Wipro Ltd (WIT) 2022 Q3 法說會逐字稿

Good day, ladies and gentlemen. We wish you all a very Happy New Year. Welcome to Wipro Limited Q3 FY '22 Quarterly Earnings Conference Call. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Ms. Aparna Iyer, Vice President and Corporate Treasurer. Thank you, and over to you.

Thank you, Stanford. Wish you all a terrific 2022, and a very warm welcome to our Q3 earnings call. We will begin the call with business highlights and overview by Thierry Delaporte, our CEO and Managing Director; followed by financial overview by our CFO, Jatin Dalal. Afterwards, the operator will open the bridge for Q&A with our management team.

Before Q&A starts, let me draw your attention to the fact that during the call, we may make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 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 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 made available on our website. Over to you, Thierry.

Aparna, thank you very much. Good evening, everyone. Thank you for joining us today. I, first, would like to really wish you all a Happy New Year. At Wipro, we are starting this year with hope and a large momentum and purpose. We would like to wish health and success to everyone of our friends in the analyst and investor community. Across the globe, the new variants of the COVID-19 virus are spreading rapidly, which wasn't unexpected, but it's a damper now nonetheless. As I said to all our colleagues at Wipro, "Mask up, take your vaccines, and let's help stop the spread of this virus."

Now despite the pandemic, we have delivered the fifth consecutive quarter of excellent performance, strong growth in revenues, acceleration in bookings, sustained operating margin and solid operating cash flow. I want to thank every one of our employees who helped us achieve this. These results reflect their passion, their dedication and inventiveness. And I must say I was really glad to see that our colleagues have taken the time to attend to their health and well-being while continuing to serve our clients with integrity and zeal.

Looking at our financials. Our revenue growth during the quarter was up 3% in constant currency terms and 27.5% year-on-year. In the first 9 months of this year, we have grown at 28% year-on-year. This is nearly 6x faster than the average growth rate we've had in the last 10 years. We've been consistently growing up for over 3% for 5 quarters now.

And frankly, this is because of our improved execution abilities and followed through on our business strategy that was established in November 2020. Our growth continues to be broad-based across all our key markets, service offerings and in most of our sectors. We have added about 34,000 new employees on a net basis in the past 9 months. To give you a sense of proportion in pace, we actually have added in 3 quarters what took us 11 quarters in the past.

Now looking forward, the demand environment continues to be robust. Our growth rates, our pipeline and our order bookings all reflect that. Our pipeline in fact shows a healthy mix of medium and large deals across all our business lines. We also continue to see rapid expansion in small- and mid-sized deals, which really represents growth in our existing accounts as well as expansion of our market portfolios.

Order books, which is frankly the best measure of the demand environment, has grown 27% on a year-to-date basis in terms of annual contract value. In fact, our bookings have been the highest ever. And in Q3, we saw 50% year-over-year increase in the total contract value order bookings for deals in the $10 million to $30 million range.

What I feel stands out is that our win rate in the market has improved dramatically. For this year, our win rate has expanded 300 basis points. This is clearly a reflection of our strategy, the cultural shift we have been pursuing as well as the services we are now being recognized for. And I feel it's also a reflection of our impact on our clients' business.

As expected, we are seeing the benefit of Capco's consulting edge in our large new pipeline. We are now winning in cloud transformation, in engineering services, data, digital transformation and security. Our clients are continuing to place their trust in us to have them turn into digital businesses.

On the M&A front, we have continued to pursue aggressively on our strategic fit. We announced two completion of two acquisitions -- the completion of two acquisitions in Q3. The first one is Edgile, a transformational cybersecurity consulting provider that focuses on risk and compliance, on information in cloud security and digital identity. Edgile is definitely recognized by security and risk leaders for its very unique business-aligned cybersecurity capability for their deep understanding of the changing regulatory environment and enabling cloud transformation that help secure the modern enterprise.

