Ten key takeaways from Infosys’s first-quarter results

BENGALURU: Here are the 10 key takeaways from the first-quarter results of Bengaluru-based Infosys:

Revenue: Infosys’s sequential revenue growth of 4.5% handily trumped average expectations and gave the company its highest quarterly revenue growth in nearly 4 years. The robust revenue growth also overshadowed larger peer TCS’s performance this quarter -- the first time this has happened in several years. Most of the growth was driven by large deal wins during the June quarter as well as higher spending from its top client Bank of America, which now gives out over $300 million of annual business to Infosys. North America drove much of the growth with a 5.1% sequential jump in revenues, while the manufacturing, financial services and retail verticals witnessed healthy growth rates. This is also the first time in several quarters that Infosys has trumped TCS in terms of growth from North America. The solid performance now puts Infosys in pole position to meet or even exceed its full-year guidance this year.

Guidance: In another first, Infosys raised its actual revenue growth guidance -- from a range of 6.2-8.2%, Infosys raised the revenue growth range to 7.2-9.2% for the financial year ending March 2016 and maintained its constant-currency guidance of 10-12% -- a move that should assuage anxious investors.

Volume growth: On volume growth too, Infosys comfortably beat TCS during the June quarter -- Infosys posted sequential volume growth of 5.4%, its highest in 19 quarters. TCS in comparison recorded volume growth of 4.8% during the quarter.

Attrition and utilization: In another big positive, Infosys managed to bring down its attrition rates considerably, a clear sign that CEO Vishal Sikka’s employee-friendly and confidence-boosting measures for the company’s 179523 employees are clearly working. Quarterly annualized attrition for Infosys stood at 14.2% compared to 23.4% during the same period last year. Utilization jumped 160 basis points to 80.2%.

Large deals and total TCV: Infosys said it won six large deals from companies such as Deutsche Bank worth a total contract value of $688 million. The company said each of those six deals would generate over $50 million of annual business for Infosys. This should also allay concerns over the company’s inability to win large deals against rivals such as TCS and US-based Cognizant Technology Solutions.

Client additions: During the quarter Infosys added 79 clients, with significant deal wins from companies such as Deutsche Bank, FTS International and Allied Irish Banks.

Growth from products and platforms: Infosys also made significant progress with its Infosys Information Platform, with 127 active client engagements. The company said it had completed 16 pilot programs using the platform. On the products side, Infosys said it had made good progress with EdgeVerve, with 14 client wins. From products and platforms, Infosys currently generates about 5% of its annual revenues.

Traction from recent acquisitions: Infosys’s recent acquisition of Panaya also helped the company win some large deals -- in earlier investor calls, CEO Sikka had also said that Infosys won more than a dozen new deals using Panaya’s platform.

Margins: Margins came in at around 24% -- impacted slightly by the wage hike cycle and the rupee depreciation, but still came within the range that the company had targeted.

Training: Infosys said it had trained over 39,000 employees till date on its design thinking program. The company said it would continue to train more employees across the company on the program.