Infosys Q2, 2011 Facts, Metrics & Learnings
Q2,2011 Earnings: Quarter Ending September 30 2010
FACTS
• 27 new clients added.
• # of active clients – 592
• 337 million dollar clients, 27 50+ million dollar clients
• Top 10 client contribute 26.7% of revenue
• Larger deals coming back to the markets. Not at the level pre financial crisis but coming back. Infosys did 9 deals in this quarter and some of them were $200 million plus.
• Total Contract Value of deals closed first half was $865 million.
• 137 Global Fortune 500 as clients and 124 US Fortune 500 are clients
• Projected to hire 40,000 this year vs earlier forecast of 36,000. Added 14,000 this quarter, will add another 11,000 next quarter.
• Vertical growth in financial services, retail. Energy and Utilities & Manufacturing in Europe.
• 12,000 promotions this year
• Financial Services M&A related projects tapering down and move to run the bank model gaining traction.
METRICS
• Revenues – $1.496 billion QoQ – (+10.2), YoY – (+29.6%)
• Net Income – $374 million QoQ – (+14.7%), YoY – (+18.0%)
• Earnings forecast for next quarter – between $1.413 to $1.427 billion, YoY growth between 22.4% and 23.7%
• Earnings forecast for next quarter – between $1.547 billion and $ 1.562 billion. YoY growth forecast of 25.6 to 26.8%
• Earning forecast for fiscal year 2011 – Revenue between $5.95 billion to $ 6.00 billion. YoY growth of 24.0% to 25.0%
• Cash – $ 5.211 billion
• 14,264 gross addition of employees, net addition of 7,646
• 122,468 employee strength end of September 2010
• 115,972 software employees ( 99,667 – billable, 5,178 Banking Product Group, 11,127 trainees)
• 6,4,96 – Sales & Support
• Attrition Rate – 17.1% ( compared to 13.6% last quarter, 11.6% 2 quarter prior) BPO had larger number of people leaving 5,411 compared to 3,589 last quarter.
• Majority of the people leaving are those between 2 to 6 years of experience
• Pay raises of 14% offshore ( India) and 2-3% onshore
• Infosys BPO employee strength – 18,560, Australia – 443, China – 2,729, Consulting – 654, Mexico – 454, Sweden – 17, Brazil – 133
• Revenue break up – North America – 65.8%, Europe – 21.8%, India – 2.1%
• Application Development – 39.1%, BPM – 5.6%, Consulting Services and Package Implementation – 25.8%, Infrastructure Service – 6.2%, Product Engineering Services – 2.5%, SI – 5.7%, Testing Services – 7.6%
• Insurance,Banking – 35.4%, Manufacturing – 18.9%,Retail -14.4%, Telecom- 13.3 %, Energy & Utilities – 6.3%
• Subsidary Revenue (millions USD) BPO– 79.72, Consulting – 46.81, China – 19.28
• Net Income (millions USD) BPO– 10.33, Consulting – 5.27, China – 2.03
LEARNINGS
• Deals coming in from Operations as well as transformation deals started to come back.
• Regulatory changes in the US , specially around financial services is something which the offshore vendors will continue to be cautious on. A number of them are also leveraging this opportunity by building risk management, compliance, data reporting capabilities as part of the service offering.
• Retails Sectors continue to invest in reaching out to the digital consumer and that is an opportunity which a number of firms are leveraging with the global delivery model.
Q1, 2011
FACTS
• 38 new clients added.
• # of active clients – 590
• 341 million dollar clients, 26 50+ million dollar clients
• Top 10 client contribute 26.1% of revenue
• 137 Global Fortune 500 as clients and 124 US Fortune 500 are clients
• Projected to hire 36,000 this year vs earlier forecast of 30,000. Increased numbers are due to projected demand and also to mitigate attrition risks ( 2,000 for growth and 4,000 for attrition)
• Pricing stable but overall pricing came down by 1.6 to 1.7% this quarter
• $ 15 – $16 million dollars in visa expenses per quarter
• Retail Spending and Energy & Utilities spending growth is because of discretionary spending
METRICS
• Revenues – $1.358 billion QoQ – (+4.8), YoY – (+21%)
• Net Income – $336 million QoQ – (-6.6%), YoY – (+4.2%)
• Earnings forecast for next quarter – between $1.413 to $1.427 billion, YoY growth between 22.4% and 23.7%
• Earnings forecast for next year – between $5.72 billion and $ 5.81 billion. YoY growth forecast of 19% to 21%
• Cash – $ 4.658 billion
• 8,859 addition of gross employees, net addition of 1,026 this quarter
• 114,822 employee strength end of June 2010
• 108.495 software employees ( 95,863 – billable, 5,029 Banking Product Group, 7,603 trainees)
• 6,327 – Sales & Support
• Attrition Rate – 15.8% ( compared to 13.6% last quarter, 11.6% 2 quarter prior) BPO had larger number of people leaving 5,411 compared to 3,589 last quarter.
• Majority of the people leaving are those between 2 to 6 years of experience
• Pay raises of 14% offshore ( India) and 2-3% onshore
• Infosys BPO employee strength – 18,609, Australia – 394, China – 1,765, Consulting – 605, Mexico – 414, Sweden – 17, Brazil – 116
• Revenue break up – North America – 67.3%, Europe – 20.3%, India – 1.7%
• Application Development – 40.8%, BPM – 5.7%, Consulting Services and Package Implementation – 24.9%, Infrastructure Service – 6.9%, Product Engineering Services – 2.1%, SI – 4.2%, Testing Services – 7.3%
• Insurance,Banking – 36.1%, Manufacturing – 19.5%,Retail -13.2%, Telecom -14.1%, Energy & Utilities – 6.0%
• Subsidary Revenue (millions USD) BPO– 78.14, Consulting – 38.55, China – 15.81
• Net Income (millions USD) BPO– 6.42, Consulting – 3.25, China – 1.69
LEARNINGS
• Europe markets are slower in recovery and growth in these markets will continue to lag and be slow to come back. A number of outsourcing vendors are cautious about the European market growth
• Budgets for firms are closed and the firms will spend the budget this year compared to last year when the budget were reopened during the year..
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