The second acquisition that we completed was LeanSwift Solutions, a U.S.-headquartered system integrator of Infor Products whose service capabilities include ERP, e-commerce, digital transformation, supply chain, warehouse management system, business intelligence and, of course, integrations. This acquisition will expand the capabilities of Wipro's FullStride Cloud Services. So we are very excited about these acquisitions. And we've welcomed so many new colleagues from Edgile and LeanSwift into Wipro recently.

On operating margins, at 17.6% in Q3, we are ahead of our stated range of 17% to 17.5%. These margins were delivered after an incremental 2-month impact of salary increases in September that covered 80% of our colleagues globally and a equity grant for our senior colleagues. And we continue frankly to invest heavily in our business across self-transformation, capabilities and talent.

I will now provide some final details on market, on service offerings and sectors, right, as it were. Americas and Europe, our top 2 markets, grew at 28% and 38%, respectively, for the quarter in year-on-year terms. In Americas 1, we grew 23% year-on-year and 5.2% sequentially with all sectors showing strong growth. Communication, media, information services grew 30%; consumer goods and life science grew 25%; health care and medical device grew 16% year-on-year. Now looking at Americas 2, we grew 33% year-on-year with a strong growth across BFSI and manufacturing. The order book in terms of annual contract value grew over 47% year-on-year. Frankly, this was led by good overall bookings in the bucket of $10 million to $30 million.

Our European business has delivered an outstanding year-on-year growth of 38%. Germany, the largest market in Europe, has almost doubled. Benelux grew 24%. And our U.K. business grew 40% year-on-year. The momentum on deal wins have accelerated this quarter. And our pipeline has several large deals above the $100 million range. We are frankly confident about how they are shaping up as well. I'm sure you know where we were with our European business a year ago, so it's a great turnaround story here.

Finally, our APMEA market grew at 13% year-on-year. All our major markets are growing sequentially. Overall, the order booking in TCV terms are looking healthy with 37% year-on-year growth excluding acquisitions, of course. In my mind, this should definitely support the growth agenda in this market in the coming quarters.

But one of our key of pillars of our strategy is to grow our existing large accounts and deepen the relationship. So let's look at that. Our top 5 customers grew 36% year-on-year. Our top 10 customers grew 37% year-on-year. In the last 12 months, we've added 7 customers in the more than $100 million bracket and 9 new customers in the more than $50 million bracket. This is, I mean, a significant shift, one that we believe will continue.

From a service offering standpoint, we have two big global business lines. Our iDEAS global business line grew 37% year-on-year. Most of the sub-practices showed a healthy growth. Our engineering business grew over 26% year-on-year in Q3 and grew at a compounded quarterly growth rate of over 6% in the last 4 quarters. Our iCORE global business line grew by 17% year-on-year. Again, most sub-practices grew in double digits on a year-on-year basis, too. Digital operations and platform led the growth with 18%.

We also continue to invest in and strengthen our partnership with hyperscalers and industry-leading platform players. We, in fact, expanded our go-to-market approach with cloud and with application partners now, resulting in us driving leading-edge solutions in the market. Wipro is, therefore, more visible in the market because of this.

We are driving proactive solution development and campaigns with our partners on both horizontal and vertical solutions, all of this resulting in an increasing number of multi-partner wins. Our order bookings that were a result of going to market together with our partners grew 40% year-on-year. This is the highest ever. Our cloud ecosystem revenues also grew and grew at an accelerated pace of 30% on a year-to-date basis.

Now let me give you a sense of the kind of deals we are winning. One, we won a strategic ServiceNow implementation engagement from a large Brazil-based oil and gas company to transform their IT processes, increase agility and quality of services to business areas. Leveraging Wipro's FullStride Cloud Services, this is a significant ServiceNow implementation in the Latin American market.

Second, a U.S.-headquartered financial services institution has awarded us a contract to transform the core banking functionality of their retail portfolio. Wipro here will leverage its domain and technology transformation capabilities to bring in design thinking methodologies, improve agility and obviously increase business value for the client.

