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WILLIS TOWERS WATSON PLC (WTW)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered steady top-line and stronger profitability: Revenue $2.29B (flat y/y) with 5% organic growth, Adjusted EPS $3.07 (+11% y/y), and Adjusted operating margin 20.4% (+230 bps y/y) .
  • Broad-based execution: R&B organic growth +6% and margin +70 bps (18.8%), HWC organic growth +4% and margin +390 bps (28.6%) (ex-TRANZACT +100 bps) .
  • Guidance cadence improved: FX tailwind to adjusted EPS raised to ~$0.15 in Q4 and ~$0.10 for FY 2025; reinsurance JV headwind maintained at ~($0.10) net (down from ($0.25–$0.35) in Q1) .
  • Capital return remains a catalyst: $600M share repurchases and $90M dividends in Q3; FY 2025 buybacks guided at ~$1.5B, subject to conditions .

What Went Well and What Went Wrong

  • What Went Well

    • Margin expansion outpaced expectations: Adjusted operating margin 20.4% (+230 bps y/y); Adjusted EBITDA margin 22.5% vs 20.9% y/y .
    • Specialty-led R&B wins and tech enablement: CRB growth +6% (ex book/interest +7%); launch of Radar 5 (GenAI) and Gemini digital facility underpin productivity and placement capacity .
    • HWC resilience and pricing tailwinds: Health grew +7% organically with strong International and NA performance; management cited “robust demand” and EU Pay Transparency-related work pipelines .

  • What Went Wrong

    • Rate environment headwinds: Softening property pricing (large & complex segments) and broader pricing relief began to weigh on brokerage growth vs earlier quarters .
    • ICT consulting caution persists: Clients remain hesitant on large multi‑year tech implementations; ICT revenue flat y/y .
    • Medicare commission softness in North America and timing shift in Career surveys pushed some revenue into Q4, muting Q3 HWC growth to +4% .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$2.289 $2.223 $2.261 $2.288
Diluted EPS ($USD)$(16.44) $2.33 $3.32 $3.11
Adjusted Diluted EPS ($USD)$2.77 $3.13 $2.86 $3.07
Operating Margin %(33.5)% 19.4% 16.3% 18.3%
Adjusted Operating Margin %18.1% 21.6% 18.5% 20.4%
Adjusted EBITDA ($USD Millions)$479 $532 $470 $515
Adjusted EBITDA Margin %20.9% 23.9% 20.8% 22.5%

Q3 2025 vs S&P Global consensus:

MetricQ3 2025 Estimate*Q3 2025 Actual
Primary EPS Consensus Mean ($USD)3.05*3.07
Revenue Consensus Mean ($USD)$2,284.4M*$2,288.0M
EPS – # of Estimates19*—
Revenue – # of Estimates10*—

Values retrieved from S&P Global.

Segment breakdown (Q3):

SegmentQ3 2024 Revenue ($M)Q3 2025 Revenue ($M)Organic Growth (Q3 2025)Operating Margin Q3 2024Operating Margin Q3 2025
Health, Wealth & Career$1,328 $1,261 +4% 24.7% 28.6%
Risk & Broking$940 $1,007 +6% 18.1% 18.8%

KPIs and cash/tax:

