Infosys: Accelerated Double Digit Growth of 12.4%; Highest Ever Large Deal TCV at $ 2.7 Bn


BENGALURU, India, July 12, 2019 /PRNewswire/ — “We had a strong start to FY 20 with constant currency growth accelerating to 12.4% on year over year basis and digital revenue growth of 41.9%. This was achieved through our consistent client focus and investments which have strengthened our client relationships,” said Salil Parekh, CEO and MD. “Consequently, we are raising our revenue guidance for the year from 7.5%-9.5% to 8.5%-10%.”

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41.9%
YoY 12.4% YoY 2.8% QoQ 20.50%

$2.7 bn

Digital
CC
growth
CC growth
CC growth
Operating margin Large deal signings

— Q1 20 revenues grew year-on-year by 10.6% in USD; 12.4% in constant
currency
— Q1 20 revenues grew sequentially by 2.3% in USD; 2.8% in constant
currency
— Q1 20 Digital revenues at $1,119 million (35.7% of total revenues),
year-on-year growth of 41.9% and sequential growth of 8.6% in constant
currency
— Increased FY 20 revenue growth guidance range to 8.5%-10% in constant
currency
— Maintained FY 20 operating margin guidance range of 21%-23%
1. Financial Highlights – Consolidated results under International Financial Reporting Standards (IFRS)

Revenues were $3,131 million, growth of 10.6% YoY and 2.3% QoQ

Operating profit was $642 million, decline of 4.2% YoY and 2.3% QoQ. Operating margin was 20.5%.

“We had a good quarter as we continue to leverage our digital navigation framework to help our clients build and nurture their live enterprise,” said Pravin Rao, COO. “Large deal TCV was highest ever at $2.7 bn. Segment growth was robust with all large regions and most verticals growing at double digits yoy in constant currency.”

“Our first quarter results and continued focus on operational efficiencies gives us the confidence on our revenue and margin guidance for the year,” said Nilanjan Roy, CFO. “Continuing our objective of improving shareholder returns, we have revised our capital allocation policy upwards to distribute ~ 85% of free cash flows cumulatively over a 5-year period.”

2. Capital Allocation

— The Company is on track towards completing its previously announced
share buyback of INR 8,260 crore. The company has till date bought back
shares worth `INR 5,934 crore.
— The Company’s current policy is to pay up to 70% of the free cash flow
annually by way of dividend and/or buyback. The Board has reviewed and
approved a revised Capital Allocation Policy of the Company after taking
into consideration the strategic and operational cash
requirements.”Effective from Financial year 2020, the company expects to
return approximately 85% of the free cash flow cumulatively over a
5-year period through a combination of semi-annual dividends and/or
share buyback and/or special dividends, subject to applicable laws and
requisite approvals, if any.”Free cash flow is defined as net cash
provided by operating activities less capital expenditure as per the
consolidated statement of cash flows prepared under IFRS Dividend and
buyback include applicable taxes
3. Client wins & Testimonials

— We were selected by Finnish postal service Posti as a strategic partner
for the digital transformation of its business and IT services to drive
the modernization of its IT applications and infrastructure, helping it
move to a flexible IT service model. This will also strengthen Posti’s
ability to respond to changes in customer needs with agility and provide
a seamless customer user experience through a dedicated command center.
— We entered into long term strategic partnership with Toyota Material
Handling Europe to help in its digital transformation journey by
facilitating transformation to a scalable digital hybrid cloud platform,
providing application services, digital workplace, infrastructure
management and a dedicated data center operation.
— Infosys McCamish, a US based subsidiary of Infosys BPM entered into a
partnership with Pan-American Life Insurance Group (PALIG), a leading
provider of life, accident and health insurance to provide policy
administration services for PALIG’s new Global Assets Indexed Universal
Life product.
— We have partnered with a leading consumer technology company to help
them localize their virtual assistant by training their AI. Infosys is
helping the client to define its overall global strategy for
localization while analyzing data to identify patterns which can train
the AI to respond better to the user command. This will improve their
virtual assistant to provide a better user experience.
— Marc Schmidt, Head of SDD and GIT-ACI, BSH said, “At BSH GmbH, for the
software Development Platform (SDD) which is used for developing
thousands of micro to large scale applications, we wanted to deploy an
auto-scaling Infrastructure on AWS Cloud that can handle millions of
users across the world. Infosys leveraging its Agile and DevOps
methodology and expertise, automated build and deployment which led to
an overall 70% reduction in environment provisioning time, Zero
downtime, 100% improvement in recovery time objectives.”
— One of the world leaders in the manufacturing of connectivity and sensor
products engaged Infosys to transform their delivery of Sales solutions
needed for their globally dispersed sales team, leveraging Salesforce
ecosystem. Infosys over the last 12 months has moved to a Highly Agile
Capability based delivery model and helped in an estimated 40%
improvement in time to market for solutions, shortened release cycles
from once-a-quarter to on-demand releases and improvement in time to
revenue of solutions by upto 25%
Recognitions