Now more examples worth sharing, but I'd like to now focus on our biggest success factor, talent. Our focus on building world-class talent remains more than ever. We've worked very hard to ensure that scale is never a constraint for growth. We are, of course -- we are on course to onboard over 70% more fresh talent from the campus in FY '22 versus the previous year.

It will not surprise you if I said that attrition is a reality across almost all industries. It's been no different for us. I shared with you last quarter that we expect attrition to slow down only after a few more quarters. However, we now feel more confident of having stabilized our attrition rate and expect it to moderate next quarter.

When we embarked on our transformation in 2020, we had committed to creating a vibrant, diverse and a more local leadership team. We've made progress on every count. Our leadership has moved closer to clients. The presence of senior leadership in locations outside India has improved by 13 percentage points. It's also relevant to note that nearly 50% of our leadership hires have been in the growth office and in the customer-facing global account executive roles, which are strengthening our frontline (inaudible).

Over the last 18 months, we have improved ethnic diversity in our senior leadership by 20 percentage points. And gender diversity in the leadership has nearly doubled. Without a doubt we have more work to do here, but I'm pretty proud of the change we are seeing in Wipro thus far. Now we are committed to being a company that respects diversity, walks the talk on inclusion and is a beacon for change within our industry, it's very clear.

On an even more current and urgent topic, I'd like to reaffirm that the health and safety of all our employees remain our topmost priority. With the rapidly spreading Omicron variant of the COVID-19 virus, we remain very vigilant. As a proactive measure, we have decided to close our offices globally for the next 4 weeks. It's of some relief to us that 90% of our employees globally are now vaccinated with one dose of the vaccine and over 65% are fully vaccinated with the recommended two doses. Our plans to return to office, even in a hybrid model for our fully vaccinated employees, will be calibrated in the context of the evolving situation, keeping both our employees' safety and client preferences in mind. That said, of course, we are continuing to service our clients with dedication and agility as always.

Staying with topics of great urgency, our sustainability efforts have continued with great momentum. You may know we have been included in the Dow Jones Sustainability Index again for the 12th time in a row, a testament to our consistent ongoing efforts in this area. Climate change and our ecological and carbon footprint is something we take very, very seriously. Finally, on to our outlook for the next quarter. We have guided for a revenue growth of 2% to 4%, which will translate into a full year growth of 27% to 28%.

To summarize, the demand environment continues to be robust. And our growth path over the last few quarters reflects this. We will stay on course with the strategic priorities I had shared with you in November. And I'm confident of sustaining the growth momentum we have so far displayed, right?

On that note, let me welcome Jatin for his comments on the financials. Jatin, over to you.

Thank you very much, Thierry, and thank you all for joining our earnings call. I will quickly summarize the financial details. As you know, we have grown 28.5% on a year-on-year basis on a rupee -- in rupee terms. Our margins have remained constant or stable between quarter 2 and quarter 3 in a narrow range. Our effective tax rate, or ETR, has actually improved from 22% to 21.3% in quarter 3. Overall, our earnings per share has grown at 4.2% on a year-on-year basis.

We have had a strong performance in cash collection as well as a strong performance in billing. And as a result, both our unbilled revenue as a percentage of revenues have improved and our DSO days have also improved. Our operating cash flows were 101% of our net income. At the end of quarter 3, we had $4.6 billion of gross cash and $2.8 billion of net cash. We had $3.4 billion of ForEx hedges as of 31st December. And we realized an exchange rate of INR 76.12 for quarter 3.

The Board of Directors has recommended an interim dividend of INR 1 per share as you would have read in the press -- in our press release. And our guidance for quarter 4 is 2% to 4% in the constant currency at the exchange rates which are mentioned in the press release.

We'll be very happy to take your questions here. Thank you.

(Operator Instructions) We take our first question from the line of Moshe Katri from Wedbush Securities. As there's no response, we move to the next question from the line of Sandeep Shah from Equirus Securities.

