Wipro - Earnings Call - Q2 25/26

Transcript

Operator (participant)

Ladies and gentlemen, good day and welcome to Wipro Limited Q2 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Jain, Vice President, Corporate Treasurer, and Head of Investor Relations. Thank you and over to you.

Abhishek Jain (VP, Corporate Treasurer, and Head of Investor Relations)

Yes, thank you, Yashashri. Warm welcome to our Q2 FY 2026 earnings call. We will begin the call with the business highlights and overview by Srinivas Pallia, our Chief Executive Officer and Managing Director, followed by updates on financial overview by our CFO, Aparna Iyer. We also have CHRO Saurabh Govil and our Chief Strategist and Technology Officer, Hari Shetty, on this call. Afterwards, the operator will open the bridge for Q&A with our management team. Before Shrini starts, let me draw your attention to the fact that during this call, we may make certain forward-looking statements within the meaning of Private Securities Litigation Reform Act, 1995. These statements are based on management's current expectations and are associated with uncertainties and risks, which may cause the actual results to differ materially from those expected. The uncertainties and risk factors are explained in our detailed filings with the SEC.

Wipro does not undertake any obligation to update the forward-looking statements to reflect events and circumstances after the date of filing. The conference call will be archived and a transcript will be available on our website. With that, I would like to turn over the call to Shrini. Shrini, over to you.

Srinivas Pallia (CEO and MD)

Thanks, Abhishek. Good evening and thank you all for joining us today. In Q2, our IT services revenue grew at $2.6 billion, with sequential growth of 0.3% in constant currency. Our adjusted operating margin for the quarter was 17.2%. This is within the narrow band we had previously indicated, and it's an improvement of 0.4% compared to the same period last year. Let me now walk you through some of the highlights and key moments for this quarter. Within our markets, three of the four SMUs reported sequential growth. Americas 1 delivered sequential and year-on-year growth driven by strong performance in healthcare, technology, and communication sectors. Americas 2 saw a decline this quarter, however, we remain confident about future growth in this region as some of the deals we won in the first half are now beginning to ramp up.

Europe returned to sequential growth in Q2 after several quarters led by BFSI. The Phoenix deal is set to start generating revenue from Q3, providing further momentum. APMEA growth was fueled by strong results in India, Australia, and Southeast Asia. Capco grew both sequentially and year-on-year, with momentum coming from newer markets like LATAM and APMEA. Turning to our industry sectors now, we continue to see momentum in BFSI, with clients prioritizing cost optimization, vendor consolidation, legacy modernization, and scaled deployment of agentic AI. Tariff uncertainties continue to impact the consumer, energy, and manufacturing sectors, leading customers to reevaluate their supply chains. In technology and communications, the focus is on accelerating AI adoption and developing industry-specific solutions, with cost optimization remaining central. Healthcare, especially in the U.S., is undergoing structural changes. We are actively supporting clients through this transition, and the sector remains one of our strong performers.

Coming to deal wins and pipelines, this quarter, we closed $4.7 billion in total contract value and signed 13 large deals. Much of this demand is driven by vendor consolidation, AI-powered transformations, and consulting-led programs, areas where our strategy is truly making an impact. Our order bookings this quarter also include two mega deals, one with a healthcare client and another in BFSI. While a significant portion of these two deals are renewals, they are important for deepening our presence and unlocking future growth in these accounts. We are seeing strong momentum in Europe, and I want to highlight two examples that bring this to life. First, Wipro has formed a strategic multi-year partnership with a leading U.K. financial company to modernize their business. We are using our WeGA AI platform and a new center of excellence to drive this change.

We are helping improve customer experiences and streamlining back-office operations. We are also bringing advanced AI to business and technology streams like HR, mortgages, financial crime prevention, and of course, IT. This will optimize workflows and support real-time decisions for our clients. Above all, it will help become more resilient for the future. In my second example, we are partnering with a leading European distribution and logistics company on a multi-year transformation of their operations and IT. By leveraging our expertise in operating model design, process standardization, and technology modernization, we are helping them move to a unified digital core, making their operations more efficient and unlocking long-term growth with AI and digital tools. Now, I am excited to introduce Wipro Intelligence, our unified suite of AI-powered platforms, solutions, and transformative offerings. With Wipro Intelligence, we are enabling our clients to scale with confidence and lead in an AI-first world.

