Infosys Limited's CEO Discusses F2Q 2012 Results - Earnings Call Transcript

Infosys Limited (INFY)

F2Q 2012 Earnings Call

October 12, 2011 8:30 a.m. ET

Executives

Sandeep Mahindroo - Investor Relations

S.D. Shibulal - Chief Executive Officer and Managing Director

V. Balakrishnan - Chief Financial Officer and Member of the Board

B. G. Srinivas - Senior Vice President, Head of Europe and Global Head, Manufacturing

Ashok Vemuri - Head of Americas, Global Head, Financial Services & Insurance

Prasad Thrikutam - Senior Vice President, Global Head, Energy, Utilities, Communications & Services

Analysts

Jason Kupferberg - Jefferies

Joseph Foresi - Janney Montgomery Scott

Moshe Katri - Cowen and Company

Bhavan Suri - William Blair

Rod Bourgeois - Bernstein

Keith Bachman - BMO Capital Markets

Shashi Bhushan - Prabhudas Liladhar

David Grossman - Stifel Nicolaus

Mayank Tandon - Needham & Company

Presentation

Operator

Ladies and gentlemen, good day and welcome to the Infosys Earnings Conference Call. As a reminder, for the duration of this conference, all participants’ lines will be in the listen-only mode, and there will be an opportunity for you to ask questions at the end of today's opening remarks. Please note that this conference is being recorded. (Operator Instructions)

I now hand the conference over to Mr. Sandeep Mahindroo of Infosys. Thank you, and over to you Mr. Mahindroo.

Sandeep Mahindroo

Thanks, Rochelle. A very warm welcome to everyone on this call to discuss Infosys earnings release for the quarter ended September 30, 2011. I’m Sandeep from the Investor Relations team in New York. Joining us today on this conference call is CEO and M.D., Mr. S.D. Shibulal; CFO, Mr. V. Balakrishnan, along with other members of the senior management team.

We’ll start the proceedings with a statement on the performance of the company for the recently concluded quarter, followed by outlook for the quarter ending December 31, 2011 and year ending March 31, 2012. Subsequently, we will open up the call for questions.

Before I pass it on to the management team, I would like to remind you that anything that we say which refers to our outlook for the future is a forward-looking statement, which must be read in conjunction with the risk that the company faces. A full statement and explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov.

I’ll now like to pass it on to Mr. S.D. Shibulal.

S.D. Shibulal

Thank you. This is Shibu. I will give you a color on the quarter performance and then give it to Bala for more details on the numbers. We have seen overall growth in Q2. We have delivered $1.746 billion in revenue which is 4.5% growth in reported currency and 5% growth in constant currency. Actually in rupee terms we have grown 8.2%, volume growth is 4.5%. Pricing, blended pricing has gone by 0.5% and the utilization is at 78%. Margins have improved and we have added 1.9% to the margin, 26.1% to 28%, at the operating margin.

Overall client additions have been very strong this quarter, 45 new clients. 19 of them in our new investment areas which is in utilities, life science, healthcare. Million dollar clients have 388 and our repeat business is 98.5% this quarter.

Now let me give you some color on our strategic direction and our new organization structure. We have seen very good traction for Building Tomorrow’s Enterprise. Clients are acknowledging that this is very relevant to them. They are acknowledging that it is through thought leadership in the teams which we have chosen. We are wining deals in those teams. We have closed a deal in the Smarter Organizations team with a European client in transforming them from a country focused to a client centric approach. From a country centric approach to a client centric approach and build their next generation organization.

We are working on another deal in creating new consumer experience in the store with a major retailer, that’s it’s in the digital consumer space. And in the emerging market space we are working with a client in creating engineering innovation in the emerging markets. So these are examples of opportunities and deals which we are seeing in our Building Tomorrow’s Enterprise teams.

As far as Infosys 3.0 concerned, we have completed the realignment. We have reorganized 100,000 people. We have four major go to market verticals. We of course have Finacle, BPO and the Engineering service. We have new leadership, new executive council in place and new sectors in place, which will allow us to move towards our aspirations.

We are also investing in new areas. We have new units for enterprise mobility, sustainability and cloud. Those units are also seeing good traction. Our products and platform strategy is planning out well. We have launched Infosys Edge, which is a Infosys family of platforms. Nine of them. We have 20 clients operating on them, we have 10 new clients this quarter. $200 million in TCB closed. Good traction in that direction.

Consulting and system integration is doing well for us, 31% of our revenue. It has grown quarter-on-quarter and we are seeing -- we are at this point -- our pipeline for transformational programs is 27 at this point. We have been recognized with the industry and by our partners. We are rated in the leadership quadrant by Gartner and Forrester. We received the Titan award, 3rd year in a row at -- Oracle Titan award, 3rd year in a row. We are rated number 15 in the most innovative company list in the world by Forbes. So we are recognized by the industry and our partners.

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