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Infosys: Broad based growth in H1 of 20.1% in constant currency; Q2 margins expand 150 bps sequentially

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BENGALURU, India, Oct. 13, 2022 /PRNewswire/ — Infosys (NSE: INFY) (BSE: INFY) (NYSE: INFY), a global leader in next-generation digital services and consulting, reported strong Q2 performance with year-on-year growth at 18.8% and sequential growth at 4.0% in constant currency. Year-on-year growth was in double digits across all business segments in constant currency terms. Digital comprised 61.8% of overall revenues and grew at 31.2% in constant currency. Operating margin for the quarter increased sequentially by 150 bps to 21.5%. Large deal TCV for the quarter was robust at $2.7 bn, highest in last 7 quarters. FY 23 revenue guidance is revised to 15%-16%; operating margin guidance is also revised to 21%-22%.

"Our strong large deal wins and steady all-round growth in Q2 reflect the deep relevance and differentiation of our digital and cloud solutions for clients as they navigate their business transformation," said Salil Parekh, CEO and MD. "While concerns around the economic outlook persist, our demand pipeline is strong as clients remain confident in our ability to deliver the value they seek, both on the growth and efficiency of their businesses. This is reflected in our revised revenue guidance of 15%-16% for FY 23," he added.

31.2% YoY
CC Digital growth

18.8% YoY
4.0% QoQ
CC Revenue growth

21.5%
Operating margin
(in $ terms)

11.5% YoY 
Increase in EPS 
(₹ terms)

$2.7 bn 
Large deal TCV

 

1.  Key highlights:

For the quarter ended September 30, 2022

  •  Revenues in CC terms grew by 18.8% YoY and 4.0% QoQ
  •  Reported revenues at $4,555 million, growth of 13.9% YoY
  •  Digital revenues at 61.8% of total revenues, YoY CC growth of 31.2%
  •  Operating margin at 21.5%, decline of 2.1% YoY and increase of 1.5% QoQ
  •  Basic EPS at $0.18, growth of 2.5% YoY
  •  FCF at $589 million, decline of 17.3% YoY; FCF conversion at 78.6% of net profit

For six months ended September 30, 2022

  •  Revenues in CC terms grew by 20.1% YoY
  •  Reported revenues at $8,999 million, growth of 15.7% YoY
  •  Digital revenues at 61.4% of total revenues, YoY CC growth of 34.5%
  •  Operating margin at 20.7%, decline of 2.9% YoY
  •  Basic EPS at $0.34, growth of 0.8% YoY
  •  FCF at $1,245 million, decline of 21.0% YoY; FCF conversion at 86.6% of net profit

 

"Operating margins in Q2 expanded sequentially by 150 bps, helped by our operational rigor. While supply side challenges are gradually abating as reflected in the reducing attrition rates, they continue to exert pressure on our cost structure," said Nilanjan Roy, Chief Financial Officer. "In line with the capital allocation policy, the Board has announced an interim dividend of ₹16.50 per share, an increase of 10% over FY 22 interim dividend and an open market share buyback of ₹9,300 crores," he added.

2.  Capital allocation

The Board in its meeting held today approved the following:

*USD-INR rate of 82.00

3. Client wins and Testimonials

4.  Recognitions

About Infosys

Infosys is a global leader in next-generation digital services and consulting. Over 300,000 of our people work to amplify human potential and create the next opportunity for people, businesses and communities. With over four decades of experience in managing the systems and workings of global enterprises, we expertly steer clients, in more than 50 countries, as they navigate their digital transformation powered by the cloud. We enable them with an AI-powered core, empower the business with agile digital at scale and drive continuous improvement with always-on learning through the transfer of digital skills, expertise, and ideas from our innovation ecosystem. We are deeply committed to being a well-governed, environmentally sustainable organization where diverse talent thrives in an inclusive workplace.

Visit www.infosys.com to see how Infosys (NSE, BSE, NYSE: INFY) can help your enterprise navigate your next.

