Infosys: Strong growth of 13.7% in constant currency in a seasonally weak quarter

Strongest large deal wins in the last 8 quarters at $3.3 billion

Revenue guidance for FY23 revised to 16.0%-16.5%

Infosys (NSE: INFY) (BSE: INFY) (NYSE: INFY), a global leader in next-generation digital services and consulting, reported strong Q3 performance with year-on-year growth at 13.7% and sequential growth at 2.4% in constant currency. Year on year growth was in double digits for most business segments and geographical regions in constant currency terms. Large deal TCV for the quarter was the strongest in the last 8 quarters at $3.3 billion. Digital comprised 62.9% of overall revenues and grew at 21.7% in constant currency. Operating margin for the quarter remained resilient at 21.5%. FY23 revenue guidance revised to 16.0%-16.5%. FY23 operating margin guidance retained at 21%-22%.

“Our revenue growth was strong in the quarter, with both digital business and core services growing. This is a clear reflection of our deep client relevance, industry-leading digital, cloud, and automation capabilities, and the unrelenting dedication of our employees”, said Salil Parekh, CEO and MD. “As reflected in the large deals momentum, we continue to gain market share as a trusted transformation and operational partner for our clients. Our end-to-end capabilities and global scale make us a preferred choice as clients look at consolidating vendors. We remain focused on helping businesses accelerate their digital agenda to uncover new value and growth, as well as improve operational and cost effectiveness”, he added.

21.7% YoY 13.7% YoY
2.4% QoQ 21.5 % 13.4% YoY $3.3 bn
CC Digital growth CC Revenue growth Operating margin Increase in EPS
(INR terms) Large deal TCV
1. Key highlights:

For the quarter ended December 31, 2022 For nine months ended December 31, 2022
Revenues in CC terms grew by 13.7% YoY and 2.4% QoQReported revenues at $4,659 million, growth of 9.6% YoY Digital revenues at 62.9% of total revenues, YoY CC growth of 21.7%Operating margin at 21.5%, decline of 2.0% YoY and stable QoQ Basic EPS at $0.19, growth of 3.3% YoY FCF at $576 million, decline of 19.9% YoY;
FCF conversion at 72.0% of net profit Revenues in CC terms grew by 17.8% YoY Reported revenues at $13,657 million, growth of 13.5% YoY Digital revenues at 61.9% of total revenues, YoY CC growth of 29.5% Operating margin at 21.0%, decline of 2.6% YoY Basic EPS at $0.53, growth of 1.7% YoY FCF at $1,821 million, decline of 20.6% YoY;
FCF conversion at 81.4% of net profit
“Operating margins in Q3 remained resilient due to cost optimization benefits which offset the impact of seasonal weakness in operating parameters”, said Nilanjan Roy, Chief Financial Officer. “Attrition reduced meaningfully during the quarter and is expected to decline further in the near-term,” he added.

2. Capital Allocation

Pursuant to the Board recommendation and subsequent to shareholders’ approval through postal ballot, the company has started share buyback program through open market route from December 7, 2022 and till date, has bought back 31.3 million shares worth ?4,790 crore (app. $0.6 billion*) or 51.5% of total authorization of ?9,300 crore at an average price of approx. ?1,531 per share (compared to maximum Buyback Price of ?1,850 per share).

