Infosys: Continued Momentum in Digital Drives 11.1% YTD Growth

Infosys

2020/1/13 11:28

Infosys: Continued Momentum in Digital Drives 11.1% YTD Growth

AsiaNet 82480

BANGALORE, India, Jan. 10, 2020 /PRNewswire=KYODO JBN/--

    FY 20 revenue guidance increased to 10.0%-10.5%

"Q3 results further underscore that we remain steadfast in our journey of

sustained client relevance and deepening engagement with them, as they partner

with us in navigating their next in the digital transformation era", said Salil

Parekh, CEO and MD. "For us, this has translated into double digit growth

year-to-date, leading to an increase in revenue guidance, accompanied by

expanding operating margins."

40.8% YoY               9.5% YoY       1% QoQ          

21.9%                        $1.8 bn

Digital CC growth      Cc growth      CC growth       Operating Margin        

Large deal signings

LOGO: https://mma.prnewswire.com/media/633365/Infosys_Logo.jpg

(Caption: Infosys Logo)

Infosys

- Q3 20 revenues grew year-on-year by 8.6% in USD; 9.5% in constant currency

- Q3 20 revenues grew sequentially by 1.0% in USD and in constant currency

- Q3 20 Digital revenues at $1,318 million (40.6% of total revenues),

year-on-year growth of 40.8% and sequential growth of 6.8% in constant currency

- Q3 20 operating margin at 21.9%, 0.2% improvement over Q2 20

- Year-to-date revenues grew by 11.1% in constant currency

- Year-to-date operating margin at 21.4%, within the margin guidance for the

year

- Increased FY 20 revenue guidance; revised guidance is 10.0%-10.5% in constant

currency

Maintained FY 20 operating margin guidance range of 21%-23%

1.Financial Highlights – Consolidated results under International Financial

Reporting Standards (IFRS)

- For the quarter ended December 31, 2019

    - Revenues were $3,243 million, growth of 8.6% YoY and 1% QoQ

    - Operating profit was $711million, increase of 5.4% YoY and 2.2% QoQ.

Operating margin was 21.9%.

    - Basic EPS was $0.15, growth of 27.7% YoY and 10.2% QoQ

- For nine months ended December 31, 2019

    -Revenues were $9,583 million, growth of 9.7% YoY

    - Operating profit was $2,049 million, growth of 0.6% YoY. Operating margin

was 21.4%.

    - Basic EPS was $0.41, growth of 9.7% YoY

"Overall performance during the quarter was satisfactory on multiple counts –

broad-based growth, steady increase in client metrics and healthy large deal

wins", said Pravin Rao, COO. "Large deal wins continue to be robust with growth

of 56% so far this year. We had a further reduction in attrition, demonstrating

the results of our continued efforts towards strengthening employee engagement

and value proposition."

"Operating margins improved further during the quarter driven by relentless

cost optimization and operating leverage", said Nilanjan Roy, CFO. "Cash

generation was extremely strong with cumulative free cash flow crossing $ 1.5

bn. Return on Equity increased further to 25.9% driven by margin expansion and

increased shareholder payouts."

2.  Update on Whistleblower Matters

The company has issued a separate press release announcing conclusion of the

independent investigation into allegations contained in the anonymous

whistleblower complaints disclosed earlier.

3.  Client wins & Testimonials

- We were selected by Telenet, a Belgian telecommunication provider as its

preferred IT partner to deliver several digital and data initiatives for the

next five years. Telenet plans to leverage Infosys' ecosystem to drive

simplification of its existing landscape, build new digital and data

capabilities, extract relevant insights from data and leverage existing talent

more effectively.

- We entered a strategic long-term partnership with Siemens Gamesa Renewable

Energy (SGRE) to support its digital transformation journey. Infosys will

provide end-to-end IT infrastructure transformation of SGRE, including hybrid

cloud transformation, roll-out of a software defined network, set-up of an

intelligent service desk and digital workplace services.

- We were selected as the main supplier to deliver Volvo Cars' digital

transformation services for its Enterprise Digital Commercial Operations

Applications and Products. As part of this engagement, Infosys will offer next

generation application services leveraging its Global Delivery Model (GDM),

agile delivery, automation and other service optimization levers to deliver

effective service operations.

-Infosys entered an agreement with the Australian Federal Government's Services

Australia to transform the entitlement calculation engine for the nation's

welfare system. The project will enable Services Australia to more quickly

implement policy changes for the benefit of Australians without disrupting

services and deliver operational cost savings. The Welfare Payment

Infrastructure Transformation (WPIT) programme will replace a significant

portion of Centrelink's 30-year-old platform, modernizing the way Services

Australia calculates entitlements for Australians needing government support.