Just a question in terms of last 2 quarters, we have actually exceeded the upper end of the guidance, and I do agree that's a high base. In this quarter, we are at the midpoint of the guidance as a whole. So is it fair to say, is it a high growth? Was it some deceleration in a small tenure, faster conversion deal rates and deal wins are a bit decelerating as a whole, which is impacting the growth? And even if I look at the current quarter guidance, on an organic basis, it looks like 1.3% to 3.3% as a whole.

No. Sandeep, this is Thierry. So I really do not see any deceleration of our growth. I think what we've done for the last few quarters is we've guided between 2% and 4%. And we've been consistent in guiding that. Sometimes you go a little up, you go a little down. But there's no real trend that would go down by any mean. We haven't lost clients. We haven't terminated abruptly any deal or so on. We continue to grow. We've done fabulously in bookings frankly, with the best performance ever. And that gives us the confidence that we can continue to guide on 2% to 4% for the next quarter.

Keep in mind also because here, obviously, we are tracking performance on a quarterly basis. This is 28% growth over last year. So imagine the company, the transformation of the company in 4 quarters. If you go back 5 quarters, we actually have added 1/3 of the Wipro revenue of that time to the overall base. So the company has increased by 30 -- by 1/3 in 5 quarters. And I think it is the kind of growth that we've had. And we continue to see the same trend going forward, frankly.

Yes, this is helpful. And we also acknowledge that the growth journey of Wipro has really turned around. Just a question further to that, in this era when Wipro has successfully turned around the organic growth, why are we depending on too much of inorganic growth as a whole? So because in one of your media interviews, clearly you also mentioned that we may be open for another large-sized acquisition. And in terms of smaller acquisitions, we keep doing that as a whole.

Why not focus in terms of improving the margins, improving the return ratios, when the time has come where organic growth is easy to come rather than too difficult the efforts, which already have been taken by you in terms of turning around the organic growth? That's it.

Yes. So it is two different things. We are not mixing our organic growth strategy with the inorganic strategy. Those are two different tracks. M&A will never be seen as a way to compensate for organic growth. The focus on the market on the business is to drive organic growth. And every of our business units are driving growth and focusing on that.

The M&A strategy is to help us accelerate and gain and -- accelerate in speed to make jump in some strategic areas. When we do an acquisition like Edgile, okay? Edgile brings expertise, consulting expertise in cybersecurity area. We have a strong cybersecurity practice. We have a good business that is growing very well, led by a very strong leader, Tony Buffomante.

We feel that by adding this consulting business, it will allow us to have -- and be able to have a bigger impact in this market. And so that's really how we are seeing M&A. It's strategic, it's to reinforce and bring expertise we don't have and compress time. But it is not to compensate for organic growth.

Yes. And just the last question, which I think is in terms of margins. I think even in this quarter, if we look at EBITDA margin, the decline has been 45, 50 bps versus last quarter being close to 70 bps. So the question is in terms of the margin outlook. Are we continuing the band of 17%, 17.5%, which may continue over the next 4, 6 quarters, which we call out as a medium term? Or we believe now there could be tailwinds because of growth as well as pressure addition, which you may be doing, demand has upside potential rather than a downside potential?

So Sandeep, Jatin here. We have maintained that we will -- there could be quarterly variations. But this is a range that we think margins are sustainable for our business. And there is no change to it. This year is going to be like -- previous 2 years is going to be a year of its own pattern and pressure points and excitement. And we should remain pragmatic and dynamic with the changing scenarios on the ground. So there is no change. Fundamentally, we have always said that the first priority for us is growth. And alongside, very clearly, is talent.

And as we walk through these two, we also try and maintain the margin in the band that we have spoken about. And we have done a decent job around it in current quarters despite 2 months' impact of wages and that we have invested a little bit in additional flexibility and utilization. As you can see, it's about 2.5% change from previous quarter, which gives us some additional headroom for growth in quarter 4 and beyond. Despite these two sort of investments on cost side, we have been able to remain in a narrow range on operating margin. So I would say the -- it's going to be a year -- dynamic year will need to manage every quarter as it comes. But our mid-term sort of range remains.

