Q1 2020 Earnings Call
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The conference is now being recorded we could not overcome some of them.
During the quarter and be able to say grew 11.2% year on year in constant currency.
And consumer business grew at 7.7 year on year.
Consumer most specifically impacted by the completion of certain large programs and while we have a very good deal pipeline. We did have deferral of certain programs that we had expected to start.
Oh this business should pick up from Q2 and beyond.
Energy and utilities and the communications business continued to grow.
The 1.8 and 8.8% year on year.
In constant currency terms.
We continue to see softness in our manufacturing and held to business.
The overall demand environment is stable in the global markets, but in pockets like banking and financial services. The decision, making has been slower due to the overall macro environment.
Our capital markets in particular and banking in Europe is seeing softness we are hopeful that some of this delay in different is temporary and will improve as we progress through the year.
Our utilization dipped this quarter.
For two reasons, one is because of fresher hiring that we have done and the second is the.
Bench that we had in anticipation of ramping up some of the projects, which have got delayed.
In Q1, we've hired 6000 for ships and Onboarded them globally, we continue to investing in our employees and we completed our annual merit salary increase process across the organization as planned.
Our attrition on a trailing 12 month basis remained in a very narrow band at about 17.6%.
Now let me go to a quick update of our six strategic teams.
Did you do business continues to see strong growth rate.
Quarterly revenue growth of about 5.6% annual growth of 34.6%.
Digital revenue now contributes 37.4% of our overall revenues our wins in digital have demonstrated this quarter that our leadership position in both.
Digital and cloud transformation provides airplanes end to end capability, the request for growth and future business.
Just to give you. An example, a large north American health insurer selected reported you too.
To support its ongoing engineering transformation and move to new ways of working and help with the organizational change management to improve speed quality and value of.
I'd software releases across its idea environment.
We continued to be focused on client mining our top 10 accounts grew 13.2% a year on year.
We have added three more inclined to the $100 million annual revenue trailing 12 month revenue bucket this quarter and we've added that land in the $75 million plus bucket as well.
We continue to cross sell into our existing accounts.
Across our various services.
This quarter as an example, we have been chosen as a partner to modernize the business services for a leading technology provider.
It entails transformation of the entire stack, including applications infrastructure and associated services and modernize it to the cloud this used to be in application services account for US. We have now we will be able to provide infrastructure services as well.
We continue to drive hyper automation and now Wipro Holmes is in over 350 clients.
With our percentage of work done by box exceeding 15% in Q1 in our fixed price engagements was mix has gone up to about 61.6%.
As an example, a Europe based pharmaceutical company has selected wipro to apply intelligent automation for its a.
Procurement HR taxation and legal functions leveraging automation capabilities of Wipro Holmes and its automation ecosystem. We've proven build use cases across all of these processes and set up a bought factory specifically for this customer.
Helping them transform their operations.
We continue to.
Invest in IP platforms and IP in Q1, we filed another 26 patents, taking our total count of patents filed to about 2200, plus and now we have 602.
Patents granted within our portfolio.
[noise] leveraging.
Wipro ventures investments.
Continues to help us win deans and.
A global beverages company has selected wipro to improve the overall customer experience and boost customer trust.
During this engagement, we proven support the company's managed network and help enhance its cyber security and temperature postures, leveraging our cyber security platform, which has embedded in it some of the innovation from our Wipro venture investments.
We have seen very good progress with top corridor.
With the number of clients both enterprise customers for the what we call as enterprise cloud sourcing as well as the typical gig economy customers want to leverage the gig economy.
Smart enterprises are using the gig economy to drive innovation and are starting to do so at scale.
This is what we believe is the future of how I do services will be provided and we are quite heavily invested in this freelancers are being tapped on demand to spurt and execute on technology projects utilizing a computer vision Aiotv machine learning more violent even quantum computing.
Intuition is happening at the edge and Topcoder with Bruce crowd sourcing platform, we need to.
And help enterprises drive innovation and execution with the gig economy.
With 1.5 million community members worldwide and more than 15 years of enterprise experience top quarter. Now is one of the most sophisticated and simplest way for enterprises to access styling and execute a digital engagements.
We have further onboarded a number of customers from our existing claims said as well as the expanded customers that came along with the top quartile acquisition.
