Infosys Q1FY23 earnings: Profit misses estimates, revenue increase
Infosys reported its Q1 earnings on Sunday evening, and profits were below analysts’ expectations. The share price of Infosys was trading 0.55% lower on Monday morning at Rs 1498.05 post the earnings.
Key highlights of the Infosys Earnings:
- Net Profit: Rs 5,360 crore, 3.2% year-on-year
- Revenue: Rs 34,470 crore, up 23.6% year-on-year
- Operating margin at 20.0%, a decline of 3.7% since last year and a decline of 1.5% since the March quarter
- Revenues in Constant currencies terms jumped by 21.4% since last year and 5.5% since the March quarter
- Reported revenues at $4,444 million, a growth of 17.5% since last year
- Digital revenues at 61.0% of total revenues, since last year, growth of 37.5%
- Basic Earnings Per Share at $0.16, a decline of 1.1% YoY
- Free Cash Flow at $656 million; Free Cash Flow conversion at 95.2% of net profit
Below is the detailed review of Infosys Q1FY23 Earnings:
Infosys Q1FY23 Earnings: Profit Jumped
Infosys, India's second-largest IT firm, reported a 3.2% on-year rise in consolidated profit to Rs 5,360 crore below street estimates. Analysts had an estimated profit growth between 5.5% and 9.5%. In the same period last year, the company reported a net profit of Rs 5,195 crore. On a sequential basis, the profit declined by 5.7% from Rs 5,685.
Infosys Q1FY23 Earnings: Revenue up by 23.6%
The consolidated revenue from the operations jumped to Rs 34,470 crore, up nearly 23.6% on the year and 6.8% from the previous quarter. Analysts had estimated revenue of Rs between 21.5% and 22.5%. Infosys’ digital revenue was 61% of total revenues. Among verticals, manufacturing, communication, life science, and financial services posted robust year-on-year growth in sales. Geographically, North America reported 17.8% on-year growth, Europe 21.9% growth, and India saw muted growth of 2% from the year-ago quarter.
Infosys Q1FY23 Earnings: Margins down
The company was impacted by supply-side pressures, travel costs, and a rise in wages. The operating margins fell by 3.7% on year to 20.1%. Operating margins were down 1.5% from the March quarter.
Also, there was a decline in utilization due to a high number of freshers in the June quarter. The utilization level tanked 570 bps on year to 77.6%. It fell 240 bps sequentially (including trainees).
Infosys Q1FY23 Earnings: Guidance maintained
Infosys has maintained its margin guidance for FY23 between 21% and 23% and has increased the revenue guidance between 14% and 16%.
Infosys Q1FY23 Earnings: 106 New Deals
The company added 106 new clients in Q1FY23. In the June quarter, for $100 million plus bucket, the company added 38 new clients. It added 69 new clients in the $50 million plus bucket and 278 clients in the $10 million plus bucket.
Infosys Attrition rate:
During the Apr-June quarter, Infosys saw a rise in attrition at the company. The voluntary attrition rate increased to 28.4% from 27.7% in the previous quarter and 13.9% in the year-ago period. Infosys total employee count increased by 21,171 taking the total count to 3,35,186.
Infosys Management Commentary
“Our strong overall performance in Q1 amidst an uncertain economic environment is a testament to our innate resilience as an organization, our industry-leading digital capabilities, and continued client relevance as we continue to gain market share and see a significant pipeline driven by our Cobalt cloud capabilities and differentiated digital value proposition”, said Salil Parekh, CEO, and MD.
Infosys Share Price: Analysts view
Mitul Shah, Head of Research at Reliance Securities: Infosys reported a subdued Q1FY23 performance. Margins were below expectations. However, management raised its FY23 revenue growth guidance from 13-15% to 14-16% and maintain its EBIT margin guidance at 21-23%, indicating better performance during the balance of 9M of FY23.
What is Infosys's profit?
Infosys reported a profit of Rs 5,360 crore, up 3.2% year on year, in June quarter.
Has Infosys declared a dividend in the June quarter?
No, Infosys has not declared a dividend for Q1FY23.
How many employees does Infosys have?
At the end of the June quarter, Infosys had 3,35,186 employees in total.
Has attrition increased at Infosys?
Yes, the attrition increased from 27.7% in Q4FY22 to 28.4% in Q1FY23.