Infosys Limited American Depositary Shares

Good day and welcome to the Infosys earnings conference call. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Mahindru, Thank you and over to you, sir.

Hello everyone and welcome to Infosys earnings call for Q1 FI24. Joining us here on this call is UNMD Mr. Salil Parekh, CFO Mr. Nilanjan Roy, and other members of the senior management team. We'll start the call with some remarks on the performance of the company for the quarter by Salil and Nilanjan, subsequent to which the call will be opened up for questions. Kindly note that anything which we say that refers to our outlook for the future is a forward-looking statement which must be read in conjunction with the risks that the company faces. A full statement and explanation of these risks is available in our filing with SEC, which can be found on www.sec.gov. I would now like to pass it on to Salil.

Thanks, Sandeep. Good evening and good morning to everyone on the call. Thank you for joining us. We had a strong quarter in Q1. Our Q1 growth was solid at 4.2% year-on-year and 1% quarter-on-quarter in constant currency. We had 21% growth in manufacturing, 14% in life sciences. Our Europe region grew by 10%. Our operating margin for the quarter was strong at 20.8%. We generated robust free cash flow of $699 million in Q1. Our large deals value for Q1 was $2.3 billion. 56% of this was net new. We had one mega deal win in Q1. Our value of deals for financial services was 50% of the overall large deal value in Q1. We announced a mega deal of $2 billion value after the close of Q1 and before our results before today. With a strong large deal and mega deal wins, we are building well for the future. Our pipeline of large deals is strong and we continue to have mega deals in our pipeline. We are delighted that Topaz, our AI and generative AI platform, is resonating well with our clients. We are working on 80 generative AI projects for our clients at this time. The work we are doing encompasses large language models for software development, text, document, voice, and video. Internally, we have developed generative AI tools using an open source model for software development. We are working with open source and proprietary generative AI platforms and models. We have trained 40,000 employees on generative AI. We see opportunities for new work and for productivity improvements through this technology. All of these elements are available within our Topaz set of capabilities. We see this area of generative AI and Topaz being really transformative for our clients. As we look ahead with our large and mega deal successes and our strength in cost efficiency, automation and consolidation, we feel confident. In the short term, we see some clients stopping or slowing down work on transformation programs and discretionary work. This is especially so in financial services, in mortgages, asset management, investment banking, and payments, and in the telecom industry. We also see some impact in the high-tech industry and in parts of retail. Even as we've won two mega deals recently and have a strong pipeline of large and mega deals, we receive revenue from some of these and other large deals towards the later part of our financial year. Keeping that in mind, we are changing our revenue growth guidance for this financial year to growth of 1% to 3.5% in constant currency. As a consequence of our mega deal wins, overall traction in cost efficiency, automation, and differentiated digital cloud and generative AI capabilities, we are well positioned for the medium term and especially towards the end of our financial year and the period after that. We've launched a broader and comprehensive margin expansion program. The program will work across five areas, pyramid efficiency, automation and generative AI, improvements in critical portfolios, reducing indirect costs and communicating and deriving value across the portfolio. Our senior leadership is mobilized on this. We're working on this program with our clients, our employees and partners. and we're taking steps for the short, medium, and long-term while keeping the overall strategic direction of the company in mind. We have an ambition to improve our operating margin in the future periods. Our operating margin guidance for the financial year remains unchanged at 20% to 22%. With that, let me hand it over to Nilanjan.