Infosys Technologies Q1 Earnings and Revenues Beat Estimates - Analyst Blog

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Infosys Technologies Ltd ( INFY ) reported first-quarter fiscal 2015 results. Quarterly earnings per ADS from continuing operations came in at 84 cents, surpassing the Zacks Consensus Estimate of 76 cents by 10.5%. Quarterly earnings were up 15.1% year over year and 1.2% sequentially. Profits during the quarter were primarily driven by large deal wins along with cost optimization efforts and strong focus on increasing productivity and utilization. However, high attrition remains a cause of concern.

Quarter Details

During the quarter, total revenue generated was $2.13 billion, up 7.1% year over year and 2.0% sequentially. Revenues also surpassed the Zacks Consensus Estimate of $2.11 billion. The company witnessed volume growth, client additions, significant deal wins and increased sales momentum in its big data and cloud offerings. In the first quarter of 2015, Infosys won 20 new contracts in the big data and cloud offerings market and has executed more than 260 deals in these areas to date.

The company added a total of 61 clients and also formed partnerships with clients to create innovative solutions such as cloud-based version of its Clinical Trial Supply Management solution to help life sciences companies enhance the efficiency of clinical trial processes during the quarter. Further, Infosys signed large outsourcing agreements across various sectors such as Energy, Communications, Financial Services and Government.

Revenue by Geographical Segment

During the reported quarter, Infosys reported strong sequential growth in geographic revenues. Revenues from North America grew 3.7% while the same in Europe and India declined 1.1% and 6.9%, respectively. However, Rest of the World reported revenue growth of 1.9%.

Revenues by Industry Segment

Revenues in the Insurance, Banking and Financial services (IBFS) grew 1.8% while the Manufacturing segment (MFG) revenues improved 2.6%. Revenues from the Retail and Life Sciences division (RCL) rose 2.1% while revenues in Energy, Utilities, Communications & Services (ECS) grew 1.6% year over year.

Income

The company recorded an operating profit of $536 million compared with $468 million in the prior-year quarter, reflecting an increase of 14.5%. The operating margin expanded 161 basis points year over year to 25.1% from 23.5% in the comparable prior-year quarter. Net profit after tax deductions stood at $482 million for the quarter, up 15.3% year over year.

Cash

Infosys maintains a strong liquidity position with cash & cash equivalents of $4.2 billion as of Jun 30, 2014 as against $4.3 billion as of Mar 31, 2014.

Outlook

Concurrent with the earnings release, management reiterated its outlook for fiscal 2015 projecting revenue increase in the range of 7% to 9%.


Other Stocks that Warrant a Look

Infosys currently has a Zacks Rank #3 (Hold). Some better ranked companies in the sector include MICROS Systems, Inc. ( MCRS ), Science Applications International Corporation ( SAIC ) and Progressive Software Solutions, Inc. ( PRGS ). All three carry a Zacks Rank #2 (Hold).



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: MFG , RCL , INFY , MCRS , PRGS

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