Infosys: Double Digit Growth for the Fourth Consecutive Quarter, Coupled With 1.2% Operating Margin Expansion in Q2
Infosys: Double Digit Growth for the Fourth Consecutive Quarter, Coupled With 1.2% Operating Margin Expansion in Q2
PR80988
BENGALURU, India, Oct. 11, 2019 /PRNewswire=KYODO JBN/--
"Our performance was robust on multiple dimensions – revenue growth, digital
growth, operating margins, operational efficiencies, large deal signings and
reduction in attrition," said Salil Parekh, CEO and MD. "All these are clear
signs that we are progressing well in our journey of client-centricity and
maximizing value for our stakeholders."
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38.4% YoY
Digital CC growth
11.4% YoY
CC growth
3.3% QoQ
CC growth
1.2% QoQ
OM expansion
to 21.7%
$2.8 bn
Large deal signings
- Q2 20 revenues grew year-on-year by 9.9% in USD; 11.4% in constant currency
- Q2 20 revenues grew sequentially by 2.5% in USD; 3.3% in constant currency
- Q2 20 Digital revenues at $1,230 million (38.3% of total revenues),
year-on-year growth of 38.4% and sequential growth of 10.7% in constant
currency
- Q2 20 operating margin at 21.7%, 1.2% improvement over Q1 20
- H1 revenues grew by 11.9% in constant currency
- H1 operating margin at 21.1%, within the margin guidance for the year
- Declared interim dividend of ₹8 per share (approximately $0.11 per
ADS*)
- Increased lower end of FY 20 revenue guidance; revised guidance is 9%-10% in
constant currency
- Maintained FY 20 operating margin guidance range of 21%-23%
*USD/INR exchange rate as of September 30, 2019
1. Financial Highlights – Consolidated results under International Financial
Reporting Standards (IFRS)
- For the quarter ended September 30, 2019
Revenues were $3,210 million, growth of 9.9%
YoY and 2.5% QoQ
Operating profit was $696 million, increase of 0.5% YoY and 8.3% QoQ. Operating
margin was 21.7%.
Basic EPS was $0.13, growth of 0.2% YoY and 5.6% QoQ
- For six months ended September 30, 2019
Revenues were $6,340 million, growth of 10.2% YoY
Operating profit was $1,338 million, decline of 1.8% YoY. Operating margin was
21.1%.
Basic EPS was $0.26, growth of 1.6% YoY
"Q2 witnessed another quarter of all-round growth in industry segments and
geographies which is a testimony to our strong credentials and client
relevance", said Pravin Rao, COO. "Large deal wins were $2.8 bn. We are
especially pleased by the reduction in attrition driven by our focus on
enhanced employee value proposition."
"We saw expansion in operating margins during the quarter driven by improvement
in operational parameters and cost efficiencies", said Nilanjan Roy, CFO. "We
took the first step towards implementation of our new capital allocation policy
by increasing interim dividend by over 14% compared to FY 19."
2. Capital Allocation
The Company completed its share buyback of ₹8,260 crore on 26th August,
2019. With this the company completed the additional capital return program of
upto ₹13,000 crore announced in April 2018.
3. Client wins & Testimonials
- We were selected by Toyota Material Handling North America (TMHNA) for a
cloud-based IoT telematics product implementation along with application
support and development for its SAP Platform. As the development partner for
TMHNA Global Telematics Solution (GTS), an industry leading cloud-based IoT
offering, Infosys is enabling remote monitoring and diagnostic capabilities
including vehicle access control, system maintenance, condition sensing and
location tracking.
- We were selected as a strategic partner by Movement Mortgage, a fast-growing
mortgage bank in the U.S., to lead its digital transformation and accelerate
growth. Infosys will support Movement Mortgage's 650 locations in 47 states to
ensure the smooth transition of business models in key projects, with the aim
to increase business volume and leverage the company's fintech services to
develop mortgage industry specific solutions for Infosys customers.
- In collaboration with Microsoft, we announced a long-term strategic
partnership with JG Summit Holdings, Inc., one of the largest and most
diversified conglomerates, headquartered in Manila, Philippines. As a
technology services partner, Infosys is helping formulate and execute the
digital transformation strategy for JG Summit, based on Microsoft Azure, an
open, hyper-scale, enterprise-grade cloud platform, along with SAP S/4 HANA.
The collaboration will offer JG Summit seamless implementation and migration to
Microsoft Azure cloud platform, to develop an agile and robust digital
infrastructure for its business processes.
- EdgeVerve Systems, a subsidiary of Infosys, was selected by Al Ahli Bank of
Kuwait to steer its automation journey using AssistEdge Robotic Process
Automation (RPA). We are working the bank in their process automation journey,
driving cost efficiencies and streamlining its operations.
