All you need to know about Infosys' June quarter results

 BT Online   New Delhi     Last Updated: July 15, 2016  | 14:50 IST
10 key takeaways from the Infosys' June quarter earnings
Photo: Reuters

Infosys, country's second largest software services firm, reported 4.47 per cent fall in consolidated net profit at Rs 3,436 crore in the June quarter of fiscal year 2016-17 against Rs 3597 crore in the March quarter of fiscal year 2015-16, which came in way lower than Street expectations.

The IT giant had reported Rs 3028 crore net profit in the corresponding quarter a year ago.

"We had unanticipated headwinds in discretionary spending in consulting services and package implementations as well as slower project ramp-ups in large deals that we had won in earlier quarters, resulting in a lower than expected growth in Q1," Infosys CEO Vishal Sikka said.

He added that the company continued to see strong momentum in large deal wins.

"Q1FY17 has been disappointing but this has come after couple of good quarters and YoY CC growth of 10.9 per cent is healthy and FY17 growth guidance also implies above industry growth rate. After a initial disappointment, we believe Street will look at the positives in the results which are CC YoY growth of 10.9 per cent," said brokerage Prabhudas Liladhar in a research note.

Below are 10 key takeaways from the Infosys' June quarter earnings:

Cut in revenue guidance

For the full year 2016-17, the country's second-largest software services firm slashed its revenue forecast to 10.5-12 per cent in constant currency terms, lower than the previously estimated 11.5-13.5 per cent.

The outlook translates into 11.7-13.2 per cent revenue growth in rupee terms and 10.8-12.3 per cent in dollar terms.

Dollar revenues below expectations

In US dollar terms, the company's revenues grew 2.2 per cent quarter-on-quarter to $511 million in the June quarter. Brokerage Prabhudas expected Infosys to report revenue growth of 4.1 per cent QoQ in dollar terms.

Margins

On the operating front, EBDITA and EBIT margins dipped by 121 bps QoQ bps and 138bps QoQ respectively to end the period at 26.5% and 24.1% respectively. These numbers are better than the peer group.

Earnings per share

The IT major's earnings per share (EPS) stood at 15.03 against for the quarter ended June 30, 2016, against 15.74 for the quarter ended March, 2016.\

Attrition

Quarterly annualized attrition has increased to 15.8% for the quarter vs 12.6% last quarter.

Investments

This quarter the company made an investment in Trifacta, a leading provider of data wrangling software that enables non-technical users to easily transform data for analysis. As part of this investment Trifacta will provide a data wrangling solution for the Infosys Information Platform (IIP) and Infosys' other platforms and offerings.

Purposeful Artificial Intelligence

The company launched Infosys Mana, a knowledge-based AI platform that brings machine learning together with the deep knowledge of an organization, to drive automation and innovation - enabling businesses to continuously reinvent their system landscapes. We are already working with a number of clients including JCI and Syngenta.

Geographical segment

North America grew by 2.5 per cent sequentially; and 2.4 per cent in constant currency terms. Europe grew by 0.6 per cent sequentially; and declined by 0.3 per cent in constant currency terms. India declined by 7.6 per cent sequentially; and 8.2 per cent in CC terms, while rest of the world grew by 6.9 per cent sequentially; and 4.9 per cent in CC terms.

Industry segment

FSI grew by 2.2 per cent sequentially and by 1.7 per cent in constant currency terms. MFG & Hi-Tech grew by 2.9 per cent sequentially and 2.4 per cent in constant currency terms. RCL grew by 1 per cent sequentially and 0.7 per cent in constant currency terms, while ECS grew by 3.1 per cent sequentially and 2.4 per cent in constant currency terms.

Client addition

The company added 3 clients to $100 million category taking total count to 17.

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