Infosys today said its revenue grew 8.2 percent to $2,587 million, while profit rose 3.8 percent to $539 million in the second quarter of fiscal 2017.
“We focused on strong execution in Q2 with our core IT services business showing good progress on the strength of our innovation and operational initiatives. While we continue to navigate an uncertain external environment, we remain focused on executing our strategy and increasing momentum of our software plus services model,” said Vishal Sikka, CEO of Infosys.
Infosys said its revenue for the fiscal year ending March 31, 2017, is expected to grow 8 percent – 9 percent in constant currency.
The above constant currency guidance translates to 8.2 percent – 9.2 percent in USD terms based on March 31st rates.
Infosys Ltd on Friday lowered its annual revenue guidance for the 2016-17 fiscal due to uncertain business outlook and currency volatility despite robust growth in the second quarter (July-September).
“Our consolidated dollar revenue for this fiscal (FY 2017) will grow 8-9 per cent in constant currency, which translates into 7.5-8.5 per cent on September 30 dollar value of Rs 66.62 and 10.9-11.9 per cent in rupees,” said the IT major in a statement here.
Around 85 per cent of the outsourcing firm’s revenues are billed in dollar and euro currencies as software exports.
On July 15, too, the company lowered dollar guidance for FY 2017 to 10-11.5 per cent on June 30 exchange rate of Rs 67.53 per dollar from 11.8-13.8 per cent projected in April on March 31 exchange rate of Rs 66.26.
For fiscal 2015-16, consolidated revenue grew 9.1 per cent to $9.5 billion in dollar terms and 17.1 per cent to Rs 62,441 crore in rupee terms.
The lower revenue outlook impacted the blue chip company’s scrip in the stock markets, resulting in its shares of Rs 5 face value, losing Rs 11.70 to Rs 1,041.10 in post-noon trading from Thursday’s closing price of Rs 1,052.05 despite opening at a high of Rs 1,060 per share.
“Considering our performance in the first-half (April-September) of the year and the near-term uncertain business outlook, we are revising our revenue guidance,” said company’s Chief Executive Vishal Sikka at a media conference here.
Earlier, the city-based company reported Rs 3,606 crore consolidated net profit for second quarter (Q2), registering 6.1 per cent year-on-year (YoY) growth from Rs 3,398 crore in the like period year ago and 4.9 per cent sequentially from Rs 3.436 crore in the first quarter (April-June).
Consolidated revenue for the quarter (Q2) under review increased 10.7 per cent YoY to Rs 17,310 crore from Rs 15,635 crore in same period year ago and 3.1 per cent sequentially from Rs 16,782 crore in first quarter.
In dollar terms, consolidated net income grew 3.8 per cent YoY to $539 million from $519 million year ago and 5.5 per cent sequentially from $511 million quarter ago.
Likewise, consolidated gross revenue rose 8.2 per cent YoY to $2,587 million ($2.6 billion) from $2,392 million ($2.4 billion) year ago and 3.5 per cent sequentially from $2,501 million ($2.5 billion) quarter ago under the International Financial Reporting Standard (IFRS).
“We focused on strong execution in Q2 with our core IT services business showing good progress on the strength of our innovation and operational initiatives,” recalled Sikka.
Operating margins expanded 80 basis points sequentially to 24.9 per cent in dollar and rupee value, while volume growth was 4 per cent during the quarter.
“Our margins expanded during the quarter on the back of further improvement in operational efficiencies, said Chief Financial Officer M.D. Ranganath.
Operating profit grew in second quarter 7.9 per cent YoY and 6.5 per cent sequentially in rupee terms to Rs 4,309 crore. In dollar terms, it grew 5.6 per cent YoY and 7 per cent sequentially to $644 million.
“While we continue to navigate an uncertain external environment, we remain focused on executing our strategy and increasing momentum of our software plus services model,” asserted Sikka.
The company had 78 clients during the quarter as against 95 quarter ago and 82 year ago, taking the total number of active clients to 1,136 by second quarter as against 1,126 in first quarter and 1,011 in like quarter year ago.
“Longer-term, I believe it’s increasingly clear that our industry’s future lies in evolving from a cost-based, people-only model, to one in which people are amplified by software and AI (artificial intelligence), and are freed to innovate in areas that are strategic to our clients’ future,” added Sikka.
Liquid assets, including cash and investments, were Rs 35,640 crore ($5.4 billion) at the end of the quarter as against Rs 33,212 crore ($4.9 billion) quarter ago and Rs 32,099 crore ($4.8 billion) year ago.
“Operating cash flows for the quarter were healthy and we effectively navigated a volatile currency environment through prudent hedging,” noted Ranganath.
Although the company and its subsidiaries hired 12,717 people during the quarter, net addition was 2,779, as 9,938 techies left, taking the total number of employees to 1,99,829 as against 1,97,050 quarter ago and 1,87,976 year ago.
“The changes we made to employee engagement, policies and rewarding high performers continue to help retain our high quality workforce,” pointed out Chief Operating Officer U.B. Pravin Rao.