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Infosys (INFY) Q3 Earnings & Revenues Top Estimates, Up Y/Y

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Shares of Infosys (INFY - Free Report) were trading 4.3% higher during the pre-market trading session on Wednesday after the India-based IT consulting and outsourcing company reported better-than-expected third-quarter fiscal 2021 results.

The company’s fiscal third-quarter adjusted earnings of 17 cents per share surpassed the Zacks Consensus Estimate of 15 cents. Moreover, quarterly earnings jumped 13.3% from the year-ago quarter’s earnings per share of 15 cents.

Infosys’ fiscal third-quarter revenues increased 8.4% to $3.52 billion year over year and topped the Zacks Consensus Estimate of $3.38 billion as well. In terms of constant currency (CC), the metric was up 6.6%.

Rise in large deal wins and fast-growing digital services were key catalysts. Solid demand for its services in cloud, IoT, cyber security, SaaS, user experience, data and analytics is a major driver.

Revenue Details

Digital Revenues (50% of total) climbed 33.6% year over year (31.3% at cc) to $1.76 billion, while Core Revenues (50%) declined 8.8% (down 10.3% at cc) to $1.76 billion.

The company recorded revenue growth across all of its geographical regions. Revenues across North America, Europe, and Rest of the World regions recorded year-over-year increase of 8.9%, 6.8%, and 10.7%, respectively, on a reported basis. On a constant-currency basis, the regions registered respective growth of 8.8%, 1.3%, and 6.1%. India witnessed growth of 1.7% on a reported basis and 4.3% on CC.

Segment wise, Hi Tech registered the highest growth of 17.6%. Life Sciences, Financial Services, and Retail jumped 13.2%, 13.9% and 4%, respectively. Communication, and Energy, Utilities, Resources & Services recorded a decline of 3.4% and 6.5%, respectively. However, revenues from the Manufacturing division edged down 1.9%.

The company added 139 clients during the fiscal third quarter. It also signed multiple large deals of contract value (TCV) worth $7.13 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 29, down from the second-quarter number of 30 clients.

Other Financial Details

Gross profit climbed 14.5% year on year to $1.24 billion. Gross margin expanded 190 basis points (bps) on a year-over-year basis to 35.3%.

The company’s operating income jumped 25.6% to $893 million, year over year. Operating margin expanded 350 bps to 25.4%.

Infosys ended the fiscal third quarter with cash and cash equivalents of $3.48 billion, up from the fiscal second-quarter level of $3.04 billion.

Zacks Rank and Other Stocks to Consider

Infosys currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the broader technology sector include Micron (MU - Free Report) , Dell Technologies (DELL - Free Report) and NetApp (NTAP - Free Report) , all 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 Micron, Dell and NetApp is currently pegged at 12.7%, 12%, and 11.9%, respectively.

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