Infosys revenue outlook up despite flat growth in Q1 (Second Lead)


Infosys, India's second biggest software services company, beat some analysts' expectations after a slightly stronger than expected performance for its fiscal first quarter.

"The driverless vehicle shows we can be at the cutting edge of technologies", he added, stressing that Infosys aims to get back on the growth track, for which it would develop VR and driverless auto technology for its clients like Toyota and Boeing. On sequential basis, the company showed a marginally down of 0.2% in the revenues. According to Sikka, software that didn't exist several years ago contributed 8.3% in growth, 1.6% in revenue and accounts for half the growth the company has seen in contracted services in the last two years.

Vishal Sikka, CEO infosys has always insisted that success in the company's transformation in a post-labor arbitrage world will come from ramping Infosys emphasis on lifelong learning and design thinking.

In US dollar terms, revenue was $2,651 million for the quarter ended June 30, 2017, up 3.2% sequentially in reported terms and up 2.7% in constant currency terms. While the dollar revenue guidance has been raised to 7.1-9.1 per cent from 6.1-8.1 per cent earlier, the revenue guidance on a CC basis remains unchanged at 6.5-8.5 per cent.

Q1 net income was up 5.8 per cent YoY to $541 million from $511 million year ago and flat (0.4 per cent) sequentially from $543 million quarter ago in dollar terms. Sanjeev Hota, AVP Research at brokerage house Sharekhan, said that Infosys had reported a better-than-expected performance on both revenue and margin fronts. For the Q1 quarter the company reported an operating profit of $638m, a growth of 0.7% over the previous quarter and a 6% growth year over year. Tata Consultancy earns roughly 19% of its revenue from digital services. The fundamentals of IT services industry are not so good.

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The company said it added eight clients in its $100 million category.

Last month, the industry's main trade body, the National Association of Software and Services Companies said it expects the growth pace from software exports to slow down this year as spending shifts to new technologies. As Infosys aims to hire more in the the next two years, it has to change the processes and is putting together new innovation centres, he said. The growth was a result of better efficiency, better utilization, and improved operation controls, which helped the company remain stable even as business remained muted in its main markets, such as North America.

Massive changes that their largest clients themselves are facing in the age of cloud computing, automation and artificial intelligence - for instance, the big churn among USA retailers - are also contributing to the uncertainty over how tech spending will pan out in the IT sector's biggest market for the rest of the year. Founders are giving Chief Executive Officer Vishal Sikka heat for everything from overpaying himself to overpaying for an acquisition.

Share buybacks typically improve earnings per share and return surplus cash to shareholders, while also supporting share price during periods of sluggish market conditions. Murthy, the main founder of Infosys, denied any such move.

Sikka also mentioned that almost 50 percent of incremental revenues came from these services in last two years.