- We have partnered with one of the largest utility companies to transform its
IT Service Management. The program, leveraging ServiceNow, is helping our
client significantly improve end-user experience, enhance employee productivity
and deliver business agility. Infosys will also deliver a comprehensive
solution for organization change management and user training as a part of this
program.
4. Recognitions
- Ranked 3 in the Forbes list of The World's Best Regarded Companies for 2019
- Won the United Nations Global Climate Action Award in the 'Climate Neutral
Now' category
- Recognized as a leader in Gartner Magic Quadrant for IT Services for
Communications Service Providers, Worldwide
- Recognized as a leader in Software Product Engineering Services PEAK
Matrix(TM) Assessment 2019 by Everest Group
- Recognized as a leader in the DevOps Services PEAK Matrix(TM) Assessment 2019
by Everest Group
- Recognized as a leader in IDC MarketScape: Worldwide Intelligent Automation
Services 2019 Vendor Assessment
- Recognized in HFS Top 10: Digital Front Office: CX Design, Sales, And
Marketing
- Recognized in HFS Top 10: Banking and Financial Services (BFS) Sector Service
Providers
- Recognized in HFS Top 10: Cloud Migration and Management Services 2019
- Recognized as a Leader in NelsonHall's Smart IT Services in Utilities
- Recognized in HFS SAP SuccessFactors Services Top 10 Report
- Recognized as 2019 Working Mother & AVTAR Best 100 Companies for Women in
India and '2019 Champion of Inclusion' in the Most Inclusive Companies in India
Index
- Won the 2019 Oracle Excellence Award for Global Partner of the Year in CX –
Sales Cloud
- Won the Oracle Excellence Award for NA partner of the Year for Emerging
Technologies
- Recognized as the 2019 Global Alliance SI Partner of the Year by Microsoft
- Recognized as the Microsoft US Service Partner ACR Winner for the FY20
Microsoft One Commercial Partner Winners Circle program
About Infosys
Infosys is a global leader in next-generation digital services and consulting.
We enable clients to navigate their digital transformation, leveraging our
teams from over 46 countries. With over three decades of experience in managing
the systems and workings of global enterprises, we expertly steer our clients
through their digital journey. We do it by enabling the enterprise with an
AI-powered core that helps prioritize the execution of change. We also empower
the business with agile digital at scale to deliver unprecedented levels of
performance and customer delight. Our always-on learning agenda drives their
continuous improvement through building and transferring digital skills,
expertise, and ideas from our innovation ecosystem.
Visit www.infosys.com to see how Infosys (NYSE: INFY) can help your enterprise
navigate your next.
Safe Harbor
Certain statements mentioned in this release concerning our future growth
prospects are forward-looking statements regarding our future business
expectations intended to qualify for the 'safe harbor' under the Private
Securities Litigation Reform Act of 1995, which involve a number of risks and
uncertainties that could cause actual results to differ materially from those
in such forward-looking statements. The risks and uncertainties relating to
these statements include, but are not limited to, risks and uncertainties
regarding fluctuations in earnings, fluctuations in foreign exchange rates, our
ability to manage growth, intense competition in IT services including those
factors which may affect our cost advantage, wage increases in India, our
ability to attract and retain highly skilled professionals, time and cost
overruns on fixed-price, fixed-time frame contracts, client concentration,
restrictions on immigration, industry segment concentration, our ability to
manage our international operations, reduced demand for technology in our key
focus areas, disruptions in telecommunication networks or system failures, our
ability to successfully complete and integrate potential acquisitions,
liability for damages on our service contracts, the success of the companies in
which Infosys has made strategic investments, withdrawal or expiration of
governmental fiscal incentives, political instability and regional conflicts,
legal restrictions on raising capital or acquiring companies outside India, and
unauthorized use of our intellectual property and general economic conditions
affecting our industry. Additional risks that could affect our future operating
results are more fully described in our United States Securities and Exchange
Commission filings including our Annual Report on Form 20-F for the fiscal year
ended March 31, 2019. These filings are available at www.sec.gov. Infosys may,
from time to time, make additional written and oral forward-looking statements,
including statements contained in the Company's filings with the Securities and
Exchange Commission and our reports to shareholders. The Company does not
undertake to update any forward-looking statements that may be made from time
to time by or on behalf of the Company unless it is required by law.