Safe Harbor

This Release contains ‘forward-looking statements’ within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance and that are based on our current expectations, assumptions, estimates and projections about the Company, our industry, economic conditions in the markets in which we operate, and certain other matters. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as ‘may’, ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘continue’, ‘intend’, ‘will’, ‘project’, ‘seek’, ‘could’, ‘would’, ‘should’ and similar expressions. Those statements include, among other things, statements regarding our business strategy, our expectations concerning our market position, future operations, growth, margins, profitability, attrition, liquidity, and capital resources, our ESG vision, our capital allocation policy, the effects of COVID-19 on global economic conditions and our business and operations, wage increases, change in the regulations including immigration regulation and policies in the United States, and corporate actions including timely completion of the proposed buy-back of our equity shares. These statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results or outcomes to differ materially from those implied by the forward-looking statements. 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, 2022. 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

Extracted from the Condensed Consolidated Balance Sheet under IFRS as at:                         (Dollars in millions)

September 30, 2022

March 31, 2022

ASSETS

Current assets

Cash and cash equivalents

1,828

2,305

Current investments

1,448

880

Trade receivables

3,122

2,995

Unbilled revenue

1,635

1,526

Other Current assets

1,178

1,159

Total current assets

9,211

8,865

Non-current assets

Property, plant and equipment and Right-of-use assets

2,339

2,429

Goodwill and other Intangible assets

1,072

1,042

Non-current investments

1,557

1,801

Unbilled revenue

174

124

Other non-current assets

1,287

1,294

Total non-current assets

6,429

6,690

Total assets

15,640

15,555

LIABILITIES AND EQUITY

Current liabilities

Trade payables

512

545

Unearned revenue

855

834

Employee benefit obligations

276

288

Other current liabilities and provisions

2,946

2,766

Total current liabilities

4,589

4,433

Non-current liabilities

Lease liabilities

685

607

Other non-current liabilities

489

521

Total non-current liabilities

1,174

1,128

Total liabilities

5,763

5,561

Total equity attributable to equity holders of the company

9,828

9,941

Non-controlling interests

49

53

Total equity

9,877

9,994

Total liabilities and equity

15,640

15,555

 

Extracted from the Condensed Consolidated statement of Comprehensive Income under IFRS for:

                                                                                                                                                                                            (Dollars in millions except per equity share data)

3 months ended
September 30,
2022

3 months ended
September 30,
2021

6 months ended
September 30,
2022

6 months ended
September 30,
2021

Revenues

4,555

3,998

8,999

7,780

Cost of sales

3,170

2,675

6,315

5,184

Gross profit

1,385

1,323

2,684

2,596

Operating expenses:

   Selling and marketing expenses

185

167

378

336

   Administrative expenses

221

215

439

423

Total operating expenses

406

382

817

759

Operating profit

979

941

1,867

1,837

Other income, net (3)

65

65

145

142

Profit before income taxes

1,044

1,006

2,012

1,979

Income tax expense 

295

272

574

540

Net profit (before minority interest)

749

734

1,438

1,439

Net profit (after minority interest)

748

733

1,437

1,437

Basic EPS ($)

0.18

0.17

0.34

0.34

Diluted EPS ($)

0.18

0.17

0.34

0.34

NOTES:

  1. The above information is extracted from the audited condensed consolidated Balance sheet and Statement of Comprehensive Income for the quarter and six months ended September 30, 2022, which have been taken on record at the Board meeting held on October 13, 2022.
  2. A Fact Sheet providing the operating metrics of the Company can be downloaded from www.infosys.com.
  3. Other Income includes Finance Cost.
  4. As the quarter and six months ended figures are taken from the source and rounded to the nearest digits, the quarter figures in this statement added up to the figures reported for the previous quarter might not always add up to the six months ended figures reported in this statement.

IFRS INR Press Release: https://www.infosys.com/investors/reports-filings/quarterly-results/2022-2023/q2/documents/ifrs-inr-press-release.pdf 

Fact Sheet: https://www.infosys.com/investors/reports-filings/quarterly-results/2022-2023/q2/documents/fact-sheet.pdf

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