Infosys: Double Digit Growth for the Fourth Consecutive Quarter, Coupled With 1.2% Operating Margin Expansion in Q2
BENGALURU, India, Oct. 11, 2019 /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."
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38.4%
YoY 11.4% YoY 3.3% QoQ 1.2% QoQ
$2.8 bn
Digital
CC
growth
CC growth
CC growth
OM expansion Large deal signings
to 21.7%
-- 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 ?8 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 quarter For six months ended September
ended September 30, 2019
30, 2019
Revenues were Revenues were $6,340 million,
$3,210 million, growth of 10.2% YoY
growth of 9.9%
YoY and 2.5% QoQ
Operating profit was $1,338
million, decline of 1.8% YoY.
Operating margin was 21.1%.
Operating profit
was $696
million,
increase of 0.5%
YoY and 8.3%
QoQ. Operating
margin was
21.7%.
Basic EPS was Basic EPS was $0.26, growth of
$0.13, growth of 1.6% YoY
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 ?8,260 crore on 26th August, 2019. With this the company completed the additional capital return program of upto ?13,000 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 30, 2019
March 31, 2019
---
ASSETS
---
Current assets
---
Cash and cash
equivalents 2,324 2,829
---
Current investments 496 958
---
Trade receivables 2,265 2,144
---
Unbilled revenue 1,026 777
---
Prepayments and other
current assets 761 827
---
Income tax assets 5 61
---
Derivative financial
instruments 15 48
---
Total current assets 6,892 7,644
---
Non-current assets
---
Property, plant and
equipment 1,878 1,931
---
Right-of-use
assets(B3) 552 -
---
Goodwill 576 512
---
Intangible assets 191 100
---
Non-current investments 556 670
---
Deferred income tax
assets 192 199
---
Income tax assets 904 914
---
Other non-current
assets 280 282
---
Total non-current
assets 5,129 4,608
---
Total assets 12,021 12,252
---
LIABILITIES AND EQUITY
---
Current liabilities
---
Trade payables 301 239
---
Lease liabilities(B3) 73 -
---
Derivative financial
instruments 5 2
---
Current income tax
liabilities 216 227
---
Client deposits 2 4
---
Unearned revenue 382 406
---
Employee benefit
obligations 258 234
---
Provisions 86 83
---
Other current
liabilities 1,388 1,498
---
Total current
liabilities 2,711 2,693
---
Non-current liabilities
---
Lease liabilities(B3) 503 -
---
Deferred income tax
liabilities 99 98
---
Employee benefit
obligations 6 6
---
Other non-current
liabilities 113 55
---
Total liabilities 3,432 2,852
---
Equity
---
Share capital- ?5
($0.16) par value
4,800,000,000
(4,800,000,000) equity
shares 332 339
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 earnings 10,510 11,248
---
Cash flow hedge reserve 2 3
---
Other reserves 460 384
---
Capital redemption
reserve 17 10
---
Other components of
equity (3,079) (2,870)
---
Total equity
attributable to equity
holders of the company 8,537 9,391
---
Non-controlling
interests 52 9
---
Total equity 8,589 9,400
---
Total liabilities and
equity 12,021 12,252
---
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 marketing
expenses 165 154 333 303
---
Administrative expenses 209 191 408 384
---
Total operating expenses 374 345 741 687
---
Operating profit 696 692 1,338 1,363
---
Other income, net 89 105 195 212
---
Finance cost(B3) (6) (12) -
---
Reduction in the fair value
of Disposal Group held for - (39)
sale(A1)
--- ---
Profit before income taxes 779 797 1,521 1,536
---
Income tax expense 207 216 403 420
---
Net profit 572 581 1,118 1,116
---
Other comprehensive income
---
Items that will not be reclassified subsequently
to profit or loss:
---
Re-measurements of the net
defined benefit (3) 1 (6) 1
liability/asset, net
---
Equity instrument through
other comprehensive 1 2 1 2
income, net
---
(2) 3 (5) 3
Items that will be reclassified subsequently to profit
or loss:
---
Fair valuation of
investments, net - (2) 2 (9)
--- ---
Fair value changes on
derivatives designated as 2 (4) (1) (3)
cash flow hedge, net
---
Foreign currency translation (224) (461) (207) (929)
---
(222) (467) (206) (941)
Total other comprehensive
income/(loss), net of (224) (464) (211) (938)
tax
---
Total comprehensive income 348 117 907 178
---
Profit attributable to:
---
Owners of the Company 569 581 1,115 1,116
---
Non-controlling interests 3 3 -
---
572 581 1,118 1,116
Total comprehensive income attributable to:
---
Owners of the Company 346 117 905 178
---
Non-controlling interests 2 2 -
---
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
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SOURCE Infosys
