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Infosys Limited (NYSE: INFY).

Results for the Third Quarter ended December 31, 2018


10.1% CC YoY Revenue Growth in Q3 Leads to Upward Revision in Guidance

Infosys (NYSE: INFY) announces results for the Quarter ended December 31, 2018 Bengaluru, India -- January 11, 2019 "With increased client relevance, we saw double digit (10.1%) year-on-year growth in Q3 on a constant currency basis", said Salil Parekh, CEO and MD. "We also had another strong quarter in our digital business with 33.1% growth and large deals at $1.57 billion which gives us confidence entering 2019", he added.

* Q3 19 revenues grew year-on-year by 20.3% in INR terms; 10.1% in constant currency terms

* Q3 19 revenues grew sequentially by 3.8% in INR terms; 2.7% in constant currency terms

* Digital revenues at $942 million (31.5% of total revenues), year-on-year growth of 33.1% and sequential growth of 5.0% in constant currency terms

* 9 months revenues grew by 16.6% in INR terms; 8.1% in constant currency terms

* FY 19 revenue guidance in constant currency revised upward to 8.5%-9.0%; Operating margin guidance retained at 22%-24%

* Announces buyback under open market route of '8,260 crore at a Maximum price of '800 per share

* Announces a special dividend of '4 per share

1. Financial Highlights- Consolidated results under International Financial Reporting Standards (IFRS)

For the Quarter ended December 31, 2018

Revenues were '21,400 crore, growth of 20.3% YoY and 3.8% QoQ

Operating profit was '4,830 crore, growth of 11.8% YoY and decline of 1.3% QoQ#

Basic EPS was '8.30, decline of 26.4% YoY#@ and 12.2% QoQ#

For nine months ended December 31, 2018

Revenues were '61,137 crore, growth of 16.6% YoY

Operating profit was '14,261 crore, growth of 12.5% YoY

Basic EPS was '26.06, decline of 3.6% YoY##@

"Volume growth was strong and revenue productivity was stable despite Q3 being a seasonally weak quarter. We had good growth across geographies and large business segments", said Pravin Rao, COO. "Attrition declined during the quarter and we are continuing on the path of increased interventions and employee engagements to reduce it further."

"We saw significant currency volatility during the quarter and managed it effectively by our hedging strategy", said Jayesh Sanghrajka, Interim CFO. "Cash generation was strong during the quarter. Executing on the capital allocation strategy announced in April 2018, we have announced a share buyback program and a special dividend."

2. Capital Allocation Policy

The Board in its meeting held today approved the following:

* Buyback of Equity Shares, from the open market route through the Indian stock exchanges, amounting to [INR]8,260 crore (Maximum Buyback Size) (approximately $1,184 million) at a price not exceeding [INR]800 per share (Maximum Buyback Price) (approximately $11.46 per share), subject to shareholders' approval by way of Postal Ballot, and

* A Special Dividend of [INR]4/- per share (approximately $0.06 per share) that would result in a payout of approximately [INR]2,107 crore (approximately $302 million) (including dividend distribution tax)

After the execution of the above, along with the special dividend (including dividend distribution tax) of [INR]2,633 crore ($386 million) already paid in June 2018, the Company would complete the distribution of [INR]13,000 crore, which was announced as part of its capital allocation policy in April 2018.

As the USD/INR* exchange rates have moved from April 2018 when the capital allocation policy was announced, the total capital allocation in US$ terms amounts to $1,872 million (comprising $1,184 million pertaining to buyback as mentioned above, $386 million towards special dividend paid in June 2018 and $302 million towards special dividend to be paid to shareholders in January 2019).

3. Assets Held for Sale

The company had earlier classified its subsidiaries Kallidus & Skava (together referred to as "Skava") and Panaya as "Held for Sale". During the quarter ended December 31, 2018, based on evaluation of proposals received and progress of negotiations with potential buyers, the Company concluded that it is no longer highly probable that sale would be consummated by March 31, 2019. Accordingly, Panaya and Skava have been de-classified from "held for sale" in accordance with the requirements of IFRS 5.

On de-classification, the Company recognized additional depreciation and amortization expenses of '88 crore and a reduction of '451 crore in the carrying value for Skava. The impact of the same on the Basic Earnings Per Share was a decrease of '1.24 for the quarter ended December 31, 2018. The Company plans to repurpose Skava's micro services based business and refocus Panaya's suite of products.

4. Board Update

Based on the recommendation of the Nomination and Remuneration Committee, the Board approved the reappointment of Kiran Mazumdar-Shaw as the Lead Independent Director from April 1, 2019 to March 22, 2023, subject to shareholder' approval

"I am delighted that the Infosys Board of Directors has unanimously recommended Kiran MazumdarShaw for reappointment as the Lead Independent Director.", said Nandan Nilekani, Chairman of the Board. "Kiran has been a pillar of strength to the board, especially over the last eighteen months as we steered the company to stability and growth. As chair of the Nominations & Remuneration Committee, she played a critical role in the CEO and CFO selection process. Her continuity, experience and insights are greatly valued by the Board as it guides the company in executing its strategy in the coming years", he added.

About Infosys

Infosys is a global leader in next-generation digital services and consulting. We enable clients in 45 countries to navigate their digital transformation. 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 Al-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.
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Title Annotation:Leading Companies
Publication:India IT
Date:Apr 25, 2019
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