KPIQ3 2024Q3 2025
Organic Revenue Growth %—+5%
Adjusted Tax Rate %19.7% 22.4%
Free Cash Flow YTD ($M)$724 $838
Share Repurchases (Quarter)—$600M; 1,848,098 shares
Dividends (Quarter)—$90M ($0.92/share)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
FX tailwind to Adjusted EPSQ4 2025 / FY 2025FY 2025 ~+$0.05 (Q2) Q4 ~+$0.15; FY 2025 ~+$0.10 (Q3) Raised
Reinsurance JV (Bain) EPS impact (net)FY 2025Headwind ($0.25–$0.35) (Q1) ~($0.10) net headwind (Q2/Q3) Lowered vs Q1; Maintained vs Q2
Share repurchasesFY 2025~$1.5B (Q1/Q2) ~$1.5B (Q3) Maintained
Adjusted operating margin expansion (R&B)Next 3 years~100 bps per year (Q1/Q2) ~100 bps per year (Q3) Maintained
Non-GAAP methodologyOngoingExclude non-cash net periodic pension; include capitalized software in FCF (Q1/Q2) Same (Q3) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Technology enablementTransformation/WEDO; tech investments; ICT mixed Launched Radar 5 with GenAI; Gemini digital facility; WEDO automation driving margins/FCF Strengthening
Insurance pricing/macroRate/FX headwinds; CRB growth despite environment Property softening (large/complex); NA Casualty rising; growth harder at high-single-digit Worsening prices, mixed lines
Health care inflationDemand tailwind; high-single-digit Health growth in Q1/Q2 73% of companies feeling more cost pressure; pipeline strong; high-single-digit FY outlook Persistent tailwind
EU Pay TransparencyAnticipated advisory demand into 2026 Survey timing pushes revenue to Q4; demand building for compliance support Building
BD&O seasonalityFlat in Q2; 80% Medicare revenue in Q4 Nearly half of BD&O revenue in Q4; Medicare open enrollment drives commissions Seasonal Q4 uplift
FX outlookNeutral in Q1; small tailwind in Q2 Raised to Q4 ~$0.15, FY ~$0.10 tailwind More favorable

Management Commentary

  • “In the third quarter, we generated 5% organic growth, 230 basis points of adjusted operating margin expansion, and adjusted EPS of $3.07, up 11% year-over-year.”
  • “Radar 5 brings advanced capabilities, including GenAI techniques… enabling insurers to unlock smarter data-driven decision making at scale.”
  • “At the current spot rates, we expect a foreign currency tailwind to adjusted EPS of approximately $0.15 in the fourth quarter and approximately $0.10 for the full year.”
  • “BD&O overall generates nearly half of its revenue in the fourth quarter… our Medicare exchange generates about 80% of its revenue in the fourth quarter.”
  • “Pricing pressure has continued… property is the most impacted class… most lines are showing softening other than North American Casualty.”

Q&A Highlights

  • Risk & Broking mix: Specialty project-based placements contributed more in Q3; these are inherently one-time, alongside recurring work .
  • Margin trajectory: Despite softer rates, management reaffirmed R&B ~100 bps average annual margin expansion over next three years, supported by process/tech levers .
  • Free cash flow setup: H2 tailwinds from waning transformation cash costs and removal of TRANZACT outflows; confident in ongoing FCF margin improvement .
  • HWC margins ex-TRANZACT: Added 40 bps in Q1, 20 bps in Q2, 100 bps in Q3; discipline on cost/resource management and continued optimization .
  • BD&O outlook: Strongest growth in Q4 driven by open enrollment timing and new clients; mid single-digit FY growth expected .

Estimates Context

  • Q3 2025 results slightly beat consensus: Adjusted EPS $3.07 vs $3.05*; Revenue $2.288B vs $2.284B*; EPS estimates (19), Revenue estimates (10). Values retrieved from S&P Global.
  • Implications: Modest positive revisions likely to FY EPS and margin trajectories, aided by FX tailwind and Q4 BD&O seasonality .

Key Takeaways for Investors

  • Mix shift and tech leverage are supporting margins despite rate softening; expect continued R&B margin expansion per guidance .
  • HWC remains resilient with recurring revenue and secular demand (health inflation, regulatory compliance), supporting mid single-digit growth with expanding margins .
  • Q4 is seasonally strongest: FX tailwind, BD&O open enrollment, and Career survey timing should lift Q4 profitability and cash conversion .
  • Capital return remains robust: ~$1.5B FY buybacks maintained, with $600M executed in Q3 and $90M dividends; supports per-share metrics .
  • Reinsurance JV EPS drag now ~($0.10) net for FY 2025, down from Q1 guide; reduces a key headwind to earnings quality .
  • Watch pricing cycle: Property softness and consulting caution in ICT could temper R&B/ICT top-line; specialization and one-off project placements offset near-term .
  • Near-term positioning: Expect a constructive Q4 print (FX, seasonality, margin expansion), with medium-term thesis anchored in specialization, automation/AI, and disciplined capital allocation .