It strengthens our consulting-led approach, driving innovation and delivering measurable outcomes for our clients. In fact, Wipro Intelligence brings together advanced capabilities across delivery and industry platforms. Our delivery platforms are already accelerating work from software development, infrastructure, and cloud to business process operations. On the industry side, we have reimagined core business processes and developed more than 200 AI agents and platforms spanning multiple sectors. As AI continues to evolve, we are helping clients experiment, adapt, and scale rapidly by working closely with our partners, ventures, and leading research institutions. Wipro Intelligence is about proof, not just promise. We embed productivity gains, assure business outcomes, and build in responsible AI guardrails. Let me share three examples of our solutions. One, AutoCortex for our automotive sector, WealthAI for BFSI, and PayerAI for healthcare.

Each of them is already making a tangible difference for our clients and also earns strong recommendations from industry analysts. This momentum gives us real confidence for the future. With that, let me move on to our forecast for the next quarter. In Q3, we are projecting sequential IT services revenue growth of -0.5% to +1.5% in constant currency. Our priority remains converting our strong backlog into revenue while maintaining operational discipline to ensure profitable growth. With that, I'll hand it over to Aparna, who will take you through the financials in more detail. Over to you, Aparna.

Aparna Iyer (CFO)

Thank you, Srini. Good evening, everybody. Let me share with you an update on the financial performance for the quarter ended 30th September 2025. After that, we can open up the call for Q&A. Our IT services revenue for Q2 grew 0.3% sequentially in constant currency terms and 0.7% sequentially in reported currency. This is well within our guided range. Revenue declined 2.6% year-on-year in constant currency terms. Our operating margins for Q2 at 16.7% contracted 60 basis points quarter-on-quarter and 10 basis points year-on-year. Our operating margins were impacted by a one-off charge taken on account of a client bankruptcy event. Adjusted for this, our margins were at 17.2%, which is an expansion of 40 basis points year-on-year and is in a narrow band. Our quarter one margins were set at 17.3%.

As we invest for growth, we will continue to see pressure on our margins as we make investments, but our endeavor will be to maintain the margins in a narrow band. Let me also give you some color on our strategic market unit performance. All growth numbers that I share will be in constant currency. Americas 1 sustained its growth momentum, growing 0.5% sequentially and grew 5% on a year-on-year basis. Americas 2 declined 2% sequentially and 5% on a year-on-year basis. Europe grew 1.4% sequentially, declined 10.2% on a year-on-year basis. APMEA grew 3.1% sequentially and 2.6% on a year-on-year basis. BFSI grew 2.2% sequentially and declined 4% year-on-year. Healthcare declined 0.2% sequentially and grew 3.9% year-on-year. Consumer declined 1.7% sequentially and 7.4% year-on-year. Technology and communication grew 0.8% sequentially, declining 1.7% year-on-year. EMR declined 1.5% sequentially and 0.5% year-on-year.

Capco continues to perform well, growing 3.2% on a year-on-year basis. Let me share some other key financial metrics. Our net income and EPS grew 1% year-on-year in this quarter. Our operating cash flows continue to remain higher than our net income and stood at 104% of net income for Q2. Our gross cash, including investments, was at $6 billion for the quarter. In Q2, our net income, net other income declined 14% year-on-year. Our accounting yield for the average investments held in India was at 7.1%. Our ETR was at 23.8% for Q2 2026 versus 24.6% in the same quarter in the last year. In terms of guidance to reiterate what Srini shared, we expect the revenues from our IT services business to be in the range of $2.59 billion to $2.64 billion.

This translates to a sequential guidance of -0.5% to +1.5% in constant currency terms. The Harman Digital Transformation Solutions acquisition that we had announced in Q2 is expected to close through the course of the quarter. Our guidance number does not factor any revenues from this acquisition. Thank you. With that, operator, you can open it up for Q&A.

Operator (participant)

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Nitin Padmanabhan from Investec. Please go ahead.

Nitin Padmanabhan (Analyst)

Yeah, hi. Good evening. Thanks for the opportunity. The first is, just wanted your thoughts on the deal to revenue conversion. I think we have had very strong deal wins, large consolidation wins. Do you think BFSI, considering you had those large consolidation wins, should start flowing through this year itself, those that you closed last quarter? How should we think about how are you thinking about growth as you sort of go forward in the next year? Do you think this alone can sort of continue to sort of help maintain a positive momentum on revenue?

Aparna Iyer (CFO)

I'll take this one, Nitin. Obviously, we had several large deal wins in the BFSI space. We had one in Q4, which is expected to ramp up in Q3 and is factored as a part of our guidance. We had a few large deals in Q1 in BFSI, all of which have a reasonable element of new in it, and we expect them to kind of ramp up over the next few quarters. This may take about six to eight quarters to fully ramp up on the new. In terms of the large deal win that we had in the BFSI space in Q2, it's largely renewal, right? It is a mix of both renewal, renewal plus expansion, and then net new. The net new deal is likely to ramp up, like I said, in Q3. The ones with expansion will take a few quarters for them to ramp up.

