Wipro Limited — Q1 FY26 earnings call

Call held 17 Jul 2025

Management summary

Wipro reported a mixed Q1 FY26, with IT services revenue declining 2% QoQ in constant currency, within its guidance range. Despite ongoing macro uncertainties, the company demonstrated strong deal momentum, securing $5 billion in TCV bookings, driven significantly by large deals and a strategic focus on AI and modernization. Operating margins expanded year-on-year, and management expressed confidence in a stronger H2 FY26, contingent on successful execution of the new deal pipeline and continued operational excellence.

Highlights

  • IT services revenue of $2.59 billion, with 2% QoQ degrowth in constant currency.

  • IT services operating margin at 17.3%, an expansion of 80 bps YoY.

  • Total contract value (TCV) bookings reached $5 billion, a 51% YoY growth.

  • Large deal bookings were $2.7 billion, up 131% YoY, including 16 large deals and 2 mega deals.

  • Net income grew 10.9% YoY, and EPS was INR 3.2, up 10.8% YoY.

  • Free cash flow generation was robust at 115% of net income.

  • An interim dividend of INR 5 per share was declared.

  • Guidance for Q2 FY26 IT services revenue is $2.56 billion to $2.612 billion, translating to -1% to +1% sequential growth in constant currency.

Key financials

  1. IT Services Revenue $2.59 Bn -2.3%YoY
  2. IT Services Operating Margin 17.3% +0.8%YoY
  3. Net Income Growth 10.9% +10.9%YoY
  4. EPS ₹3.2 +10.8%YoY
  5. Free Cash Flow to Net Income 115%
  6. Gross Cash (incl. investments) $6.4 Bn
  7. Net Other Income Growth 62% +62%YoY
  8. Effective Tax Rate 21.6%
  9. Restructuring Cost ₹246 Cr

What they filed

Q1 FY27: revenue up 10.6%, net profit up 0.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue22,302 22,319 22,504 22,135 22,697 +2%23,556 +6%24,236 +8%24,479 +11%
EBITDA4,503 4,540 4,624 4,233 4,372 −3%4,296 −5%4,909 +6%4,633 +9%
Net profit3,227 3,367 3,588 3,336 3,262 +1%3,145 −7%3,522 −2%3,356 +1%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentYoY Growth (CC)Sequential Growth (CC)
Americas 15.8%20%
Americas 2-2.7%-1.7%
Europe-11.6%-6.4%
APMEA—60%
BFSI-3.5%-3.8%
Healthcare3.5%50%
Consumer-5.7%-4%
Technology and Communication-30%40%
Energy, Manufacturing, and Resources-2.4%-70%
Capco6%—

Guidance & targets

Revenue

  • IT Services Revenue Revenue · Q2 FY26 · Medium confidence $2.56 billion to $2.612 billion
    In terms of guidance, to reiterate what Srini shared, we expect revenues from our IT services revenue business to be in the range of $2.56 billion to $2.612 billion.

    — Aparna Iyer, CFO

Revenue Growth

  • IT Services Revenue Sequential Growth (Constant Currency) Revenue Growth · Q2 FY26 · Medium confidence minus 1% to plus 1%
    This translates to a sequential growth of minus 1% to plus 1% in constant currency terms.

    — Aparna Iyer, CFO

Capital Allocation

  • Payout Ratio Capital Allocation · next 3 years · High confidence minimum of 70%
    As you know, we revised our capital allocation policy in January 2025 to increase the payout to a minimum of 70% of our net income over a block of 3 years.

    — Aparna Iyer, CFO

Dividend

  • Dividend Frequency Dividend · going forward · High confidence twice a year
    Thus, going forward, subject to the cash position and Board approval, our endeavor would be to pay these dividends twice a year, once along with the June results and then along with our December quarter results.

    — Aparna Iyer, CFO

Margin

  • Operating Margin Band Margin · earlier (aspirational) · Medium confidence 17% to 17.5%
    But you are right when you say that 17% to 17.5% band that we called out earlier remains a band that we would like to operate in.

    — Aparna Iyer, CFO

Risks & concerns

  • Macro uncertainty and muted overall demand

    medium

    The quarter started with significant macro uncertainty, leading to muted overall demand from clients.

    Management acknowledged

  • Impact of tariffs on Consumer and EMR sectors

    medium

    Retail, CPG, and manufacturing within Consumer and EMR sectors have been most affected by tariffs, leading to a more cautious client mode.

    Management acknowledged

  • Margin pressure from upfront investments in large, competitive deals

    medium

    Large deal wins, often involving vendor consolidation and competitive pricing, require upfront investments and have a weaker margin profile, which will create some pressure on overall margins.

    Both acknowledged

  • Headwinds and uncertainty in the European market

    medium

    Europe continues to face headwinds and market uncertainty, although client-specific issues are now behind them, and a turnaround is expected in H2 FY26.

