BENGALURU: Infosys continues to make a remarkable recovery from the depths of the pandemic a year ago. The company’s revenue was up 16.9% in constant currency for the quarter ended June 30, making it its best first quarter in a decade. The growth is slightly better than TCS’s 16.4%, but considering that TCS’s revenue had fallen much more than Infosys’s in the year-ago quarter – which was the height of the pandemic – the latter’s numbers this quarter are on top of that relatively more solid base.
The performance and future visibility around orders encouraged Infosys to raise its revenue guidance for the full year to 14-16%, from 12-14% it made just three months ago. The company’s ADRs on the New York Stock Exchange (NYSE) were up 2% in morning trade. The impact on its shares on the BSE will be seen on Thursday. On a dollar basis, the company’s revenue was up 21.2% to $3.8 billion. Net profit was up 26.2% to $704 million.
“It’s landmark first quarter with robust YoY growth of 16.9% and sequential 4.8% in constant currency terms. This is the fastest growth we’ve seen in ten years. We continue to gain significant market share, with this growth being essentially organic and especially in the area of digital transformation. The strong momentum in the quarter, deal wins and a healthy pipeline gives us confidence to increase our revenue guidance,” CEO Salil Parekh said.
IT companies in general are seeing a smart recovery from the pandemic, thanks to their clients’ desire for digital transformation through cloud and increased focus on data and analytics. Infosys’s digital deals, which lie at the heart of the sustained growth over the last few quarters, was up 42% to $2 billion in the first quarter. The company signed 22 large deals worth $2.6 billion, out of which 14 are from North America and five in Europe.
The financial services business was up 22.6%, retail 22.2%, and manufacturing 18.5%. Out of the 22 large deals, nine were in the BFSI space, suggesting that growth in the bread and butter sector is getting back to normal.
Operating margin was up 100 basis points to 23.7% compared to last year, but came down 80 basis points sequentially as the company spent on compensation hikes, getting new talent and retaining older ones as the war for talent heats up in the IT space.
“We remain confident of delivering on the margin guidance, underpinned by our comprehensive cost optimisation programme, despite increasing cost headwinds arising largely from compensation review, talent acquisition and retention,” said chief financial officer Nilanjan Roy.