The next question is from the line of Vibhor Singhal from PhillipCapital.

So for Thierry, my question was on the deal flow and the overall demand environment that we are seeing. We are hearing a lot of news, and I think the anecdotal evidence also suggests, that the large deals that we have seen in the last calendar year in CY '20, in fact, there's been very few and far between those kind of deals in the last 6 to 9 months.

And what we're hearing is that clients are breaking those deals into smaller-sized deals with smaller size and tenure as well. So are we also seeing similar kind of a pattern in the deal flow? And how does that impact our ability? I mean, is there more competition, more difficult to win those deals? How does that basically impact our overall strategy to grow over the next couple of years? And after that, I have a follow-up for Jatin.

Okay. So I'll take that one on the overall structure of the large deal. So one is obviously the clients are -- in every industry, clients at the moment are driving [various activities], execution of large transformation program, okay? So it's not -- they're not in design phase and not building road maps, they are getting it down. So they are progressing and they want to see the results. And so it's not uncommon indeed that clients feel that rather than going for lengthy legal negotiation for building a 3-year road map, a 5-year road map, let's go ahead with 6 months, 12 months and see how things are going and we'll adjust along the line.

And so oftentimes, we see clients indeed having a large transformation program in mind but willing to contractualize through chunks as opposed to having a big one. It doesn't mean it's not going to happen. We are observing that at times, they like to be pragmatic and go with a phased approach as opposed to a big bang. That's all fine for us. It doesn't really change as long as we are able to structure the way we are developing and driving our solution the same way. But it's okay, it's okay. Frankly, at the end of the day, if you sign five times a $100 million deal with a client or a $500 million deal with this client, it's about the same.

Got it. So in terms of effort as well, you don't believe that maybe chasing smaller but more number of deals would be, let's say, a higher, let's say, pressure on your sales and marketing cost and it could be probably more difficult to compete with the smaller companies, which probably aren't present there in large deals anyhow?

No, I don't think so, frankly. I believe that when we are going for a deal of 5 or 7 years, it just gives you a little bit more perspective and a little bit of time to really define the way you're going to project your investments. But frankly speaking, our clients are very mature and they know that well as well. And so when we are building and structuring the Phase 1 or Phase 2 of a larger transformation program, we are able to structure it in a way that is in the context of a bigger and larger plan. So at the end of the day, I think it's not dramatically changing the way we work.

And from a sales standpoint, I think it has its ups and downs. It has its upside and downside. If you sign one deal for 5 years, then you maybe do not have to come back to the negotiation table a year later. But when you do it regularly, you are able to adjust to the needs that are possibly changing over time a little bit also. So it drives a little more flexibility that can play for the client like for the partners. So I think I'm not -- I'm not too concerned at all about that. I tend to look at those deals, whether they are sold maybe once or in chunks as big deals, and I'm expecting our teams to work on it with the same mindset.

Got it. Thanks for answering that question in detail. Jatin, just one quick question. You mentioned we have around $4.6 billion of cash on our balance sheet. Any basically outlook on basically enhancing shareholder returns, either by buyback or increasing dividend in future (inaudible)?

Sure. So we have articulated that over a block of years, we will continue to, for sure, return 50% of our net income to the shareholders. You know that over the last few years, we have returned even higher amount. For the current quarter, the Board of Directors have gone ahead with the recommendation of dividend INR 1 per share, as I spoke about it. Our approach to any other action or decision on cash distribution is really based on two aspects: the quantum of cash on the balance sheet; and second is around the need that we see over next few quarters from a strategic use and investment standpoint.

And whenever we feel that we don't need an additional cash beyond 50% of the net income, we have gone -- we have come to you all with the proposal for buyback. But right now, there is no such proposal under active consideration. Otherwise, you would have heard about that. Right now, we have announced the dividend -- interim dividend of INR 1 per share.

The next question is from the line of Moshe Katri from Wedbush Securities.

A couple of things. First, you mentioned a 27% increase in TCV. Is there a way to slice it by new logos versus renewals? That's number one. And obviously, this is important, you wanted the renewal piece to be higher because it will drive growth.

