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11.10.2019 – 16:22

INFOSYS

Infosys: Double Digit Growth for the Fourth Consecutive Quarter, Coupled With 1.2% Operating Margin Expansion in Q2

Bengaluru, India (ots/PRNewswire)

"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. 

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 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 

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: https://www.infosys.com/investors/reports-filings/quarterly-results/2019-2020/q2/Documents/IFRS-INR-press-release.pdf

Fact Sheet: https://www.infosys.com/investors/reports-filings/quarterly-results/2019-2020/q2/Documents/fact-sheet.pdf

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

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