Robust Volumes drive Strong Performance in Q2 (Revised)
MUMBAI, India, Oct. 13, 2017 /PRNewswire/ -- Tata Consultancy Services (BSE: 532540, NSE: TCS), the leading IT services, consulting and business solutions firm reported its consolidated financial results according to IFRS and Ind AS for the period ending September 30, 2017.
Financial Highlights for Quarter Ended September 30, 2017
-- Revenue at $4,739 million, +8.3 % Y-o-Y; +3.2% Q-o-Q
-- Net Income at $1 billion, +1.6% Y-o-Y; +8.4% Q-o-Q
-- Operating Margin at 25.1%, an expansion of 1.7% Q-o-Q
-- Net Cash from Operations at ` 5,809 crore i.e. 90.1% of Net Income
-- Earnings Per Share at $0.52
-- Dividend per share of ` 7.00Proposed record date 26/10/17; Payment date
01/11/17
Business Highlights for Quarter Ended September 30, 2017
-- Digital revenue at 19.7%, +31% Y-o-Y; +5.9% Q-o-Q (CC)
-- 1 new client in $100M+ band; 6 clients each added in $50M+, $20M+ and
$10M+ bands
-- 28 clients added in $1M+ band
-- IT Attrition rate (LTM) down further by 0.3% to 11.3%
-- Total employees: 389,213; Gross addition: 15,868 employees
Commenting on the Q2 performance, Rajesh Gopinathan, CEO and MD, said: "We experienced robust volume growth in Q2, driven by good demand across multiple industry verticals. Strong, broadbased client metrics this quarter demonstrates our increasing success with newer customers. Large deal wins this quarter, a good pipeline, and bottoming out of the Retail sector softness positions us well."
Mr Gopinathan added: "We continue to gain share in the fast growing Digital spend of our customers, evident in our industry-leading Digital growth in Q2. By sharpening our focus on individual components of the Digital service stack, we have been able to bring to bear the full power of our contextual knowledge, research and innovation, and investments in location-independent agile, automation and cloud on our customers' transformational imperatives and become a trusted partner in their Business 4.0 journeys."
N. Ganapathy Subramaniam, Chief Operating Officer & Executive Director, said: "It has been a very satisfying performance this quarter, striking a good balance between pursuing revenue growth, particularly in Digital opportunities, while tightening our execution to deliver greater efficiency. Our client-centricity and business depth are resulting in industry-leading customer satisfaction levels and strong client metrics. With the sectoral headwinds slowly abating, we expect steadier and stronger growth ahead."
V. Ramakrishnan, Chief Financial Officer, said: "Rigor and discipline in our operations helped accomplish an impressive margin performance and progress along the profitability path we had outlined earlier. Our investment program remains geared for growth. Continued investments in digital design and transformational capabilities are paying off, and it shows in the strong growth in our Digital business."
Q2 Segment Highlights(1)
Industries: Strong revenue growth was visible across verticals in the September quarter. With the exception of Retail and CMI, all industry verticals grew above the company average, led by Travel & Hospitality (up 8% Q-o-Q), Energy & Utilities (up 7.2% Q-o-Q) and Life Sciences & Healthcare (up 3.6% Q-o-Q). On a year on year basis, all industry verticals - with the exception of BFSI and Retail - grew above 9.5%.
Markets: Growth was led by Europe (up 5.3% Q-o-Q), Latin America (up 5.7% Q-o-Q), APAC (up 3% Q-o-Q) and UK (up 2.5% Q-o-Q). North America grew by 1.4% Q-o-Q with continued softness in Banking and Retail.
Services: The reorganized service lines successfully completed their transition in Q2, and are experiencing strong demand in their respective domains. Key highlights:
-- Consulting & Service Integration: Newly launched strategic offerings
which combine consulting and multiple service lines saw more than 10
major wins in Q2 across Enterprise Agility, M&A, Global Shared Services,
Supply Chain and Front Office Customer Experience Transformations.
-- Cognitive Business Operations: The value proposition around leveraging
cognitive technologies to simplify and streamline business operations is
gaining strong traction. 2 large deals powered sales momentum in Q2
-- IoT: The practice saw double digit quarterly growth as the mainstreaming
of IoT deployments gathered steam, with several wins in this quarter
including a Digital Twin and AI-based remote monitoring and optimization
solution for a Japanese heavy industrial equipment manufacturer.
-- Enterprise Application Services: Experienced robust growth in Q2, driven
by transformational wins around newer Cloud Platforms from SAP, Oracle,
Salesforce, Microsoft & others. We also expanded our partner footprint
in specialized areas.
Select Key Wins in Q2
-- Engaged by a large UK based global insurer to provide policy
administration services to their four million heritage customers using
TCS BaNCS' digitally-enabled, end-to-end policy administration platform
for Life, Pensions and Investment products
-- Selected as a strategic partner by a large North America based global
insurer for application services across multiple geographies and lines
of business.
