Wipro Limited Announces Results for the Quarter ended September 30, 2018 under IFRS

Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) today announced financial results under International Financial Reporting Standards (IFRS) for its quarter ended September 30, 2018.

Highlights of the Results

Results for the Quarter ended September 30, 2018:

  • Gross Revenue was Rs 145.4 billion ($2.0 billion3).
  • IT Services Segment Revenue was Rs 143.8 billion ($2.0 billion3). Adjusted1 IT Services Segment Revenue was up 6.2% sequentially and 10.4% YoY in INR terms.
  • IT Services Segment Revenue in dollar terms at $2,041.2 million.
  • Adjusted1 Non-GAAP constant currency IT Services Segment Revenue up 2.8% sequentially and 5.1% YoY.
  • Adjusted2 IT Services Margin4 for the quarter was 18.1%. IT Services Margin4 reported was 14.6%.
  • Net Income was Rs 18.9 billion ($260.4 million3).
  • EPS for the quarter was Rs 4.19 ($0.063) per share.

Performance for the Quarter ended September 30, 2018

Abidali Z. Neemuchwala, CEO and Member of the Board said – Wipro has delivered a strong quarter on both revenue and margin growth. We won our largest deal to date and four of our Business Units grew over 4% sequentially in constant currency terms. The demand environment is robust, especially for digital transformation and enterprise scale modernization services.

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Jatin Dalal, Chief Financial Officer said “ Consistent improvement in our operating metrics reflects our relentless rigor of execution, which has resulted in our Adjusted2 IT Services Margin reaching 18.1% in quarter 2. We see automation as a key lever to drive margins going forward.

As part of our India business reorganization, we are carving out our India Public Sector Undertaking (PSU) and India Government business, given their distinct operating rhythm and need for differentiated execution rigor. The rest of our India strategy remains unchanged and will focus on enterprise customers, leveraging our new and core portfolio offerings in line with the global business. Given this, we will carve out the India PSU and India Government business out of our IT Services segment in our financials effective quarter ending December 31, 2018. The enterprise business in India will continue to be part of the IT Services segment. We will make the necessary disclosure pertaining to this carve out in our financials for the quarter ending December 31, 2018. Our outlook for the quarter ending December 31, 2018 reflects this change.

Outlook for the Quarter ending December 31, 2018

We expect Revenue from IT Services business to be in the range of $2,028 million to $2,068 million*. Comparable revenue excluding India PSU and India Government business for the quarter ended September 30, 2018 was $2,007 million. This translates to sequential growth outlook of 1.0% to 3.0%.

* Outlook is based on the following exchange rates: GBP/USD at 1.31, Euro/USD at 1.17, AUD/USD at 0.73, USD/INR at 72.02 and USD/CAD at 1.31.

IT Services Highlights

Wipro continued its momentum in winning large deals globally as described below:

  • Wipro has won a global multi-year digital workplace and managed network services contract from OMV, an Austrian integrated oil and gas company. The engagement will leverage Wipros automation capabilities and oil & gas industry expertise to standardize and transform the technology landscape, and lay the foundation for digitalization to improve employee experience at the client organization.
  • Wipro has been chosen as an end-to-end system implementation and program management partner by a leading development financial institution. The project will streamline the clients technology landscape and optimize their business processes while instituting industry best practices and solutions. Wipro will define future state business processes, design and implement a CRM layer, and develop product specifications and process flows for the client.
  • Wipro has won a long-term digital strategic engagement with a leading healthcare company to enhance their user experience through IT service desk transformation. The contract will leverage artificial intelligence and automation for service desk transformation.
  • Wipro will help a global nutrition company set up cloud-based IT infrastructure. This program will drive greater business agility, and improved employee and end-customer experience for the client.
  • Wipro has won a multi-year engagement from a leading Europe-based facility management company for transforming its IT operations. The program will help the client set up a futuristic, agile and scalable platform that will power digital initiatives through a next-gen delivery model, integrated platforms, hyper-automation and cloud technologies.

Digital Highlights

We continue to see increasing traction in digital oriented deals as illustrated below:

  • Wipro has been selected by a large North American bank to help create a new digital bank by providing and integrating strategy, design and technology services.
  • A large global pharmaceutical company has selected Wipro Digital to streamline and modernize its clinical trial process for vaccines through an experience-led approach.
  • A global financial services company has selected Wipro Digital to provide cloud-native development support, using Pivotal Cloud Foundry, as part of its ongoing cloud transformation program.
  • Wipro has won a multi-year deal from a global beverages retailer to deliver a digital workplace management solution to manage the clients worldwide physical assets.