Recently, we completed an engagement leveraging topcoder and.
Talent at Wipro, which helped.
Address.
Oncologist at the Dana Farber Institute.
Working closely with the Harvard Medical school to help identify.
And.
Treat lung cancer more effectively essentially using artificial intelligence and.
Visual computing technologies, we were able to develop an algorithm, which is able to detect the impacted areas.
For lung cancer patient.
As accurately, but three times faster as an end got oncologist and this kind of innovation can be used to.
Increase the reach of medical expertise and oncology expertise across the globe last month.
This has been published in Jama, which is the journal of American Medical Association, and we feel that these kind of engagements.
And impact.
Could be tremendous to the investments that we place making.
We continue to invest in talent and localization and they're now a U.S. localization has crossed 65%.
Including setting up of centers across the us.
In conclusion, while we had a slow start to this year we believe.
This is the strong pipeline of deals and the differentiated capabilities that we have invested in.
We will gain back momentum as we progress through the years through the year I now request shipping to give some color on our financials.
Thank you our base I want to make only two specific comments the fallacy that our all operating margin and profitability has remained fairly robust.
Despite the investment in MSR high.
And utilization that we have made to the need through the quarter.
Two is our cash conversion, we have converted once again nearly hundred person off our net income into free cash flow in fact, the retreat at 98.8.
Our tax rate for the quarter was 21.8%, which is very competitive.
Our utilization rate was 70.39 compared to 70.28, despite an appreciating currency.
Our other income grew year on year, 53%.
And overall therefore.
Our fears on year on year basis was 12.5%.
Overall, we had a satisfactory quarter as I said in the beginning both on profitability and cash conversion.
We are guiding for a zero to 2% sequential growth for quarter two of this fiscal.
And with that we'll be happy to take your questions.
Thank you very much.
Ladies and gentlemen, we will now begin the question answer session.
Anyone who wish to ask a question. Please press Star then one on your Touchstone telephone.
If you wish to remove yourself from the question queue.
Style then too.
Participants are requested to use handsets when asking a question.
Ladies and gentlemen, we will wait for a moment, while the question can assemble.
To ask a question. Please press Star then one.
The first question is from the line of Sundeep other one for me to Rice. Please go ahead.
Hello, Thanks for taking my question.
I have just one question on these on the growth side.
Our digital continues to be robust and is not a significant proportion of our revenue.
How much is our logistic these are little known legal fees and how charters than we can today.
In a moment and how long investment can may continue.
No impacting our such a robust maybe little growth and not contributing to overall growth.
The second one is on the northeastern lost picking up the industry growth rates are the growth rate of the PSS.
What is what is the problem in our in our level what is the problem in our business right now, we're just not allowing us to pause for several months number or is there some client specific issue something with your team contemporaneously generally.
So for me.
As we have been articulating that certain note.
Reported claim specific issues.
That we have been addressing and as we prioritize those issues.
We continue to address it and see good turnaround on doors right now if you look at it from a vertical perspective.
There are a couple of verticals manufacturing.
Primarily in Europe and.
Hello.
Primarily around the FDA, while we have a robust growth in the Bay area in held for example, or.
Yes in manufacturing, we still need to do some work on the yes.
To address to get a robust secular growth where these two verticals can also start contributing to the overall the program. Similarly on the service lines, we have some work to do.
In engineering.
Otherwise I'm quite satisfied with most of the other verticals, we have had a slight softness in the application of the same but that is combined with the softness that you see in consumer which is more.
Entered into to this quarter, where there were certain large programs record all work and new programs did not start at the time that we had anticipated.
Similarly in the markets as you know we.
Okay do work on India, Middle East and a couple of other markets.
Primarily continental Europe , where do we need to do some more work but.
As I said, we have been prioritizing as you remember.
A couple of years back we had a.
At relatively lower market share in banking and financial services and as we.
Restructured the business and as we drove momentum in it today, we are gaining market share within the PFS say business. Similarly.
Come back to the industry, we were relatively Uh huh.
We're seeing lower growth in our biggest market, which is the U.S. and today, we have double digit growth.
Orders in the U.S.
The.
You did talk about the digital investments that we made in capabilities today, we have market leading capabilities in digital and cloud and as you see we have market leading growth and proportion of revenues on that.