*USD-INR rate of 82.00

3. Client wins & Testimonials

Centric Brands has selected Infosys to be a strategic technology partner to provide a range of digital, IT, business operations and transformation services. Infosys will leverage its cognitive first IT framework along with its industry leading digital, cognitive AI, cloud and retail industry solution accelerators to improve and transform the technology landscape. Anurup Pruthi, Global CFO, Centric Brands, said, “By partnering with Infosys, we will be able to standardize our internal processes, bring in the best practices and tools, and strengthen the skills needed for continued success in the Retail B2B marketplace.”
Infosys helped develop a cloud-based platform to digitize and automate manual processes at Envision AESC, a world-leading battery technology company’s Electric Vehicle (EV) battery manufacturing plants. “At Envision AESC, we believe that advancements in battery technology will propel the EV revolution to newer heights. The manufacturing processes of our breakthrough batteries need a robust digital foundation to accelerate the speed and scale of innovation. We are confident that Infosys, with their trusted cloud technologies and deep expertise in the automotive industry, will help us continue on our journey towards achieving our transformation goals,” said, Brian Sullivan, Executive Vice President of Global Manufacturing and Supply Chain at Envision AESC.
Infosys and Microsoft modernized Spark New Zealand’s corporate functions to enhance business resilience, operational simplicity, workplace agility, and customer experience. Mark Beder, Chief Operating Officer, Spark, said, “As we embarked on a journey to revamp our business operations and step out of our legacy systems, we were looking for partners that understand and provide strength to our vision for an ERP-driven business transformation. It has been great working with Infosys and Microsoft as our transformation partners. The level of ERP implementation expertise and scale they bring to the table in this endeavor underpinned by best-fit digital solutions and resources is helping us to unshackle legacy system constraints and will help us improve operational simplicity, workplace agility and customer experience.”
Infosys collaborated with CIRCOR, one of the world’s leading providers of mission critical flow control products and services for the Industrial, Aerospace & Defense markets, to help transform its IT landscape and modernize its IT infrastructure. Pete Sattler, Chief Information Officer, CIRCOR, said, “The goal of our alliance with Infosys is to offer all our customers – both internal and external – faster and more reliable service, enhance our cybersecurity, and provide 24×7 monitoring for our global IT environment.”
Avon, part of Natura Group, entered a five-year strategic collaboration with Infosys to advance its digital transformation journey, implement cognitive operations, drive continuous innovation, and help in better serving its customers. Karen McElhatton, CIO, Avon, said, “Through this collaboration, Infosys will accelerate the realization of our Digital vision, through a well-planned transformation roadmap to reduce opex spends, increase resilience and reliability of our application landscape, and prepare us better for new digital capabilities. We are confident that Infosys, with its sound expertise in Infrastructure Management Services, Cybersecurity, and Application Services, will enable us to continue to provide cutting-edge services to our members and customers.”
Conagra has entered into a five-year strategic partnership with Infosys to innovate its IT operations. Conagra and Infosys will be implementing product based cognitive-first delivery model, with focus on improving operational excellence, drive continuous innovation, and most importantly improve the quality of service for Conagra’s customers. Andy Xydakis, CTO, Conagra, said, “We wanted to change the way we run our IT operations. Delivering in true agile fashion where teams focus on value delivery. Our partnership with Infosys will help achieve the vision, given their deep Industry knowledge and ability to align this new way of working to support our overarching business strategy. Through this collaboration, Infosys will help accelerate the adoption of our product based continuous delivery operating model, by creating capacity to deliver features, increase resiliency and reliability of our infrastructure and application landscape, thereby helping Conagra advance new digital capabilities.”
4. Recognitions

Infosys received the Great Place to Work(R) Certification across five regions including India, Australia, United Kingdom, Germany, and Mexico. Infosys BPM received the Great Place to Work(R) Certification in Philippines
Infosys recognized as the Champion of Inclusion in the Most Inclusive Companies Index (MICI) and featured in the “100 Best – Hall of Fame” by Avtar & Seramount, 2022
Infosys secured a place in CDP’s annual ‘A List’ for its leadership in corporate transparency and performance on climate change
Infosys rated as “Most Noteworthy” Company by DiversityInc, USA
Infosys recognized as a constituent of the Dow Jones Sustainability World Index for 2022
Infosys InStep Ranked as the ‘Best Internship Program’ in the 2023 Vault Internship Rankings
Infosys won the 2022 Marketing Excellence Gold Award from Information Technology Services Marketing Association (ITSMA) for Infosys Cobalt
Infosys, along with client Lanxess recognized as a winner in the “Workplace of the Future” category in 2022 ISG Paragon Awards(TM) EMEA
Infosys positioned as a leader in Gartner Magic Quadrant for IT Services for Communications Service Providers, Worldwide
Infosys recognized as a leader in Forrester Wave(TM): Cloud Migration and Managed Service Partners in Asia Pacific, Q4 2022
Infosys positioned as a leader in IDC MarketScape: Asia/Pacific Salesforce Implementation Services 2022 Vendor Assessment
Infosys recognized as a leader in Software Product Engineering Services PEAK Matrix(R) Assessment 2023 by Everest
Infosys recognized as a leader in System Integration (SI) Capabilities on Google Cloud Platform (GCP) PEAK Matrix(R) Assessment 2022 by Everest
Infosys recognized as a leader in HFS Horizons: Cloud Native Transformation, 2022
Infosys ranked as a leader in Next-Gen ADM Services 2022 ISG Provider lens(TM) study in US
Infosys positioned as a leader in IDC Worldwide Manufacturing Service Life-Cycle Management Strategic Consulting 2022
Infosys recognized as a leader in Workplace Communication and Collaboration (WCC) Services PEAK Matrix(R) Assessment 2023 by Everest
Infosys positioned as a leader in IDC MarketScape: EMEA Industrial Internet of Things Service Providers for Oil and Gas Companies 2022 Vendor Assessment
Infosys recognized as a leader in Application and Digital Services (ADS) in Property & Casualty (P&C) Insurance PEAK Matrix(R) Assessment 2023 by Everest
Infosys recognized as a leader in Risk & Compliance in BFS IT Services PEAK Matrix(R) Assessment 2023 by Everest
Infosys positioned as a leader in Avasant’s Utilities Digital Services 2022-2023 RadarViewTM
Infosys positioned as a leader in Avasant’s Manufacturing Digital Services 2022-2023 RadarViewTM
Infosys Finacle positioned as a Leader in The Everest Group PEAK Matrix(R) for Wealth Management Products Provider 2023 report
Infosys BPM ranked as Leader and Star Performer in Everest Group’s Finance and Accounting Outsourcing (FAO) PEAK Matrix(R) Assessment 2022
About Infosys