Wipro continues to win deals in the cloud applications space by leveraging Appirio Cloud Services:

  • An American financial services company has extended its contract with Wipro. Wipro will help upgrade the user experience, integrate CRM touch-points and put together a financial services cloud capability roadmap for the clients retail banking portfolio.
  • Wipro has been chosen by a US-based healthcare organization for a cloud-based engagement that will help the client better manage its B2C and B2B stakeholder relationships.

Analyst Accolades and Awards

  • Wipro was recognized as a Leader in IT Infrastructure Services Automation “ Market Trends and Services PEAK Matrix„¢ Assessment 2018: Become AI Aware or Fall Behind
  • Wipro was positioned in the Winner’s Circle of HfS Blueprint on Software Product Engineering Services 2018
  • Wipro is recognized as a Leader in Embedded System Engineering Services PEAK Matrix„¢ Assessment: Enabling the Era of Connected and Intelligent Products
  • Wipro was recognised as a ˜Leader by The Forrester Wave„¢: Digital Process Automation Service Providers
  • Wipro is recognized as a Major Contender in Finance and Accounting Digital Augmentation Suite (F&A DAS) “ Service Provider Landscape with Solutions PEAK Matrix„¢ Assessment 2018
  • Wipro was selected as a member of the global Dow Jones Sustainability World Index (DJSI) – 2018 for the ninth year in succession. Launched in 2009, the S&P DJSI (World) is the gold standard for corporate sustainability. Inclusion in DJSI (World) index is based on a rigorous analysis of a companys performance on 600 data points spread across 21 primary indicators and more than 120 secondary indicators across Economic, Environmental and Social dimensions.

IT Products

  • IT Products Segment Revenue for the quarter was Rs 2.9 billion ($39.6 million3).
  • IT Products Margin for the quarter was -14.8%.

Please refer the table at the end for reconciliation between IFRS IT Services Revenue and IT Services Revenue on a non-GAAP constant currency basis.

All product names, logos, and brands are property of their respective owners.

About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures within the meaning of Regulation G and Item 10(e) of Regulation S-K. Such non-GAAP financial measures are measures of our historical or future performance, financial position or cash flows that are adjusted to exclude or include amounts that are excluded or included, as the case may be, from the most directly comparable financial measure calculated and presented in accordance with IFRS.

The table at the end of the release provides IT Services Revenue on a constant currency basis, which is a non-GAAP financial measure that is calculated by translating IT Services Revenue from the current reporting period into U.S. dollars based on the currency conversion rate in effect for the prior reporting period. We refer to growth rates in constant currency so that business results may be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of our business performance.

This non-GAAP financial measure is not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, the most directly comparable financial measure calculated in accordance with IFRS, and may be different from non-GAAP measures used by other companies. In addition to this non-GAAP measure, the financial statements prepared in accordance with IFRS and the reconciliation of these non-GAAP financial measures with the most directly comparable IFRS financial measure should be carefully evaluated.

Results for the quarter ended September 30, 2018, prepared under IFRS, along with individual business segment reports, are available in the Investors section of our website www.wipro.com

Quarterly Conference Call

We will hold an earnings conference call today at 07:15 p.m. Indian Standard Time (09:45 a.m. U.S. Eastern Time) to discuss our performance for the quarter. The audio from the conference call will be available online through a web-cast and can be accessed at the following link- http://services.choruscall.eu/links/wipro181024.html

An audio recording of the management discussions and the question and answer session will be available online and will be accessible in the Investor Relations section of our website at www.wipro.com

About Wipro Limited

Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) is a leading global information technology, consulting and business process services company. We harness the power of cognitive computing, hyper-automation, robotics, cloud, analytics and emerging technologies to help our clients adapt to the digital world and make them successful. A company recognized globally for its comprehensive portfolio of services, strong commitment to sustainability and good corporate citizenship, we have over 175,000 dedicated employees serving clients across six continents. Together, we discover ideas and connect the dots to build a better and a bold new future.

Forward-Looking Statements

The forward-looking statements contained herein represent Wipros beliefs regarding future events, many of which are by their nature, inherently uncertain and outside Wipros control. Such statements include, but are not limited to, statements regarding Wipros growth prospects, its future financial operating results, and its plans, expectations and intentions. Wipro cautions readers that the forward-looking statements contained herein are subject to risks and uncertainties that could cause actual results to differ materially from the results anticipated by such statements. Such risks and uncertainties include, but are not limited to, risks and uncertainties regarding fluctuations in our earnings, revenue and profits, our ability to generate and manage growth, complete proposed corporate actions, intense competition in IT services, our ability to maintain our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which we make strategic investments, withdrawal of fiscal governmental incentives, political instability, war, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our business and industry. Additional risks that could affect our future operating results are more fully described in our filings with the United States Securities and Exchange Commission, including, but not limited to, Annual Reports on Form 20-F. These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in the companys filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statement that may be made from time to time by us or on our behalf.

