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Half of Infosys' revenues now from digital, co expects 4.5-5% growth in FY21

While Infosys adopted a three-pronged approach to protect its margins at the beginning of the year owing to COVID-19, CFO Nilanjan Roy said that all of it worked well and had helped margin expansion

Half of Infosys' revenues now from digital, co expects 4.5-5% growth in FY21

KEY HIGHLIGHTS

  • Free cash flow for the quarter stood at $772 million
  • Revenue growth guidance increased to 4.5-5 per cent in constant currency

Bengaluru-based IT major Infosys posted a strong growth in Q3 FY21 and raised its full year revenue guidance on expected lines. The company posted a 5.3 per cent sequential dollar revenue growth in constant currency and 6.6 per cent on year-on-year basis. Digital revenues also crossed the 50 per cent mark of the total revenue with digital growing at 31.3 per cent on a year-on-year in constant currency terms.

The operating margin for the quarter stood at 25.4 per cent an expansion of 350 basis points on a year-on-year comparison. Terming the quarter to be exceptional on all fronts and focus being largely being on digital and cloud, CEO Salil Parekh said that it had signed the highest ever large deal wins in the company's history at around $7.13 billion.

The company further raised it full year revenue guidance for FY21 from 2-3 per cent, as stated in the previous quarter, to 4.5-5 per cent. With enough optimism stemming from the directionality of client spend, "We see a lot of our large enterprise clients looking at huge move to accelerate the digital spend, to do more things on the cloud and we see all of that all of our investments by us over the past. We are now ready to participate in this trend massively," said Salil.

While the company had stated a three-pronged approach to protect its margins at the beginning of the year owing to pandemic, CFO Nilanjan Roy said that all of it worked well and had helped the margin expansion. Though it remained flattest on a sequential basis, the company said that on the discretionary spends, it continues to see travel and other related costs being low.

With some of the travel related costs being permanent in nature and some which will be unwinding, "our strategic levers which we continue to accelerate each year around Pyramid, onsite and offshore, automation, subcon costs, we will continue to work on that and all contributed to the 3.5 per cent increase," said Nilanjan.

Infosys also announced that it had signed a definitive agreement to purchase assets and onboard employees of Carter Digital, a design agency in Australia that deals in creative strategy, research and insights, branded commerce and digital product development, user and customer experiences, interaction, experiential and creative design, consumer and product design. The transaction is expected to close in the next quarter.

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