Infosys (INFY) Q2 Earnings Beat, Revenues Miss, View Bleak
Zacks Investment Research | Oct 23, 2017 10:21PM ET
Infosys Limited (NYSE:INFY) has braved formidable odds like a high-profile CEO’s exit, contracted IT spending and unfavorable political climate in the United States to score an earnings beat in second-quarter fiscal 2018.
The company reported earnings per American Depository Share (“ADS”) of 25 cents for the quarter, which topped the Zacks Consensus Estimate by a penny and was up 4.2% on a year-over-year basis. The bottom line benefited from a modest top-line performance and diligent operational execution.
Quarterly Details
Revenues increased 5.5% year over year to $2,728 million, but lagged the Zacks Consensus Estimate of $2,782 million. In terms of constant currency, revenues were up 4.6%.
Top-line growth was largely supported by lucrative client wins and impressive traction of new high growth services and software business. The company’s Renew New Strategy is proving to be a solid growth driver, helping in earning more clients. The company added 72 new clients in the quarter.
Infosys’ investments in new services, particularly in Cloud Ecosystem, Big Data and Analytics, Data and Mainframe Modernization, Cyber Security, API and Micro services and IoT Engineering Services have been showing promising results. In the reported quarter, the company’s offerings have seen increased traction with clients, and contributed 9.4% of the company quarterly revenues.
Infosys’ new software business also continues to show momentum, and contributed 1.6% to fiscal second-quarter revenues, driven by offerings across Finacle, Edge, NIA, Panaya and Skava.
Infosys’ operating profit rose 2.4% year over year to $659 million. Strong focus on operational improvement helped maintain the company’s operating profits, despite strong headwinds.
Renew New Strategy Progresses Well
Infosys has been diligently following the “Renew New” program, which lays the blueprint of its long-term growth. The company’s three distinguished offerings — Artificial Intelligence, Knowledge-based IT and Design Thinking — are proving to be key profit churners, helping expand its market share.
During the reported quarter, Infosys continued to renew traditional services and rolled out others in areas such as Cloud Ecosystem, Big Data and Analytics, API and Micro Services, Cyber Security, and IoT Engineering Services. It also launched some software-led offerings.
Infosys Limited Price, Consensus and EPS Surprise
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