Infosys ( INFY Quick Quote INFY - Free Report) reported better-than-expected first-quarter fiscal 2022 results. The company’s fiscal first-quarter earnings of 17 cents per share came in line with the Zacks Consensus Estimate and grew 26% year over year.
Infosys’ fiscal first-quarter revenues increased 21.2% to $3.78 billion year over year and topped the Zacks Consensus Estimate of $3.70 billion. In terms of constant currency (CC), the metric was up 16.9%.
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.
Digital Revenues (53.9% of total) climbed 46.9% year over year (42.1% at cc) to $2.04 billion, while Core Revenues (46.1%) inched up 0.6% (down 3% at cc) to $1.74 billion.
Revenues across India, North America, Europe and the Rest of the World regions recorded year-over-year increases of 23.1%, 21.6%, 21.9% and 16.9%, respectively, on a reported basis. On a constant-currency basis, India, North America, Europe and the Rest of the World registered growth of 20.7%, 21.1%, 12.2% and 4.9%, respectively.
Segment wise, the Financial Services segment registered the highest growth of 27.1%. Communication, Life Sciences, Hi Tech and Retail jumped 10.6%, 23.4%, 15.1% and 26.6%, respectively. Manufacturing, Energy, Utilities, Resources & Services, and Others recorded growth of 23.1%, 14.5% and 16.3%, respectively.
The company added 113 clients during the fiscal first quarter. It also signed multiple large deals of contract value (TCV) worth $2.6 billion.
The company reported that its clients worth more than $100 million now add up to 34, up from the fourth-quarter fiscal 2020 number of 32 clients.
Other Financial Details
Gross profit climbed 21.2% year on year to $1.27 billion. Gross margin expanded 10 basis points (bps) on a year-over-year basis to 33.7%.
The company’s operating income jumped 26.6% to $896 million, year over year. Operating margin expanded 100 bps to 23.7%.
Infosys ended the fiscal first quarter with cash and cash equivalents of $2.87 billion, down from the $3.38 billion recorded at the end of fourth-quarter fiscal 2021.
FY22 Revenue Outlook Up
Buoyed by the stellar fiscal first-quarter performance, Infosys raised the revenue outlook for the full fiscal year. The company now expects annual revenues to grow between 14% and 16% year over year at cc, up from the previous forecast of a 12-14% increase. It kept the operating margin guidance range of 22-24% unchanged.
Zacks Rank & Key Picks
Currently, Infosys carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include
Digital Turbine ( APPS Quick Quote APPS - Free Report) , Intuit ( INTU Quick Quote INTU - Free Report) and Zoom Video Communications ( ZM Quick Quote ZM - 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 Digital Turbine, Intuit and Zoom is currently pegged at 50%, 14.8% and 15.6%, respectively.