As far as the legacy decline is concerned there are two kinds of declined one is as some of these engagements get or what customers are not.
Going for newer legacy engagements are there was a decline second is we've been quite proactive in providing productivity benefits to customers as automation becomes mainstay and the way customers love that it does have an impact on our top line. So the way we look at our business is that most of the growth to over 100% of the growth would come from a digital and the new it services, while we will continue to maintain our share of.
The legacy business from a point of view to bring value proactively to customers.
And transform them to digital and modernize the idea and operations landscape.
Thank you.
The next question is from the line of nothing but we're not going from Investec. Please go ahead.
Hi, Thanks for taking my question.
Maybe in the past I think a couple of years ago no.
HM.
There's one thing that we used to mention that.
Capital markets is the reasonable proportion of our financial services business. If you could give us some sense on how that is today and how that proportion has changed.
And second you did allude to <unk> a possibility of some recovery in this space going forward.
I just wanted to understand what's driving the confidence and what's actually happening on the ground that basically gives us confidence on improvement in growth I see move forward on the financial summary, subsea space.
Shouldn't look at our financial services business, a consistently over the last two or three years, we've oh look the industry and grow to even a this quarter on a year on year basis Weve grown double digit.
We do see softness in two areas one is in Europe in banking in taking this capital market overall.
I think.
You know as you all from the financial services industry. You know this as much of that would be a you know we would like that goes beyond that there is an opportunity at some of the customers about consolidating some of the customers are leveraging automation and some of our other services to be able to.
Not only digitally transform themselves, but also drive efficiency and we're participating in both of them our capital markets proportion of the total proportion of BFS say has not changed much over the years, both have grown equally and ER right know the softness.
In the order would be a nice basis more in capital markets and in the European banking space.
Sure and just one more question, if I may Oh, I'm, sorry business I'm I'm. The initial thought was that we thought that the numbers would keep sort of declining order period, considering the very low profitability in that business, but it appears that it's grown has seen pretty solid growth. This quarter. Despite the very low margins in that business and get the margins.
Just wanted your thoughts on that so for now and going forward.
So as you are aware, we've taken a very strategic approach to the India a state run interfaces business in the long then we do believe that this business has a lot of value.
And ER, but the two cents with a different rhythm and we want to make a fundamental shift in what services, we provide and how we provide those services how do we engage how do we take balance sheet exposure into that business and I'm seeing some very encouraging results from what we are trying to do and hopefully you don't really get results earlier than we would have originally set expectations and that is why you see growth. We still have some legacy issues in that business that we have to resolve and because of which there is a pressure on the margin of that business, but the new business. The incremental business that we are acquiring which is showing in the topline growth is coming with margins, which are in line with our expectations. So I feel good about that overall India.
Sorry business, we have a good leadership team we have an exact you shouldn't read them, we've made certain changes, which enable us to address market in a different manner with a different set of services. We have eliminated than what we had earlier called reporting for take no because one we brought it approaches it which all all the leading edge digital services and we think we can make most of digital India and are a lot of the services that are happening in Scotland organizations in terms of digital transformation and.
Citizen services.
Oh, thanks, so much and on the best.
Thank you.
The next question is from the line of Abhishek Monday from Macquarie. Please go ahead.
Justin My question is for you or so but this is a new buyback tax or does it in any way influence our upcoming buyback program.
[noise].
So you know we will wait for the final clarity on on the same in the.
Now in that in the budget that does get passed.
Having said that.
Our clear intention we shake ease to go ahead, and and complete the buyback process that we have.
Talked about.
People have to just wait and watch the final clarity of how are the whole mechanism around the tags and a and how it will get it how it will be applied to Amherst.
So let me ask you know what I mean, so let's assume that it gets passed through and then the Brady percentage enforced so well build the quantum remain unchanged and be paid taxes from our cashless or reduce the buyback amount to that extent.
Yeah. So you know the the whole concept of 25% cap comes from Savi regulation.
Thankfully we are at a stage, where we are under process of.
Our our buyback proposal with baby So I'm sure we will get clarity how to consider this.
You know we.
We just want to follow Walt CB regulation as it is interpreted and appreciated by fabby and buyback tax as it gets applied.
