Infosys: Growth acceleration accompanied by 3.7% YoY margin expansion; revenue and margin guidance increased to 2%-3% in cc and 23%-24% respectively
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BENGALURU, India, Oct. 14, 2020 /PRNewswire=KYODO JBN/ --
"Our second quarter performance is a clear reflection of our ability to
help clients on their digital transformation journeys. Our digital and cloud
capabilities combined with intense client relevance are helping us achieve
differentiated results in the market as is visible in 2.2% year on year overall
revenue growth and 25.4% growth from digital offerings, which now are at 47.3%
of revenues," said Salil Parekh, CEO and MD. "Increase in revenue and margin
outlook for FY 21 is due to the continued trust clients have in us. I am extremely
proud of our team for achieving these results in challenging business conditions globally."
25.4% YoY
Digital CC growth
2.2% YoY
CC growth
25.4%
Operating margin
$3.15bn
Large deal signings
INR 12
Interim DPS,
up by 50% YoY
- Q2 revenues grew sequentially by 4.0% in constant currency
- Q2 revenues grew year-on-year by 3.2% in USD; grew by 2.2% in constant currency
- Q2 Digital revenues at $1,568 million (47.3% of total revenues),
year-on-year growth of 25.4% in constant currency
- Q2 operating margin at 25.4%, increase of 370 basis points year-on-year
- Q2 free cash flow at $674 million; year-on-year growth of 69.8%
- Q2 net profit at $653 million, year-on-year growth of 14.7%
- Q2 voluntary attrition for IT services declined to 7.8% from 18.3% in Q2 20
- H1 revenues grew by 1.9% in constant currency
- H1 operating margin at 24.1%
- Declared interim dividend of INR 12 per share
- FY 21 revenue growth guidance revised upward to 2%-3% in constant currency
- FY 21 operating margin guidance revised upward to 23%-24%
1. Financial Highlights – Consolidated results under International Financial Reporting Standards (IFRS)
For the quarter ended September 30, 2020
Revenues were $3,312 million, growth of 3.2% YoY and 6.1% QoQ
Operating profit was $840 million, growth of 20.7% YoY and 18.7% QoQ
Basic EPS was $0.15, growth of 14.9% YoY and 17.0% QoQ
For six months ended September 30, 2020
Revenues were $6,433 million, growth of 1.5% YoY
Operating profit was $1,547 million, growth of 15.6% YoY
Basic EPS was $0.29, growth of 9.5% YoY
"The strength and resilience of Infosys was fully visible in Q2 with
operating metrics witnessing a healthy increase, broad-based growth, highest
ever large deal TCV at $ 3.15 bn and attrition reducing to single digits," said
Pravin Rao, COO. "Employees have been critical part of our success. As a
recognition of their stellar performance, we are giving 100% variable pay along
with a special incentive for Q2. Additionally, we are rolling out salary
increases and promotions across all levels effective Jan 1st."
"Our relentless efforts on cost optimization and strengthening operational
efficiencies helped by certain cost deferrals led to 270 bps sequential
improvement in operating margin to 25.4% and a 300 bps improvement in H1
margins," said Nilanjan Roy, CFO. "Free Cash Flows grew significantly in H1
driven by our consistent focus on liquidity and cash management. Consequently,
we are increasing our interim dividend per share by 50% to INR 12."
2. Client wins & Testimonials
Even amid global uncertainty across industries and the current medical
situation, Infosys continued to nurture a culture of deep client relevance
while building capabilities to aid them through recovery.
- Among several milestones achieved in the second quarter,
Consolidated Edison Company (Con Edison), one of the oldest Fortune 500 utility
companies, selected Infosys to digitally transform Con Edison's customer
service capabilities over the next four years
- Infosys collaborated with LANXESS, a leading specialty chemicals
company headquartered in Cologne, Germany, to support the company's IT
Infrastructure digitization strategy and enable its global workforce with a
secure and fully managed modern workplace
- Essential Utilities, one of the largest publicly traded water,
wastewater and natural gas providers in the U.S., selected Infosys as a
strategic partner to drive its digital transformation
- Infosys has entered into a first-of-its-kind, 360 degree partnership
with LivePerson, a leader in conversational AI, headquartered in New York, to
transform their infrastructure on the public cloud that will deliver
industry-leading agility, scalability, and security. Infosys will also help
drive penetration of LivePerson's offerings across its clients and digital marketing,
e-commerce, contact center, employee engagement and shared services channels.
- Old National Bancorp (ONB), the largest financial services bank
holding company headquartered in Indiana, U.S., wanted Infosys to enable faster
adoption of digital solutions, modernize ONB's existing technology
infrastructure, and enhance both the client and employee experience
- The National Bank of Bahrain (NBB) selected Infosys Finacle for the
digital transformation of its transaction banking business
As global businesses navigate this tough environment, the strength of our
relationships and our digital capabilities have helped us sustain the momentum
to help our clients grow resilient. Here is what some of them have to say:
- "We have worked with the Infosys team for over 5 years now, and very
successfully. The results were phenomenal. My finance team and the senior
Enterprise leadership team couldn't believe how far the guys have gone above
and beyond the contract. I am so delighted with the results, delighted with the
service that I have received. When the pandemic hit, we had to shut down and
lock down both onshore and offshore teams. Thanks to the RPA bots, we were able
to issue every single order and we didn't miss a single KPI. Without those
bots, we would have been stranded. I can't speak highly enough of the guys
involved and the actual tool itself. Superstars one and all." - Brad Monks,
Head of Mobile, BT Enterprise
- Kai Finke, CIO of LANXESS said, "Standardized and harmonized
workplace services will enable us to increase our service quality and usability
on a global basis as well as increase flexibility and scalability which
nowadays are getting more and more important. Working with Infosys will allow
us to implement state-of-the-art-technologies faster and thus bring LANXESS to
the next level regarding workplace services enhancing our collaboration and
mobility capabilities."