    Management acknowledged

  • Tight discretionary budgets and impact on smaller deals

    medium

    Discretionary budgets remain tight, and while the environment seems to have stabilized, it has impacted smaller and medium deals, with clients prioritizing cost optimization.

    Management acknowledged

Areas of evasion (1)

  • Naming specific competitors

Q&A highlights

3 direct
Deal TCV vs ACV growth and duration of large deals Direct
You are correct that our TCV has been growing much faster than the ACV. And this is also because the deal tenors have been going up. Our pipeline has a good balance of both vendor consolidation, cost takeout deals, which are typically longer tenor and deals that are coming in in the areas of data, AI, and modernization that Srini alluded to.

Clarifies the dynamics behind strong TCV growth, indicating longer deal tenors and a mix of deal types that influence ACV conversion and future revenue recognition.

Asked by Abhishek Kumar

Margins outlook given upfront investments in large deals Direct
Our focus and energy is going to be on conversion, right? A lot of these deals will ramp up over the next 4 to 6 quarters... And these are larger deals and are like strongly contested. And therefore, the nature of the deals, the margin profile is weaker compared to the rest of portfolio. So, there will be some pressures.

Management explicitly acknowledges that executing the recently won large deals will require upfront investments and may lead to margin pressures, providing a realistic outlook despite an aspirational margin band.

Asked by Nitin Padmanabhan

Geographic performance (Americas vs Europe) and sector-specific demand trends Direct
Sure, Ravi. Let me take it one at a time. So, if you look at the sectors in the U.S., we have BFSI. And like I said, that BFSI, the current pipeline is very strong and steady... Now, coming to Europe, right, you know, the pipeline continues to be strong in Europe... And actually, the revenue will start coming in Quarter 3.

Provides a detailed breakdown of demand and pipeline health across key geographies and sectors, outlining areas of strength (BFSI, Tech & Comm in US) and challenges (Consumer, EMR, Europe) and a timeline for Europe's expected recovery.

Asked by Ravi Menon

2 min read 5 chapters

Detailed narrative

Q1 FY26 Performance Overview

Wipro reported IT services revenue of $2.59 billion for Q1 FY26, experiencing a 2% sequential degrowth in constant currency, which was within the company's guidance range. On a year-on-year basis, revenue declined by 2.3% in constant currency. Despite the revenue contraction, the IT services operating margin expanded by 80 basis points year-on-year to 17.3%, reflecting continued focus on operational efficiency. Net income grew 10.9% YoY, and EPS stood at INR 3.2, up 10.8% YoY, even after absorbing a one-time restructuring cost of INR 246 crores.

Strong Deal Wins and Pipeline Momentum

The quarter was marked by robust deal momentum, with total contract value (TCV) bookings reaching $5 billion, a significant 51% year-on-year growth. Large deal bookings were particularly strong, increasing 131% year-on-year to $2.7 billion, and included 16 large deals, two of which were mega deals. These wins were largely driven by vendor consolidation and clients prioritizing initiatives with immediate impact, such as cost optimization and AI, data, and modernization programs. Management expressed confidence that these bookings, along with a healthy pipeline, position the company for a stronger second half of the fiscal year.

Geographic and Sectoral Performance

Geographically, Americas 1 grew 0.2% sequentially and 5.8% YoY in constant currency, while Americas 2 declined 1.7% sequentially. Europe continued to face headwinds, declining 6.4% sequentially and 11.6% YoY, though management anticipates a turnaround in H2 FY26, with revenue from the large Phoenix deal expected to start in Q3. Sector-wise, BFSI demand remained strong but declined 3.8% sequentially. Healthcare grew 0.5% sequentially, and Technology and Communication grew 0.4% sequentially, driven by increased AI investments. Consumer and EMR sectors were more cautious, affected by tariffs.

Margin Outlook and Capital Allocation

Wipro's operating margin of 17.3% aligns with its aspirational band of 17-17.5%. However, management indicated that the execution of large, competitive deals would require upfront investments, potentially creating some margin pressures in the coming quarters. The company remains committed to its revised capital allocation policy, aiming to pay out a minimum of 70% of net income over a three-year block. Going forward, Wipro endeavors to pay dividends twice a year, typically after June and December quarter results, subject to cash position and Board approval.

Strategic Focus on AI and Modernization

Wipro is actively building an 'AI-first, AI-everywhere' enterprise, integrating AI capabilities into both industry and cross-industry solutions. The company noted a clear trend of mini-AI projects moving to scale and production, with clients accelerating their AI, data, and modernization programs. Examples include using AI for hyper-personalized wealth management, predictive industrial insights, and deploying over 200 AI-powered agents for smarter lending and intelligent claims processing. This strategic alignment with client priorities is a key driver behind recent deal wins.

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