwin, on depreciation, in Q3 of the last fiscal, we actually had a one-off. So, that's not the right number to take, even if you have to look at it over the last two to three quarters of depreciation. So, broadly there, there is some optimization, but that's a result of the natural phase-off of intangible amortization that we do, right? So, like I said, what you're seeing in Q3 is actually the word of any noise, and you can model that going forward.
Speaker Change: To me Ashwin on depreciation.
Speaker Change: In Q3 of the last fiscal we actually had a one off so that's not the right number to think even if you have to look at it for the last two or three quarters.
Speaker Change: Quarters are better patient care broadly that there is some optimization, but that's a is locked up in an accident piece off of our intangible amortization that they do so.
Speaker Change: So like I said, what youre seeing in Q T, Rob actually devoid of any home.
Speaker Change: And you can model that going forward.
Aparna Iyer: Now, to the point on, you know, what's playing out in the employee costs, there are quite a few things. One, we've spoken about improved levels of utilization. The number of prints you're seeing is a reduction, but that's how we just define it, because of all those, you know, the utilization looks lower. But, you know, there is, if you look at the core utilization, even outside of this is very, very strong. Two, if you look at, you know, the FPP productivity that we've been driving, we've been consistently improving. And what you're seeing as a flow through into Q3 is also a lot of the productivity initiatives that we had already initiated through Q2, right?
Speaker Change:
Speaker Change: Oh Fine go on you know, what's playing out in the employee costs that are quite a few things one well.
Speaker Change: Talking about <unk>.
Speaker Change: That utilization the number of things you are seeing.
Is that is the reduction, but that's how we just define it because off on those.
Speaker Change: Listen look no robot.
Speaker Change: If you look at it.
Speaker Change: Coal utilization even outside of this is maybe a strong. So if you look at you know the FPP productivity that we've been driving consistently.
Speaker Change: And what you'll see is a flow through into Q3 is also a lot of the product the niche productivity initiatives that he had already initiated.
Speaker Change: Q2 O right also mean that to me through the quality of it and if you look at all or part D. So it's of course, it's also something that would be how did you sort of improved quality of everything is also playing into the margin expansion.
Aparna Iyer: Also, we've actually improved our quality of revenue. If you look at our third-party services costs, it's also something that we have reduced. So, improved quality of revenue is also playing out into the margin expansion. And then again, you know, so those are some of the leaders.
Speaker Change: And then again you know so those are some of them to leave us.
Unknown Shareholder: Sure.
Speaker Change: Yeah sure. Thanks, Seth I can separate at that time. So there is lot of instead of the base.
Unknown Shareholder: Thanks Aparna. Thanks for the clarification.
Unknown Shareholder: All the best.
Speaker Change: Thank you.
Unknown Shareholder: Ladies and gentlemen, that was the last question for today. I would now like to hand the conference... Thank you for all joining the call.
Speaker Change: Ladies and gentlemen.
Speaker Change: It was the last question for today I would now like to hand, the conference back to Mr Depot, Florida for closing comments over to you.
Speaker Change: Sure.
Speaker Change: Yeah. Thank you for all.
Speaker Change: Joining the call.
Unknown Shareholder: In case you could not take any questions due to time constraints, You can reach out to Investor Relations directly. Have a nice day, sir. Thank you, members of the management team.
Speaker Change: He could not take any questions.
Speaker Change: You can't be totally Mr. Images are good if you have a nice day.
Thank you members of the management team.
Unknown Shareholder: On behalf of Wipro Ltd.
Speaker Change: On behalf of Wipro limited that concludes this conference. Thank you for joining US and you may now disconnect your lines.