Once the final budget proposals.
Okay. Thank you. Thank you Sir.
Thank you.
The next question is from the line of Sandeep Shah from C.G.S. Yang. Please go ahead.
Yeah, Thanks for the opportunity.
Just wanted to understand or the start of the year versus one quarter past or how do you like the water wondered on the macro as well as the growth outlook for the full company as a whole or can you give some clarity on this.
Yeah as I said, you know I would have felt more comfortable if we if we had a slightly stronger at start of the year Hollywood. Our demand pipeline is strong we've had some wins, which have not translated into revenue because customers are not necessarily signing contracts and starting projects in some cases, a fast enough. So I would be a little more watch full at this point in the yard compared to the beginning of the yard.
A lot will determine the full year outlook is terms of what happens in quarter. Two just as an example, a couple of deals that we were expecting to get signed early in Q1 have just got signed in the last couple of weeks in this quarter and if that trend continues to develop a more comfortable.
For the rest of the year. So right now we are watchful of the macro environment and its impact on our customer's decision to spend I think that is a sufficient oh potential in the market, especially in the digital transformation cloud and the various new it services and I think we are very very pleased in terms of our ability to win market share and the majority of our offerings. We just need to see how this pans out from a macro perspective.
Okay, just a follow up Buddy sporadic instances that you had made you watch full is it more broad base across industry segment or the across many lines or how is how is it yeah.
I think the industry segments I already mentioned that is where it is a little more broad based some specific line says customers get into financial trouble or some customer specific instances would be more there.
In our portfolio now as we have talked about earlier to be volatile focus quite a lot on quality of revenue and how we address some of these kind of risks from a balance sheet perspective, so I feel much more comfortable from a claim specific issues.
Oh, okay.
Just a question in terms of modeling because this quarter for older peers. So on a Q1 commuter it'll be appreciation right for you I realize it will be one or two a slight depreciation. So can you breakdown or what does the margin walk and what could be the benefit of the <unk> dollar onto baked into the margin and am I wrong in saying that these are cutting margin versus the reported margin. There is a gap or 40 bips versus the reckoning Medina, 18%. Excluding the 70 gross <unk> net operating income was 18.4% which has been reported.
So their operating income Sandeep. It is really busy belong on the on the financials and certainly that's something that is that will not recur, it's a onetime in nature for quarter one.
So if you see from a debt standpoint 19 too.
That 18 is approximately a 1% delta and that one but then did it has had several impacts which I think we've done well to do count Oh, one is clearly the investment in in M.S. I imagine salary increase for the Oh, all of which is behind us out from a exit action standpoint, but we'll have two months impact in quarter. Two the second is the investment in the utilization that we have made in quarter. One toadies that is a little bit of adverse movement on onsite offshore mix in quarter, one, which hopefully will will sort of normalize as we go to the yup.
And yes, we of course had Oh forex benefit due to our.
Ah slightly superior realization of 70 point 39 works is 70 point 28 in quarter one quarter four.
But I would see more of that as a pricing power because you know 61.6% of our revenues come from fixed price project.
They are not based on the rate card. So it's it's really how I am able to manage might go to a revenue line VW might go to pause a that is a that is more critical. So we had us like we definitely had a slight tailwind of forex, but I would I would really see an entire one person did operational and a part of it more as an investment in bench and employee salaries.
Okay, Okay, and any lease accounting has led to any big impact on your margins.
It is it is Ah Ah.
Ladies I don't 0.1% or so it's very small.
Act BB 80 level and it is a zero nearly act up act PBT level. So you effectively at a PBT level you can see them.
Okay. Okay, Okay, and just last thing on are they cutting bases that fynineteen margins out 18.4% limit how do look a entering a fight with the slight rupee appreciation, which is happening to your commentary about oh merging with enough where the buyers continues to remain agile disappointing thing.
So the color focus right now is as I I be that articulated is really to get the momentum back a far afford the growth.
I'll be made commitments on investment in some of our investment ideas, which we call the big banks internally.
We have invested in in utilization.
Ah so right now the focus or all four organization would be to get revenue trajectory back and if you see last year also our quarter on quarter margin expansion came on back of fairly robust growth that we were able to get in quarter, two and quarter three of a of the of the fiscal so oh, so even in our business as you.