- Benjamin Kreider, Global Traceability Director, Mars Global Services, said,

"At Mars, we are delighted to enter into a partnership with Infosys for our

Digital Supply Chain initiative focused on improving the ongoing market

traceability of all of our products, across all business segments, by using

Infosys' Traceability Solution for the Food, Beverage, and CPG Industry on

their TradeEdge Market Connect Platform. The efficiency and agility of this

platform make it strongly suited to meet the unique needs of our industry,

across a variety of ERP and warehouse management systems in our factories and

third party manufacturers who service our global markets."

- Christian Bornfeld, Chief Innovation & Technology Officer (Group COO) and

Executive Board Member at ABN AMRO Bank, said, "At ABN AMRO Bank, we're excited

to be working with Infosys and accomplish our strategic goals and deliver this

very key IT transformation in the coming years. Infosys' strategic investment

in Cloud, Digital and DevOps has helped create best in class solutions and we

are confident that this partnership will help us transform our IT environment

in a timely and cost-effective way."

- Jean-Luc Galzi, CIO, GEFCO, said: "We are pleased to begin our digital

transformation journey with Infosys. Digital innovation in the supply chain

sector is key and our new partnership will help strengthen GEFCO's expertise

and bring value to our customers."

4.  Recognitions

Infosys was recognized as a 2020 Top Employer in Australia, Singapore and Japan

Our flagship global internship program, Infosys InStep, has been ranked number

one in the Best Overall Internship category in 2020 Internship Rankings by

Vault.com, a career intelligence organization

Recognized as a leader in Gartner Magic Quadrant for Application Testing

Services, Worldwide

Ranked as a leader in IDC MarketScape: Asia/Pacific (Excluding Japan) Microsoft

Dynamics 365 Implementation Services 2019 Vendor Assessment

Rated as a leader by ARC Advisory for Engineering Services by Global Service

Providers in India Global Market 2018-2023

Recognized in HFS Top 10: IOT Service Providers 2019

Recognized in HFS Top 10: ServiceNow Services 2019

Recognized in HFS Top 10: Retail and CPG Services 2019

Recognized in HFS Top 10: Insurance Services Providers 2019

Recognized in HFS Top 10: Life Science Services 2019

Recognized in HFS Top 10: Industry 4.0 Services

Recognized as a leader in NelsonHall's Agile & DevOps Services – NEAT Analysis

Recognized as a leader in Enterprise Blockchain Services PEAK Matrix(TM)

Assessment 2020 by Everest Group

Recognized as a leader in Application and Digital Banking PEAK Matrix(TM)

Vendor Assessment 2020 by Everest Group

Recognized as a leader in Healthcare Payer Digital Services PEAK Matrix(TM)

2020 by Everest Group

Recognized as a leader in Application and Digital Services Capital Markets Peak

Matrix(TM) Vendor Assessment 2020 by Everest Group

Recognized as leader in Insurance Application and Digital Services Life

Insurance Peak Matrix(TM) 2020 by Everest Group

Awarded the Excellent Partner Award by Mazda

Infosys Finacle won the Juniper Research Future Digital Awards in the category

Banking Innovation for Best Banking Platform 2019

Infosys Finacle awarded the Banking Technology Awards for Best Use of Emerging

or Innovative Technology

Infosys Finacle won the IBS Global FinTech Innovation Awards 2019 for Best

Payments System implementation

Conferred with the 2019 Asia IP Elite award excellence in developing innovative

Intellectual Property (IP) functions and creating IP value

Compass – The career enablement platform at Infosys won the international

Association for Talent Development (ATD) Excellence in Practice Award

Awarded the IT Ratna of Karnataka for 2018-19 for outstanding performance in IT

Exports and being the biggest exporter and employer in the state of Karnataka

Awarded the NASSCOM Corporate Award for Excellence (2019) for the Inclusion of

Persons with Disability

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,

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, 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)