If you look at, like I said, the one that we did in Q2, it is largely renewal. Now, to your other question on BFSI growth, yes, we've grown sequentially. That's the first dot in the plot. We will have to sustain that momentum. We're quite confident Q3 looks positive. From there on, we will have to build on it. Like I said, as the large deals ramp up, that will go up. A lot of the growth was actually led by Europe and APMEA within the BFSI space. We expect Americas to join in in that growth as those large deals pick up.

Nitin Padmanabhan (Analyst)

Got it. Just one last one on margins. I sort of missed the margin work that you sort of provided. How should we broadly think about margins going forward? You think this quarter, the transition costs will start kicking in on a going-forward basis, or we've already had some impact from that? There's some color on margins. How should we think about it?

Aparna Iyer (CFO)

When we started Q2, we had alluded to headwinds as some of these large deals start to ramp up. Those headwinds will continue as some of these large deals ramp up and phase. In Q2, the walk, while we're not quantifying the exact impact, we had two positives. One was certainly the rupee depreciation and the dollar weakness, which was a positive. Second, operationally, too, we have continued to expand. In terms of our utilization, it has improved. Our attrition has come down. We also drove better profitability in our fixed-price programs. All in all, I think operations and forex were positive. Yes, we continue to make certain investments for our growth in terms of these large deals, and that is also a part of our margins. Some of it is there in Q2, and there will be more as some of these large deals continue to ramp up.

Q3 is also a seasonally weaker quarter in terms of lower working days, etc. That's the headwind we're starting Q3 with. We have several initiatives in place. If you look at it, our utilization has been better. We've also driven better profitability in our fixed-price program. Even our SG&A, we're continuing to optimize. These three levers will continue. We don't guide for a margin, but our endeavor will be to be in a narrow band of our adjusted operating margins of 17.2%. The notable one-off was the provision for bar and doubtful debt provision that we took in terms of the insolvency, which is 50 basis points. Adjusted for that, our operating margins are 17.2%, which is in a narrow band of Q1 performance.

Nitin Padmanabhan (Analyst)

Perfect. That's helpful. Thank you so much. I'll fall back in the queue. All the very best.

Aparna Iyer (CFO)

Thank you, Nitin.

Operator (participant)

Next question is from the line of Kumar Rakesh from BNP Paribas. Please go ahead.

Kumar Rakesh (Analyst)

Hey, hi. Good evening, ma'am. Thank you for taking my question. My first question was around the growth side. Over the last couple of quarters, we have seen the deal wins have materially picked up. Total bookings have been touching close to about $5 billion. Your large deals also have been quite high. You also spoke about the Phoenix deal will start ramping up in the third quarter. All these momentums are something which is behind us and should be pushing us towards growth. At the midpoint, what we are guiding is only marginal improvement in growth. What exactly is something which we are looking at from the headwind perspective? Last year, during the December quarter, we had reported marginal growth. The furlough shouldn't be so big that it eats into all the incremental tailwind which we have.

Aparna Iyer (CFO)

Rakesh, when we guide, we guide based on the visibility that we have at the start of the quarter. You should look at the midpoint, and then we guide in a range that is both +1.5% on the top end and -0.5% to accommodate volatilities that we could see during the quarter. Yes, there is a ramp-up of the large deal wins, and you are right. That is giving us a positive momentum. If you look at it after several quarters, we have guided where the midpoint is in a positive. That we believe is the first step. As we convert more of these large deals into revenues, this momentum should improve.

Kumar Rakesh (Analyst)

Thanks, Aparna. My second question was around margins. Today, you spoke about that you would intend to keep the margin in a narrow band around 17.2%. You had earlier also spoken about some of these large deals would be margin dilutive, and there would be some impact of that. How should we tie up these two comments?

Aparna Iyer (CFO)

Yeah, you know, like I said, we don't guide for a range on the margin, right? Our endeavor has to be to keep it in the band of 17%-17.5% that we had earlier alluded to. Obviously, if you look at it in terms of the investments for growth, there will be, organically, we will continue to win some of these large deal wins. There is a vendor consolidation-led pipeline, which are quite intensely fought, right? One is also looking to be on the right side of some of those deal wins, which will also come with pressure on margins, at least as they start, right? Over a period of time, as we realize the productivity that we have offered to our clients and that starts to kick in, the margins then tend to improve.

