Infosys net profit at Rs 3,690 crore; 10 key takeaways from Q4 results

“We will execute our strategy around the four pillars of Scaling our Agile Digital business which is today US$2.79 billion in revenue, Energizing our client’s Core technology landscape via AI and automation, Re-skilling our employees, and Expanding our localization in markets such as US, Europe, and Australia," he said.

We have collated a list of top 10 takeaways from Q4 results:

Net Profit:

The net profits grew 2.4 percent on a year-on-year (YoY) basis to Rs 3,690 crore but fell 28.1 percent on a quarter-on-quarter (QoQ) basis. The Q3 FY18 net profit included the positive impact of Rs 1,432 crore on account of the conclusion of an APA with the US IRS.

The net profit in dollar terms stood at USD 571 million for the quarter ended March 31, 2018, which grew 5.3 percent on a YoY basis but declined 28.2 percent sequentially.

Infosys results also include an impairment loss of Rs 118 crore (USD 18 million) in respect of Panaya that has been recognised in the consolidated profit and loss for the quarter and year ended March 31, 2018.

The corresponding write down in the investment value of Panaya in the standalone financial statements of Infosys is Rs 589 crore (USD 90 million).

Revenues:

The revenues grew by 5.6 percent on a YoY basis to Rs 18,083 crore and 1.6 percent on a QoQ basis. The Q4 revenues grew by 6.4 percent in constant currency terms.

The dollar revenue grew by USD 2805 million for the quarter ended March which translates into a growth of 9.2 percent on a YoY basis, and 1.8 percent sequentially.

Guidance:

Revenues are expected to grow 6-8 percent in constant currency terms. Revenues are expected to grow 8.2-10.2 percent in INR terms based on the exchange rates as of March 31, 2018.

Dividend Payout:

For the Financial Year 2018, the Board recommended a final dividend of Rs 20.50 per share (USD 0.31 per ADR) amounting to Rs 5,349 crore (USD 821 million) including DDT.

After including the interim dividend of Rs 13 per share, the total dividend for Financial Year 2018 will amount to Rs 33.50 per share resulting in a payout of Rs 8,771 crore (USD 1,349 million) including DDT, which will amount to approximately 70 percent of free cash flow for the Financial Year 2018.

The total dividend of Rs33.50 per share is approximately 30 percent higher than the total dividend of Rs25.75 per share for Financial Year 2017.

Operating Profit:

The operating profit for the quarter ended March stood at Rs 4,472 crore which rose 6.2 percent on a YoY basis and 3.5 percent sequentially.

Acquisition:

On April 13, 2018, the Company entered into a definitive agreement to acquire WongDoody Holding Company, Inc., a US-based digital creative and consumer insights agency for a total consideration of up to $75 million including contingent consideration and retention payouts, subject to regulatory approvals and fulfillment of closing conditions.

Capital Allocation:

The Board reviewed and approved the Capital Allocation Policy of the Company after taking into consideration the strategic and operational cash requirements of the Company in the medium term.

A) The Board has decided to retain the current policy of returning up to 70 percent  of the free cash flow of the corresponding Financial Year in such manner.

B) In addition to the above, out of the cash on the Balance Sheet, the Board has identified an amount of up to Rs13,000 crore ($2 billion*) to be paid to shareholders.

Revenue from Digital Business:

Revenues from Digital offerings at $ 2.79 billion (25.5% of total revenues) for FY 18. In Q4, digital revenues grew sequentially by 3.6 percent in constant currency terms.

The company entered into a definitive agreement to acquire WongDoody Holding Company, Inc., a US-based digital creative and consumer insights agency FY 18 revenues grew by 7.2 percent in USD terms, 5.8 percent in constant currency terms, with operating margins at 24.3 percent.

Revenues by Client Geography:

The share of revenues from North America slipped marginally to 59.4% but bounced back in Europe to 24.8%. The share of revenues from India declined to 2.8%, and for the rest of the world, it grew marginally to 13%.

Client Additions:

Infosys, which reported a client base of 1204 at the end of March quarter of FY18 added 4 clients in the 1 Million categories, 5 clients in the 5 million categories, 4 clients in the 25 million categories, and 1 client each in the 75 million and 50 million categories.