Infosys Management Discusses Q1 2013 Results - Earnings Call Transcript

Infosys (INFY)

Q1 2013 Earnings Call

July 12, 2012 8:30 am ET


Sandeep Mahindroo

S. D. Shibulal - Co-Founder, Managing Director, Chief Executive Officer, Director and Chairman of Infosys Technologies (Sweden) AB

V. Balakrishnan - Chief Financial Officer, Director and Chairperson of Infosys BPO Limited

B. G. Srinivas - Head of Europe, Global Head of Financial Services & Insurance, Director and Chairman of Infosys Technologies (Australia) Pty., Limited


Joseph D. Foresi - Janney Montgomery Scott LLC, Research Division

David Grossman - Stifel, Nicolaus & Co., Inc., Research Division

Moshe Katri - Cowen and Company, LLC, Research Division

Rod Bourgeois - Sanford C. Bernstein & Co., LLC., Research Division

Jesse Hulsing - Pacific Crest Securities, Inc., Research Division

David J. Koning - Robert W. Baird & Co. Incorporated, Research Division

Mayank Tandon - Needham & Company, LLC, Research Division

George A. Price - BB&T Capital Markets, Research Division

Shankar AVSB



Ladies and gentlemen, good day, and welcome to the Infosys Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Sandeep Mahindroo of Infosys. Thank you and over to you, sir.

Sandeep Mahindroo

Thanks, Marina. Good morning, everyone, and a very warm welcome to all of you to discuss Infosys' financial results for the quarter ended June 30, 2012. I'm Sandeep from the Investor Relations team in New York. Joining us today on this earnings call is CEO and MD, Mr. S.D. Shibulal; CFO, Mr. V. Balakrishnan; along with other members of the senior management. We'll start the proceedings with some remarks on the performance of the company for the recently concluded quarter, followed by the outlook for the year ending March 31, 2013. Subsequently, we'll 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 risks 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

I'd now like to pass it on to Mr. S.D. Shibulal.

S. D. Shibulal

Thank you, Sandeep. This is Shibu. We have done fairly well in a challenging environment. On dollar terms on year-on-year, we have grown by 4.8%. We have achieved our EPS guidance for the quarter. We have added 51 new clients during this quarter. Our million-dollar clients have grossed 400. Top 10% grew by 2.4% and top 5 grew by 4% this quarter. Our quarterly guidance was $1.771 billion to $1.786 billion. Our revenue came at $1.80 billion, but there are 2 events which happened: number one was the currency impact, which is $13 million for the quarter; number two, we took a one-time reversal of revenue -- reversal of accrued revenue as a matter of prudence on a large transformation program, which got canceled during the quarter. This happened in Europe in the energy and utilities space. So we took a one-time reversal of $15 million. So that puts the revenue and in reported terms at $1.752 billion. That's a de-growth in constant currency terms of 0.4%.

Apart from these 2 events, we have ended up in the middle of the guidance for the quarter. This is a one-time reversal, and we don't expect this to happen on a frequent basis in the future. Our client additions, as I said, has been quite strong. We are continuing to execute on our Infosys 3.0 strategy. We have completed the transformation. We have the new leadership in place. We are purely in the execution mode. The early signs of successes are clearly there. This quarter, we have closed 4 transformational deals, 4 large deals in the bid space, one of them more than $300 million, multiple deals in the Products & Platforms space. We added 10 new clients in the Products & Platforms space. We launched branded, a new platform along with fabric, in this quarter. Our SocialEdge platform has more than 10 clients today, and our book value in Products & Platforms has grossed $380 million. Our new areas are doing well. Cloud, we have 3,000 people working in Cloud, revenues growing above company average. We have 150 engagements in Cloud. Mobility, we have 1,200 people working. We have 60 clients. We have seen very good traction.

We are also seeing very good traction with our Building Tomorrow's Enterprise innovation framework with our clients. We had numerous conversations during the last 2 quarters, which are now converted into opportunities or deals for us. So as I started saying, we have done fairly well in a challenging environment. The environment continues to be challenging. We have high exposure to the financial services space. We also have high exposure to the discretionary spend because of our large percentage of revenue coming from consulting and system integration. That makes our ability to predict -- that challenges our ability to predict. We have given a guidance of 7% to 8%. Now we have revised it to at least 5% growth for the year. There are 3 factors which have gone into this division: number one is the currency impact, which is 1% to 2%; number two is the pricing decline, which we have seen in this quarter of 3.7%; and number three are business reasons. All of these have been factored into revising the guidance to at least minimum 5% for the year.

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