WTW Q3 Adjusted EPS Rises 18% as Propel Plan Begins

WTW (NASDAQ: WTW) reported an 18% increase in third-quarter adjusted diluted earnings per share as organic revenue growth and expense discipline lifted its adjusted operating margin. The company also began implementing Propel, its artificial-intelligence acceleration plan, which targets an adjusted operating margin of about 30% in 2028.

Revenue for the three months ended Sept. 30 rose 8% to $2.46 billion from $2.29 billion a year earlier. Organic revenue increased 4%, while acquisitions and divestitures contributed four percentage points to reported growth. Foreign currency had no impact on the quarterly revenue change.

Adjusted operating income increased to $539 million from $467 million, with the adjusted operating margin expanding 150 basis points to 21.9%. Adjusted diluted EPS rose to $3.63 from $3.07, while adjusted net income reached $339 million, compared with $301 million a year earlier.

On a GAAP basis, income from operations increased 3% to $429 million, but the operating margin declined 90 basis points to 17.4%. Net income rose 1% to $309 million, and diluted EPS increased 4% to $3.24. The quarter included $42 million of transaction and program expenses, $14 million of restructuring costs and $59 million of amortization.

For the first nine months of 2026, revenue increased 8% to $7.34 billion, including 4% organic growth. Adjusted diluted EPS advanced 18% to $10.70, and the adjusted operating margin rose 100 basis points to 21.2%. Free cash flow increased by $226 million to $1.06 billion as net cash from operating activities reached $1.21 billion.

Growth Across Both Main Segments

Health, Wealth & Career generated third-quarter revenue of $1.35 billion, up 7% as reported, with organic growth of 4%. Segment operating income increased 10% to $398 million, while its operating margin rose 90 basis points to 29.5%, reflecting improved operating leverage and expense discipline.

Within the segment, Health delivered 6% organic growth, supported by new business and renewals across all regions. Career grew 9%, primarily because of higher compensation-survey sales, more typical survey-delivery timing and increased communications project work. Wealth posted 2% organic growth, supported by retirement work outside North America and new client wins.

Benefits Delivery & Outsourcing was the segment’s weak point, with organic revenue declining 2%. Growth from new clients, project work and regulatory-driven outsourcing activity was more than offset by lower commissions in Individual Marketplace.

Risk & Broking revenue rose 8% to $1.09 billion, with organic growth of 5%. Operating income increased 14% to $216 million, and the operating margin expanded 100 basis points to 19.8%, driven primarily by higher book-of-business settlement activity and expense management.

Corporate Risk & Broking produced 5% organic growth, supported by new business in North America and international markets and higher settlement activity. That growth was partly offset by a demanding prior-year comparison that included revenue from multi-year, project-based placements in global specialty businesses. Insurance Consulting & Technology grew 2% organically as strong software sales were partly offset by lower consulting revenue.

Propel Implementation Begins

WTW incurred $7 million of cash costs and $14 million of non-cash charges related to Propel during the quarter. The non-cash charges reflected an asset impairment in Risk & Broking. Actions completed during the period generated $18 million of annualized run-rate savings.

Through 2028, WTW expects Propel to require about $625 million of cash costs and $25 million of non-cash charges, producing approximately $400 million of run-rate savings. After about $50 million of planned reinvestment in growth, projected net run-rate savings are approximately $350 million.

The plan is intended to expand the use of AI and automation across client work and enterprise functions. WTW expects an adjusted operating margin of about 30% in 2028, including approximately 35% for Health, Wealth & Career and 30% for Risk & Broking. These forward-looking non-GAAP targets are not reconciled to GAAP measures because the company said the necessary components cannot be forecast without unreasonable effort.

Outlook and Capital Allocation

WTW’s strategic framework calls for long-term mid-single-digit organic revenue growth, continued annual adjusted operating margin expansion and improved free cash flow margins. For 2026, management expects mid-single-digit enterprise organic growth, with low- to mid-single-digit growth in Health, Wealth & Career and mid-single-digit growth in Risk & Broking.

The company expects the Willis Re joint venture to reduce 2026 adjusted diluted EPS by about $0.30, while the Newfront acquisition is expected to be approximately $0.10 dilutive. Newfront is expected to contribute about $250 million of post-close 2026 revenue at an adjusted EBITDA margin of roughly 26%. At prevailing rates, foreign exchange is expected to provide an approximately $0.35 full-year adjusted EPS benefit, including about $0.02 in the fourth quarter.

WTW repurchased $220 million of shares and paid $89 million in dividends during the quarter, including a quarterly dividend of $0.96 per common share. It expects 2026 share repurchases to exceed $1 billion, subject to market conditions and potential organic and inorganic investments. At Sept. 30, total debt was $6.53 billion, while trailing 12-month debt to adjusted EBITDA was 2.3 times.

The company identified execution of Propel and integration of acquired businesses among its uncertainties. Other risks include macroeconomic and geopolitical conditions, inflation, interest rates, trade policies, foreign-exchange movements, competition, cybersecurity and data-privacy requirements, AI regulation, litigation, and the possibility that revenue fluctuates against relatively fixed or higher-than-expected expenses.