We are driving several other initiatives to offset some of these investments that we are making. I also want you to note that the Harman DTS acquisition is not a part of these numbers. When that comes, that will also be an investment that we will be making for our growth. That will come with a 60 basis points dilution that we have already spoken of at the point of announcing the acquisition. These are things that we are, these are the headwinds we have to the margins. We have initiatives in play that we will use to offset some of these pressures. That's why we're saying at least for Q3, we are holding it in a narrow band, and then we will see from there how we take those margins.

Kumar Rakesh (Analyst)

Got it. Thanks a lot, Aparna.

Operator (participant)

Thank you. We'll take our next question from the line of Ravi Menon from Macquarie. Please go ahead.

Ravi Menon (Analyst)

Hi. Thank you for the opportunity. I want to check when you are now growing year on year on an organic basis in line with the peers. Do you think this can sustain or can you even improve from here?

Aparna Iyer (CFO)

Ravi, can you repeat your question?

Ravi Menon (Analyst)

I was saying that you know now you're growing year on year basis. You're actually growing in line with the peer group on an organic basis. Do you think that can sustain or can you even improve beyond that?

Aparna Iyer (CFO)

Yeah, Srini, you want to take it?

Srinivas Pallia (CEO and MD)

Good.

Aparna Iyer (CFO)

Okay.

Srinivas Pallia (CEO and MD)

Ravi, Shrini here. As far as we are concerned, at this point in time, we're giving a quarter-three guidance like Aparna talked about. The midpoint is positive. The second point is some of the deals that we have won in the first half, some of them we'll have to start executing, and each of them have their own rhythm in terms of when the ramp-ups will happen. It varies from client to client. Our focus right now is to execute some of the deal wins that we have. We have a very robust pipeline into the second half. Our focus is to convert those deals into bookings, which will again translate to revenues going into the future. From that perspective, Ravi, the main focus for us is to execute both in terms of the deal win and also win the deals.

Ravi Menon (Analyst)

Thanks, Srini. Going into Q3, other than seasonality, are there any specific factors that you think are headwinds to revenue?

Aparna Iyer (CFO)

No, not really.

Ravi Menon (Analyst)

All right. Thanks so much. Best of luck.

Operator (participant)

Thank you.

Aparna Iyer (CFO)

Thank you.

Operator (participant)

We'll take our next question from the line of Sudheer Guntupalli from Kotak Mahindra AMC. Please go ahead.

Sudheer Guntupalli (Analyst)

Hi, Shrini. Hi, Aparna. I just wanted some clarity on your response to one of the earlier questions that you said a large part of it is renewal. Are you talking about any specific large deal within BFSI, or are you talking about the overall deal wins that we had this quarter?

Srinivas Pallia (CEO and MD)

As far as Q2 deal wins are concerned, the two mega deals that I talked about, one is in the healthcare sector, the other one is in the BFSI sector. Sudheer, I hope that clarifies.

Sudheer Guntupalli (Analyst)

Yes, Shrini, that's fine. I was asking Aparna's response to a prior question that it is largely a renewal. You were referring specifically to the BFSI deal, right? You're not characterizing the overall deal wins that you had this quarter. What I'm trying to understand is if you look at the deal wins this quarter, again, for the second consecutive quarter, it was very strong. I wanted to understand what is the mix of renewal and new within the overall space, not specific to that particular deal.

Srinivas Pallia (CEO and MD)

Yeah. Sure. I think if you look at the kind of deal flows we had in the first half, it's a combination of the three types of deals. One is, like you rightly called out, there are renewals where you actually get to work in those accounts and find opportunities to bring in growth. The second are renewals with extension of the pipeline, wherein the extensions, like Aparna talked about, will take its time in the next six to eight months. The third piece is net new deals that we have, which we will execute immediately. The two deals that I called out in Europe are the net new deals, Subir.

Sudheer Guntupalli (Analyst)

Okay, sir. Fair enough. Thank you.

Operator (participant)

Thank you. Next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead.

Sandeep Shah (Analyst)

Yeah, my question's been answered. Thanks. Hello?

Abhishek Jain (VP, Corporate Treasurer, and Head of Investor Relations)

Yashashri, you'll have to move to the next participant.

Operator (participant)

Thank you. The next question is from the line of Dipesh Mehta from Emkay Global. Please go ahead.

