Infosys (NYSE: INFY) Announces Results for the Quarter Ended June 30, 2018

BENGALURU, India, July 13, 2018 /PRNewswire/ --

  • Digital revenues at $803 million (28.4% of total revenues), sequential growth of 8.0% and year-on-year growth of 25.6% in constant currency terms
  • 1:1 bonus issue of equity shares and 1:1 stock dividend of American Depositary Shares
  • Q1 19 revenues grew year-on-year by 6.8% in USD terms; 6.0% in constant currency terms
  • Q1 19 revenues grew sequentially by 0.9% in USD terms; 2.3% in constant currency terms
  • Operating margins at 23.7%, at the upper quartile of the guidance
  • Large deal wins crossed $1 billion, of which over 40% was from Financial Services
  • $ 100 mn clients increased sequentially by 4 to 24
  • Utilization (excluding trainees) at all-time high of 85.7%
  • Free Cash Flow up sequentially by 32.1% in USD terms
  • RoE increases to 25.5% as compared to 24.1% last quarter
  • EPS grew by 3.9% on a year-on-year basis
  • FY 19 revenue guidance in constant currency retained at 6%-8%; FY 19 operating margin guidance retained at 22%-24%

     (Logo: https://mma.prnewswire.com/media/633365/Infosys_Logo.jpg )

1. Financial Highlights

Consolidated results under International Financial Reporting Standards (IFRS) for the quarter ended June 30, 2018

  • Revenues were $2,831 million for the quarter ended June 30, 2018

    YoY growth of 6.8%; QoQ growth of 0.9%

  • Net profit was $534 million for the quarter ended June 30, 2018, including impact of $39 million on account of reduction in the fair value of Assets held for sale

    YoY decline of 1.2%; QoQ decline of 6.5%

  • Basic EPS was $0.25 for the quarter ended June 30, 2018, including impact of $0.02 on account of reduction in the fair value of Assets held for sale

    YoY growth of 3.9%; QoQ decline of 6.5%

"The strong revenue and margin performance in this quarter shows that our dual emphasis on Agile Digital and AI-driven Core services is resonating with our clients," said Salil Parekh, CEO and MD. "With our Agile Digital business growing sequentially at 8% in constant currency and increase in our large deal wins to over US$ 1 billion, we see good traction in the market."

"Our emphasis on deepening client relationships resulted in strong client metrics including increase in the number of $100 million+ clients to 24," said U B Pravin Rao, COO. "Utilization excluding trainees reached an all-time high of 85.7%."

"We had broad-based financial performance on multiple fronts - RoE crossed 25%, Free cash flow was up 32% quarter on quarter and operating margins were at the upper quartile of our margin guidance," said M.D. Ranganath, CFO. "While we continue to make strategic investments to leverage the opportunities in Digital, our relentless focus on operational efficiencies continued in this quarter."

2. Bonus issue of equity shares

The Board in its meeting held on July 13, 2018 has considered, approved and recommended a bonus issue of one equity share for every equity share held and a stock dividend of one American Depositary Share (ADS) for every ADS held, as on a record date to be determined. Consequently, the ratio of equity shares underlying the ADSs held by an American Depositary Receipt holder would remain unchanged. The Board approved and recommended the issue of bonus shares to celebrate the 25th year of Company's public listing in India and to further increase the liquidity of its shares. The bonus issue of equity shares and ADSs will be subject to approval by the shareholders, and any other applicable statutory and regulatory approvals.

The bonus shares once allotted shall rank pari passu in all respects and carry the same rights as the existing equity shareholders and shall be entitled to participate in full, in any dividend and other corporate action, recommended and declared after the new equity shares are allotted.

3. Addition to the Board  

The Board appointed Michael Gibbs as an Independent Director of the Company effective July 13, 2018 for a period of three years, based on the recommendation of the Nomination and Remuneration Committee of the Board.

4. Assets Held for Sale  

During the three months ended June 30, 2018, on remeasurement, including consideration of progress in negotiations on offers from prospective buyers for Panaya, the Company has recorded a reduction in the fair value of Disposal Group held for sale amounting to $39 million in respect of Panaya. Consequently, profit for the three months ended June 30, 2018 has decreased by $39 million resulting in a decrease in Basic earnings per equity share by $0.02 for the quarter ended June 30, 2018.

5. Adoption of Ind AS 115 - Revenue from contracts with customers

Effective April 1, 2018, the Company adopted Ind AS 115 "Revenue from Contracts with Customers" using the cumulative catch-up transition method which is applied to contracts that were not completed as of April 1, 2018. Accordingly, the comparatives have not been retrospectively adjusted.  The effect on adoption of Ind AS 115 was insignificant.    

6. Voluntary delisting of American Depositary Shares from Euronext Paris and London

In line with the announcement made on June 11, 2018, the Company has voluntarily delisted its American Depository Shares ("ADSs") (ISIN US4567881085) from Euronext Paris and London on July 5, 2018 and its ADS were removed from Euroclear France on July 10, 2018. The primary reason for voluntary delisting from Euronext Paris and London was the low average daily trading volume of Infosys ADSs on these exchanges, which was not commensurate with the related administrative expenses.  Infosys ADSs will continue to be listed on the NYSE under the symbol "INFY" and investors can continue to trade their ADSs on the New York Stock Exchange.

