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Infosys (INFY) Falls 3% as Q4 Earnings & Revenues Miss Estimates
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Infosys’s (INFY - Free Report) stock was trading nearly 3% lower during the pre-market trading session today after the India-based IT services provider reported lower-than-expected fourth-quarter fiscal 2022 results. The company’s fiscal fourth-quarter earnings of 18 cents per share came a penny lower than the Zacks Consensus Estimate. However, on a year-over-year basis, the bottom line improved 9.2%.
Infosys’ fiscal fourth-quarter revenues increased 18.5% to $4.28 billion year over year but missed the Zacks Consensus Estimate of $4.30 billion. In terms of constant currency (cc), the metric was up 20.6%.
A rise in large deal wins amid the ongoing digital transformation wave was a key catalyst. INFY continued to fortify its digital capabilities. The Infosys CobaltTM cloud portfolio witnessed solid traction.
Digital Revenues (59.2% of the total) climbed 36.2% year over year (38.8% at cc) to $2.53 billion, while Core Revenues (40.1%) declined by 0.3% (up 1.4% at cc) to $1.75 billion.
Revenues across India, North America, Europe and the Rest of the World regions recorded year-over-year increases of 25.9%, 18.2%, 22.2% and 9.6%, respectively, on a reported basis. On a cc basis, India, North America, Europe and the Rest of the World registered growth of 29.5%, 18.5%, 28.3% and 13.9%, respectively.
Segment-wise, Manufacturing registered the highest growth of 45.3%. Life Sciences, Financial Services, Communication and Retail jumped 15.1%, 12.4%, 26.4% and 14.3%, respectively. The Energy, Utilities, Resources & Services and Hi-Tech divisions recorded year-over-year revenues of 15.7% and 20.5%, respectively. Moreover, sales at the Others business segment increased by 3.6%.
Infosys added 110 clients during the fiscal fourth quarter. It also signed multiple large deals of a contract value worth $2.3 billion.
The company reported that its clients, worth more than $100 million, now add up to 38, up from the previous quarter’s 37 and 32 at the end of the year-ago quarter.
Other Financial Details
Gross profit climbed 5.5% year over year to $1.33 billion. However, the gross margin contracted by 380 basis points (bps) on a year-over-year basis to 31%.
The company’s operating income increased 4.1% year over year to $920 million. The operating margin declined by 300 bps to 21.5%.
Infosys ended the fiscal fourth quarter with cash and cash equivalents of $2.31 billion, up from $2.15 billion recorded at the end of the third quarter of fiscal 2022.
Fiscal 2023 Revenue Guidance
For fiscal 2023, INFY expects annual revenues to grow between 13% and 15% year over year at cc. It forecasts the operating margin in the 21-23% range during the fiscal.
Zacks Rank & Stocks to Consider
Currently, Infosys carries a Zacks Rank #3 (Hold).
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Infosys (INFY) Falls 3% as Q4 Earnings & Revenues Miss Estimates
Infosys’s (INFY - Free Report) stock was trading nearly 3% lower during the pre-market trading session today after the India-based IT services provider reported lower-than-expected fourth-quarter fiscal 2022 results. The company’s fiscal fourth-quarter earnings of 18 cents per share came a penny lower than the Zacks Consensus Estimate. However, on a year-over-year basis, the bottom line improved 9.2%.
Infosys’ fiscal fourth-quarter revenues increased 18.5% to $4.28 billion year over year but missed the Zacks Consensus Estimate of $4.30 billion. In terms of constant currency (cc), the metric was up 20.6%.
A rise in large deal wins amid the ongoing digital transformation wave was a key catalyst. INFY continued to fortify its digital capabilities. The Infosys CobaltTM cloud portfolio witnessed solid traction.
Infosys Limited Price and Consensus
Infosys Limited price-consensus-chart | Infosys Limited Quote
Revenue Details
Digital Revenues (59.2% of the total) climbed 36.2% year over year (38.8% at cc) to $2.53 billion, while Core Revenues (40.1%) declined by 0.3% (up 1.4% at cc) to $1.75 billion.
Revenues across India, North America, Europe and the Rest of the World regions recorded year-over-year increases of 25.9%, 18.2%, 22.2% and 9.6%, respectively, on a reported basis. On a cc basis, India, North America, Europe and the Rest of the World registered growth of 29.5%, 18.5%, 28.3% and 13.9%, respectively.
Segment-wise, Manufacturing registered the highest growth of 45.3%. Life Sciences, Financial Services, Communication and Retail jumped 15.1%, 12.4%, 26.4% and 14.3%, respectively. The Energy, Utilities, Resources & Services and Hi-Tech divisions recorded year-over-year revenues of 15.7% and 20.5%, respectively. Moreover, sales at the Others business segment increased by 3.6%.
Infosys added 110 clients during the fiscal fourth quarter. It also signed multiple large deals of a contract value worth $2.3 billion.
The company reported that its clients, worth more than $100 million, now add up to 38, up from the previous quarter’s 37 and 32 at the end of the year-ago quarter.
Other Financial Details
Gross profit climbed 5.5% year over year to $1.33 billion. However, the gross margin contracted by 380 basis points (bps) on a year-over-year basis to 31%.
The company’s operating income increased 4.1% year over year to $920 million. The operating margin declined by 300 bps to 21.5%.
Infosys ended the fiscal fourth quarter with cash and cash equivalents of $2.31 billion, up from $2.15 billion recorded at the end of the third quarter of fiscal 2022.
Fiscal 2023 Revenue Guidance
For fiscal 2023, INFY expects annual revenues to grow between 13% and 15% year over year at cc. It forecasts the operating margin in the 21-23% range during the fiscal.
Zacks Rank & Stocks to Consider
Currently, Infosys carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader technology sector include Jabil (JBL - Free Report) , Broadcom (AVGO - Free Report) and Apple (AAPL - Free Report) . While Jabil sports a Zacks Rank #1 (Strong Buy), Broadcom and Apple each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Jabil’s third-quarter fiscal 2022 earnings has been revised upward to $1.62 per share from $1.46 30 days ago. For fiscal 2022, earnings estimates have been revised upward by 67 cents to $7.25 per share in the past 30 days.
Jabil’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 13.5%. Shares of JBL have rallied 7.2% in the trailing 12 months.
The Zacks Consensus Estimate for Broadcom’s second-quarter fiscal 2022 earnings has been revised upward by eight cents to $8.72 per share over the past seven days. For fiscal 2022, earnings estimates have moved upward by 18 cents to $35.67 per share over the past seven days.
Broadcom’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 1.9%. Shares of AVGO have rallied 20.8% over the past year.
The Zacks Consensus Estimate for Apple’s second-quarter fiscal 2022 earnings has been revised upward by seven cents to $1.43 per share over the past 90 days. For fiscal 2022, earnings estimates have moved upward by a penny to $6.16 per share in the past 60 days.
Apple’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while meeting the same on one occasion, the average surprise being 20.3%. AAPL stock has soared 24.7% in the past 12 months.