Dipesh Mehta (Analyst)

Yeah. Thanks for the opportunity. Two questions. First, just want to understand whether from net new person perspective, are we seeing any change compared to, let's say, past trend in H1? Because we have very strong deal booking. Any change in terms of net new person, if you can give some qualitative sense? If not possible, give quantitative sense. Qualitatively, if you can give some sense. Our second question is whether we are witnessing any delay in this deal ramp-up. What we have seen in the last six months, whether those deals are ramping up as scheduled or we are witnessing some challenges there. Our second question is about we earlier faced some client-specific challenges, particularly in Europe BFSI.

As we speak, are we seeing, let's say, most of those client-specific challenges are behind and we can see normal trajectory of growth based on the deal intake and pipeline entering into H2? Last question is about the vertical. If I look, let's say, even Q2, the way we report our vertical mix, three out of five still showing sequential decline. By when do you expect relatively more broad-based growth, considering very strong deal intake what we observed in H1, if you can provide some color there. Thanks.

Aparna Iyer (CFO)

Yeah. I'll take a few questions, and then, Srini, you can also add in. From a net new standpoint, we had in our last deal bookings for the first half, is it better or worse compared to the past? I would say for the first half, our net new bookings have been fairly good. If you look at Q2, we had two net new deals, six renewals, and the others are a combination of renewal plus expansion, right? In terms of whether these deals are ramping up on time and whether we are seeing any delay, I don't think there's any delay in the ramp-up. They're pretty much right now on course to ramp up as planned. There is no delay or deferral or challenges that we are facing on that.

In terms of Europe, whether that client-specific issue is behind us, yes, you know in some sense, the client-specific issue that we had called out earlier is behind us. You should see the trajectory of Europe continue to improve. We will obviously have to sustain the win momentum that we have had in the last two to three quarters, even into the next few. As you know, we continue to operate in a very competitive environment, which means that we have to be on the right side of all the vendor consolidation deals for us to be able to sustain that momentum. That's what I would like to call out, Manik.

Srinivas Pallia (CEO and MD)

Deepesh, in the context of the sector questions that you asked for, if I look at it, of the five sectors that we have, I think where we see the impact of tariff is mostly on the consumer and energy manufacturing sectors. These are the two sectors which have degrown sequentially as well as on the year-on-year basis. For us, what we are looking for in these two sectors are what kind of deals that we can play proactively with the clients, especially because of the challenges that they're facing on the cost side. They're also facing challenges on the supply chain side, and we are having conversations with them. Otherwise, the other three sectors, you know, I think, Dipesh, we're looking good.

Dipesh Mehta (Analyst)

Understood. Thank you.

Operator (participant)

Thank you. We'll take our next question from the line of Girish Pai from BOB Capital Markets. Please go ahead.

Girish Pai (Analyst)

Thanks for the opportunity. I had a few questions. Just on the renewal deal side, are the clients asking for a greater level of savings now compared to the past when such renewals happened, considering that you were using AI? What are they doing with the savings, if at all they're getting them? Are they kind of plowing that back into new work, and are you getting that work?

Srinivas Pallia (CEO and MD)

If you look at the broader industry trend that we are seeing, Girish, clients across industry segments and across the markets that we are in are clearly looking for cost optimization, and that is also driving to some extent vendor consolidation. As far as the cost optimization is concerned, clearly the clients are looking at aspects of, in addition to cost, speed, and also the efficiency through AI. We see that as an opportunity for us. If you look at the way we see the opportunities, they are, of course, on the run and operate side, which includes your application support and maintenance, infrastructure, and business process services, where we infuse the AI, helping the client bring in efficiency, productivity, velocity. The second part is build and transform, which is our software development lifecycle, product development lifecycle, package implementation.

Here, there are multiple tools that are available, and we are using our Wipro Intelligence Vega platform to actually bring in those productivity benefits for our clients. As far as the run and operate, we are using Winx as a platform to bring the productivity and efficiency. Wherever the clients are able to get this efficiency and productivity, they're actually investing, especially around the business innovation, leveraging AI and all the aspects of AI advisory, data architecture, and also the platforms, some of the platforms that we have built, and also solutions that are industry-specific platforms and solutions that we have built are also creating a positive impact for us with the clients. Just to name AutoCortex in automotive, PayerAI in healthcare, WealthAI in BFSI. In fact, some of these we have already started implementing for the clients, and clients are seeing the benefits.

We also have some of the industry analysts talking about these industry-specific AI solutions as well, Girish. It's a combination of all this that we see as an opportunity for us.

