Wipro Limited Announces Results for the quarter and year ended March 31, 2018 under IFRS

IT Services Revenue surpasses $8 Billion

BANGALORE, India & EAST BRUNSWICK, N.J.--()--Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) today announced financial results under International Financial Reporting Standards (IFRS) for its quarter and year ended March 31, 2018.

Highlights of the Results

Results for the Year ended March 31, 2018:

  • Gross Revenue was Rs 544.9 billion ($8.4 billion1), a decline of 1.0% YoY.
  • IT Services Segment Revenue was $8,060.2 million, an increase of 4.6% YoY.
  • Non-GAAP constant currency IT Services Segment Revenue grew 2.9% YoY.
  • IT Services Segment Revenue in Rupee terms remained flat at Rs 528.4 billion ($8.1 billion1).
  • IT Services Margin was 15.8%. Excluding the impact of insolvency of two customers and the impairment loss in one of our acquisitions, IT Services Margin for the year was 16.8%*.
  • Net Income3 was Rs 80.1 billion ($1.2 billion1), a decrease of 5.7% YoY.

Results for the Quarter ended March 31, 2018:

  • Gross Revenue was Rs 137.7 billion ($2.1 billion1), an increase of 0.7% sequentially.
  • IT Services Segment Revenue in dollar terms was $2,062.0 million, up 2.4% sequentially and 5.5% YoY.
  • Non-GAAP constant currency IT Services Segment Revenue grew 1.1% sequentially and 2.5% YoY.
  • IT Services Segment Revenue in Rupee terms at Rs 134.1 billion ($2.1 billion1), an increase of 1.3% sequentially.
  • IT Services Margin for the quarter was 14.4%. Excluding the impact of insolvency of a customer and the impairment loss in one of our acquisitions, IT Services Margin for the quarter was 16.0%*.
  • Net Income3 for the quarter was Rs 18.0 billion ($277 million1).

Performance for the quarter and year ended March 31, 2018

Abidali Z. Neemuchwala, CEO and Member of the Board said - “Our investments in Digital and our efforts in client mining are paying off well. Our strong order bookings in the last two quarters provide us the right foundation to grow as we progress through the year.”

Jatin Dalal, Chief Financial Officer said - “We continue to make progress in our client mining, with number of clients contributing revenues over $75 million increasing from 17 to 20 during the quarter. Our investments in Wipro HOLMESTM and our automation suite are resulting in consistent productivity improvements. We generated robust Operating Cash Flows of Rs 84 billion at 105% of our Net Income in FY18.”

Outlook for the Quarter ending June 30, 2018

We expect Revenue from our IT Services business to be in the range of $2,015 million to $2,065 million*. We had announced the divestiture of our hosted data center services business to Ensono for a consideration of $405 million. We expect the transaction to complete during the quarter ending June 30, 2018. For the purpose of the Outlook, we have not considered the impact of the divestment on the Revenue for the quarter ending June 30, 2018. We will revise the Outlook for the quarter based on the actual date of completion of the divestment.

* Outlook is based on the following exchange rates: GBP/USD at 1.39, Euro/USD at 1.24, AUD/USD at 0.78, USD/INR at 65.12 and USD/CAD at 1.27.

Capital Allocation

The Board of Directors at its meeting held on January 19, 2018, had declared an interim dividend of Rs 1 per equity share for the financial year 2017–18. The Board recommends adoption of the interim dividend as the final dividend for the financial year 2017–18. Thus, the total dividend for the financial year 2017–18 remains Rs 1 per equity share. We also completed a buyback of Rs 110,000 million in December 2017.

IT Services

We signed a definitive agreement to divest Wipro’s hosted data center services business to Ensono, a leading hybrid IT services provider, for USD 405 million. Wipro will unlock value by transitioning eight data centers and over 900 employees of its hosted data center services business to Ensono. As part of the agreement, Wipro will make a strategic investment of USD 55 million in Ensono’s combined entity.

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

A leading North American healthcare technology company has chosen Wipro as a strategic partner to help enhance its services and solutions, consolidate operations and grow the scale and scope of their offerings. Leveraging the Wipro HOLMESTM platform, Wipro will implement digital solutions that harness the power of cognitive computing, machine learning and hyper-automation. This engagement will help the client address the emerging needs of the industry as they work towards enabling a more value-based healthcare system.

