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Infosys (INFY) Q4 Earnings Meet Estimates, Revenues Beat

Infosys INFY reported better-than-expected fourth-quarter fiscal 2021 results.

The company’s fiscal fourth-quarter adjusted earnings of 16 cents per share matched the Zacks Consensus Estimate and grew 18% year over year.

Infosys’ fiscal fourth-quarter revenues increased 13% to $3.61 billion year over year and topped the Zacks Consensus Estimate of $3.56 billion. In terms of constant currency (CC), the metric was up 9.6%.

Rise in large deal wins and the fast-growing digital services were key catalysts.

Notably, Infosys continued to fortify its digital capabilities. The Infosys CobaltTM cloud portfolio witnessed solid traction.

Infosys Limited Price, Consensus and EPS Surprise

Infosys Limited price-consensus-eps-surprise-chart | Infosys Limited Quote

Revenue Details

Digital Revenues (51.5% of total) climbed 38.6% year over year (34.4% at cc) to $1.86 billion, while Core Revenues (48.5%) declined 5.5% (down 8.3% at cc) to $1.75 billion.

Revenues across North America, Europe and the Rest of the World regions recorded year-over-year increases of 13%, 12.8% and 9.3%, respectively, on a reported basis. On a constant-currency basis, North America and Europe registered respective growth of 12.3% and 5.1%, whereas the Rest of the World declined 0.9%. India witnessed growth of 30.8% on a reported basis as well as at cc.

Segment-wise, the Others segment registered the highest growth of 31.4%. Life Sciences, Financial Services, Hi Tech and Retail jumped 20.8%, 19.1%, 15.9% and 7.6%, respectively. Communication, Manufacturing, and Energy, Utilities, Resources & Services recorded growth of 4.5%, 7.1% and 8%, respectively.

The company added 130 clients during the fiscal fourth quarter. It also signed multiple large deals of contract value (TCV) worth $14.1 billion. The TCV recorded during the reported quarter was the highest ever in the company’s history.

The company reported that its clients worth more than $100 million now add up to 32, up from the third-quarter number of 29 clients.

Other Financial Details

Gross profit climbed 18% year on year to $1.26 billion. Gross margin expanded 180 basis points (bps) on a year-over-year basis to 34.9%.

The company’s operating income jumped 31.1% to $884 million year over year. Operating margin expanded 340 bps to 24.5%.

Infosys ended the fiscal fourth quarter with cash and cash equivalents of $3.38 billion, down from the fiscal third-quarter level of $3.48 billion.

Full-Year Fiscal 2021 Highlights

Revenues of $13.56 billion grew 6.1% year on year on a reported basis and 5% at cc.

Adjusted earnings of 62 cents per share grew 12.5% year over year.

Guidance

Infosys provided guidance for the fiscal year 2022. It expects annual revenues to grow between 12% and 14% year over year at cc and operating margin between 22% and 24%.

Zacks Rank & Stocks to Consider

Infosys currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader technology sector are Ubiquiti Inc. UI, Micron Technology, Inc. MU and Etsy, Inc. ETSY, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Ubiquiti, Micron and Etsy is currently pegged at 32.94%, 15.66% and 25.25%, respectively.

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