Girish Pai (Analyst)

Okay. My second question is regarding potential liabilities that vendors like you face because of artificial intelligence work that leads to hallucinations, and you know there could be some damages that clients may probably have to bear. There seems to be quite a few cybersecurity incidents that have happened with certain clients and certain vendors, Indian vendors. How do you ensure that you don't get hit by any of these? Do you have watertight contracts where you don't bear any costs attached to these hallucinations because of any artificial intelligence contracts that you're executing or cybersecurity contracts that you're executing?

Hari Shetty (Chief Strategist Officer)

Hey, Girish. This is Harish Shetty here, glad to be on the call today. A couple of key things, you bring up a very valid point in terms of your question. One of our strengths in terms of our Wipro Intelligence platform is the responsible AI guardrails that we have actually built into the platform. It is probably one of the best implementations of how AI can be responsibly implemented, and that is what actually differentiates us from a Wipro Intelligence perspective. These capabilities go into both of the platforms that Srinivas Pallia talked about, whether it is WeGa or [Winx], and that gives us the confidence that we can actually deliver the promise of what we are talking about from an AI perspective, as well as make sure some of the guardrails that you talked about are taken care of.

Some of this will also translate into contractual commitments on both sides. From a risk management perspective, we take care of those controls as well.

Girish Pai (Analyst)

Okay. Just last question on H1B. I know probably it's been beaten to death. Do you foresee any higher pressures on subcontractor costs or on-site utilization going down because you need to maintain an on-site bench now because you can't bring in as many H1B workers, H1B employees from India as you used to, especially if wages go up in the sense that they're talking about moving away from a lottery system? How do you kind of foresee that?

Saurabh Govil (President & Chief Human Resources Officer)

Girish, Saurabh here. As you know, a large part of our workforce in the U.S. is localized. First of all, we don't see a supply issue from an H1B perspective. More than 80% of people are localized, and we are looking at 250-odd H1Bs in the past four or five years. We have been progressively reducing our dependence on H1Bs. Either on subcontractors or otherwise, we don't see an impact. We have been building our centers in the U.S., and we'll continue to grow with them based on the demand scenario.

Operator (participant)

Thank you.

Thank you. We'll take our next question from the line of Vibhor Singhal from Nuvama. Please go ahead.

Vibhor Singhal (Analyst)

Yeah, hi. Thanks for taking my question, and congrats on continuous solid deal wins. Shrini, my question was regarding the BFSI segment. You mentioned that amongst the five verticals, manufacturing and retail will continue to probably face challenges. In the BFSI vertical, we have a very interesting mix in which Capco continues to do well. We have the Phoenix deal ramp up maybe next quarter. At the same time, we were facing challenges in Europe and BFSI. Putting all this together, how do you see the BFSI sector playing out for us over the next, let's say, two to three quarters?

Srinivas Pallia (CEO and MD)

Sure, Vibhor. Maybe I will answer this in a.

Operator (participant)

I'm sorry, sir.

Srinivas Pallia (CEO and MD)

Sure, Vibhor. Maybe I'll answer this question in a little bit more detail if that's okay with you.

Vibhor Singhal (Analyst)

Please.

Srinivas Pallia (CEO and MD)

If you look at our BFSI sector, we reported a sequential growth of 2%. Also, by absorbing near-term impact taken for the mega deals that we signed in Q1. That's number one. Second is the growth for us in BFSI, like I said, was led by Europe and APMEA. In both these SMUs, if you noticed, have reported high single-digit sequential growth. Also, in the BFSI segment, the order booking continues to be robust. The same point I made to Girish and Dipesh in terms of the kind of deals that we have. The clients are obviously rebalancing. In the BFSI sector, the clients are modernizing a lot of their core in addition to vendor consolidation and efficiencies provided through AI. If you look at Capco, Vibhor, we saw Capco demonstrating both sequential and year-on-year growth for us, which Aparna talked about.

If you look at it specifically, if I have to double-click on BFSI, banking and payments continues to be our large domains. The capital markets, some of our global top accounts and anchor accounts, they're showing positive growth. The most important is, I talked about the platforms, industry platforms, the wealth and asset management is really getting attraction for us. We are also in this segment. There's a lot of conversations around how we can advise our clients on the AI side. That's something that we are helping the customers.

Vibhor Singhal (Analyst)

Right. A lot of, I would say, traction that we are seeing in multiple parts. Capco, as you said, should produce because overall as the outlet for the sector, they're looking at a good, decent run in the coming quarters as well. Is that a good summary to say?