And then the other part of my question is focusing more on Capco. So maybe you can talk a bit about where are we in terms of integrating Capco, focusing on the cross-selling initiative, that's going to be a big deal. And what happens to growth when it normalizes, i.e., fiscal '23, you're analyzing -- you're annualizing the contributions from Capco? So is mid-teens kind of a good number to kind of focus on from a big-picture perspective? Obviously, we're not talking about guidance but maybe from a long-term perspective.

Sure, okay, Moshe. So I'll ask Stephanie to go on question one, around the type of deals we've closed. I will take question two on Capco and question three on margin projection, okay? Stephanie, do you want to go ahead with number one?

Yes, sure. Thank you. So we're really seeing a mix of renewals but also new logos and also new areas within existing clients. So I'm energized by the mix of growth that we're seeing. We see a lot of new clients placing their trust in Wipro on major transformation initiatives. And as Thierry described, some of that is in initial smaller chunks, and in some cases, it's large transformation deals.

So I think it's a healthy mix of adding new clients as well as renewing existing business. So clients continue to place their trust in us to continue to transform. But also they're bringing us into new parts of the organization. So that's what's driving a lot of our growth in our existing accounts but also adding new logos.

Thank you, Stephanie. Moshe, on the Capco question, what I can say is that now it's been, what, 8 months since the acquisition of Capco. And frankly, it's actually been a wonderful first year. The teams are working well. We have aligned -- we have built common governance on the large accounts. We have worked on opportunities with Capco and Wipro and BFSI together. We have really won some very nice deals.

And we had a nice slurry of deals shaping up in the previous quarter and this quarter. Beginning of this quarter, we really won a very significant transformation deal that typically we would have never won without the other. So I'm pleased with really the attention of the Capco team to the market. I'm very pleased with the performance of Capco team.

I am pleased with the way the leaders are engaging with the larger Wipro organization and sensing there's a great -- I would say, there's a warm feeling for the Capco team and the Wipro team. To me, it is a success and not one single day of being -- doubting about the decision we made. And I think it will continue to deliver. So I would say, obviously, it's difficult to reflect after 8 months. You will want to have more perspective. But frankly, it is very promising. And again, solid performance from Capco every month.

Your third point on margins, if I understood well, because at some point in time, at least for me, your voice broke up. But it's a question about you want to know where we go in terms of margin. You mentioned yourself the fact that we are not guiding yet for fiscal year '23. What I would say is that if you look at our margins, we have been pretty consistent over the last 6 quarters, guiding about -- we guided around 19%.

And then came Capco, we announced Capco's impact on margin was between 1.6% and 2%. And we've guided ever since on our band between 17% and 17.5%. And we have maintained our focus and our attention to this level of margin. So from that standpoint, Moshe, I would not be expecting anything changing from where we are now.

And also on that respect, in fiscal '23, the annual revenue contributions from Capco annualized, so growth rate will normalize. And the question here is whether we should use mid-teens growth rate for fiscal '23 and beyond is the right kind of range because of the fact that...

Growth rate.

That's right. Exactly.

Growth rate. Look, again, we've been communicating we've been guiding on 2% to 4% growth quarter-after-quarter for the last quarters. Obviously, Capco has already normalized, it's not impacting those numbers anymore. I can tell you that we are maintaining this guidance for Q4. As you know, we are -- we have made as a practice to communicate on the -- quarter-after-quarter. So you'll have to be a little patient. But again, read us, we are saying we are going for 2% to 4% this quarter, and we are not seeing major change in the market. And we are performing.

The next question is from the line of Diviya Nagarajan from UBS.

Thierry, I think you've kind of answered this question in different parts, but let me try and come at it from a different angle. So if you look at the last 3 -- the quarter that you just reported, I think some of your peers have seen pretty strong surprises. It is a seasonally weak quarter, we don't really see those kind of surprises.