No very well our revenue and margins go pretty much hand in hand, So we bought the main focus right now is that we look at quarter to in quarter three.
To get revenue trajectory back and remain committed to our investment.
I will also pay veto vote fourx as well as two months impact of salary increases in quarter. Two so it's a delicate balance that we'll have to see through as we look at what are doing ahead. We're always say that we remain very tight on execution that we will always be.
Okay, Okay, and just last question I do what would be the impact would be marginal but this international technique group incorporated a clinician has been factored for all three months of the coming quarter in terms of guidance.
So as you know that acquisition has been announced.
And typically announcement to close yet or has a a an element of a regulatory approvals and so on and so forth also subject to closing conditions by the.
Sellers. So that is Oh, we don't know when we will close it we certainly our attempt is to close.
As early as we could but as we speak it is not closed.
And it's a small acquisition so whatever we announced is considered as part of our guidance and that's the reason we also give the range.
Okay, Okay, Thanks, and all the best.
Thank you.
The next question is from the line of both single from Phillipcapital. Please go ahead.
But both single from Phillip Capital. Your line is on mute or do something over the line from you'll start and go ahead.
Hi.
And then what are the <unk>.
Oh, yes. So you I think you know hi, thanks for taking my question still though so basically my question is on some of the key word because.
So if you see a in this quarter of one of our European geography business reported a Y on Y decline in constant currency down says that absolutely could were just there was some light on that number.
Also secondly, the health care business, I think I'm going to eight or nine quarters for the first time, we've seen.
A positive, though a marginal one but a positive but in that bucket. So can we assume that the SBS business has probably bottomed out and.
If it's not a good old wasn't that it leaves this business is would remain at the levels that it currently is.
And lastly on de emphasize business are we seeing some impact of beacon because in some of the things, especially by the likes of large clients like you'll be ethanol.
And are these getting anything on that front.
In terms of ER business impact.
So while we've had as you know it will not make a comment on any specific customer.
The Continental Europe softness that you see is primarily an into fictional for European banking.
Capital markets globally, and the European part as Willis Wipro specific for the manufacturing.
Business in Europe , so that kind of <unk> and as you know so we continue to Europe is this consists of these two verticals quite significant.
Sure. So you see softness in continental Europe in business, but I feel good that.
You know we have started to win deals over there we've got a good pipeline of deals and hopefully we shouldn't be.
Back to a positive trajectory on that one.
Hello.
Right as you know.
We as I said, we've seen good traction in our core health business, the Hps piece I would still.
I'll keep it does.
You know uncertain, but we have builds pituitary, so who heads our health vertical and I like to ask him to give some color on the business.
Yes, so for health, we still see softness in the <unk>, Although we are seeing some trends such as changes in California around the individual mandate and member enrollment across.
Leveling out and so while we are are guarded on H.P.S., we continue to build with pipeline as Ivan mentioned cash, especially in our payer provider to compensate which is translated to the the flattening you've seen over the last couple of quarters.
So we see that that will continue and in fact, our bullish that the deal pipeline that we see will translate into second half growth.
So would it be fair to say that we could probably continue this ER positive better to be though however module it might be or we could probably going to do this and begun to Israel.
Yes.
Yes.
Yes, you could Ah that's exactly it right. So we're expecting that can seem to see that in and are expecting growth to to feather in to compensate for any challenges that we see further in Asia.
So that's good enough for me I'll get on the bus or excuse me in sourcing, but are you going to be up and it was applied question, but I'll be hitting any noises about or what do you think he's insourcing either from U.S. off from European clients or from potential customers.
Nothing compared to what we have been seeing over the last couple of years.
The banking and financial services, specifically and fever or gain market share over the last couple of years.
Okay, that's good to hear.
Thanks for taking my question and Michelle.
Thank you.
The next question is from the line of multi level from Centrum Broking. Please go ahead.
So group continues to remain tepid, so whenever beer has taken a step forward in margins over the last four five quarters and has seen some acceleration in D.C. Moving then the growth momentum. So that we have seamless tried to do which would be useful for us.
So oh, we do believe that.
