Infosys slashes revenue guidance, blames slow growth in large deals

BANGALORE, INDIA: IT major Infosys has disappointed the market today by lowering its constant currency revenue guidance for the year to 10.5-12.0 per cent from 11.5-13.5 per cent.

Brexit has created an uncertainty in the near term for all the IT services companies catering to Europe and the same is true for Infosys too.

“As we look ahead to the future clearly (Brexit) is something that many banks are worried about and so forth,” said CEO Vishal Sikka. “In the near term we don’t know how this will play out and so forth. So, given the visibility we lowered our guidance.”

Europe contributes upto 23 per cent of Infosys' revenue, but it has not affected the company so far, added Sikka.

But he is hopeful that Brexit would create more need for services, integration, and more need for ways to interact across boundaries, which means there will be opportunities for revenue growth.

The quarterly net profit rose 13.4 per cent, but declined 4.5 percent sequentially to Rs 3,436 crore. The revenue increased 1.4 percent from the preceding quarter to 16,782 crore.

“We had unanticipated headwinds in discretionary spending in consulting services and package implementations as well as slower project ramp-ups in large deals that we had won in earlier quarters, resulting in a lower than expected growth in Q1,” said CEO Vishal Sikka.

It added one client in $25 million+ category, three clients in $100 million+ category, while total clients grew 14 per cent to 1,126 during Q1.

However, automation, which is a core element of the company's Renew-New strategy along with AI and Zero Distance strategy has been able to bring growth in delivery services, according to the company.

Geography-wise, North America grew by 2.5 per cent sequentially, Europe grew by 0.6 per cent sequentially, India declined by 7.6 per cent sequentially and Rest of the world grew by 6.9 per cent sequentially.

Industry-wise, financial services & insurance grew by 2.2 per cent sequentially, manufacturing & hi-tech grew by 2.9 per cent sequentially, retail & life sciences grew by 1 per cent sequentially, energy, utilities, communications & services grew by 3.1 per cent sequentially.