Infosys is a global leader in next-generation digital services and consulting. Over 300,000 of our people work to amplify human potential and create the next opportunity for people, businesses and communities. With over four decades of experience in managing the systems and workings of global enterprises, we expertly steer clients, in more than 50 countries, as they navigate their digital transformation powered by the cloud. We enable them with an AI-powered core, empower the business with agile digital at scale and drive continuous improvement with always-on learning through the transfer of digital skills, expertise, and ideas from our innovation ecosystem. We are deeply committed to being a well-governed, environmentally sustainable organization where diverse talent thrives in an inclusive workplace.

Visit www.infosys.com to see how Infosys (NSE, BSE, NYSE: INFY) can help your enterprise navigate your next.

Safe Harbor

This Release contains ‘forward-looking statements’ within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance and that are based on our current expectations, assumptions, estimates and projections about the Company, our industry, economic conditions in the markets in which we operate, and certain other matters. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as ‘may’, ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘continue’, ‘intend’, ‘will’, ‘project’, ‘seek’, ‘could’, ‘would’, ‘should’ and similar expressions. Those statements include, among other things, statements regarding our business strategy, our expectations concerning our market position, future operations, growth, margins, profitability, attrition, liquidity, and capital resources, our ESG vision, our capital allocation policy, the effects of COVID-19 on global economic conditions and our business and operations, wage increases, change in the regulations including immigration regulation and policies in the United States, and corporate actions including timely completion of the proposed buy-back of our equity shares. These statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results or outcomes to differ materially from those implied by the forward-looking statements. 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, 2022. These filings are available at 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
Extracted from the Condensed Consolidated Balance Sheet under IFRS as at: (Dollars in millions)
December 31, 2022 March 31, 2022
ASSETS
Current assets
Cash and cash equivalents 1,401 2,305
Current investments 1,055 880
Trade receivables 3,343 2,995
Unbilled revenue 1,588 1,526
Other Current assets 1,366 1,159
Total current assets 8,753 8,865
Non-current assets
Property, plant and equipment and Right-of-use assets 2,405 2,429
Goodwill and other Intangible assets 1,098 1,042
Non-current investments 1,497 1,801
Unbilled revenue 206 124
Other non-current assets 1,267 1,294
Total non-current assets 6,473 6,690
Total assets 15,226 15,555
LIABILITIES AND EQUITY
Current liabilities
Trade payables 579 545
Unearned revenue 861 834
Employee benefit obligations 290 288
Other current liabilities and provisions 3,251 2,766
Total current liabilities 4,981 4,433
Non-current liabilities
Lease liabilities 795 607
Other non-current liabilities 424 521
Total non-current liabilities 1,219 1,128
Total liabilities 6,200 5,561
Total equity attributable to equity holders of the company 8,975 9,941
Non-controlling interests 51 53
Total equity 9,026 9,994
Total liabilities and equity 15,226 15,555
Extracted from the Condensed Consolidated statement of Comprehensive Income under IFRS for:
(Dollars in millions except per equity share data)
3 months ended
December 31,
2022 3 months ended
December 31,
2021 9 months ended
December 31,
2022 9 months ended
December 31,
2021
Revenues 4,659 4,250 13,657 12,031
Cost of sales 3,230 2,856 9,544 8,041
Gross profit 1,429 1,394 4,113 3,990
Operating expenses:
Selling and marketing expenses 196 177 574 513
Administrative expenses 232 219 671 642
Total operating expenses 428 396 1,245 1,155
Operating profit 1,001 998 2,868 2,835
Other income, net (3) 84 61 229 203
Profit before income taxes 1,085 1,059 3,097 3,038
Income tax expense 285 283 859 823
Net profit (before minority interest) 800 776 2,238 2,215
Net profit (after minority interest) 800 774 2,237 2,211
Basic EPS ($) 0.19 0.18 0.53 0.52
Diluted EPS ($) 0.19 0.18 0.53 0.52
NOTES :

The above information is extracted from the audited condensed consolidated Balance sheet and Statement of Comprehensive Income for the quarter and nine months ended December 31, 2022, which have been taken on record at the Board meeting held on January 12, 2023.
A Fact Sheet providing the operating metrics of the Company can be downloaded from www.infosys.com .
Other income is net of Finance Cost .
The quarter figures added up to the figures reported in previous quarters might not always add up to the nine months ended figures reported in this statement as all figures are taken from the source and rounded off to the nearest digits.
IFRS-INR Press Release: https://www.infosys.com/investors/reports-filings/quarterly-results/2022-2023/q3/documents/ifrs-inr-press-release.pdf

Fact sheet:https://www.infosys.com/investors/reports-filings/quarterly-results/2022-2023/q3/documents/fact-sheet.pdf

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