You have to make the right investment in our business to build capability, which enables us to differentiate in the market and drive growth I think a couple of years back with it ticked up call. It made the right investments today feel very good about that investment for that capability, our wind, which and the leadership position that we have as I've shared last time.
You know in a.
The total number of reports that we participate up majority of those reports, we get a leadership position in our capabilities. So right now I don't see a need for operating margin for good purely from a dealer buying or pricing perspective, we believe in maintaining a very disciplined growth richa, it's sustainable on the long term and hence a apart from the investments that we will make him capabilities I don't see a trading.
Margins for growth.
As a strategy.
And we have been relatively acquisitive company, so, but there has been some slowdown in momentum there. So I didn't read this kind of buyback tags and would be start to explore acquisitions more aggressively.
Rather than returning money to shareholders.
So I've lived benign for the.
Capital allocation piece, but as a strategy. We clearly have for every word tickle every market and every service line a clearly articulated through your strategy in which we identify white spaces, where if we get the right asset acquisition could accelerate out of the growth ought to give us different efficient and when we find the right asset and when we find it at the right price, we will not be shy of making an acquisition and.
Improving our ability to serve our customers. So from that perspective, the acquisition strategy doesn't change we just as that's been mentioned, we announced an acquisition last quarter and we'll be closing it sometime during this quarter post regulatory approvals.
So I don't see other ER our true.
Strategy on acquisitions, changing specifically to and we have sufficient cash on our balance sheet in spite of the capital that we return to our shareholders.
I guess a lot yeah.
I was just numerically or supplement what I did say that we are sitting at a $4.6 billion snack of that cash as of June .
And even if one were to assume that 1.5 billion of that would get paid out as part of the buyback will be still left to be close to $3.1 billion up of cash our net off there and a lot of just a cash payout that we have made in a in a span of two elements have been a billion dollar so.
We we can assure you that our payout policy is.
More than factors in the the use of cash that we call, though we could find on a minute. Our choice is based on the criteria that I've been much.
And the last one from my side, so digital which other verticals, where we are seeing strong momentum from us that needed to be to see verticals like retail consumer.
Or even the late adopters like energy utilities, and on which we've just seen some transmission spend thanks.
Right and who's the president of the digital business and let him.
So we have seen quite a broad based interest in digital digital is no mainstream it is true that a couple of years back or the initial interest was more from the b to C vertical but increasingly it is no.
But he you know very broad based health for example that you have shown growth. This quarter is the also known leveraging digital quite well.
BFS I NCB you clearly are the industries with a dish that is most penetrated and they are a b to C. But increasingly I think the difference will increase between the leverage of digital across all industries.
Thank you.
Okay. So thanks.
Thank you.
The next question is from the line of trying to get funding from probably modestly lighter. Please go ahead.
Hey.
Thank you for the opportunity set last quarter, you had mentioned that the growth guidance was weaker because there was a delay in the completion of lodge.
Large program in March quite though and there was also delayed award off a couple of things be if they say.
Can we get an update on that.
Thank you.
[noise].
As I mentioned in my earlier response, we do see some of those engagements that we would expect to start getting started.
But its still 50 50 as I said towards the end of last quarter, an early this quarter.
We've got couple of deals that we had one but were pending contract timing and start a signal for almost four or five months, we've got it.
There are still a few deals which again, we have the preferred partner, but we have not got the go ahead. So I would still be watchful, although I'm a little more optimistic now than I was at the beginning of last quarter.
Okay and then one more question you have I know declines in your Oh, I'm determined yet, but at least so disk lines would be into each segment.
Yeah. So any color that you know we don't breakout though.
The name or segments, where they belong to us, but I can tell you that they represent a diverse verticals and not just one.
Okay.
Thank you.
Thank you.
The next question is from the line up for a whole Jen from dollar capital. Please go ahead.
[laughter].
Yeah, Hi, Oh My question is given the depth of the menthol.
Closure in some deals from Q1 into Q2 and up or whether it's tapered demand scenario. So why are we think you know we have the zero to 2% carried in a kind of a guidance for Q2 or do we see a attack different them and kind of hitting card to persist or on an ongoing basis or is there anything like that.
I will let you know.
The guidance, we give based on what we see at the day, we give the guidance and it does the range as we execute to the quarter.
I am hopeful that our momentum a main ooh some of those Oh before deans.
