Earnings Review and Free Research Report: Infosys Outperformed Revenue and Earnings Expectations
LONDON, UK / ACCESSWIRE / July 18, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Infosys Ltd (NYSE: INFY), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=INFY, following the Company's announcement of its first quarter fiscal 2018 earnings results on July 14, 2017. India's No. 2 software services exporter reported its best ever utilization number, while revenue per employee grew for the sixth consecutive quarter. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Earnings Reviewed
For the quarter ended June 30, 2017, Infosys reported revenues of $2.65 billion for the quarter ended June 30, 2017, compared to revenue of $2.50 billion in Q1 FY17, reflecting y-o-y growth of 6.0% in reported terms and 6.3% in constant currency terms. The Company's revenue number topped analysts' estimates for revenue of $2.63 billion.
During Q1 FY18, 8.3% of Infosys' revenue was generated from new services in the cloud first, AI first digital experience service area, while 1.6% of its revenues came from new software that started since April 01, 2015, comprising of Edge, Nia, Infosys' next-generation Artificial Intelligence platform, Panaya, and Skava.
During Q1 FY18, Infosys' gross margins totaled 36.2%, 0.1% lower on a y-o-y basis and 1% lower on a q-o-q basis. The Company's operating profit was $638 million for the quarter ended June 30, 2017, reflecting q-o-q growth of 0.7% and y-o-y growth of 6.0%. Infosys' operating margin for Q1 FY18 was 24.1%, unchanged on a y-o-y basis, while it declined 60 basis points on a sequential basis. The Company stated that appreciation in rupee during the reported quarter impacted the margins negatively by 80 basis points, which was partly offset by 20 basis points of cross currency movement benefit.
Infosys reported a net profit of $541 million, or $0.24 per share, in Q1 FY18 compared to net income of $511 million, or $0.22 per share, in Q1 FY17. The earnings results exceeded Wall Street's expectations of $0.23 per share.
Key Metrics
During Q1 FY18, Infosys' utilization excluding trainees increased to 84%, which is the highest level in 15 years compared to 80.5% in Q1 FY17, and including trainees' utilization was 80.2%, which is the highest level ever. Similarly, the Company's total employee cost as a percentage of revenue reduced to 54.6% in the reported quarter from 55% in the prior year's same quarter.
Infosys' on-site volumes grew 2% and offshore volumes grew 1.5% on a q-o-q basis. The Company's pricing realization improved by 1.8% in reported terms and 1.3% in constant currency terms sequentially, while on a y-o-y basis, pricing realization decreased by 0.5% in reported terms and 0.2% in constant currency terms.
During Q1 FY18, Infosys' headcount decreased 1,811 from the previous quarter. The Company's net headcount addition was 3,006 in Q1 FY17. On a y-o-y basis, Infosys' basis, headcount grew at the group level by 0.8%, while the revenue grew by 6.3% in constant currency and 6.0% in reported terms, reflecting an increase in revenue per employee to $51,921.
In Q1 FY18, Infosys' attrition was up 16.9% on a standalone basis compared to 15.8% in Q1 FY17 and 13.5% in Q4 FY16. The Company stated that the difference was owing to Q1 seasonality when employees leave to pursue higher studies.
Cash Matters
During Q1 FY18, Infosys' cash provided within operating activities as per consolidated IFRS was $644 million compared to $547 million in Q4 FY17. The Company's free cash flow increased to $558 million. CapEx for the reported quarter was $86 million, representing a reduction of $14 million on a q-o-q basis. Infosys' Yield on cash for Q1 FY18 was 7.07% compared to 7.12% in Q4 FY17.
Infosys noted that due to strong cash generation, cash and cash equivalents including investments stood at a record high of $6.09 billion, an increase of $112 million, compared to $5,979 million as on March 31, 2017, despite large outflow of $522 million on account of dividend during the quarter. The Company's operating cash as a percentage of net profit remained over 100% for the fourth quarter in a row.
Outlook
For FY18, Infosys reiterated its constant currency revenue guidance at 6.5% to 8.5%. The Company expects FY18 operating margins in the range of 23% to 25%.
Stock Performance
Infosys' share price finished yesterday's trading session at $15.64, slightly down 0.19%. A total volume of 7.26 million shares has exchanged hands, which was higher than the 3-month average volume of 6.04 million shares. The Company's stock price advanced 3.78% in the last one month, 7.64% in the past three months, and 7.86% in the previous six months. Additionally, the stock gained 5.46% since the start of the year. Shares of the Company have a PE ratio of 16.06 and have a dividend yield of 2.94%. The stock currently has a market cap of $34.58 billion.
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