Wipro has won a multi-year infrastructure transformation deal in the Securities & Capital Markets domain from a global financial services firm. The deal encompasses hybrid cloud management services, workplace services, cybersecurity operations, and cloud-enabled transformation, and will standardize and modernize IT operations across the client’s lines of business. In addition to leveraging Wipro's expertise in infrastructure operations transformation, the engagement will be powered by Wipro HOLMESTM for intelligent automation, and analytics-driven insights.

Wipro has won a multi-year contract from a leading German automotive company to transform and operate a large advanced analytics platform. The program will foster business agility and scalability for the client through transformation of enterprise operations and data-driven business insights.

A leading network equipment provider has selected Wipro to enhance its Internet Protocol products. Wipro will develop next-generation platforms for the client as well as support their existing product portfolio.

Digital highlights

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

A national U.S. retailer has hired Wipro Digital to support the ongoing development of its new omnichannel B2B platform and website. Wipro Digital’s Buildit engineering team will partner with the retailer to introduce new approaches and agile methodologies to enhance the user experience.

A North American healthcare company has chosen Wipro as its digital transformation partner to digitize and improve its partner experience to take advantage of the evolving business models in the healthcare industry. The project will leverage the offerings of Wipro Digital and its strategic design firm Designit - in product design, product branding and technology implementation.

Designit and Wipro Digital undertook a strategic design engagement to reimagine the merchant onboarding process for a large credit card processing firm. The extensive desk and field research resulted in the development of a reimagined onboarding experience. The new platform will help the client differentiate and remain competitive in a highly disrupted industry.

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

  • A large US-based healthcare company has selected Wipro to support the consolidation and standardization of its CRM processes;
  • Wipro was selected by a social purpose-driven software company to standardize the user experience of their organization and its sub brands on a cloud platform;
  • A global financial services firm has selected Wipro to upgrade its existing CRM solution; and
  • An international non-profit organization has chosen Wipro to transform its financial accounting processes.

Analyst Accolades and Awards

Wipro was positioned as a Leader in the NelsonHall Big Data & Analytics NEAT Report 2017.

Wipro won the ‘Best Blockchain Application of the Year’ award at the Global Logistics Excellence Awards 2018.

Wipro was recognized as the leading AI Partner for 2017 by Intel Corporation at the Intel AI and HPC Ecosystem Summit 2018, for driving transformational outcomes for clients, by leveraging solutions powered by Wipro HOLMESTM and Intel’s AI-optimized hardware platforms.

Wipro was recognized at the 14th Annual 2018 Info Security Product Guide's Global Excellence Awards®, in three categories - Managed Security Services, Security Products and Solutions for Enterprise (Large) and Identity Management.

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

IT Products

  • IT Products Segment Revenue for the quarter ended March 31, 2018 was Rs 4.2 billion ($64 million1).
  • IT Products Segment Revenue for the year ended March 31, 2018 was Rs 18.0 billion ($276 million1).
  • IT Products Margin for the year was 2.0%.

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

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 and year ended March 31, 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/wipro180425.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 160,000 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 Wipro’s beliefs regarding future events, many of which are by their nature, inherently uncertain and outside Wipro’s control. Such statements include, but are not limited to, statements regarding Wipro’s 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 company’s 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.

    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 65.11, as published by the Federal Reserve Board of Governors on March 31, 2018. However, the realized exchange rate in our IT Services business segment for the quarter ended March 31, 2018 was US$1= Rs 65.04

2.

Segment Profit refers to Segment Results Total.
3. Net Income refers to ‘Profit for the period attributable to equity holders of the Company.
4. * For the year, we recognized provisions totaling Rs 5,255 million ($81 million1) with respect to insolvency of two customers and the impairment loss in one of our acquisitions. For the quarter, we recognized provisions totaling Rs 2,080 million ($32 million1) with respect to insolvency of a customer and the impairment loss in one of our acquisitions.
Wipro limited and subsidiaries
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
(Rupees in millions, except share and per share data, unless otherwise stated)
 
      As of March 31,   As of March 31,
2017 2018   2018
   

Convenience
translation into US
dollar in millions
(unaudited) Refer
footnote 1

ASSETS

Goodwill 125,796 117,584 1,806
Intangible assets 15,922 18,113 278
Property, plant and equipment 69,794 64,443 990
Derivative assets 106 41 1
Investments 7,103 7,668 118
Investment in equity accounted investee - 1,206 19
Trade receivables 3,998 4,446 68
Deferred tax assets 3,098 6,908 106
Non-current tax assets 12,008 18,349 282
Other non-current assets 16,793 15,726 242
Total non-current assets 254,618 254,484 3,910
 
