Infosys: Double Digit Growth for the Fourth Consecutive Quarter, Coupled With 1.2% Operating Margin Expansion in Q2

Bengaluru, India (ots/PRNewswire) – „Our performance was robust on multiple dimensions – revenue growth, digital growth, operating margins, operational efficiencies, large deal signings and reduction in attrition,“ said Salil Parekh, CEO and MD. „All these are clear signs that we are progressing well in our journey of client-centricity and maximizing value for our stakeholders.“

38.4% YoY

11.4% YoY 3.3% QoQ 1.2% QoQ $2.8 bn

Digital CC growth CC growth CC growth OM expansion to 21.7% Large deal signings

* Q2 20 revenues grew year-on-year by 9.9% in USD; 11.4% in constant
currency

* Q2 20 revenues grew sequentially by 2.5% in USD; 3.3% in constant currency

* Q2 20 Digital revenues at $1,230 million (38.3% of total revenues), year-on-year growth of 38.4% and sequential growth of 10.7% in constant currency

* Q2 20 operating margin at 21.7%, 1.2% improvement over Q1 20

* H1 revenues grew by 11.9% in constant currency

* H1 operating margin at 21.1%, within the margin guidance for the year

* Declared interim dividend of INR8 per share (approximately $0.11 per ADS*)

* Increased lower end of FY 20 revenue guidance; revised guidance is
9%-10% in constant currency

* Maintained FY 20 operating margin guidance range of 21%-23%

*USD/INR exchange rate as of September 30, 2019

1. Financial Highlights – Consolidated results under International Financial Reporting Standards (IFRS)

For the For six quarter months ended ended September September30, 2019 30, 2019 Revenues Revenues
were were
$3,210 $6,340
million, million,
growth of growth of
9.9% YoY 10.2% YoY
and 2.5% Operating
QoQ profit
Operating was
profit $1,338
was $696 million,
million, decline
increase of 1.8%
of 0.5% YoY.
YoY and Operating
8.3% QoQ. margin
Operating was
margin 21.1%.
was Basic EPS
21.7%. was
Basic EPS $0.26,
was growth of
$0.13, 1.6% YoY
growth of
0.2% YoY
and 5.6%
QoQ

„Q2 witnessed another quarter of all-round growth in industry segments and geographies which is a testimony to our strong credentials and client relevance“, said Pravin Rao, COO. „Large deal wins were $2.8 bn. We are especially pleased by the reduction in attrition driven by our focus on enhanced employee value proposition.“

„We saw expansion in operating margins during the quarter driven by improvement in operational parameters and cost efficiencies“, said Nilanjan Roy, CFO. „We took the first step towards implementation of our new capital allocation policy by increasing interim dividend by over 14% compared to FY 19.“

2. Capital Allocation

The Company completed its share buyback of INR8,260 crore on 26th August, 2019. With this the company completed the additional capital return program of upto INR13,000 crore announced in April 2018.

3. Client wins & Testimonials

* We were selected by Toyota Material Handling North America (TMHNA)
for a cloud-based IoT telematics product implementation along with
application support and development for its SAP Platform. As the development partner for TMHNA Global Telematics Solution (GTS), an
industry leading cloud-based IoT offering, Infosys is enabling remote monitoring and diagnostic capabilities including vehicle access control, system maintenance, condition sensing and location
tracking.

* We were selected as a strategic partner by Movement Mortgage, a fast-growing mortgage bank in the U.S., to lead its digital transformation and accelerate growth. Infosys will support Movement Mortgage’s 650 locations in 47 states to ensure the smooth transition of business models in key projects, with the aim
to increase business volume and leverage the company’s fintech services to develop mortgage industry specific solutions for Infosys customers.

* In collaboration with Microsoft, we announced a long-term strategic partnership with JG Summit Holdings, Inc., one of the largest and most diversified conglomerates, headquartered in Manila, Philippines. As a technology services partner, Infosys is helping formulate and execute the digital transformation strategy for JG Summit, based on Microsoft Azure, an open, hyper-scale, enterprise-grade cloud platform, along with SAP S/4 HANA. The collaboration will offer JG Summit seamless implementation and migration to Microsoft Azure cloud platform, to develop an agile and robust digital infrastructure for its business processes.

