Infosys, the country’s second-largest IT services provider, missed analysts’ estimates on net profit and margins, but was ahead on the revenue front in the first quarter. The company increased its FY23 revenue guidance to 14-16%, from 13%-15% announced earlier, while retaining the margin guidance at 21-23%.
The company’s net profit during the period declined 5.7% to Rs 5,360 crore. Consolidated revenue was up 6.8% on a sequential basis to Rs 34,470 crore. At 20.1%, the company’s operating margin was down 1.4% on a sequential basis.
The revenue growth was broad-based across the business verticals, but supply side challenges and higher travel costs hit the margins.
The company’s revenues in constant currency terms saw a growth of 5.5% on sequential basis. The IT firm’s total contract value (TCV) during the quarter stood at $1.7 billion.
“Our strong overall performance in Q1 amidst an uncertain economic environment is a testament to our innate resilience as an organisation, our industry-leading digital capabilities and continued client-relevance as we continue to gain market share and see a significant pipeline driven by our Cobalt cloud capabilities and differentiated digital value proposition,” Salil Parekh, CEO and MD, said.
“We are investing in rapid talent expansion while ensuring rewarding careers for our employees, to better serve evolving market opportunities. This has resulted in a strong performance in Q1 and increase in FY23 revenue guidance to 14-16%”, he added.
Financial services continued to be the largest contributor to the company’s revenues at 30.6%. However, its contribution was reduced by 240 bps from the year-ago period and 70 bps from the previous quarter.
Likewise, retail continued to be a stable business and contributed 14.5% of the total revenues while the contribution from the communication vertical improved 80 bps on year to 13%.
North America remained the biggest business generating region as it accounted for 61.8% of the total revenues generated during the quarter. Europe generated 25% of the revenues which were up 80 bps on year while the share of the rest of world dipped 60 bps on year to 10.6%. India operations generated 2.6% of the revenues.
The company added 106 clients during the quarter, taking the total number of active clients to 1,778.
Infosys had 38 clients in the $100-million-plus category at the end of the quarter, 69 clients in the $50-million-plus basket, 278 clients in $10-million plus and 877 clients in the $1-million-plus basket.
The total employees at the end of the quarter stood at 3,35,186 compared to 3,14,015 employees at the end of quarted ended March. The LTM (last 12 months) attrition during the quarter continued to be higher at 28.4% compared to 27.7% in the preceding quarter and 13.9% a year ago.
“We are fueling the strong growth momentum with strategic investments in talent through hiring and competitive compensation revisions,” Nilanjan Roy, chief financial officer, said. “While this will impact margins in the immediate term, it is expected to reduce attrition levels and position us well for future growth while we continue to optimise various cost levers to drive efficiency in operations,” he added.