Infosys Limited and subsidiaries
Audited Condensed Consolidated Balance Sheet as at
(Dollars in millions except equity share data)
September 30, 2019 March
31, 2019
ASSETS
Current assets
Cash and cash equivalents 2,324
2,829
Current investments
496 958
Trade receivables 2,265
2,144
Unbilled revenue
1,026 777
Prepayments and other current assets
761 827
Income tax assets
5 61
Derivative financial instruments
15 48
Total current assets 6,892
7,644
Non-current assets
Property, plant and equipment 1,878
1,931
Right-of-use assets(B3)
552 -
Goodwill
576 512
Intangible assets
191 100
Non-current investments
556 670
Deferred income tax assets
192 199
Income tax assets
904 914
Other non-current assets
280 282
Total non-current assets 5,129
4,608
Total assets 12,021
12,252
LIABILITIES AND EQUITY
Current liabilities
Trade payables
301 239
Lease liabilities(B3)
73 -
Derivative financial instruments
5 2
Current income tax liabilities
216 227
Client deposits
2 4
Unearned revenue
382 406
Employee benefit obligations
258 234
Provisions
86 83
Other current liabilities 1,388
1,498
Total current liabilities 2,711
2,693
Non-current liabilities
Lease liabilities(B3)
503 -
Deferred income tax liabilities
99 98
Employee benefit obligations
6 6
Other non-current liabilities
113 55
Total liabilities 3,432
2,852
Equity
Share capital- ₹5 ($0.16) par value 4,800,000,000
(4,800,000,000) equity shares authorized, issued and
outstanding 4,239,482,666 (4,335,954,462) equity shares
fully paid up, net of 18,929,512 (20,324,982) treasury shares
as at September 30, 2019 (March 31, 2019)
332 339
Share premium
295 277
Retained earnings 10,510
11,248
Cash flow hedge reserve
2 3
Other reserves
460 384
Capital redemption reserve
17 10
Other components of equity (3,079)
(2,870)
Total equity attributable to equity holders of the company 8,537
9,391
Non-controlling interests
52 9
Total equity 8,589
9,400
Total liabilities and equity 12,021
12,252
Infosys Limited and subsidiaries
Audited Condensed Consolidated Statement of Comprehensive Income for the
(Dollars in millions except equity share and per equity share data)
Three months Three months
Six months Six months
ended
ended ended ended
September 30, September 30,
September 30, September 30,
2019
2018 2019 2018
Revenues 3,210
2,921 6,340 5,753
Cost of sales 2,140
1,884 4,261 3,703
Gross profit 1,070
1,037 2,079 2,050
Operating expenses
Selling and marketing expenses 165
154 333 303
Administrative expenses 209
191 408 384
Total operating expenses 374
345 741 687
Operating profit 696
692 1,338 1,363
Other income, net 89
105 195 212
Finance cost(B3) (6)
- (12) -
Reduction in the fair value of Disposal Group
held for sale(A1) -
- - (39)
Profit before income taxes 779
797 1,521 1,536
Income tax expense 207
216 403 420
Net profit 572
581 1,118 1,116
Other comprehensive income
Items that will not be reclassified subsequently
to profit or loss:
Re-measurements of the net defined benefit
liability/asset, net (3)
1 (6) 1
Equity instrument through other comprehensive
income, net 1
2 1 2
(2)
3 (5) 3
Items that will be reclassified subsequently
to profit or loss:
Fair valuation of investments, net -
(2) 2 (9)
Fair value changes on derivatives designated as
cash flow hedge, net 2
(4) (1) (3)
Foreign currency translation (224)
(461) (207) (929)
(222)
(467) (206) (941)
Total other comprehensive income/(loss), net of
tax (224)
(464) (211) (938)
Total comprehensive income 348
117 907 178
Profit attributable to:
Owners of the Company 569
581 1,115 1,116
Non-controlling interests 3
- 3 -
572
581 1,118 1,116
Total comprehensive income attributable to:
Owners of the Company 346
117 905 178
Non-controlling interests 2
- 2 -
348
117 907 178
Earnings per equity share
Basic ($) 0.13
0.13 0.26 0.26
Diluted ($) 0.13
0.13 0.26 0.26
Weighted average equity shares used in
computing earnings per equity share
Basic 4,249,343,678 4,347,055,177
4,275,615,916 4,346,857,296
Diluted 4,255,822,953 4,352,208,472
4,282,322,537 4,351,915,210
NOTES:
A. Notes pertaining to previous quarters / periods
1. In the six months ended September 30, 2018, the Company had recorded a
reduction in the fair value amounting to $39 million in respect of its
subsidiary Panaya.
B. Notes pertaining to the current quarter
1. The audited interim condensed consolidated Balance sheet and Statement of
Comprehensive Income for the three months and half year ended September 30,
2019 have been taken on record at the Board meeting held on October 11, 2019.
2. A Fact Sheet providing the operating metrics of the Company can be
downloaded from www.infosys.com.
3. On account of adoption of IFRS 16- Leases effective April 1, 2019.
IFRS-INR Press Release:
Fact Sheet:
Source : Infosys
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