India’s second largest software exporter by revenue, Infosys Ltd, on Friday reported a strong third quarter, raising its FY20 revenue growth guidance from 9-10% earlier to 10-10.5%, on the back of digital deal wins and several industry segments growing in double digits.
The company declared its third quarter earnings after market hours on Friday.
Infosys’s net profit for the December quarter stood at ₹4,466 crore, up 10.6% from ₹4,037 crore in the three months ended September, on higher other income and lower tax rate.
Despite a seasonally weak third quarter, Infosys’ revenue grew 2% sequentially from ₹22,629 crore to ₹23,092. “Overall performance during the quarter was satisfactory on multiple counts—broad-based growth, steady increase in client metrics and healthy large deal wins," said U.B. Pravin Rao, chief operating officer, Infosys.
The closely watched dollar revenue grew 1% sequentially from $3.21 billion to $3.24 billion in the third quarter. Infosys signed large deals worth $1.8 billion, out of which about 32% were renewals.
Financial services and retail segments contributed close to half of the revenue for the quarter. While revenue from financial services grew 5.3%, retail revenue grew 1.4% year-on-year. The management said financial services remained weak due to the impact of furloughs and slowdown in banking in Europe. “In retail, we are hopeful to see better growth in the coming quarter," said Rao.
Operating margins for the October-December period stood at 21.9%, a marginal improvement of 0.2% over the previous quarter. “Operating margins improved further during the quarter driven by relentless cost optimization and operating leverage," said Nilanjan Roy, chief financial officer, Infosys.
The company’s digital revenue stood at $1.32billion (40.6% of total revenue), with year-on-year growth of 40.8% in constant currency terms.
“Healthy deal wins, digital growth story and upward revision in guidance augurs well. Hence, we remain positive for the company," ICICI Securities said in a post-earnings note.
The attrition rate declined from 21.7% in the July-September quarter to 19.6%, indicating that steps taken by the management to re-skill the workforce and offer skill-based incentives were bearing fruit.