Srinivas Pallia (CEO and MD)

Yeah, Vibhor, if you look at my pipeline, right? Obviously, BFSI's pipeline is very strong. From that perspective, I would say the positive momentum that we see in BFSI, also, like Aparna talked about, the Phoenix deal will start executing from this quarter onwards. I agree with the point you made, Vibhor. BFSI continues, we see in a positive light.

Vibhor Singhal (Analyst)

Perfect. That's great to hear. Just to double-click on the same manner in there on the healthcare sector, I know not as large as BFSI, but a lot of our peers have been talking about challenges in the healthcare sector because of the big beautiful bill that was introduced by the Trump administration. Any color on that? How do we see this vertical playing out over the next two to three quarters?

Srinivas Pallia (CEO and MD)

Yeah. Vibhor, if you look at that, traditionally, healthcare has been a strong sector for us. Even in the last quarter, we did show a year-on-year growth. You're right, there are certain headwinds in this sector because the sector is going through structural changes. Number one, the good news is that one of the mega deals that I talked about is from this sector. Second, if you look at the companies, they are adapting to the whole policy changes that are happening. I think that will drive more cost takeouts, more modernization, and so on and so forth for our clients. Also, if you look at the healthcare companies, specifically payers, they're trying to accelerate and transform their contact centers so that they can improve their conversations with the members. That's another thing that we see as attraction for us.

A couple of areas, like some of our clients are looking for real-time claim processing, for example, or trying to look at how can we bring in more efficiency in pre-authorization. How do we bring in more enhanced transparency in the context of the structural change? All these are opportunities for us. I think we continue to be strategic technology partners for some of the tier-one healthcare payers. I think we continue to stay focused on that.

Vibhor Singhal (Analyst)

Got it. Great to hear. Just one last question, if I may squeeze in, either you or maybe Aparna can answer. On the headcount, we saw a decent addition in the headcount in this quarter. What is the kind of outlook that we're looking for in terms of headcount addition over the next, let's say, two to three quarters? With the deal ramp-up and all, do we see this number maybe inching up a bit, or do you think it might stabilize around the current levels?

Srinivas Pallia (CEO and MD)

If I look at the key people indices in this quarter, net headcount has gone up. Onboarded freshers from college, attrition has come, utilization has gone up. Based on the demand, which is very high, very strong bookings in H1, I think that depending on the as we convert to revenue, we'll continue to hire both laterally as well as from campus.

Vibhor Singhal (Analyst)

Got it. Got it. Thanks, Srini. Thank you so much for taking my questions, and I wish you all the best.

Operator (participant)

Thank you. Next question is from the line of Abhishek Kumar from JM Financial. Please go ahead.

Abhishek Kumar (Analyst)

Yeah, hi. Good evening. Thanks for the opportunity. I have two questions. First, we talked about three kinds of deal wins, right? You know, net new, scope expansion, and just plain renewal. So net new, we understand, will add to incremental revenue. In the other two types of deals, are we seeing overall book of business for those deals growing, especially in renewal and also in renewal plus scope expansion? Or, you know, the deflation which is there in renewal is kind of offsetting the new scope, you know, that we are getting from those deals? Any color on that, please.

Aparna Iyer (CFO)

Yes, you are right. Net new is fully new, so that will add to the revenues directly. In terms of just renewal, is there a deflationary pressure? Like I said, every deal, every time there is a productive renewal, there is a productivity that gets passed on. We typically tend to take on more new projects, more new spends that the client initiates. We've spoken about how some of this productivity is put back into prioritized spends around AI, AI adoption, and we are playing a huge role in that. In some sense, in the renewal plus expansion, there is a reasonable scope expansion, and therefore, there is an increase in the bookings or the revenue value that is expected. In a full-fledged renewal, is there a compression? I wouldn't call it a compression, but this is just a standard productivity that gets passed on.

It's very typical to what we have seen in renewal deals over the last few years.

Abhishek Kumar (Analyst)

Okay. Just to follow up on this one, I have the second one. I was asking this because Q2, there have been renewal deals. Even if there is new scope, would you agree that there is a timing difference between the new scope increase versus the deflation that we see near term? Does that mean that hits you in the second half?

Aparna Iyer (CFO)

Yes, so therefore, what happens is, yes, you know, there is a timing difference. There is a productivity that gets passed on. The way the deals are configured and structured, you know, typically have a certain timing and pacing. Like Srini said, each deal is very different. Are there timing differences that could really impact in the short term and play out differently in the long term? That is correct.

Abhishek Kumar (Analyst)

Okay. My second question is on the impact of the bankruptcy on your top line. Did we see any impact on 2Q revenue, or are we expected to see anything in the 3Q revenue?

