Infosys Q3 profit up 7% at Rs 3,708 crore, lowers revenue guidance again

Bengaluru: Infosys Ltd, India's second biggest software services company, on Friday reported a better- than-expected 7 per cent rise in the third quarter profit even as it slightly lowered the revenue guidance for the entire fiscal.

At Rs 3,708 crore, net profit for the October-December period was 7 percent higher than Rs 3,465 crore recorded in the corresponding quarter of the last fiscal.

Sequentially, the profit was up 2.8 per cent.

Revenue in rupees declined 0.2 per cent to Rs 17,273 crore, while in dollar terms it slipped 1.4 percent to USD 2.53 billion - the first fall seven quarters - due to RBS deal cancellation and seasonal weakness. Dollar revenue growth in constant currency was down 0.3 per cent quarter-on-quarter.

Infosys revised its full year revenue guidance to 8.4-8.8 percent from 8-9 percent in constant currency terms. This translates into a revenue guidance to 7.2-7.6 percent in dollar terms based on December 31 rates.

This is the third time that the company has revised its revenue guidance.

Infosys added 77 clients during the three months to December, including two clients in the USD 75 million-plus revenue category.

"Beyond the quarterly numbers, we continue to focus sharply on the execution of strategy, as reflected in the growing embrace of AI-based automation, growth in new software -led business, delivering innovation, both incremental and breakthrough and fostering a learning-led culture," said Vishal Sikka, CEO and MD.

He said manufacturing was weak due to lower billing days, which would bounce back in the fourth quarter, while retail continued to be volatile and energy was relatively soft. He expects most sectors to bounce back next year barring energy.

While the company crossed USD 10 billion revenue mark in 2016, Sikka said it is working to achieve USD 20 billion revenue and 30 per cent margin levels by 2020.

"We had a good performance in Q3 considering that when we were entering Q3, we were facing the traditional seasonal headwinds from less number of working days and furloughs as well as the one-time impact that we had from RBS... We improved our margin performance... As we enter Q4, we are optimistic about Q4," he told a news conference here.

Traditionally, the third quarter of the fiscal is weak for the Indian IT companies on account of fewer working days and holidays in two of its largest markets, the US and Europe.

"Overall, I am happy with the performance in the first nine months of the year," Sikka said.

While the company has crossed the USD 10 billion revenue mark in 2016, its aspirational goal of USD 20 billion revenue by 2020 still looks a little distant.

Sikka, however, said: "The USD 10 billion mark is a huge emotional, psychological milestone for us. And yes of course, our aspiration continues to be USD 20 billion, 30 per cent margin and USD 80,000 Rev per employee and that is something that we are absolutely working hard towards."

Asked if the goal was achievable, he quipped: "What good is an aspirational goal if it is not aspirational".

Infosys COO U B Pravin Rao said the company's utilisation has remained healthy in a seasonally soft quarter.

"Our continued efforts to improve employee engagement and experience resulted in a reduction in attrition. During the quarter, we added 77 clients and also added 2 clients in the USD 75 million-plus revenue category," he added.

Besides, Infosys has appointed Ravikumar S as Deputy Chief Operating Officer, who will report to Rao with immediate effect.

In addition to his current responsibility of heading the global delivery organisation, Ravikumar will oversee certain strategic business enabling functions and will be based in India, it said.

In dollar terms, Infosys posted a 4.4 per cent jump in net profit to USD 547 million, while revenue was up 6 per cent to USD 2.5 billion in the third quarter.

During the quarter, the company paid interim dividend including tax of Rs 3,029 crore.

Infosys' total headcount at the end of December quarter stood at over 1.99 lakh, down marginally from the September quarter.

Its liquid assets including cash and cash equivalents, available-for-sale financial assets and government bonds were at Rs 35,697 crore as on December 31, 2016 as compared to Rs 35,640 crore as on September 30, 2016.