Start to execution.
Okay and jet then Oh, you know if he ran his costs items chaz.
Interest cars depreciation facility expense.
Have seen significant decline sequentially how much of this is on a current girlfriend Das 116.
Yeah. So.
Clearly you eat has impacted and I think you should see though.
Ah that he then going forward, but as you know I. If I didn't think seemed requires us to our peak out though the operating leases and got plays that as as a in the balance sheet. So that has had increased but all I can tell you is that a total operating expense line level. The impact is very small. It's 0.1 person also of our revenues. So it should not have any money to any impact in terms of the aggregate number.
And he also brings out I think you know we took all the movement.
That it brings out any arbitrage on a on owning versus leasing Oh and everybody's numbers in my view would be more comfortable going forward as it happens to this.
A new accounting standard.
I understand that but ideally or all three of them should not have gone down. So is it like the cars on a you know a little child, you ran higher than forecasted acquired asked but then they were seeing and that has led to one time kind of a low bidding on these numbers or is there any other line item gravity in incremental far test data and that's why we don't see this.
In fact, a neutralizing because all tape being negative means although he has been a shrink favorite yes. So so so rahul I will request you to look at the trend on deck, because we had an accelerated their precision here didn't quarter four we had talked about it.
Then we had taken the amortization acceleration for.
A part of our platform intangibles in Hps business in quarter. Four so that was anyway going to go away, which has now go to place with diversified 16 believed that that precision.
Understood. Thanks, a lot for the color.
Thank you.
The next question is from the line of Ravi minutes from Elara capital. Please go ahead.
Hi, Thanks for the opportunity, but you know there was a small amount of auto to be declined. This quarter would you say is due to the exit of unprofitable programs off you know your any influence that restructuring does.
So I mean, the weekend I'd quit to do or the pickup which can be pretty quick.
Yeah, I was just asking about the auto revenue declined this quarter I get it that seems to be the sharpest decline for this geography segment that we've ever seen.
So it is still due to all of you know deliberate exit of any unprofitable programs and it has to be coordinated some of the margin improvement this quarter to that.
[noise]. It. So you know the I don't know do this quarter is due to certain large program seen a P.J. coming to an end of each have not got replenished. India also is sitting there, but india has been fairly stable or slight growth, but its really are two large programs coming to a and then we are quite optimistic about about eight P.J. as we go forward in the quarter.
In the yard so you should see a bounce back during the course of the USDA.
Right and secondly on the when you look at the segmental margins. It looks like you know your consumer B U and energy utilities both have.
<unk> declined sharply a kid, so anything that you'd like to call out.
And you want to be why wouldn't ER body too much as I said, if you look at the year on your number.
So over 7% growth there.
And Oh the project.
Getting or whatever.
I'd like to start up it hasn't affected Oh.
Consumer being a little bit more.
To bounce back in the next quarter, so I'm not wasn't at all.
But oh, yeah, you are getting that we have a and it's part of the president of the new business won the lines and about you want to add some color.
During this quarter.
And then a big decision touch on some of the.
And the opportunities are consulting on different later into Q2, so while low based upon what we did in Q1 B B C.
It will basically and towards the latter half of the year.
So that's basically a quick quick color on.
Thank you I appreciate that and one last question if I may on the I'm, sorry business they bit modest staff.
Seems to be a really low so you know, but you said that there are some programs are good and incrementally the margin is improving but.
When do you think that we would at least get to a breakeven you know what kind of timeframe do you think we should Franklin.
Sure it really sort of be aware of or you know you know the baby had.
Our government segment, because he believes that we need to or need to build a different execution read them around this business.
And we are very happy with the progress that we're making now some of this progress also means that we have to remain resilient then invest disproportionately to complete certain programs, which are little or no. That's right now, but the right.
Thing to do for the company is to complete and and Uh Huh.
Exit with or without a happy and good customer satisfaction and with that intent. We remain a indeed, we have remain interested in quarter four to quarter. One we could have a little bit more of that phase during the course of this year.
But as you rightly mentioned.
The trajectory there of improvement and we hope to remaining on that trajectory.
Great. Thank you appreciate it best of luck.
Thank you.
The next question is from the line of so they are going to probably from ambit capital. Please go ahead.