* EdgeVerve Systems, a subsidiary of Infosys, was selected by Al Ahli Bank of Kuwait to steer its automation journey using AssistEdge Robotic Process Automation (RPA). We are working the bank in their process automation journey, driving cost efficiencies and streamlining its operations.

* We have partnered with one of the largest utility companies to transform its IT Service Management. The program, leveraging ServiceNow, is helping our client significantly improve end-user experience, enhance employee productivity and deliver business agility. Infosys will also deliver a comprehensive solution for organization change management and user training as a part of this
program.

4. Recognitions

* Ranked 3 in the Forbes list of The World’s Best Regarded Companies
for 2019

* Won the United Nations Global Climate Action Award in the ‚Climate
Neutral Now‘ category

* Recognized as a leader in Gartner Magic Quadrant for IT Services for Communications Service Providers, Worldwide

* Recognized as a leader in Software Product Engineering Services PEAK Matrix(TM) Assessment 2019 by Everest Group

* Recognized as a leader in the DevOps Services PEAK Matrix(TM) Assessment 2019 by Everest Group

* Recognized as a leader in IDC MarketScape: Worldwide Intelligent Automation Services 2019 Vendor Assessment

* Recognized in HFS Top 10: Digital Front Office: CX Design, Sales, And Marketing

* Recognized in HFS Top 10: Banking and Financial Services (BFS) Sector Service Providers

* Recognized in HFS Top 10: Cloud Migration and Management Services 2019

* Recognized as a Leader in NelsonHall’s Smart IT Services in Utilities

* Recognized in HFS SAP SuccessFactors Services Top 10 Report

* Recognized as 2019 Working Mother & AVTAR Best 100 Companies for Women in India and ‚2019 Champion of Inclusion‘ in the Most Inclusive Companies in India Index

* Won the 2019 Oracle Excellence Award for Global Partner of the Year in CX – Sales Cloud

* Won the Oracle Excellence Award for NA partner of the Year for Emerging Technologies

* Recognized as the 2019 Global Alliance SI Partner of the Year by Microsoft

* Recognized as the Microsoft US Service Partner ACR Winner for the FY20 Microsoft One Commercial Partner Winners Circle program

About Infosys

Infosys is a global leader in next-generation digital services and consulting. We enable clients to navigate their digital transformation, leveraging our teams from over 46 countries. With over three decades of experience in managing the systems and workings of global enterprises, we expertly steer our clients through their digital journey. We do it by enabling the enterprise with an AI-powered core that helps prioritize the execution of change. We also empower the business with agile digital at scale to deliver unprecedented levels of performance and customer delight. Our always-on learning agenda drives their continuous improvement through building and transferring digital skills, expertise, and ideas from our innovation ecosystem.

Visit www.infosys.com to see how Infosys (NYSE: INFY) can help your enterprise navigate your next.

Safe Harbor

Certain statements mentioned in this release concerning our future growth prospects are forward-looking statements regarding our future business expectations intended to qualify for the ’safe harbor‘ under the Private Securities Litigation Reform Act of 1995, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2019. These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Company’s filings with the Securities and Exchange Commission and our reports to shareholders. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company unless it is required by law.

Infosys Limitedand subsidiaries Audited Condensed Consolidated Balance Sheet as at (Dollars in millions exceptequity share data)
September March
30, 2019 31,
2019 ASSETS
Current assets
Cash and cash 2,324 2,829
equivalents
Current 496 958
investments
Trade 2,265 2,144
receivables
Unbilled 1,026 777
revenue
Prepayments and 761 827
other current
assets
Income tax 5 61
assets
Derivative 15 48
financial
instruments Total current 6,892 7,644 assets Non-current
assets
Property, plant 1,878 1,931
and equipment
Right-of-use 552 –
assets(B3)
Goodwill 576 512
Intangible 191 100
assets
Non-current 556 670
investments
Deferred income 192 199
tax assets
Income tax 904 914
assets
Other 280 282
non-current
assets Total 5,129 4,608 non-current assets
Total assets 12,021 12,252 LIABILITIES AND
EQUITY Current
liabilities
Trade payables 301 239
Lease 73 –
liabilities(B3)
Derivative 5 2
financial
instruments
Current income 216 227
tax liabilities
Client deposits 2 4
Unearned 382 406
revenue
Employee 258 234
benefit
obligations
Provisions 86 83
Other current 1,388 1,498
liabilities Total current 2,711 2,693 liabilities Non-current
liabilities
Lease 503 –
liabilities(B3)
Deferred income 99 98
tax liabilities
Employee 6 6
benefit
obligations
Other 113 55
non-current
liabilities Total 3,432 2,852 liabilities Equity
Share capital- 332 339
INR5 ($0.16)
par value
4,800,000,000
(4,800,000,000)
equity shares
authorized,
issued and
outstanding
4,239,482,666
(4,335,954,462)
equity shares
fully paid up,
net of
18,929,512
(20,324,982)
treasury shares
as at September
30, 2019 (March
31, 2019)
Share premium 295 277
Retained 10,510 11,248
earnings
Cash flow hedge 2 3
reserve
Other reserves 460 384
Capital 17 10
redemption
reserve
Other (3,079) (2,870)
components of
equity Total equity 8,537 9,391 attributable to equity holders of the company
Non-controlling 52 9
interests Total equity 8,589 9,400 Total 12,021 12,252 liabilities and
equity