Inventories 3,915 3,370 52
Trade receivables 94,846 100,990 1,551
Other current assets 30,751 30,596 469
Unbilled revenues 45,095 42,486 653
Investments 292,030 249,094 3,826
Current tax assets 9,804 6,262 96
Derivative assets 9,747 1,232 19
Cash and cash equivalents 52,710 44,925 690
538,898 478,955 7,356
Assets held for sale - 27,201 418
Total current assets 538,898 506,156 7,774
     
TOTAL ASSETS 793,516 760,640 11,684
 

EQUITY

Share capital 4,861 9,048 139
Share premium 469 800 12
Retained earnings 490,930 453,265 6,962
Share based payment reserve 3,555 1,772 27
Other components of equity 20,489 18,051 277
Equity attributable to the equity holders of the Company 520,304 482,936 7,417
Non-controlling interest 2,391 2,410 37
TOTAL EQUITY 522,695 485,346 7,454
 

LIABILITIES

Long - term loans and borrowings 19,611 45,268 695
Derivative liabilities 2 7 -
Deferred tax liabilities 6,614 3,059 47
Non-current tax liabilities 9,547 9,220 142
Other non-current liabilities 5,500 4,230 65
Provisions 4 3 -
Total non-current liabilities 41,278 61,787 949
 
Loans, borrowings and bank overdrafts 122,801 92,991 1,428
Trade payables and accrued expenses 65,486 68,129 1,047
Unearned revenues 16,150 17,139 264
Current tax liabilities 8,101 9,417 145
Derivative liabilities 2,708 2,210 34
Other current liabilities 13,027 16,613 256
Provisions 1,270 796 12
229,543 207,295 3,186
Liabilities directly associated with assets held for sale - 6,212 95
Total current liabilities 229,543 213,507 3,281
     
TOTAL LIABILITIES 270,821 275,294 4,230
     
TOTAL EQUITY AND LIABILITIES 793,516 760,640 11,684
 
 
Wipro limited and subsidiaries
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME
(Rupees in millions, except share and per share data, unless otherwise stated)
 
 
      Three months ended March 31,   Year ended March 31,
2017   2018   2018 2017   2018   2018
               

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

         

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

Gross revenues 139,875 137,686 2,115 550,402 544,871 8,368
Cost of revenues (100,771 ) (97,794 ) (1,502 ) (391,544 ) (385,575 ) (5,922 )
Gross profit 39,104 39,892 613 158,858 159,296 2,446
 
Selling and marketing expenses (11,836 ) (11,263 ) (173 ) (40,817 ) (42,349 ) (650 )
General and administrative expenses (7,267 ) (9,801 ) (151 ) (32,021 ) (34,141 ) (524 )
Foreign exchange gains/(losses), net 745 557 9 3,777 1,488 23
Other Operating Income 4,082 - - 4,082 - -
 
Results from operating activities 24,828 19,385 298 93,879 84,294 1,295
 
Finance expenses (1,170 ) (1,564 ) (24 ) (5,942 ) (5,830 ) (90 )
Finance and other income 5,753 4,803 74 22,419 23,999 369
Share of profits/(loss) of equity accounted investee - (3 ) - - 11 -
Profit before tax 29,411 22,621 348 110,356 102,474 1,574
Income tax expense (6,742 ) (4,615 ) (71 ) (25,213 ) (22,390 ) (344 )
Profit for the period 22,669   18,006   277   85,143   80,084   1,230  
 
Attributable to:
Equity holders of the Company 22,611 18,028 277 84,895 80,081 1,230
Non-controlling interest 58   (22 ) -   248   3   -  
Profit for the period 22,669   18,006   277   85,143   80,084   1,230  
 
 
Earnings per equity share:
Attributable to equity share holders of the Company
Basic 4.68 4.00 0.06 17.48 16.86 0.26
Diluted 4.66 4.00 0.06 17.43 16.83 0.26
 