So I was just wondering, in your -- from Wipro's perspective, why didn't those surprises come through? Was it a mix issue? Or is it that we had some ramp-ups that are already behind us? How should we think about this? Because we have seen, at least so far in the earnings season, fairly broad-based revenue beats from many of your peers so far.

Yes. Diviya, in some ways, I feel that because when you're guiding on a certain level, you're giving a bracket, right? It's between 2% and 4%, and we've been guiding between 2% and 4% for 3, 4 quarters. If you're hitting the top end of the guidance, then the market is expecting that you'll do the same. The reality is that when we are managing our business, we are looking at our portfolio and we are looking at the trend, and we are trying to guide really reflecting what we are seeing at the beginning of a quarter. And so at the end of the day, I cannot be unsatisfied with the fact that when I guide 2% to 4% and I do 3%, I cannot be more accurate.

I think I was coming more from the point of view with I think with some of the others, the surprise seems to have come from demand during the quarter.

Yes. But demand has not changed.

I was wondering if there's anything in the portfolio that, that kind of innovative approach on taking advantage of such a demand.

Yes. Diviya, one thing that's clear is that typically, when you sign a mega deal, one -- it's not uncommon that 1 quarter or another, you have suddenly a massive in-year revenue. And so if you do not have this mega deal, you do not necessarily have this one shot, big bump that maybe some others have but that we've had in some quarters.

So if you look at the difference, let's say, we've done a strong performance itself. The difference with, for example, the performance we did exactly a year ago in Q3 of last year, it was a little lower than what we've done this year. But it had a $1 billion deal size with METRO. So actually, it was coming to more or less the same number, a little lower but a comparable number on the TCV standpoint.

But coming from a large deal, and therefore, the performance outside of this large deal was very different, I think we've turned the engine into a way that we have more recurring type of deals every quarter so that the mega deal comes on top, right? And what's comforting is that if you look at the performance in sales, even without mega deal, with $2.85 billion of ACV, we've done probably 55% more than what we used to do on a given quarter a year ago.

Fair enough. Just a question on attrition. I think you have discussed it again. But do you feel like from here on, you're at the point where your -- you find that attritions will be more manageable and eventually back to -- come out (inaudible)?

Yes. First of all, on this topic, Diviya, I tend to be cautious because the decision lies with our employees and with the other employees of the market. But what I believe what we are seeing is that definitely the level of attrition will moderate in Q4, which is rather good news. Again, I don't want to claim victory on it.

And I think we'll continue to stay very focused on it and keep really an eye or two on the situation of our employees in the organization and continue to connect as much as we can with them. But when a quarter ago, I was saying I don't -- I think it's here to last, I feel that this might actually stabilize, if not slightly improve. So I'm really more optimistic than I was a quarter ago on that.

The next question is from the line of Sandip Agarwal from Edelweiss.

So Thierry, I have a very, very simple question. When you see the current environment when you engage with your clients, where do you see the transformation journey towards digital? Probably clients have reached -- when we do our channel check, when we speak to global technology consultants and all, what we understand is that everyone is very excited to -- for the transformation journey. They want to link more and more of their revenues to technology, generate more revenues through technology and platform. But that journey has just started.

What is your sense in that? How do you see that? Do you think that the journey has already been 30% behind or 50% behind? Number one. Number two, if the journey has just begun or even if it is at 30%, what is your sense that how long before this matures? Will it be 3 years, 4 years, 5 years? Or you think that going forward, the technology trains will continuing? So what is your sense on that front? So I'm asking more of a 5-, 10-year strategic process on how do you see the technology spend for clients will be.

Sandip, the theme I have is that technology progressive spend is critical to the transformation of every industry at the moment. And there are multiple topics that have CEO attention today. The cloud journey is the best example. Because I remember even 3, 4 years ago, Sandip, cloud discussions were happening with the CIO. The CEO would not focus much on it because it was considered to be an infrastructure discussion. And that was a back office -- perceived as back-office issue. Today, cloud is a way for organizations to be agile, to be -- to drive -- to be able to generate more opportunities, to be inventive, to develop solutions, connect with new clients. And it is across organizations.

