WTW Q2 2025: Cost Cuts Drive Profit Surge Amid Flat Revenue

Willis Towers Watson (WTW), a global leader in advisory, broking, and solutions, recently released its financial results for the second quarter of 2025. At first glance, the numbers present a mixed picture with flat revenue. However, a deeper dive into the company's 10-Q filing reveals a compelling story of improved profitability driven by strategic restructuring and solid performance in its core operations.

Let's unpack the key takeaways from their income statement.

The Tale of Two Revenues

On the surface, WTW's revenue for the second quarter was $2.26 billion, nearly unchanged from the same period last year. For the first six months of 2025, reported revenue was down 3% to $4.5 billion. This apparent stagnation is largely due to a significant strategic move: the sale of its TRANZACT business at the end of 2024.

To get a clearer view of the underlying business health, we can look at organic revenue growth, a metric that strips out the effects of currency fluctuations, acquisitions, and divestitures. Here, the picture is much brighter. WTW posted a healthy 5% organic revenue growth for both the three- and six-month periods. This growth indicates that the company's continuing operations are performing well.

The growth was broad-based across its two main segments:

• Risk & Broking (R&B): This segment, which provides risk advice and insurance brokerage services, saw reported revenue grow 7% to $1.05 billion for the quarter, with organic growth of 6%. This was fueled by new business wins and strong client retention.
• Health, Wealth & Career (HWC): While reported revenue for this segment fell 6% due to the TRANZACT sale, its organic revenue grew by 4%. The HWC segment, which advises on employee benefits, retirement, and compensation, saw strong performance in its Health and Wealth lines.

From Revenue to Profit: A Story of Efficiency

While the revenue story is one of steady underlying growth, the profitability numbers are where WTW truly shines this quarter. The following flow diagram helps visualize how the company's revenue translates into profit, highlighting the major cost components.

The company’s net income attributable to shareholders more than doubled, soaring to $331 million in Q2 2025 from $141 million in the same quarter last year. This translates to a diluted earnings per share (EPS) of $3.32, up from $1.36.

This impressive leap in profitability wasn't driven by revenue, but by significant cost reductions. Two key factors stand out:

1. Conclusion of the Transformation Program: The company's multi-year "Transformation program" concluded in late 2024. As a result, Transaction and transformation costs plummeted from $97 million in Q2 2024 to just $2 million in Q2 2025.
2. Operational Efficiencies: Other operating expenses fell by 23% to $336 million, a decrease largely tied to lower marketing expenses following the TRANZACT sale and other operational improvements.

These savings more than offset a 4% rise in salaries and benefits, leading to a substantial expansion in the company's operating margin, which grew from 9.4% to 16.3%.

Capital Management and Cash Flow

WTW continues to actively manage its capital, demonstrating confidence in its financial position. Key activities in the first half of 2025 include:

• Share Repurchases: The company spent a substantial $700 million to buy back its own shares.
• Debt and Cash Position: Total debt remained stable at $5.3 billion, while the company's cash balance increased slightly to $2.0 billion, bolstered by a $750 million earnout payment from a previous divestiture.

While cash from operations saw a decrease to $326 million for the six-month period, this was primarily due to higher compensation payments and the absence of cash flows from the now-sold TRANZACT business.

Looking Ahead

Willis Towers Watson's second-quarter results paint a picture of a company successfully executing a strategic pivot. By shedding a major business line and concluding a costly transformation initiative, it has significantly boosted its profitability and operational efficiency. The healthy 5% organic growth in its core advisory and broking businesses suggests strong demand for its services.

Moving forward, the challenge for WTW will be to sustain this organic momentum and maintain its newfound cost discipline in a competitive professional services market. These results suggest the company is well-positioned to do just that.