— Infosys positioned in HFS Top 10 Healthcare Services 2019
— Recognized as a Leader in NelsonHall’s SAP HANA and S/4HANA services
report
— Recognized as a Leader in the Enterprise Platform IT Services in BFS
PEAK Matrix(TM) Assessment 2019
— Recognized in the HFS Top 10: Managed Security Services (MSS)
— Recognized in the HFS Top 10 Google AI Services
— Recognized as a Leader in The Forrester Wave(TM): Global API Strategy
And Delivery Service Providers, Q2 2019
— Recognized as a Leader in the NEAT on Next-Generation Software Testing
Services
— Recognized as a Leader in the IDC MarketScape: Worldwide Microsoft
Implementation Services 2019 Vendor Assessment
— Recognized in the NEAT on IoT in Digital Transformation
— Recognized in the HFS Top 10 Manufacturing Service Providers 2019
— Recognized in the HFS Top 10 Energy Services 2019
— Recognized as a Leader in Gartner Magic Quadrant for Public Cloud
Infrastructure Managed Service Providers
— Awarded the “Most Valuable Partner – Commercial Cloud” Award by Oracle
— Won the Golden Peacock Environment Management Award
— Won the Pega partner excellence award in recognition of innovative
practice development and continued investment in the growth of a strong
delivery practice
— Recognized with the Global Partner of the Year Award for driving
customer success at TIBCO NOW
— Recognized as MuleSoft Americas Growth & Emerging Partner of the Year
2019 by MuleSoft
— Awarded ‘System Integrator Partner of the year 2019 for Hybrid Cloud
Solutions’ by HPE at HPE Discover 2019
About Infosys

Infosys is a global leader in next-generation digital services and consulting. We enable clients to navigate their digital transformation, leveraging our teams from over 45 countries. With over three decades of experience in managing the systems and workings of global enterprises, we expertly steer our clients through their digital journey. We do it by enabling the enterprise with an AI-powered core that helps prioritize the execution of change. We also empower the business with agile digital at scale to deliver unprecedented levels of performance and customer delight. Our always-on learning agenda drives their continuous improvement through building and transferring digital skills, expertise, and ideas from our innovation ecosystem.

Visit www.infosys.com [http://www.infosys.com/] to see how Infosys can help your enterprise navigate your next.

Safe Harbor

Certain statements mentioned in this presentation concerning our future growth prospects are forward-looking statements regarding our future business expectations intended to qualify for the ‘safe harbor’ under the Private Securities Litigation Reform Act of 1995, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. 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, 2019. These filings are available at www.sec.gov [http://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

Audited Condensed Consolidated Balance Sheet as at

(Dollars in millions except equity share data)

June 30, 2019 March 31, 2019

ASSETS

Current assets

Cash and cash equivalents 2,266 2,829

Current investments 778 958

Trade receivables 2,290 2,144

Unbilled revenue 964 777

Prepayments and other current
assets 851 827

Income tax assets 38 61

Derivative financial
instruments 26 48

Total current assets 7,213 7,644

Non-current assets

Property, plant and equipment 1,903 1,931

Right-of-use assets(B3) 540 –

Goodwill 589 512

Intangible assets 207 100

Non-current investments 548 670

Deferred income tax assets 204 199

Income tax assets 917 914

Other non-current assets 296 282

Total non-current assets 5,204 4,608

Total assets 12,417 12,252

LIABILITIES AND EQUITY

Current liabilities

Trade payables 317 239

Lease liabilities(B3) 72 –

Derivative financial
instruments 3 2

Current income tax liabilities 305 227

Client deposits 4 4

Unearned revenue 408 406

Employee benefit obligations 248 234

Provisions 84 83

Other current liabilities 2,022 1,498

Total current liabilities 3,463 2,693

Non-current liabilities

Lease liabilities(B3) 483 –

Deferred income tax liabilities 112 98

Employee benefit obligations 7 6

Other non-current liabilities 115 55

Total liabilities 4,180 2,852

Equity

Share capital- INR 5 ($0.16)
par value 4,800,000,000
(4,800,000,000) equity shares
authorized, issued and
outstanding 4,271,404,014
(4,335,954,462) equity shares
fully paid up, net of
20,094,430 (20,324,982)
treasury shares as at June 30,
2019 (March 31, 2019) 334 339