So I don't think I've seen yet a company that can say that it has reached 50% of the cloud transformation. I think it's -- obviously, I'm not going to be able to give a percentage. But my feel is that we are still in the early stage of the cloud transformation across industries. And so it is a massive wave ahead of us, to a point that today, when I look at the big hyperscalers, who play a big role in cloud, the Microsoft, the Google, AWS, ServiceNow, Salesforce, they are coming at us because they need us to help them develop vertical solutions on their platforms or on the cloud. And I think it is very clear that the more they do, the more opportunities there are.

That's for the cloud. And the growth in the cloud will be massive over the next 5 years at least, okay? Then we have the whole world of data. And we know that we are producing billions of data. And we are very -- we're leveraging very little, the power of this data, turning them into insight to drive some decisions. Companies have started to work on it, but it's very complex because it requires alignment of processes and systems and policies in those companies. And there's still a lot of level of complexity.

And so the way we are helping companies to develop to become data-driven organizations is a huge hot topic for us. And the last one is -- not saying the last one but just taking a third one because I realize the clock is ticking. But it's endearing, I mean, the need for organization to invest more in R&D for them to transform their processes and product developments by leveraging technology is immense. So looking forward, I think we have a market that will be driven by talent and will be very, very hot in the next years.

The next question is from the line of Sumeet Jain from Goldman Sachs.

First of all, can you split your guidance of 2% to 4% into organic and inorganic, given the recent acquisition that you have already closed?

No, we don't do that. We usually -- because no, we don't do that. Because it's very difficult to do that. Because at the end of the day, these businesses, when they join our organization, they are part of the organization and they're driving -- and we are driving synergies from day 1. So we are not reporting -- unless those are very large acquisitions, we are not reporting separately. But I think, Jatin, do you want to add something?

Yes, Thierry. So we did share the details about the acquisition when we announced them. So I'm sure it gives you a good indication. From our perspective, both internally and from the way we manage the success in the market, we stay with the one number. And hence, the guidance we will not break down into the two components. But I'm sure you can -- you would be able to have some indication.

Right. No, that's helpful. And secondly, I joined the call a bit late. So have you disclosed your deal win TCV number for this quarter?

No, Sumeet, we haven't disclosed that, the number. We did speak about the ACV growth number, which is 27% for the first 9 months. And we did share the contributing details around it, which was about $2.8 billion on an aggregate basis for quarter 3 and that we did in the previous quarter.

So basically, no disclosure for this quarter in terms of TCV or ACV?

Yes. The number that we -- that I just shared was for quarter 3. The growth number that we had shared was for the first year -- first 9 months of the year.

Got it. And then lastly, if I look at your EBIT margins, your D&A expense as a percentage of sales has been coming down for the last 2 quarters pretty sharply. So any reasons why? And what kind of D&A expense as a percentage of sales one should expect going forward?

So the way, Sumeet, you would appreciate is that when some of the amortization lines are coming to an end of their tenure of -- over which we take those amortization, then it leads to the reduction, which is step-down reduction in the number of amortization. It's not uniform as you can see. That has happened over the last 2 quarters for some of our prior capitalization.

My suggestion is that you should look at Q4 as a base because we have two more acquisitions, which are getting integrated from 1st of January. So you would see that number stepping up a bit because they will come with the intangible schedules overall as we do the acquisition accounting for that. So Q4 should be a good base for you to build your model for future.

Ladies and gentlemen, that was the last question. I now hand the conference over to Ms. Aparna Iyer for closing comments.

Thank you, Stanford. We understand that it must have been really hectic for many of you as you've had to take -- simultaneously attend multiple results that have been announced today. So thank you all for joining the call. If you have further questions, do not hesitate to reach out to the Investor Relations team. Stay safe and stay healthy, and we'll see you next quarter. Thank you.

Thank you very much.

Thank you.

Thank you very much. Ladies and gentlemen, on behalf of Wipro Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.