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Infosys Q3 revenue beats estimates; earnings miss

Infosys (INFY) reported better-than-expected revenues for the third quarter of 2019 while earnings came in shy of estimates. The stock was up 2.9% in premarket hours on Friday.

Total revenues grew 8.4% to $2.98 billion from the year-ago quarter. On a constant currency basis, revenues grew 10.1%. Net profit dropped to $502 million or $0.12 per share from $796 million or $0.17 per share in the prior-year period.

Infosys third quarter 2019 earnings infographic
Infosys Q3 2019 Earnings Infographic

During the quarter, Infosys recorded revenue increases in both its digital and core businesses, with digital revenues growing 33.1% year-on-year to $942 million in constant currency terms. Revenues remained relatively flat across most business segments and geographies on a year-over-year basis. The company secured $1.57 billion in large deal signings during the quarter.

Infosys revised its revenue guidance for fiscal year 2019 to 8.5% to 9% on a constant currency basis. Operating margin guidance was retained at 22% to 24%.

Earnings preview: BFSI to be the deciding factor for Infosys in Q3

Infosys had previously classified its subsidiaries Kallidus & Skava and Panaya as Held for Sale. During the third quarter, based on evaluation of proposals and negotiations with buyers, the company concluded that the chances of completing a sale by March 31, 2019 were very low.

Accordingly, both assets have been de-classified from Held for Sale and the company incurred additional depreciation and amortization expenses of $12 million in the process. The company also recognized a reduction of $65 million in the carrying value of Skava. Infosys plans to repurpose Skava’s micro services-based business and refocus Panay’s product suite.

 

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