Infosys Limited and subsidiariesAudited Condensed Consolidated Statement of Comprehensive Income for the (Dollars in millions except equity share andper equity sharedata)

Three months Three months Six months Six months

ended ended ended ended

September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Revenues 3,210 2,921 6,340 5,753

Cost of sales 2,140 1,884 4,261 3,703 Gross profit 1,070 1,037 2,079 2,050 Operating
expenses

Selling and 165 154 333 303

marketing

expenses

Administrative 209 191 408 384

expenses

Total operating 374 345 741 687

expenses
Operating profit 696 692 1,338 1,363 Other income, 89 105 195 212 net
Finance cost(B3) (6) – (12) – Reduction in the – – –
(39) fair value of
Disposal Group
held for
sale(A1)
Profit before 779 797
1,521 1,536 income taxes

Income tax 207 216 403 420

expense
Net profit 572 581 1,118 1,116 Other
comprehensive
income
Items that will
not be
reclassified
subsequently to
profit or loss:

Re-measurements (3) 1 (6) 1

of the net

defined benefit

liability/asset,

net

Equity 1 2 1 2

instrument

through other

comprehensive

income, net

(2) 3 (5) 3
Items that will
be reclassified
subsequently to
profit or loss:

Fair valuation – (2) 2 (9)

of investments,

net

Fair value 2 (4) (1) (3)

changes on

derivatives

designated as

cash flow hedge,

net

Foreign currency (224) (461) (207) (929)

translation

(222) (467) (206) (941) Total other (224) (464) (211) (938) comprehensive
income/(loss),
net of tax
Total 348 117 907
178 comprehensive
income
Profit
attributable to:

Owners of the 569 581 1,115 1,116

Company

Non-controlling 3 – 3 –

interests

572 581 1,118 1,116 Total
comprehensive
income
attributable to:

Owners of the 346 117 905 178

Company

Non-controlling 2 – 2 –

interests

348 117 907 178 Earnings per
equity share

Basic ($) 0.13 0.13 0.26 0.26

Diluted ($) 0.13 0.13 0.26 0.26 Weighted average
equity shares
used in
computing
earnings per
equity share

Basic 4,249,343,678 4,347,055,177 4,275,615,916 4,346,857,296
Diluted 4,255,822,953 4,352,208,472 4,282,322,537 4,351,915,210

NOTES:

A. Notes pertaining to previous quarters / periods

1. In the six months ended September 30, 2018, the Company had recorded a reduction in the fair value amounting to $39 million in respect of its subsidiary Panaya.

B. Notes pertaining to the current quarter

1. The audited interim condensed consolidated Balance sheet and Statement of Comprehensive Income for the three months and half year ended September 30, 2019 have been taken on record at the Board meeting held on October 11, 2019.

2. A Fact Sheet providing the operating metrics of the Company can be downloaded from www.infosys.com .

3. On account of adoption of IFRS 16- Leases effective April 1, 2019.

IFRS-INR Press Release:
https://www.infosys.com/investors/reports-filings/quarterly-results/2
019-2020/q2/Documents/IFRS-INR-press-release.pdf

Fact Sheet:
https://www.infosys.com/investors/reports-filings/quarterly-results/2
019-2020/q2/Documents/fact-sheet.pdf

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