1.Sequential and YoY revenue growth rates for the quarter ended September 30, 2018 are adjusted for the impact from the divestment of our hosted data center services business for the quarters ended June 30, 2018 and September 30, 2017.
2.IT Services Margin and EPS for the quarter ended September 30, 2018 includes a loss of Rs 5,141 million from the settlement with one of our key customers. Adjusted IT Services Margin exclude the impact of this loss.
3.For the convenience of the readers, the amounts in Indian Rupees in this release have been translated into United States Dollars at the certified foreign exchange rate of US$1 = Rs 72.54, as published by the Federal Reserve Board of Governors on September 30, 2018. However, the realized exchange rate in our IT Services business segment for the quarter ended September 30, 2018 was US$1= Rs 70.44.
4.IT Services Margin refers to Segment Results Total.
WIPRO LIMITED AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(Rs in millions, except share and per share data, unless otherwise stated)

As at March 31,As at September 30,
201820182018

Convenience translation into US dollar in millions (unaudited) Refer Footnote 3

ASSETS

Goodwill117,584128,0261,765
Intangible assets18,11318,027249
Property, plant and equipment64,44368,370943
Derivative assets4117
Investments7,6687,494103
Investment in equity accounted investee1,2061,30518
Trade receivables4,4464,17958
Deferred tax assets6,9088,861122
Non-current tax assets18,34920,237279
Other non-current assets15,72620,227279
Total non-current assets254,484276,7433,816
Inventories3,3704,06056
Trade receivables100,990106,3821,466
Other current assets30,59627,150374
Unbilled receivables42,48628,685395
Contract assets18,573256
Investments249,094248,8153,430
Current tax assets6,2627,895109
Derivative assets1,2323,79352
Cash and cash equivalents44,92579,8181,100
478,955525,1717,238
Assets held for sale27,201
Total current assets506,156525,1717,238
TOTAL ASSETS760,640801,91411,054

EQUITY

Share capital9,0489,048125
Share premium80087912
Retained earnings453,265491,4016,774
Share based payment reserve1,7722,26031
Other components of equity18,05117,414240
Equity attributable to the equity holders of the Company482,936521,0027,182
Non-controlling interest2,4102,31232
TOTAL EQUITY485,346523,3147,214

LIABILITIES

Long – term loans and borrowings45,26852,329721
Derivative liabilities7
Deferred tax liabilities3,0592,47534
Non-current tax liabilities9,2209,543132
Other non-current liabilities4,2304,68865
Provisions32
Total non-current liabilities61,78769,037952
Loans, borrowings and bank overdrafts92,99162,726865
Trade payables and accrued expenses68,12984,7971,169
Unearned revenues17,13923,607325
Current tax liabilities9,41713,667188
Derivative liabilities2,2106,48789
Other current liabilities16,61317,507241
Provisions79677211
207,295209,5632,888
Liabilities directly associated with assets held for sale6,212
Total current liabilities213,507209,5632,888
TOTAL LIABILITIES275,294278,6003,840
TOTAL EQUITY AND LIABILITIES760,640801,91411,054
WIPRO LIMITED AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENT OF INCOME

(Rs in millions, except share and per share data, unless otherwise stated)

Three months ended September 30,Six months ended September 30,
201720182018201720182018

Convenience translation into US dollar in millions (unaudited) Refer Footnote 3 on Page 1

