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Thursday 15 October 2020

Infosys recovers quickly

LogoInfosys has made a rapid recovery from the mild case of COVID that it experienced last quarter (see here). Revenue for Q221 (the three months to 30th September) rose to $3.3b, up by 4% sequentially and 2.2% yoy on a constant currency basis. This result lifted the offshore heavyweight into positive growth territory for the first half of the FY. Operating margin improved significantly for the second successive quarter increasing by a further 270 bps to a very healthy 25.4% (Q220: 21.7%).

Demand for digital services was the driving force behind the firm’s second quarter performance. Sales of these jumped by 12.9% qoq and 25.4% yoy. The “new” offerings now account for approaching half of Infosys’s global turnover.

The picture was mixed from an industry vertical perspective.  Declines in activity in the Communications, Manufacturing and Energy & Utilities segments were more than offset by both a near 25% yoy increase in revenues from the Hi-Tech sector and low single digit growth in the Financial Services arena. The latter generates nearly a third of Infosys’s annual sales

All four of the company’s geographic regions – North America, Europe, Rest of World and India – delivered yoy improvements in Q221 turnover. In what is becoming a common theme of many of the current crop of quarterly results from the leading SI’s, however, European demand proved to be least resilient to the impacts of the pandemic. Sales in this territory were up by just 0.6% over the same period in the prior year.

For the second quarter in a row, Infosys has set the growth benchmark for the Tier 1 IPP players. Wipro and TCS have already announced yoy revenue falls of 3.4% and 1.7% respectively for the same three calendar months. Cognizant, HCL and TechMahindra are yet to publish.

Infosys also continues to be of the few SI’s willing issue full year guidance. The company now expects that FY21 revenue growth will be in the range of 2%-3% in constant currency, up from the 0%-2% view provided in July.

Posted by: Duncan Aitchison

Tags: results   offshore   systemsintegration  

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