Tech bellwether Infosys has posted ‘encouraging’ first quarter revenue numbers on the back of strong deal wins and robust growth in its digital transformation business.
Buoyed by these, the company has revised its revenue growth guidance upwards for FY20.
However, the company said growing attrition had been a major cause for concern.
Client focus
Addressing the media, at the company’s Electronic City facility, Infosys CEO & MD Salil Parekh said: “We had a strong start to FY20 with constant currency growth accelerating to 12.4% on year-over-year basis and a digital revenue growth of 41.9%. This was achieved through our consistent client focus and investments which have strengthened our client relationships.
“Consequently, we are raising our revenue guidance for the year from 7.5%-9.5% to 8.5%-10%,’’ he said.
For the quarter ended June 30, 2019, Infosys’s revenue was ₹21,803 crore, a growth of 14% year-on-year (YoY) and 1.2% quarter-on-quarter (QoQ).
During the period, the company’s operating profit was ₹4,471 crore, a decline of 1.5% YoY and 3.2% QoQ.
Net profit came in at ₹3,802 crore (₹3,612 crore) Operating margin stood at 20.5%.
Large deals
During the quarter, the company signed large deals worth $2.7 billion, the highest-ever in its history.
On deal wins, COO U.B. Pravin Rao said: “We had a good quarter as we continue to leverage our digital navigation framework to help our clients build and nurture their live enterprise. Segment growth was robust with all large regions and most verticals growing at double digits year-on-year in constant currency.’’
Its digital revenue in constant currency terms grew 41.9% YoY and services revenue 0.6%.
The company also said it was on track to complete its previously announced share buy-back of ₹8,260 crore. Till date, it has bought back shares worth ₹5,934 crore.
ADRs open higher
On the NYSE, Infosys’s ADRs opened at $11.34 apiece, gaining 5.8% and recording a new 52-week high at $11.56, up from a previous close of $10.72
Infosys CFO Nilanjan Roy said: “Continuing our objective of improving shareholder returns, we have revised our capital allocation policy upwards,” after considering the strategic and operational cash requirements. Accordingly, Infosys has decided to distribute about 85% of free cash flows, from the current 70%, cumulatively over a five-year period.
The distribution would happen through a combination of semi-annual dividends and/or share buyback and/or special dividends, the company said.
While responding to a query on access to cash, Mr. Parekh said: “Capital allocation was done to put us on a discipline. We will still have $3.5 billion on our balance sheet that can be spent on M&A, and the like.”