Convenience translation into US dollar in millions (unaudited). Refer Footnote 3

Gross Revenues134,234145,4102,005270,495285,1873,931
Cost of revenues(94,694)(101,770)(1,403)(191,805)(202,120)(2,786)
Gross profit39,54043,64060278,69083,0671,145
Selling and marketing expenses(9,867)(10,814)(149)(20,013)(21,627)(298)
General and administrative expenses(7,085)(13,696)(189)(14,349)(22,304)(307)
Foreign exchange gains/(losses), net4531,217178061,98827
Other operating income26942,79839
Results from operating activities23,04120,61628545,13443,922606
Finance expenses(1,434)(1,569)(22)(3,035)(3,218)(44)
Finance and other income6,7095,1367113,03610,333142
Share of profit /(loss) of equity accounted investee5204(33)
Profit before tax28,32124,20333455,13951,004704
Income tax expense(6,426)(5,347)(74)(12,420)(11,212)(155)
Profit for the period21,89518,85626042,71939,792549
Profit attributable to:
Equity holders of the Company21,91718,88926042,68240,095553
Non-controlling interest(22)(33)37(303)(4)
Profit for the period21,89518,85626042,71939,792549
Earnings per equity share:
Attributable to equity share holders of the Company
Basic4.524.190.068.818.900.12
Diluted4.524.190.068.808.890.12
Weighted average number of equity shares used in computing earnings per equity share
Basic4,845,485,1494,503,556,4114,503,556,4114,844,289,0244,503,618,0864,503,618,086
Diluted4,852,992,5464,513,452,6374,513,452,6374,852,340,2244,513,533,4644,513,533,464
Additional Information
Three months ended September 30,Six months ended September 30,
Segment Revenue201720182018201720182018
IT Services Business Units
BFSI36,34944,10560871,28385,1591,174
HEALTH17,98918,36425337,13936,573504
CBU20,98923,53232441,52445,519628
ENU17,76918,23925135,23335,444489
TECH18,51519,58127036,17939,085539
MFG11,49511,73216223,17323,036318
COMM8,5838,22011317,41415,960220
IT SERVICES TOTAL131,689143,7731,981261,945280,7763,872
IT PRODUCTS2,9882,876409,3316,40888
RECONCILING ITEMS10(22)25(9)
TOTAL134,687146,6272,021271,301287,1753,960
Segment Result
IT Services Business Units
BFSI6,0557,72510611,49614,874205
HEALTH2,6982,659375,4324,72965
CBU3,2444,156576,1786,77193
ENU3,435(2,084)(29)7,0866068
TECH3,7484,644647,2298,708120
MFG1,6522,247313,3463,64950
COMM1,1471,070152,5961,82425
UNALLOCATED80531041,3371,00514
OTHER OPERATING INCOME26942,79839
TOTAL IT SERVICES22,78420,99628944,70044,964619
IT PRODUCTS88(426)(6)119(1,166)(16)
RECONCILING ITEMS1694613151242
TOTAL23,04120,61628445,13443,922605
FINANCE EXPENSE(1,434)(1,569)(22)(3,035)(3,218)(44)
FINANCE AND OTHER INCOME6,7095,1367113,03610,333142
SHARE OF PROFIT/(LOSS) OF EQUITY ACCOUNTED INVESTEE52004(33)(0)
PROFIT BEFORE TAX28,32124,20333355,13951,004703
INCOME TAX EXPENSE(6,426)(5,347)(74)(12,420)(11,212)(155)
PROFIT FOR THE PERIOD21,89518,85625942,71939,792548

Segment result represents operating profits of the segments and dividend income and gains or losses (net) relating to strategic investments, which are presented within Finance and other income in the statement of Income.

The Company is organized by the following operating segments: IT Services and IT Products.

IT Services: The IT Services segment primarily consists of IT Service offerings to customers organized by industry verticals.

Effective April 1, 2018, consequent to change in organization structure, the Company reorganized its industry verticals. The Manufacturing (MFG) and Technology Business unit are split from the former Manufacturing & Technology (MNT) business unit. The revised industry verticals are as follows: Banking, Financial Services and Insurance (BFSI), Health Business unit (HEALTH) previously known as Health Care and Life Sciences Business unit (HLS), Consumer Business unit (CBU), Energy, Natural Resources & Utilities (ENU), Manufacturing (MFG), Technology (TECH) and Communications (COMM). IT Services segment also includes Others which comprises dividend income relating to strategic investments, which are presented within Financial and other Income in the interim condensed consolidated statement of income. Key service offerings to customers includes software application development and maintenance, research and development services for hardware and software design, business application services, analytics, consulting, infrastructure outsourcing services and business process services.

Comparative information has been restated to give effect to the above changes.

IT Products: The Company is a value added reseller of desktops, servers, notebooks, storage products, networking solutions and packaged software for leading international brands. In certain total outsourcing contracts of the IT Services segment, the Company delivers hardware, software products and other related deliverables. Revenue relating to the above items is reported as revenue from the sale of IT Products.

Reconciliation of Non-GAAP Constant Currency IT Services Revenue to IT Services Revenue as per IFRS ($MN)

Three Months ended September 30, 2018
IT Services Revenue as per IFRS$ 2,041.2
Effect of Foreign currency exchange movement$ 18.7
Non-GAAP Constant Currency IT Services Revenue based on previous quarter exchange rates$ 2,059.9
Three Months ended September 30, 2018
IT Services Revenue as per IFRS$ 2,041.2
Effect of Foreign currency exchange movement$ 50.7
Non-GAAP Constant Currency IT Services Revenue based on exchange rates of comparable period in previous year$ 2,091.9

Wipro Limited
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Vaibhav Saha
+91-80-4672
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[email protected]
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Kumar Jain
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