Willis Towers Watson (WTW) reported its first quarter 2025 financial results demonstrating robust operational improvements despite a slight decline in reported revenue, reflecting strategic shifts and efficiency gains.
Total revenue of \(2.22 billion, down 5% from \)2.34 billion in Q1 2024. Even accounting for foreign currency impacts, revenue declined 4%, though organic revenue grew 5%.
Net income increased 23% year-over-year to \(239 million, with diluted earnings per share (EPS) rising 27% to \)2.33 compared to $1.83 in Q1 2024.
Operating margin surged to 19.4%, a substantial increase of 740 basis points from 12% in the prior year quarter, signaling enhanced operational efficiency.
Adjusted operating margin improved by 100 basis points to 21.6%.
Adjusted EBITDA margin slightly declined by 40 basis points to 23.9%, reflecting continuing strategic investments and portfolio changes.
Health, Wealth & Career (HWC): Revenue declined 13% to $1.17 billion due to the sale of TRANZACT, offset by a 3% organic growth spurred by client retention, new business, and geographic expansion. Operating margin expanded 160 basis points to 26.7%, aided by cost savings from the Transformation program.
Risk & Broking (R&B): Revenue increased 5% to $1.03 billion with 7% organic growth, supported by strong new business and client retention. Operating margin improved by 120 basis points to 22.0%, reflecting operating leverage and efficiency improvements.
Operating cash flows turned negative at -\(35 million compared to a positive \)24 million in Q1 2024, primarily due to the absence of cash collections from TRANZACT and higher compensation expenses.
Free cash flow decreased by \(50 million to -\)86 million.
Continued capital return to shareholders with $200 million spent on share repurchases during the quarter.
WTW’s FY 2024 financials reveal a net loss of \(98 million on revenues of \)9.93 billion and operating income of $627 million, yielding an approximate operating margin of 3.7% for the full year. In contrast, the Q1 2025 operating margin of 19.4% indicates significant margin expansion driven by portfolio optimization and transformation initiatives.
Management anticipates sustained margin expansion over the next three years, especially a 100 basis points yearly increase in R&B operating margin and incremental margin gains in HWC. Share repurchases are planned at around $1.5 billion in 2025, reflecting confidence in capital allocation strategy amid economic uncertainties.
WTW’s prior earnings calls emphasized the strategic importance of the TRANZACT divestiture completed in Q4 2024, aimed at sharpening portfolio focus and enhancing margins. The current results affirm these moves with visible impact on operating efficiency and EPS growth despite topline pressures. Continued focus on technology-driven consulting solutions and risk management services aligns with the firm’s goal to navigate macroeconomic headwinds and deliver sustainable growth.
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For detailed financials and full 8-K report, visit the SEC Filing here.