About Infosys 

Infosys is a global leader in next-generation digital services and consulting. We enable clients in 45 countries to navigate their digital transformation. 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 http://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, 2017. These filings are available at http://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) 

                                                               June 30, 2018    March 31, 2018                                                   ASSETS                                          Current assets                               Cash and cash equivalents            2,411             3,041                                     Current investments            1,004               982                                       Trade receivables            2,001             2,016                                        Unbilled revenue              680               654                    Prepayments and other current assets              707               662                        Derivative financial instruments                5                 2                                                                    6,808             7,357                               Assets held for sale[(3)]              273               316                                    Total current assets            7,081             7,673                                      Non-current assets                           Property, plant and equipment            1,781             1,863                                                Goodwill              349               339                                       Intangible assets               54                38                                 Investment in associate                -                 -                                 Non-current investments              821               883                              Deferred income tax assets              190               196                                       Income tax assets              884               931                                Other non-current assets              246               332                                Total non-current assets            4,325             4,582                                            Total assets           11,406            12,255                                  LIABILITIES AND EQUITY                                     Current liabilities                                          Trade payables              117               107                        Derivative financial instruments               20                 6                          Current income tax liabilities              297               314                                         Client deposits               27                 6                                        Unearned revenue              340               352                            Employee benefit obligations              219               218                                              Provisions               76                75                               Other current liabilities            1,269             1,036                                                                    2,365             2,114        Liabilities directly associated with assets held                                           for sale[(3)]               50                50                               Total current liabilities            2,415             2,164                                 Non-current liabilities                         Deferred income tax liabilities               74                82                            Employee benefit obligations                6                 7                           Other non-current liabilities               49                42                                       Total liabilities            2,544             2,295                                                  Equity       Share capital- `5 ($0.16) par value 2,400,000,000        (2,400,000,000) equity shares authorized, issued      and outstanding 2,173,336,341 (2,173,312,301), net        of 10,790,750 (10,801,956) treasury shares as at            June 30, 2018 (March 31, 2018), respectively              190               190                                           Share premium              253               247                                       Retained earnings           10,907            11,587                                 Cash flow hedge reserve                1                 -                                          Other reserves              294               244                              Capital redemption reserve                9                 9                              Other components of equity          (2,792)           (2,317)      Total equity attributable to equity holders of the                                                 company            8,862             9,960                               Non-controlling interests                -                 -                                            Total equity            8,862             9,960                            Total liabilities and equity           11,406            12,255 

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                                                        ended June 30,  ended June 30,                                                                  2018            2017                                               Revenues           2,831           2,651                                         Cost of sales           1,819           1,692                                          Gross profit           1,012             959                                   Operating expenses:                        Selling and marketing expenses             149             138                               Administrative expenses             193             183                              Total operating expenses             342             321                                      Operating profit             670             638                                     Other income, net             107             127         Reduction in the fair value of Disposal Group                                    held for sale[(3)]            (39)               -              Share in net profit/(loss) of associate,                             including impairment[(4)]               -            (11)                            Profit before income taxes             738             754                                    Income tax expense             204             213                                            Net profit             534             541                            Other comprehensive income      Items that will not be reclassified subsequently                                    to profit or loss:            Re-measurements of the net defined benefit                                  liability/asset, net               -               -        Equity instruments through other comprehensive                                           income, net               -               -       Items that will be reclassified subsequently to                                       profit or loss:                    Fair valuation of investments, net             (7)               4       Fair value changes on derivatives designated as                                  cash flow hedge, net               1            (10)                          Foreign currency translation           (468)              60       Total other comprehensive income/(loss), net of                                                   tax           (474)              54                            Total comprehensive income              60             595                                Profit attributable to:                                 Owners of the Company             534             541                             Non-controlling interests               -               -                                                                   534             541           Total comprehensive income attributable to:                                 Owners of the Company              60             595                             Non-controlling interests               -               -                                                                    60             595                             Earnings per equity share                                             Basic ($)            0.25            0.24                                           Diluted ($)            0.25            0.24      Weighted average equity shares used in computing                             earnings per equity share                                                 Basic   2,173,328,621   2,285,657,604                                               Diluted   2,175,355,178   2,287,058,148 

NOTES:  

1. The audited condensed consolidated Balance sheet and Statement of Comprehensive Income for the three months ended June 30, 2018 have been taken on record at the Board meeting held on July 13, 2018  

2. A Fact Sheet providing the operating metrics of the Company can be downloaded from http://www.infosys.com

3. During the three months ended June 30, 2018, on remeasurement, including consideration of progress in negotiations on offers from prospective buyers for Panaya, the Company has recorded a reduction in the fair value of Disposal Group held for sale amounting to $39 million in respect of Panaya.  

4. During the quarter ended June 30, 2017, the Company has written down the entire carrying value of the investment in its associate DWA Nova LLC amounting to $11 million 

IFRS-INR Press Release: https://www.infosys.com/investors/reports-filings/quarterly-results/2018-2019/q1/Documents/IFRS-INR-press-release.pdf

Fact Sheet: https://www.infosys.com/investors/reports-filings/quarterly-results/2018-2019/q1/Documents/fact-sheet.pdf

SOURCE Infosys

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