Awards & Recognitions
- Positioned as a leader in Everest PEAK: Cloud-Native Application
Development Services PEAK Matrix(R) Assessment 2020
- Ranked as a leader in NelsonHall NEAT for Quality Engineering
Services 2020
- Ranked as a leader by NelsonHall NEAT for Advanced Digital Workplace
Services 2020
- Positioned as a leader in HFS Research Top 10 for Travel,
Hospitality, and Logistics Service Providers
- Ranked as a leader in Gartner Magic Quadrant for IT Services for
Communications Service Providers, Worldwide
- Ranked as a leader in IDC MarketScape: Asia /Pacific SAP
Implementation Services Vendor Assessment, 2020
- Positioned as a leader in IDC - MarketScape: Worldwide Manufacturing
Intelligence Transformation Strategic Consulting 2020 Vendor Assessment
- Positioned as a leader in IDC - MarketScape: Worldwide Manufacturing
Intelligence Transformation 2020 Vendor Assessment
- Positioned as a leader in Forrester Wave: Digital Process Automation
Service Providers
- Ranked as a leader CapioIT - Salesforce.com Global Systems
Integration and Services Providers Capture Share Report – 2020
- Infosys is a winner of the 2020 Top 10 Working Mother & Avtar Best
Company for Women in India award
- Infosys has won the Champion of Inclusion' award of Working Mother &
Avtar Most Inclusive Companies Index (MICI) 2020
- Infosys Düsseldorf innovation hub was awarded with the prestigious
NRW.INVEST award 2020
- Infosys won the German Brand Award 2020 for Excellence in Brand
Strategy and Creation
- Recognized by the Top Employers Institute, a global certification
company, for exceptional standards in employee conditions across Europe for
three years in a row. Infosys is also the certified Top Employer in France,
Germany, Switzerland, The Netherlands and the United Kingdom
- Infosys Finacle was positioned as a leader in The Forrester
Wave(TM): Digital Banking Processing Platforms (Corporate Banking), Q3 2020 report
- Infosys Finacle was ranked as a Leader in Gartner's Magic Quadrant
for Global Retail Core Banking report 2020 for the 13th consecutive year
About Infosys
Infosys is a global leader in next-generation digital services and
consulting. We enable clients in 46 countries to navigate their digital
transformation. With nearly four 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 in this release concerning our future growth prospects,
financial expectations and plans for navigating the COVID-19 impact on our
employees, clients and stakeholders are forward-looking statements 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 COVID-19 and the
effects of government and other measures seeking to contain its spread, risks
related to an economic downturn or recession in India, the United States and
other countries around the world, changes in political, business, and economic
conditions, 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,
unauthorized use of our intellectual property and general economic conditions
affecting our industry and the outcome of pending litigation and government
investigation. 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, 2020. 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
Extracted from the Condensed Consolidated Balance Sheet under IFRS as at:
(Dollars in millions)
September 30, March 31,
2020 2020
ASSETS
Current assets
Cash and cash equivalents 3,038 2,465
Current investments 488 615
Trade receivables 2,430 2,443
Unbilled revenue 1,030 941
Other Current assets 785 748
Total current assets 7,771 7,212
Non-current assets
Property, plant and equipment
and Right-of-use assets 2,438 2,361
Goodwill and other Intangible
assets 964 950
Non-current investments 1,051 547
Other non-current assets 1,139 1,190
Total non-current assets 5,592 5,048
Total assets 13,363 12,260
LIABILITIES AND EQUITY
Current liabilities
Trade payables 322 377
Unearned revenue 455 395
Employee benefit obligations 263 242
Other current liabilities and
provisions 1,764 1,743
Total current liabilities 2,804 2,757
Non-current liabilities
Lease liabilities 551 530
Other non-current liabilities 325 272
Total non-current liabilities 876 802
Total liabilities 3,680 3,559
Total equity
attributable to equity holders
of the company 9,623 8,646
Non-controlling interests 60 55
Total equity 9,683 8,701
Total liabilities and equity 13,363 12,260
Extracted from the Condensed Consolidated statement of Comprehensive
Income under IFRS for:
(Dollars in millions except per equity share data)
---
3 months ended 3 months ended 6 months ended 6months ended
September 30, September 30, September 30, September 30,
2020 2019 2020 2019
Revenues 3,312 3,210 6,433 6,340
Cost of sales 2,125 2,140 4,196 4,261
Gross profit 1,187 1,070 2,237 2,079
Operating expenses:
Selling and
marketing expenses 153 165 305 333
Administrative
expenses 194 209 385 408
Total operating
expenses 347 374 690 741
Operating profit 840 696 1,547 1,338
Other income, net
(3) 70 83 128 183
Profit before income
taxes 910 779 1,675 1,521
Income tax expense 255 207 456 403
Net profit (before
minority interest) 655 572 1,219 1,118
Net profit (after
minority interest) 653 569 1,212 1,115
Basic EPS ($) 0.15 0.13 0.29 0.26
Diluted EPS ($) 0.15 0.13 0.29 0.26
NOTES:
1. The above information is extracted from the audited condensed
consolidated Balance sheet and Statement of Comprehensive Income for the
quarter and half year ended September 30, 2020 which have been taken on record
at the Board meeting held on October 14, 2020.
2. A Fact Sheet providing the operating metrics of the Company can be
downloaded from www.infosys.com.
3. Other Income includes Finance Cost.
IFRS-INR Press Release:
Fact Sheet:
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Source: Infosys
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