INFOSYS - RESULTS FOR Q 3 FY 2017-18 - (Q/E DECEMBER 2017)

 

INFOSYS

RESULTS FOR Q 3 FY 2017-18

(Q/E DECEMBER 2017)

INFOSYS has declared its results for the third quarter ending December 2017.

Salil Parekh, the New CEO and MD told the infosys employees says -

SALIL PAREKH

“Thanks to your tremendous hard work, we had a strong performance in Q3. I have spent the last few days meeting several of you to learn as much as I can about Infosys....”

“Whether you are just starting out in the tech world or have been on this journey for a while, each one of you has such a passion for the work you do, such deep pride in being part of Infosys and the teams share such strong commitment to the Infosys values. It has been very energising for me...."

He added that he has reached out to clients who have responded with “similar enthusiasm,” and that “their messages endorse the strong partnerships that Infosys has built with them over the years, and there is so much respect in the way they see Infosys and the work we do for them”.

Salil Parekh talked about the digital disruption impacting the IT industry and all the client industries that Infosys serves.

“The opportunities in the market for us to create new areas of potential growth for them (clients) is immense,” says the New CEO.

"At Infosys, we have the strong foundation of our business. We have over 1,100 clients that trust us. 200,000 passionate employees- like you. The results of all your work in Q3 FY 18, that we announced earlier today, stand testimony to this,” he says.

“It’s important that each one of us stays focused on executing on our current priorities and reaching the goals that we’ve already set for ourselves. This will make it easier for us to move into action faster in April and achieve all that we will set out to do,” he adds.

Infosys Q3 revenues grew year-on-year by 8.0 percent in USD terms and 5.8 percent in constant currency terms. Operating margin improved to 24.3 percent from 24.2 percent in Q2 FY 18. Utilization excluding trainees rose to an all-time high of 84.9 percent, and FY18 revenue guidance in constant currency was retained at 5.5 percent-6.5 percent.

Profits for the three months ended December 31 rose to Rs 5,129 crore from Rs 3,708 crore for the year-earlier period, Infosys said in a press release.

The 38.3 percent jump was largely due to a $225 million (Rs 1,432 crore) tax reversal in the US, the company’s biggest market. Profit fell about 0.3 percent, excluding the one-off benefit, roughly in line with street expectations. 

December-quarter sales rose 8 percent to $2,755 million from $2,551 million a year ago, and increased 1 percent from the previous quarter. That compares with the 0.7 percent sequential rise and 7.7 percent gain on the year-earlier period.

Infosys expects to finish the year ending March 31 with revenue growth of between 5.5 percent and 6.5 percent over the previous fiscal year, the company said in its press release, retaining its October forecast.

Increased adoption of our digital offerings and new services helped stabilise billing rates, COO Pravin Rao said in the press release. Rao had served as interim CEO between August and January as Co-founder Nandan Nilekani, who returned to Infosys as non-executive chairman after Sikka quit, led the search for a new permanent CEO.

“My interactions with Nandan (Nilekani, the chairman) and the board led me to believe we were here to build a stronger Infosys. That confidence led me,” to make the decision to take on the CEO’s job, Parekh told reporters in a conference in Bengaluru.

Highlights of financial results

Q3 revenues grew year-on-year by 8.0% in USD terms; 5.8% in constant currency terms

Q3 revenues grewsequentially by 1.0%in USD terms;0.8% in constant currency terms

Q3operating margin improved to 24.3% from 24.2% in Q2 FY18

Q3 EPS at $ 0.35,year-on-year growth of 46.1% and sequential growth of 38.2%

Q3 EPS of $ 0.35 includes positive impact of $ 0.10 from Advance Pricing Agreement (APA)with the US IRS

9 months year-on-year revenue growth at 6.5% in USD terms; 5.6% in constant currency terms

Q3 cash flow from operating activities were at $ 657 mn, compared to $ 441 mn in Q2 18

Utilization excluding trainees at all-time high of 84.9%

Q3 standalone attrition declined to 15.8% from 17.2% in Q2 18

FY 18 revenue guidance inconstant currency retained at 5.5%-  6.5%

FY 18 operating margin range unchanged at 23%-25%

 

 RESULTS SUMMARY

 

Revenues were $2,755 million for the quarter ended December 31, 2017

Operating profit was $ 669 million for the quarter ended December 31, 2017  QoQ growth of 1.4%;YoY growth of 4.5%

Net profit was $796 million for the quarter ended December 31, 2017 QoQ growth of 37.6%; YoY growth of 45.4%

 

Basic EPS at $ 0.35 for the quarter ended December 31, 2017

 

During the quarter, on account of the conclusion of an APA with the US IRS, net profit has increased which has led to an increase in Basic EPS by $ 0.10 for the quarter

 

 

Consolidated results under International Financial Reporting Standards (IFRS) for the nine months ended December 31, 2017

 

Revenues were $ 8,134 million for the nine months ended  December 31, 2017  ; YoY growth of 6.5% in reported terms; 5.6 % in constant currency terms 

 

Operating profit was $1,966 million for the nine months ended December 31, 2017; YoY growth of 4.3%

 

Net profit was $ 1,915 million for thenine months ended   December 31, 2017;YoY growth of 19.9%

 

During the nine months period ended December 31, 2017, on account of the conclusion of an APA with the US IRS, net profit has increased which has led to an increase in Basic EPS by $ 0.09

 

“It is a privilege for me to beappointed as the CEO & MD of Infosys, helping our clients navigate the digital future and employees build new skills and capabilities. Our Q3 performance is strong. We had 8% year-on-year growth and 24.3% operating margin with US$ 593 million of free cash flow.” said Salil Parekh, CEO & MD.

 

“We are progressing towards stability and are well positioned to serve our clients in the new areas of demand” he added.

 

“Increased adoption of our digital offerings and new services

helped stabilize price realization. We were able to grow client relationships across revenue categories.” said Pravin Rao, COO. “

 

During the quarter, we provided compensation increases and higher variable payouts to our employees. Our investments in employees continues to deliver results as reflected in lower attrition.”

 

“Our operating margins were stable on the back of broad-based improvement in operational efficiency parameters. Our cash generation continued to be robust during the quarter.” said M.D. Ranganath,CFO. “

 

We successfully executed the share buyback of Rs. 13,000 crores in line with our capital allocation policy.”

 

Outlook for FY 2018

 

The Company’s outlook (consolidated) for the fiscal year ending March 31, 2018, under IFRS is as follows:

 

Revenues are expected to grow 5.5%-6.5% in constant currency.

 

Revenues are expected to grow 6.5%-7.5 % in USD terms based on the exchange rates as of December 31, 2017