-- Chosen by one of the world's largest quick service restaurants for
global implementation of 'point of sale' software across 58 countries,
including country specific localization and hosting services on the
cloud.
-- Engaged as the single strategic partner for a leading North America
based pet specialty retailer to transform and optimize all of its IT,
Infrastructure and Business Process Services.
-- Partnered with a large APAC based airline to provide technology managed
services for IT applications and Infrastructure, enabled by increased
automation.
-- Chosen by a North America based cable TV provider as a partner for its
network and video engineering services.
-- Selected by a European headquartered global automotive OEM as its
strategic engineering partner to support the design and development of a
new range of vehicles.
-- Engaged by a Japanese pharmaceutical company to simplify and standardize
their IT services delivery.
-- Chosen by a large APAC based banking group for a multi-year
transformation and maintenance of their Information Management, Social,
Mobile, and Digital applications.
-- Selected by a North America based global publisher to provide
Infrastructure Services and technology transformation to support their
growing digital portfolio.
-- Chosen by a European communications services provider to implement a
business-centric operating model for their applications and shared
services.
Key Wins in Digital Services and Solutions in Q2:
Consulting & Service Integration Analytics & Insights
Selected by a leading North America based global Engaged by an APAC based leading Telecom provider to
information services firm for a consulting engagement migrate their existing systems to a Hadoop environment
to create an omni-channel experience for its customers and build an analytics framework using big data
through the development of an end-to-end digital technologies.
Selected by a leading North America
customer experience platform.
Chosen as the strategic based power generation company to improve their
partner for the largest UK based banking firm to lead accounts receivables by predicting invoice outcomes
their Devops transformation program using Agile through advanced analytics and machine learning
methodologies.
Partnered with a North America based techniques.
leading technology company to provide consulting
services to reduce costs by making systems smarter
through analytics and automation technologies.
Selected by a North America based global hotel brand
to lead digital transformation initiatives across all
available platforms and systems to enhance the customer
experience.
Digital Interactive Enterprise Application Services
Chosen by a Europe based multinational auto
manufacturer for Salesforce service cloud
implementation, leading to an enhanced global customer
experience.
Strategic partner for a North America based
multinational semiconductor manufacturer to revamp the
digital design for all handheld devices controlling
autonomous vehicles.
Engaged by a European logistics
service provider to revamp their multi-channel digital
communications program using digital interactive
technologies.
Cloud Application Services
Internet of Things
Partnered with a leading Japanese power systems company Engaged by a British airline to facilitate API-
to develop a Boiler Digital Twin, leveraging AI control fication and enhanced interactions with partner
and industrial analytics to enable far more efficient systems using cloud technologies.
Strategic partner
operations. for a leading UK based financial services provider to
create secure and innovative payment systems driven by
API-fication transformation programs.
Cyber Security Services
Chosen by a North America based multinational
conglomerate for their Applications Vulnerability
Management and Remediation.
----------------------------------------------------
Research and Innovation:
TCS' Research and Innovation teams continued to work on various research themes and finding innovative technological solutions to real world problems. Some key highlights:
-- The TCS-IIT Kanpur team competed against 16 teams from 10 countries in
the Amazon Robotics Challenge held in Nagoya, Japan, and stood third in
the 'pick' category and fourth overall, ahead of MIT-Princeton and three
other teams.
-- TCS won the Physionet Challenge 2017, in the ECG analytics area at the
'Computing in Cardiology' conference in Rennes, France, ahead of teams
from ETH Zurich, EPFL, MIT, Oxford University and Georgia Tech
As of September 30, 2017, the company has applied for 3517 patents, including 82 applied during the quarter. Till date the company has been granted 594 patents.
Human Resources:
Total employee strength at the end of Q2 stood at 389,213 on a consolidated basis, with gross addition of 15,868 employees and net addition of 3,404 employees during the quarter. Overseas recruitment continues apace, with 3,725 employees recruited outside India, bringing the total to 6,979 in the first half of the fiscal year.
The company continues to enjoy best in class employee retention rates. The IT attrition rate (LTM) fell by 0.3% in Q2 to 11.3%, while the total attrition rate (including BPS) fell to 12.1%. The percentage of women in TCS continues to rise, hitting 35% in Q2. The total number of nationalities represented in the workforce stood at 133.
"Our progressive policies and investments in upgrading employee capabilities are driving our industry-leading retention rate. Employees see immense value in the learning opportunities afforded by our Digital Learning program, and view it as a critical avenue to realize their potential," said Ajoy Mukherjee, Executive Vice President and Global Head, Human Resources.
