Infosys (INFY) Q4 Earnings Meet, Revenues Miss Yet Up Y/Y

Infosys Technologies Ltd. (INFY - Analyst Report) reported fourth-quarter fiscal 2015 earnings per ADS from continuing operations of 44 cents, in line with the Zacks Consensus Estimate but 2.3% above 43 cents earned in the year-ago quarter.

The rise in the bottom line is mainly attributable to the company’s profitable Renew-New strategy that has knowledge-based learning at its core. Moreover, the company’s relentless investments in innovation have contributed toward improving relationships with client as well as strengthening its capabilities.  

For fiscal 2015, the company’s earnings per ADS came in at $1.76 reflecting a 15% increase compared with the year-ago tally of $1.53.

Quarter in Details

Total revenue for the reported quarter came in at $2,159 million, up 3.2% year over year. However, it fell short of the Zacks Consensus Estimate of $2,248 million.

On a sequential basis, healthy performance of Finacle and Edge suite acted as major drivers of revenue growth. Also, the company’s improved operating efficiency supplemented the revenues.

However, increased commoditization of the outsourcing business proved to be a headwind for the company, adversely affecting the pricing levels. This, in turn, hurt the top-line growth. Moreover, sluggish revenue growth was mainly the result of weak performance of the service business.

For fiscal 2015, revenues came in at $8,711 million, up 5.6% from fiscal 2014.

Infosys recorded an operating profit of $555 million compared with $534 million in the prior-year quarter, an increase of 3.9%. Also, operating margin for fourth-quarter fiscal 2015 increased 20 basis points (bps) to 25.7% from 25.5% in the year-ago quarter. Net profit after tax deductions came in at $498 million, up 2.3% year over year.

For fiscal 2015, Infosys recorded an operating profit of $2,258 million compared with $1,979 million in fiscal 2014. Meanwhile, operating margin expanded 190 bps to 25.8% from 23.9% a year ago.

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