Share premium 286 277

Retained earnings 9,969 11,248

Cash flow hedge reserve – 3

— —

Other reserves 432 384

Capital redemption reserve 15 10

Other components of equity (2,854) (2,870)

Total equity
attributable to equity holders
of the company 8,182 9,391

Non-controlling interests 55 9

Total equity 8,237 9,400

Total liabilities and equity 12,417 12,252

Infosys Limited and subsidiaries

Audited Condensed Consolidated Statement of Comprehensive Income for the

(Dollars in millions except equity share and per equity share data)

Three months ended June 30, 2019 Three months ended June 30, 2018

Revenues 3,131 2,831

Cost of sales 2,122 1,819

Gross profit 1,009 1,012

Operating expenses

Selling and marketing
expenses 169 149

Administrative expenses 198 193

Total operating expenses 367 342

Operating profit 642 670

Other income, net 106 107

Finance cost(B3) (6) –

Reduction in the fair
value of Disposal Group
held for sale(A1) – (39)

— —

Profit before income
taxes 742 738

Income tax expense 196 204

Net profit 546 534

Other comprehensive income

Items that will not be reclassified subsequently to profit or
loss:

Re-measurements of the
net defined benefit
liability/asset, net (3) –

(3) –

Items that will be reclassified subsequently to profit or loss:

Fair valuation of
investments, net 2 (7)

Fair value changes on
derivatives designated
as cash flow hedge, net (3) 1

Foreign currency
translation 17 (468)

16 (474)

Total other comprehensive
income/(loss), net of
tax 13 (474)

Total comprehensive
income 559 60

Profit attributable to:

Owners of the Company 546 534

Non-controlling
interests –

— —

546 534

Total comprehensive income attributable to:

Owners of the Company 559 60

Non-controlling
interests –

— —

559 60

Earnings per equity share

(A2)

Basic ($) 0.13 0.12

Diluted ($) 0.13 0.12

Weighted average equity shares used in computing earnings per
equity share(

A2)

Basic 4,302,176,860 4,346,657,242

Diluted 4,308,286,160 4,350,710,356

NOTES:

A. Notes pertaining to previous quarters / periods

1. In the three months ended June 30, 2018, the Company had recorded a
reduction in the fair value amounting to $39 million in respect of its
subsidiary Panaya. The subsidiaries Kallidus and Skava (together referred
to as “Skava”) and Panaya, are collectively referred to as the “Disposal
Group”. Subsequently the company reclassified these subsidiaries as they
did not meet the criteria for “Held for Sale”.
2. Share numbers and EPS have been adjusted for September 2018 bonus issue.
B. Notes pertaining to the current quarter

1. The audited interim condensed consolidated Balance sheet and Statement of
Comprehensive Income for the three months ended June 30, 2019 have been
taken on record at the Board meeting held on July 12, 2019.
2. A Fact Sheet providing the operating metrics of the Company can be
downloaded from www.infosys.com [http://www.infosys.com/].
3. On account of adoption of IFRS 16- Leases effective April 1, 2019.
IFRS-INR Press Release: https://www.infosys.com/investors/reports-filings/quarterly-results/2019-2020/q1/Documents/IFRS-INR-press-release.pdf [https://www.infosys.com/investors/reports-filings/quarterly-results/2019-2020/q1/Documents/IFRS-INR-press-release.pdf]

Fact Sheet: https://www.infosys.com/investors/reports-filings/quarterly-results/2019-2020/q1/Documents/fact-sheet.pdf [https://www.infosys.com/investors/reports-filings/quarterly-results/2019-2020/q1/Documents/fact-sheet.pdf]

Logo: https://mma.prnewswire.com/media/633365/Infosys_Logo.jpg [https://mma.prnewswire.com/media/633365/Infosys_Logo.jpg]

CONTACT: Investor Relations: Sandeep Mahindroo, +91-80-3980-1018, Sandeep_Mahindroo@infosys.com Media Relations: Sarah Vanita Gideon, +91-80-4156-3998, Sarah_Gideon@infosys.com Chiku Somaiya, +1-71367-06752, Chiku.Somaiya@infosys.com

Web site: http://www.infosys.com/

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