Awards and Recognition:
Business Leadership: Partner:
Recognised as a prominent 'Technology Partner' at the Manufacturing Cloudera Global Partner of the Year Award
Veritas AMS Global
Leadership 100 Awards for the fourth time
Ranked among the Most Strategic Partner of the Year Award
Dell Boomi European, Middle
Honored Companies in Asia, and rated the Best Investor Relations East and Africa Region Implementation Partner
Won multiple
Professional, Best Investor Relations and Best IR website in the awards at the Oracle Excellence Awards 2017
Oracle Global
region in Institutional Investor's 2017 Annual All Asia Executive Partner of the Year Award for PaaS/IaaS Cloud Specialty
Oracle
Team rankings
Won Gold and Two Silver Stevies(R) at the 2017 Customer Advocacy Award for EMEA
Oracle 2017 Specialized
Great Employers AwardsSM
Gold Stevie(R) for Achievement in Partner of the Year -INDIA Regional Partner of the Year
Employee Engagement in the Americas,
Two Silver Stevies(R) for
Achievement in Recruitment and Employer of the Year
TCS' Singapore
Marathon App Wins Best Mobile App for Media, Entertainment &
Social Media at GSMA's Asia Mobile Award 2017.
TCS New York City
Marathon App wins Gold at Best in Biz Awards 2017 International.
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Sustainability:
Ranked #30 in Fortune's annual list of the Top 50
Companies that are changing the world, for mKrishi,
an innovative digital solution that is helping make
a positive impact on marginalized communities
Listed in the Dow Jones Sustainability Index (DJSI)
2017, and in the FTSE4Good Emerging Index
Won the
Social Responsibility Project of the Year award at
the North American Employee Engagement Awards
TCS
BridgeIT won the Project of the Year - Contribution
to the community at the PMI India Awards 2017
TCS
Awarded the Gold rating certificate for leading CSR
practices by EcoVadis, a world-leading independent
CSR Advisory firm for the fourth year in a row
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Unaudited Condensed Consolidated Statements of Comprehensive Income
For the three-month periods ended September 30, 2016, June 30, 2017 and September 30, 2017
(In millions of USD, except per share data)
Three-month Three-month Three-month
period ended period ended period ended
September 30, June 30, 2017 September 30,
2016 2017
---- ----
Revenue 4,374 4,591 4,739
------- ----- ----- -----
Cost of
revenue 2,470 2,683 2,733
-------- ----- ----- -----
Gross margin 1,904 1,908 2,006
------------ ----- ----- -----
SG & A
expenses 766 835 818
--------- --- --- ---
Operating
income 1,138 1,073 1,188
--------- ----- ----- -----
Other income
(expense),
net 157 145 127
------------ --- --- ---
Income before
income taxes 1,295 1,218 1,315
------------- ----- ----- -----
Income taxes 309 294 312
------------ --- --- ---
Income after
income taxes 986 924 1,003
------------- --- --- -----
Minority
interest 2 1 3
--------- --- --- ---
Net income 984 923 1,000
---------- --- --- -----
Earnings per
share in USD 0.50 0.47 0.52
------------- ---- ---- ----
Unaudited Condensed Consolidated Statements of Financial
Position
As of March 31, 2017 and September 30, 2017
(In millions of USD)
As of March 31, 2017 As of September 30, 2017
-------------------- ------------------------
Assets
------
Property
and
equipment 1,811 1,809
---------- ----- -----
Intangible
assets and
Goodwill 581 591
----------- --- ---
Accounts
Receivable 3,498 3,785
----------- ----- -----
Unbilled
Revenues 825 1,050
--------- --- -----
Investments 6,474 4,514
----------- ----- -----
Cash and
Cash
equivalents 555 654
------------ --- ---
Other
current
assets 1,119 872
-------- ----- ---
Other non-
current
assets 1,385 1,424
---------- ----- -----
Total
Assets 16,248 14,699
------- ------ ------
Liabilities and Shareholders' Equity
------------------------------------
Shareholders'
Funds 13,619 11,804
------------- ------ ------
Long term
borrowings 11 9
----------- --- ---
Short term
borrowings 34 3
----------- --- ---
Other
current
liabilities 2,204 2,495
------------ ----- -----
Other non-
current
liabilities 323 332
------------ --- ---
Minority
Interest 57 56
--------- --- ---
Total
Liabilities 16,248 14,699
------------ ------ ------
About Tata Consultancy Services Ltd (TCS)
Tata Consultancy Services is an IT services, consulting and business solutions organization that delivers real results to global business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT, BPS, infrastructure, engineering and assurance services. This is delivered through its unique Global Network Delivery Model(TM), recognized as the benchmark of excellence in software development. A part of the Tata group, India's largest industrial conglomerate, TCS has over 389,000 of the world's best-trained consultants in 45 countries. The company generated consolidated revenues of US $ 17.6 billion for year ended March 31, 2017 and is listed on the BSE (formerly Bombay Stock Exchange) and the NSE (National Stock Exchange) in India. For more information, visit us at www.tcs.com
Follow TCS on Twitter at @TCS_News.
(1) Growth rates mentioned are in constant currency
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SOURCE Tata Consultancy Services