Weighted average number of equity shares used in
computing earnings per equity share
Basic 4,835,568,066 4,503,353,231 4,503,353,231 4,857,081,010 4,750,043,400 4,750,043,400
Diluted 4,849,694,210 4,511,906,041 4,511,906,041 4,871,347,138 4,758,361,975 4,758,361,975
Additional Information
Segment Revenue
IT Services Business Units
BFSI 34,911 39,013 599 135,967 148,062 2,274
HLS 20,456 18,575 285 82,242 74,177 1,139
CBU 21,204 21,029 323 83,417 83,762 1,286
ENU 17,515 16,768 258 68,883 68,427 1,051
MNT 30,657 30,870 474 119,175 120,272 1,847
COMM 9,278   7,864   121   38,756   33,710   518  
IT SERVICES TOTAL 134,021 134,119 2,060 528,440 528,410 8,115
IT PRODUCTS 6,613 4,169 64 25,922 17,998 276
RECONCILING ITEMS (14 ) (45 ) (1 ) (183 ) (49 ) (1 )
TOTAL 140,620   138,243   2,123   554,179   546,359   8,390  
 
Other operating Income                      
IT Services 4,082             4,082          
IT Products
Segment Result
IT Services Business Units
BFSI 5,153 6,298 97 24,939 24,626 378
HLS (11 ) 1,824 28 9,479 9,620 148
CBU 3,719 3,013 46 14,493 13,060 201
ENU 4,097 2,286 35 14,421 8,060 124
MNT 5,969 5,475 84 23,453 21,742 334
COMM 1,449 (753 ) (12 ) 6,149 3,158 49
OTHERS - - - - -
Other Operating Income 4,082 4,082
UNALLOCATED 811   1,180   18   (951 ) 3,347   51  
TOTAL IT SERVICES 25,269 19,323 296 96,065 83,613 1,285
IT PRODUCTS (428 ) 48 1 (1,680 ) 362 6
RECONCILING ITEMS (13 ) 14   -   (506 ) 319   5  
TOTAL 24,828   19,385   297   93,879   84,294   1,295  
FINANCE EXPENSE (1,170 ) (1,564 ) (24 ) (5,942 ) (5,830 ) (90 )
FINANCE AND OTHER INCOME 5,753 4,803 74 22,419 23,999 369
SHARE OF PROFIT/(LOSS) OF EQUITY ACCOUNTED INVESTEE -   (3 ) -   -   11   0  
PROFIT BEFORE TAX 29,411 22,621 347 110,356 102,474 1,575
INCOME TAX EXPENSE (6,742 ) (4,615 ) (71 ) (25,213 ) (22,390 ) (344 )
PROFIT FOR THE PERIOD 22,669   18,006   276   85,143   80,084   1,231  
 

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.

The IT Services segment primarily consists of IT Service offerings to customers organized by industry verticals. The industry verticals are as follows: Banking,Financial Services and Insurance (BFSI), Healthcare and Lifesciences (HLS), Consumer Business Unit (CBU), Energy, Natural Resources and Utilities (ENU), Manufacturing & Technology (MNT), Communications (COMM). IT Services segment also includes Others which comprises dividend income relating to strategic investments, which are presented within “Finance and other income” in the 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. In the IT Products segment, 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.

 

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

Three Months ended March 31, 2018
IT Services Revenue as per IFRS   $ 2,062.0     IT Services Revenue as per IFRS   $ 2,062.0
Effect of Foreign currency exchange movement $ (26.6 ) Effect of Foreign currency exchange movement $ (58.0 )
Non-GAAP Constant Currency IT Services Revenue based on previous quarter exchange rates $ 2,035.4 Non-GAAP Constant Currency IT Services Revenue based on previous year exchange rates $ 2,004.0
 

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

Year ended March 31, 2018
IT Services Revenue as per IFRS $ 8,060.2
Effect of Foreign currency exchange movement $ (131.0 )
Non-GAAP Constant Currency IT Services Revenue based on previous quarter exchange rates $ 7,929.2

Contacts

Wipro Limited
Contact for Investor Relations
Vaibhav Saha, +91-80-4672 6143
vaibhav.saha@wipro.com
or
Abhishek Kumar Jain, +1 978 826 4700
abhishekkumar.jain@wipro.com
or
Contact for Media & Press
Vipin Nair, +91-80-3991 6450
vipin.nair1@wipro.com

Release Summary

Wipro Limited today announced financial results under International Financial Reporting Standards for its quarter and year ended March 31, 2018.

Contacts

Wipro Limited
Contact for Investor Relations
Vaibhav Saha, +91-80-4672 6143
vaibhav.saha@wipro.com
or
Abhishek Kumar Jain, +1 978 826 4700
abhishekkumar.jain@wipro.com
or
Contact for Media & Press
Vipin Nair, +91-80-3991 6450
vipin.nair1@wipro.com