Infosys

Infosys Q3 Results were just announced. Here are the highlights:

1. Revenues were $ 2,407 million for the quarter (Analysts were expecting $ 2,370 million); QoQ growth was 0.6% in USD; 1.1% in constant currency terms; YoY growth was 8.5% in USD; 12.5% in constant currency terms
2. Net profit was $ 524 million for the quarter; QoQ growth was 0.9%; YoY growth was 0.4%
3. Earnings per share (EPS) was $ 0.23 for the quarter on par with analyst expectations
4. FY 16 revenue guidance increased to 12.8%-13.2% in constant currency and 8.9%-9.3% in USD terms
5. Volume growth at 3.1% quarter on quarter
6. Attrition declined to 13.4% on standalone basis (TCS’ attrition was north of 15%)
7. Continued adoption of Aikido offerings, and increased traction for other platforms – Panaya, Skava, Edge, Infosys Information Platform and Infosys Automation Platform.
8. Completed the acquisition of Noah Consulting, and investment in startups – WHOOP and CloudEndure
9. Investments in OpenAI, a non-profit Artificial Intelligence organization
10. Clients mentioned – ALSTOM, Mitsubishi Aircraft Corporation, Japan (MITAC), Mercedes Benz Research and Development Center, India, TNT, ATP, Proximus, BNSF Railway, & Aimia
11. The CEO mentioned having won 4 large deals worth $360 mn; and pursuit of a $600 mn order

USD revenues and profitability to be impacted due to currency movements as currencies have depreciated against the dollar

Chennai floods will have an impact on all companies, especially HCL, Cognizant, Wipro and TCS

All companies likely to tout their “Digital revenues” (Infosys’ Aikido, Wipro’s Holmes, TCS’ Ignio & Digitate)

Industry-specific (energy/ oil) and client-specific reasons for revenue decline likely

Higher cost of visas may impact future profitability

Macro-economic weakness

Focus on acquisitions to augment revenue deficit and/or augment “Digital” capability (Wipro’s Viteos and Designit acquisitions, TCS’s slated acquisition of Perot Systems, and Infosys’ Panaya acquisition)

I will be watching the TCS Q3 results today, and the rest as they are announced, and will post my thoughts over the next few weeks.

Infosys Ltd. expects growth to bounce back from last quarter’s disappointing showing but warned that the IT services industry will take a short-term hit from Britain’s decision to depart the European Union.