          December 31, 2019 March 31, 2019

ASSETS     

Current assets   

Cash and cash equivalents       2,422   2,829

Current investments        431   958

Trade receivables        2,529   2,144

Unbilled revenue        914   777

Prepayments and other current assets      820   827

Income tax assets        1   61

Derivative financial instruments      5   48

Total current assets        7,122   7,644

Non-current assets  

Property, plant and equipment       1,896   1,931

Right-of-use assets(B4)        540   -

Goodwill         584   512

Intangible assets        185   100

Non-current investments        594   670

Deferred income tax assets       195   199

Income tax assets        739   914

Other non-current assets       255   282

Total non-current assets       4,988   4,608

Total assets         12,110   12,252

LIABILITIES AND EQUITY   

Current liabilities   

Trade payables         263   239

Lease liabilities(B4)        79   -

Derivative financial instruments      13   2

Current income tax liabilities       216   227

Client deposits         2   4

Unearned revenue        438   406

Employee benefit obligations        268   234

Provisions         85   83

Other current liabilities        1,438   1,498

Total current liabilities        2,802   2,693

Non-current liabilities   

Lease liabilities(B4)        501   -

Deferred income tax liabilities       88   98

Employee benefit obligations       6   6

Other non-current liabilities        136   55

Total liabilities         3,533   2,852

Equity   

Share capital- `5 ($0.16) par value 4,800,000,000 (4,800,000,000) equity shares

authorized, issued and outstanding 4,239,766,436 (4,335,954,462) equity shares

fully paid up, net of 18,781,564 (20,324,982) treasury shares as at December

31,

2019 (March 31, 2019)        332   339

Share premium         300   277

Retained earnings         10,458   11,248

Cash flow hedge reserve        (2)   3

Other reserves         560   384

Capital redemption reserve       17   10

Other components of equity        (3,141)   (2,870)

Total equity attributable to equity holders of the company   8,524   9,391

Non-controlling interests       53   9

Total equity         8,577   9,400

Total liabilities and equity        12,110   12,252

         Three months ended  Three months ended  Nine months ended  Nine months

ended  

         December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018

Revenues        3,243   2,987   9,583   8,740

Cost of sales        2,159   1,956   6,420   5,660

Gross profit        1,084   1,031   3,163   3,080

Operating expenses    

   Selling and marketing expenses     169   161   502   464

   Administrative expenses      204   195   612   578

Total operating expenses      373   356   1,114   1,042

Operating profit       711   675   2,049   2,038

Other income, net (A3) (B2)      116   105   312   317

Finance cost (B4)       (6)   -   (18)   -

Reduction in the fair value of Disposal Group held for

sale(A1)  -   -   -   (39)

Adjustment in respect of excess of carrying amount over recoverable

-   (65)   -   (65)

recoverable amount on reclassification from “Held for Sale” (A2)

Profit before income taxes      821   715   2,343   2,251

Income tax expense       194   213   597   633

Net profit        627   502   1,746   1,618

Other comprehensive income     

Items that will not be reclassified subsequently to profit or loss:     

Re-measurements of the net defined benefit liability/asset,

net  (16)   (4)   (22)   (3)

Equity instrument through other comprehensive income, net  (6)   8   (5)   10

         (22)   4   (27)   7

Items that will be reclassified subsequently to profit or loss:     

Fair valuation of investments, net     (1)   6   1   (3)

Fair value changes on derivatives designated as cash flow hedge, net

(4)   8   (5)   5

Foreign currency translation      (40)   295   (247)   (634)

         (45)   309   (251)   (632)

Total other comprehensive income/(loss), net of tax   (67)   313   (278)   (625)

Total comprehensive income       560   815   1,468   993

    

Profit attributable to:    

Owners of the Company         626   502   1,741   1,618

Non-controlling interests      1   -   5   -

         627   502   1,746   1,618

Total comprehensive income attributable to:    

Owners of the Company         559   815   1,465   993

Non-controlling interests      1   -   3   -

         560   815   1,468   993

Earnings per equity share    

Basic ($)        0.15   0.12   0.41   0.37

Diluted ($)        0.15   0.12   0.41   0.37

Weighted average equity shares used in computing earnings

per equity share   

Basic         4,239,607,543  4,347,673,466  4,263,569,478  4,347,130,342

Diluted         4,245,716,437  4,352,731,387  4,270,509,294  4,352,705,150

NOTES:

A.  Notes pertaining to previous quarters / periods

1. In the quarter ended June 30, 2018, the Company had recorded a reduction in

the fair value amounting to $39 million in respect of its subsidiary Panaya.

2. In the quarter ended December 31, 2018, the Company had recorded an

adjustment in respect of excess of carrying amount over recoverable amount of

$65 million in respect of its subsidiary Skava

3. Other income includes interest on income tax refunds amounting to $7 million

for the three and nine month ended Dec 31, 2018.

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 nine months ended December 31,

2019 have been taken on record at the Board meeting held on January 10, 2020

2. Other income includes interest on income tax refunds amounting to $34

million for the three month ended Dec 31, 2019 and $35 million for the nine

month ended Dec 31, 2019.

3. A Fact Sheet providing the operating metrics of the Company can be

downloaded from www.infosys.com.

4. On account of adoption of IFRS 16- Leases effective April 1, 2019.

INR:

https://www.infosys.com/investors/reports-filings/quarterly-results/2019-2020/q3/documents/ifrs-inr-press-release.pdf

  

Factsheet:

https://www.infosys.com/investors/reports-filings/quarterly-results/2019-2020/q3/documents/fact-sheet.pdf

  

Contact

Investor Relations

Sandeep Mahindroo

+91-80-3980-1018

Sandeep_Mahindroo@infosys.com  

Media Relations

Mehak Chawla

+91-80-4156-3998

Mehak.Chawla@infosys.com

Source: Infosys

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