Aparna Iyer (CFO)

No, nothing. No, there was no impact on the revenues. We actually made a provision for bad and doubtful debt. You will see that in our G&A spends of expected credit loss numbers going up. We made a disclosure to that effect as well. This has no impact on the revenue growth in Q2.

Abhishek Kumar (Analyst)

Okay, that's all from my side. Thank you and all the best.

Aparna Iyer (CFO)

Thank you.

Operator (participant)

Thank you. We'll take our next question from the line of Nitin Padmanabhan from Investec. Please go ahead.

Nitin Padmanabhan (Analyst)

Yeah, hi. Thank you for the opportunity again. Earlier, you had called out some large SAP implementation projects being pushed out, pauses by clients, and so on and so forth when the tariff-led uncertainty started. Considering some time has passed, are you seeing some of these clients' conversations beginning on trying to get these things back? That is the first question. I have three more, actually.

Srinivas Pallia (CEO and MD)

Nitin, specific to the comment you made in the context of what we said, in one quarter, we did talk about one of the transformation programs that came to an end. That particular client still is going through the difficulties of tariff. Unless and until that piece of the tariff is clear to them, they may not want to start the program. Having said that, we have got good traction, especially for SAP HANA across industries, Nitin.

Nitin Padmanabhan (Analyst)

Got it. The second is within the EMR vertical. I think last quarter, you were a little hopeful that as there is some stability, this vertical could sort of recover in the second half. Any update on how you're thinking about EMR on a going-forward basis?

Srinivas Pallia (CEO and MD)

You're right, Nitin. EMR sector for us has degrown sequentially as well as year on year. Especially the manufacturing and auto industrial, we have seen a lot more impact on account of tariffs. This sector, where we see a lot of previous generation outsourcing deals, we're hopeful to come back to the market. These deals will be very, very competitive. We are definitely staying focused on that, and some of these deals are very critical for us. As far as on the energy consulting side, we have started seeing some good traction, and we will stay focused on that. Broadly, Nitin, again, the point I made is that we do see the opportunities in SAP S/4HANA space in some of our clients. This is a quarter where many of our clients are doing budgeting planning, especially where they look at the discretionary spend and so on and so forth.

We are looking at that aspect as well. Many of these clients, in the context of what's coming at them, are also driving cost optimization and vendor consolidation. We continue to stay focused on that. There are certain deals we are also seeing on the post-merger integration space. That's another one we are kind of focusing on. Utilities, which is a part of the energy sector, is kind of muted for now. Especially in the U.K. sector, we hope that sector would turn around. Broadly, there are multiple dimensions and aspects for energy and manufacturing. Nitin, very valid. Your question is very valid.

Nitin Padmanabhan (Analyst)

Perfect. Just one last one from my end. You alluded to a very strong sort of deal pipeline. Are you seeing any improvement in smaller-sized deals within that pipeline at the moment? How do you see furloughs this year currently when you just think about it versus last year? Thank you.

Srinivas Pallia (CEO and MD)

As far as the, yeah, Nitin, as far as the deal pipeline is concerned, like I said, after closing close to $9.5 billion of booking in H1, I would say our pipeline is sustained and it is robust. If you ask me, going back to a specific question, this is evenly distributed across the large deals and across small deals. I'm seeing this consistently across sectors and GEO. Our pipeline is a lot more secular. The broad theme, Nitin, is cost, of course, speed, and AI-led efficiency as opportunities that keep coming towards. In the last few months, if you ask me, we have pitched in a lot of proactive ideas to our clients, especially because of the macro challenges that they are facing. We are trying to convert that into our qualified pipeline initiatives as well. There will be small vendor consolidation deals as and when it comes up.

We'll stay focused. The fact that we have won four mega deals, which are typically cost optimization and/or vendor consolidation, I think we have created a robust engine to go after the large deals, Nitin.

Nitin Padmanabhan (Analyst)

Sure, on the furloughs, yeah.

Srinivas Pallia (CEO and MD)

As far as furloughs are concerned, we are taking a similar approach like last year. We're taking that as the assumption right now, Nitin.

Nitin Padmanabhan (Analyst)

Perfect. Very helpful. Thank you so much and all the best.

Operator (participant)

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to Mr. Abhishek Jain for closing comments. Over to you.

Abhishek Jain (VP, Corporate Treasurer, and Head of Investor Relations)

Yeah, thanks, Srini. Thank you all for joining the call. In case you have any follow-up questions, please feel free to reach out to the investor relations team. Thank you and have a nice day.

Operator (participant)

Thank you. On behalf of Wipro Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.