When Willis Towers Watson dropped its numbers on April 24, 2025, the surface-level data looked a bit messy. If you just glanced at the headlines, you saw a 5% drop in total revenue and thought, "Oh, they're shrinking." But honestly, that’s where most people got it wrong.
The reality? WTW is basically in the middle of a massive skin-shedding phase. They sold off TRANZACT at the end of 2024, and that divestiture left a $2.22 billion hole in the top line where a bigger number used to be. But if you look at the core business—the stuff they actually kept—it grew by 5% on an organic basis.
It's a classic case of addition by subtraction.
Breaking Down the WTW Q1 2025 Earnings Numbers
Let's talk about the EPS for a second. Diluted earnings per share came in at $2.33. That's a 27% jump from the previous year. Now, the "adjusted" number that the street loves to obsess over was $3.13. It was basically flat compared to last year, and it actually missed the Zacks consensus estimate of $3.20 by a hair.
Wall Street hates misses, but the market seemed to care more about the margins.
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The operating margin was the real star here. It hit 19.4%, which is a massive 740 basis point improvement over the prior year. Even the adjusted operating margin climbed to 21.6%. That tells you that even though they have less total revenue coming in, they’re keeping a much larger slice of the pie.
Carl Hess, the CEO, has been beating the drum of "operational efficiency" for a while now. In Q1 2025, it actually showed up in the data.
Segment Performance: A Tale of Two Units
WTW isn't just one big monolith; it’s two very different engines.
The Risk & Broking (R&B) segment is currently carrying the heavy load. It pulled in $1.03 billion, up 7% on an organic basis. They’re winning new business and keeping the clients they already have, which is basically the "holy grail" for a brokerage.
Then you’ve got Health, Wealth & Career (HWC). This one looks ugly on paper—revenue fell 13% to $1.17 billion. But again, don't let that fool you. This is exactly where the TRANZACT sale hit hardest. When you strip that out, HWC actually grew 3% organically.
Retirement work in Europe and the "LifeSight" solution are doing well. On the "Career" side of things? People are still a bit nervous. Economic uncertainty has led to some client postponements. Companies are hesitant to pull the trigger on big advisory projects when they aren't sure what the next six months look like.
The Cash Flow Problem
If there’s a "fly in the ointment," it’s definitely the cash flow.
Free cash flow was negative $86 million for the quarter. Compare that to negative $36 million in the same period last year. Why the dip? Two big reasons:
- They no longer have the cash collections coming in from TRANZACT.
- They had higher compensation payments this year.
They also have some "Transformation program" costs still trailing behind them. It’s like the ghost of corporate restructuring past. They expect these outflows to continue throughout 2025, but the goal is to see a real rebound in free cash flow margin toward the end of the year.
Share Repurchases and the Long Game
Management isn't sitting on their hands. They bought back about 607,221 shares in Q1 for roughly $200 million. They have a $1.5 billion repurchase program planned for the full year 2025.
That’s a big vote of confidence.
It basically says, "We think our stock is undervalued, and we're willing to bet a billion and a half dollars on it."
What This Means for Your Portfolio
Looking at the WTW Q1 2025 earnings as a whole, it’s clear the company is becoming leaner. The "Transformation" era is technically over, and now we’re seeing the "Efficiency" era.
If you're a long-term investor, you're looking for that organic growth to stay at 5% or higher. You're also watching that R&B segment to see if they can keep that 7% momentum. The biggest risk right now is the macro environment—if the "postponements" in the Career segment turn into "cancellations," the HWC side could get a bit rocky.
Actionable Insights for Investors:
- Watch the Margins, Not the Revenue: Total revenue will look wonky for the next few quarters because of the divestitures. Keep your eyes on the adjusted operating margin; if it stays above 21%, the strategy is working.
- Monitor R&B Growth: This is the high-performing child of the family. If organic growth here dips below 5%, it’s a sign of market share loss.
- Check the Q2 Guidance: Management is sticking to their mid-single-digit organic growth targets for the full year. Any deviation from this in the next report will be a major signal.
- Follow the Buybacks: If they don't hit that $1.5 billion target by year-end, ask why. Are they saving cash for an acquisition, or is the cash flow tighter than they admitted?
The transition from a sprawling conglomerate to a specialized advisory and broking firm is never a straight line. It's bumpy. But WTW seems to have found a rhythm in the chaos of 2025.