11.10.2019 – 16:22
Infosys: Double Digit Growth for the Fourth Consecutive Quarter, Coupled With 1.2% Operating Margin Expansion in Q2
"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."
38.4% 11.4% 3.3% 1.2% QoQ $2.8 bn YoY YoY QoQ Digital CC CC OM Large CC growth growth expansion deal growth to 21.7% 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 INR8 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 For six quarter months ended ended September September 30, 2019 30, 2019 Revenues Revenues were were $3,210 $6,340 million, million, growth of growth of 9.9% YoY 10.2% YoY and 2.5% Operating QoQ profit Operating was profit $1,338 was $696 million, million, decline increase of 1.8% of 0.5% YoY. YoY and Operating 8.3% QoQ. margin Operating was margin 21.1%. was Basic EPS 21.7%. was Basic EPS $0.26, was growth of $0.13, 1.6% YoY growth of 0.2% YoY and 5.6% QoQ
"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 INR8,260 crore on 26th August, 2019. With this the company completed the additional capital return program of upto INR13,000 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.
- 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
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.
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 March 30, 2019 31, 2019 ASSETS Current assets Cash and cash 2,324 2,829 equivalents Current 496 958 investments Trade 2,265 2,144 receivables Unbilled 1,026 777 revenue Prepayments and 761 827 other current assets Income tax 5 61 assets Derivative 15 48 financial instruments Total current 6,892 7,644 assets Non-current assets Property, plant 1,878 1,931 and equipment Right-of-use 552 - assets(B3) Goodwill 576 512 Intangible 191 100 assets Non-current 556 670 investments Deferred income 192 199 tax assets Income tax 904 914 assets Other 280 282 non-current assets Total 5,129 4,608 non-current assets Total assets 12,021 12,252 LIABILITIES AND EQUITY Current liabilities Trade payables 301 239 Lease 73 - liabilities(B3) Derivative 5 2 financial instruments Current income 216 227 tax liabilities Client deposits 2 4 Unearned 382 406 revenue Employee 258 234 benefit obligations Provisions 86 83 Other current 1,388 1,498 liabilities Total current 2,711 2,693 liabilities Non-current liabilities Lease 503 - liabilities(B3) Deferred income 99 98 tax liabilities Employee 6 6 benefit obligations Other 113 55 non-current liabilities Total 3,432 2,852 liabilities Equity Share capital- 332 339 INR5 ($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) Share premium 295 277 Retained 10,510 11,248 earnings Cash flow hedge 2 3 reserve Other reserves 460 384 Capital 17 10 redemption reserve Other (3,079) (2,870) components of equity Total equity 8,537 9,391 attributable to equity holders of the company Non-controlling 52 9 interests Total equity 8,589 9,400 Total 12,021 12,252 liabilities and equity
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 165 154 333 303 marketing expenses Administrative 209 191 408 384 expenses Total operating 374 345 741 687 expenses Operating profit 696 692 1,338 1,363 Other income, 89 105 195 212 net Finance cost(B3) (6) - (12) - Reduction in the - - - (39) fair value of Disposal Group held for sale(A1) Profit before 779 797 1,521 1,536 income taxes Income tax 207 216 403 420 expense Net profit 572 581 1,118 1,116 Other comprehensive income Items that will not be reclassified subsequently to profit or loss: Re-measurements (3) 1 (6) 1 of the net defined benefit liability/asset, net Equity 1 2 1 2 instrument through other comprehensive income, net (2) 3 (5) 3 Items that will be reclassified subsequently to profit or loss: Fair valuation - (2) 2 (9) of investments, net Fair value 2 (4) (1) (3) changes on derivatives designated as cash flow hedge, net Foreign currency (224) (461) (207) (929) translation (222) (467) (206) (941) Total other (224) (464) (211) (938) comprehensive income/(loss), net of tax Total 348 117 907 178 comprehensive income Profit attributable to: Owners of the 569 581 1,115 1,116 Company Non-controlling 3 - 3 - interests 572 581 1,118 1,116 Total comprehensive income attributable to: Owners of the 346 117 905 178 Company Non-controlling 2 - 2 - interests 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
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.
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