India's second largest IT services exporter Infosys on Friday has delivered mixed set of earnings for October-December quarter, with profit rising 2.8 percent sequentially to Rs 3,708 crore but lowered its full year dollar as well as rupee revenue guidance.
Rupee revenue during the quarter declined 0.2 percent to Rs 17,273 crore and dollar revenue also slipped 1.4 percent to USD 2,531 million compared with previous quarter, with volume growth of 0.2 percent. Dollar revenue growth in constant currency was down 0.3 percent QoQ.
Its dollar revenue fell for first time in last seven quarters due to RBS deal cancellation and seasonal weakness.
"Beyond the quarterly numbers, we continue to focus sharply on the execution of strategy, as reflected in the growing embrace of AI-based automation, growth in new software-led business, delivering innovation, both incremental & breakthrough and fostering a learning-led culture," Vishal Sikka, CEO and MD said in its filing.
Infosys has tightened its constant currency revenue guidance for third time, to 8.4-8.8 percent. Its upper end of revenue guidance reduced to 8.8 percent from 9 percent but lower end of guidance raised to 8.4 percent from 8 percent.
Accordingly, the IT major lowered its full year dollar revenue guidance to 7.2-7.6 percent from 7.5-8.5 percent earlier and rupee revenue guidance to 10-10.4 percent from 10.9-11.9 percent.
Infosys tightening its guidance range was on expected lines, Moshe Katri of Wedbush Securities said, adding margin & BFSI performance was positive for the quarter and BFSI was the only vertical that saw positive constant currency growth.
Financial services & insurance business during the quarter fell 0.8 percent sequentially but grew 0.2 percent in constant currency despite RBS deal cancellation. Revenue from its manufacturing & hi-tech business declined 1.5 percent QoQ as well as 0.5 percent in constant currency.
Retail, consumer packaged goods and logistics segment also reported degrowth of 1.5 percent QoQ & 0.4 percent in constant currency, and energy, utilities, communication & services business slipped 2.1 percent and 0.8 percent in constant currency.
While addressing press conference, Vishal Sikka said manufacturing was weak due to lower billing days, which would bounce back in Q4 while retail continued to be volatile and energy was relatively soft. He expects most sectors to bounce back next year barring energy.
He feels downward steady pricing pressure is expected to remain, but he optimistic on Q4 and very optimistic about BFSI segment growth.
Overall earnings were mixed. Profit was estimated at Rs 3,569 crore on revenue of Rs 17,313 crore and dollar revenue was expected at USD 2,560 million for the quarter, according to average of estimates of analysts polled by CNBC-TV18.
Infosys has crossed USD 10 billion revenue mark in the calendar year 2016. Sikka said the company was working hard towards achieving USD 20 billion revenue and 30 percent margin levels by 2020.
From a geography perspective, North America business declined by 0.6 percent both sequentially & in constant currency while Europe revenue slipped by 2.5 percent sequentially but grew by 1 percent in constant currency.
Infosys' India revenue declined by 1 percent sequentially and 0.1 percent in constant currency while rest of the world business dropped by 3.2 percent QoQ and 1.5 percent in constant currency.
In a seasonally soft quarter, the company's operating margin beat street expectations, expanding by 0.2 percent to 25.1 percent and net margin by 0.6 percent to 21.5 percent on sequential basis. Analysts had estimated it at 24.5 percent for the quarter. Operating profit increased 0.6 percent quarter-on-quarter to Rs 4,334 crore in Q3.
Other income grew by 7.9 percent sequentially to Rs 820 crore in the quarter ended December 2016 while its tax expenses declined 1 percent to Rs 1,446 crore.
During the quarter, Infosys said it added 77 clients and also added 2 clients in USD 75 million revenue category, 9 clients in USD 10 million category and 1 client in USD 25 million revenue category.
Total active clients at the end of December quarter were at 1,152 that increased from 1,136 clients in previous quarter.
Revenue contribution from its top 10 clients reduced to 20.1 percent in December quarter from 21.8 percent in September quarter and top five clients to 12.3 percent from 13.1 percent.
Infosys said it has reported highest ever utilisation of 81.9 percent in Q3.
Attrition during the quarter declined sequentially by 0.8 percent on standalone basis and 1.6 percent on consolidated basis, the company said, adding consolidated attrition rate dropped to 18.4 percent from 20 percent sequentially.
Net headcount reduced by 66 in Q3 against an increase of 2,779 employees in Q2.