Wipro Q1 net profit tumbles 21% to ₹2,564 cr

Indian IT major Wipro reported a 21% decline in its net profit for the quarter ended June 2022 as expenses rose during the period. The Bengaluru-headquartered software services firm posted a consolidated net profit of ₹2,564 crore for the first quarter of FY23, compared with ₹3,232 crore in the corresponding quarter of last fiscal.

During Q1 FY23, Wipro saw its revenue grow to ₹21,529 crore from ₹18,252 crore in Q1 FY22. However, the rise in revenue was offset by increasing costs, which soared to ₹15,560 crore from ₹12,757 crore during this period.

IT services revenue in dollar terms increased to $2,735.5 million during the June quarter of the current fiscal, marking an annual growth of 13.3% from $2,414.5 million a year ago. Meanwhile, operating margin for the segment dipped to 15%, an on-year decline of 380 basis points from 18.8% in Q1 FY22 and sequential decline of 200 bps from 17% in Q4 FY22.

“We are consistently investing in solutions and capabilities for our growth to further strengthen our position of being a strategic partner for our clients. At 15% of operating margins, we believe that we have bottomed out,” says Jatin Dalal, chief financial officer at Wipro.

During the quarter under review, Wipro added 164 new customers, taking the total number of active customers to 1,433 as of June 30, 2022. The number of customers in the above $100 million bracket increased to 20 from 19 in the previous quarter and 13 in the same quarter last fiscal. The company reported 20 customers in the above $75 million bracket, rising from 29 in Q4 FY22 and 27 in Q1 FY22.

The top customer accounted for 3.2% of business during Q1 FY23, the top five customers accounted for 13%, and the top ten customers for 20.9%.

Wipro closed the June quarter with 258,574 employees, up from 209,890 employees in the same quarter of the last fiscal. Of this, 17,806 employees constituted sales and support staff. Attrition rate also saw a jump in annual terms, growing to 23.3% from 15.5% in the year-ago period. Employee exits, however, moderated in sequential terms from 23.8 in the March quarter. The company also onboarded 10,000 freshers during the quarter.

At the end of the June quarter, Wipro expects its IT services revenue to be in the range of $2,817 million to $2,872 million, which amounts to a sequential growth of 3-5%.

“We have made significant investments in Wipro’s growth engine and are very pleased with the outcomes. Our order bookings grew 32% YoY in total contract value terms, powered by large transformational deals, and our pipeline today is at an all-time high. We continue to reinforce the investments that allow us to grow our business, remain agile in the market and efficient as an organisation, while staying focused on serving our clients even better,” says Wipro CEO and MD Thierry Delaporte.