Infosys Technologies Ltd. (INFY - Analyst Report) reported first-quarter fiscal 2016 earnings per ADS of 21 cents, which exceeded the Zacks Consensus Estimate of 20 cents but came in line with the year-ago quarter figure.

The results were mainly attributable to the strong revenues. In addition, the company’s relentless investments in innovation have contributed toward improving relationships with client as well as strengthening its capabilities.

Quarter in Details

Total revenue for the reported quarter came in at $2,256 million, up 5.8% year over year and exceeded the Zacks Consensus Estimate of $2,219 million. On a sequential basis, revenues, excluding acquisitions, were up 4.5% – the highest in the last 15 quarters. High contract wins, volume growth and successful execution of strategic investments were the drivers.

Infosys recorded an operating profit of $541 million compared with $536 million in the prior-year quarter, an increase of 0.9%.

Also, Infosys made significant client additions via contract wins, which includes six big contracts such as multi-year agreements with Deutsche Bank AG (DB -Analyst Report) and ServiceFirst.  

As of Jul 21, 2015, the company had over 127 client engagements possessing the Infosys Information Platform. The company has finished 16 pilot programs, to date, using this platform.

Talking about the acquisitions, Infosys signed an agreement to acquire Kallidus Inc. in first-quarter fiscal 2016. Additionally, the AGM shareholders inked a contract to acquire the healthcare business from the wholly-owned subsidiary of Infosys – Infosys Public Services Inc. – for about $100 million.

Geographical Segment Performance

On the basis of geographies, strong growth was seen in regions like North America, where first-quarter fiscal 2016 sales rose about 4% over the year-ago tally. On the other hand, sales in Europe inched down 8.6% from the year-ago tally. Also, other two geographic segments -- India and ‘Rest of the World' -- experienced yearly declines. While India’s revenues in first-quarter fiscal 2016 edged down 8.3%, that from the Rest of the World fell 0.8% from the prior-year tally.

Industry Segment Performance

On a year-over-year basis, revenues in the Insurance, Banking and Financial services (“FSI”) segment dipped 0.9%, and Energy, Utilities, Communications & Services (“ECS”) divisions declined 4.1%. On the other hand, Manufacturing (“MFG”) and Retail and Life Sciences (“RCL”) segments rose 3.4% and 1.3%, respectively.

Liquidity

At the end of the quarter, Infosys had cash & cash equivalents of $4,421 million as of Jun 30, 2015, versus $4,859 million as of Mar 31, 2015.

Outlook

Infosys has reiterated its revenue guidance for fiscal 2016 in the range of 10–12% on a constant currency basis. However, considering the impact of currency change, revenues are anticipated to grow in the range of 7.2-9.2% (earlier guidance being 6.2–8.2%).

In Conclusion

Infosys posted better first-quarter fiscal 2015 results on the back of large deal wins. Also, the company’s organization realignment initiatives taken earlier this year has fueled strong volume escalations. Moreover, the company’s Panaya acquisition aided it in enhancing its market share in the cloud business via cracking 15 new deals across diverse indsutries. At the same time, Infosys holds a strong commitment towards improving its corporate social responsibility, which, we believe will help it obtain a competitive edge over its peers. 

Infosys currently has a Zacks Rank #3 (Hold). Some better-ranked stocks include Fair Isaac Corp. (FICO - Snapshot Report) and CDK Global, Inc. (CDK - Snapshot Report). Both stocks hold a Zacks Rank #1 (Strong Buy).