Infosys Q3 profit increases 12%, raises revenue guidance again

Infosys Ltd on Wednesday reported an increase of 12% in consolidated net profit for the third quarter while revenue jumped at nearly double the pace.

India’s second-largest software services exporter posted a net profit of Rs 5,809 crore for the quarter ended Sept. 30, 2021, up from Rs 5,197 crore in the same period a year earlier.

Consolidated revenue surged 23% Rs 31,867 crore from Rs 25,927 crore a year earlier.

In constant currency, Infosys reported a 21.5% year-on-year growth in third-quarter revenue, though the figure was up only 7% as compared with the previous quarter.

For the nine months ended Dec. 31, Infosys clocked a 19.3% year-on-year revenue growth, even as operating margins at 23.6% were lower by one percentage points from a year earlier. 

Infosys said that, during the three months ended December 2021, it inked large deals with a total cumulative value of $2.53 billion (more than Rs 18,700 crore at current exchange rate).

Infosys had a disappointing quarter if looked at from the point of view of the free cash flow it generated, as the figure for the three months ended December 31 came in at $719 million. This was 69% lower from a year earlier. 

The company also raised its revenue guidance for the second time in a row. It now expects revenue for FY22 to increase 19.5%-20.0%, powered by sequential growth of 7% in Q3. It had previously raised the guidance from 14-16% to 16.5-17.5%.

Other key details:

1) Digital revenue at 58.5% of total revenue, year-on-year growth of 42.6% at constant currency.

2) Basic earnings per share at $0.18, growth of 11.2% year-on-year.

3) Attrition rate rose sharply to 25.5% in Q3 from 20.1% during Q2 and 11% a year earlier.

4) Reported revenue in dollar terms came in at $4,250 million, representing a growth of 20.9% year-on-year.

Management Commentary:

The company said growth remained broad-based during the quarter and deal momentum was robust, with digital transformation rapidly scaling across verticals and regions. “Our talent strategy continued to be a key focus area marked by efforts to further strengthen employee skilling and well-being while nurturing our workforce to fulfil client requirements,” the company said, while commenting on its staffing strategy. 

Infosys CEO and managing director Salil Parekh said the strong performance and market share gains are a testament to the enormous confidence its clients have in the company to help them in their digital transformation.

“This stems from four years of sustained strategic focus on areas of relevance for our clients in digital and cloud, continued re-skilling of our people, and deep relationships of trust that our clients have with us. This is reflected in an upgrade in our revenue guidance to 19.5%-20.0% for FY22,” he said.

Parekh said Infosys expects the healthy technology spend to continue with large enterprises progressing on their digital transformations.

Nilanjan Roy, CFO of Infosys, said: “Despite the cost escalations driven primarily by supply side challenges, we delivered another quarter of healthy margins, with improved cost optimization, continued operating leverage and a stable pricing environment.”

“We continue to prioritize investments in talent acquisition and development and have further increased our global graduate hiring program to over 55,000 for FY22 to support our growth ambitions,” he added.

Also read: Wipro Q3 net profit flat but revenue jumps almost 30%