Yeah. Good evening gentlemen, thanks for the opportunity just a clarification on one of the questions asked earlier on buyback I understand that you continue with the intention of going ahead to buy back in this year, but he also confirming that the capital return policy of capital over the medium term, but not really change because of any potential taxation changes.
As you know our capital return policy has always been independent of the mood in which we have been able to return that cash or we'll say, 45% to 50% of our net profit and there are various parameters that so I I want to emphasize that 45% to 50% of net profit.
We will return every oh.
Oh, when it happens to buyback and the frequency is slightly different bill say that that is all the block of period and therefore, you know we will continue that there is no change in in in in that philosophy of.
You know, we always use dividend and buyback as a mode.
And we'll continue to evaluate what is the most appropriate way to find a cash return positive cash return execution for the shareholders.
Sure. So thanks, and secondly on a year on year basis. If you look at IP services delivered almost 5.9, Percentish kind of course, but a large part of this is actually coming from two service lines on these digital operations and platforms. Another is a data analytics and the <unk>, which at roughly 20% up but overall our business. So does that concentrated <unk> growth I can send you have it.
So David this is Pablo here.
So then if you look at the growth like got across the service lines. As you mentioned, a you know we're seeing growth across all though.
All the services that are very critical for the digital transformation of our customers. You know that includes the cloud infrastructure services that includes the data and analytics and <unk> along with the digital operations.
We do see a this quarter, we have seen a slowness in the application services due to the fact that some of the programs that got completed and it has been it late in the startup new transmission programs on then getting services side that we do see some amount of softness right now, but we do believe that you know we are making significant investments on engineering services side, and we'll see momentum much sooner than that.
I mean, if you're on the call or how do you see if you can comment about the engineering services. Please.
Sure about that.
Uh huh.
Mr Corporate bonds.
Doing business or sell some softness last quarter.
And even though he is I mean.
Let's try to be handled this wasn't up.
Okay.
Our second officer.
Yeah, Scott this is Mike.
Yes.
Clearly a good thing.
The business, where the customer spend on that I'm starting to see increased.
Oh, that's it from there so.
Oh.
Should be stops in one section because that's it.
[noise] comms business.
[noise].
Joseph Thanks, and all of us, but that is something.
Thank you.
The next question is from the line of Moshe Katri from Wedbush Securities. Please go ahead.
Hey, Thank you very much two questions for you first can you clarify whether there was any inorganic growth during the quarter. So, especially if we look at constant currency sequential growth. So was there any contribution from acquisitions and percentage points and then you indicated that you had some softness and a and b S. A side during the quarter.
Are we talking about project delays are we talking about project cancellations or any of that color could be helpful. Thank you very much.
And just sort of a there was no contribution on the competitive in numbers that you see from any acquisition fine if the things I mentioned it was more to go with some of the big Okay. Beginning of the year uncertainty that recycling the capital markets, which had an impact on or some of the let me get a spending on digital program that we would we typically what happens in a financial services into should you choose that Oh nature of digital work, where the most of what does it do Oh well first of all the work is did you have to happens in the spring starting an AD format, where the customers are able to switch on them to kill the discretionary spend another literally shocked if I could come back to you know just started fixed price or long term non engagement and that is where we saw it slow down some of that as I said, it's coming back some of that you wouldn't have to watched two quarters due to see how quickly.
They come back I think the need for it to be.
Digital spend is quite tight oh for those institutions and we do.
We if they do come back it would just be a micro fame as they assess how they want to go about the spending and the new reality offering illustrates another macro environments in that business.
Is your New guide is the guide for the next quarter factoring some of that recovery or not really are you being conservative at this point.
So Moshe we are we are not the either consider it do what I agree with you we have a range. So if it does it does pick up during the course of the quarter do you will see it in the in the numbers that please.
Perfect. Thanks, a lot.
Thank you.
Ladies and gentlemen that was the last question.
I now hand, the conference over to myself and <unk> for closing comments.
Thank you all for joining the call today in case, we couldn't take any of your questions. Please feel free to reach out to the Investor Relations team. Thank you and then have though not good day and good night.
Thank you very much.
Ladies and gentlemen on behalf of Wipro that concludes this conference.
Thank you for joining us and you may now disconnect your line.