Infosys fails to meet FY20 targets, suspends FY21 guidance citing uncertainty

• Annual revenue growth comes at 9.8% in constant currency terms, against earlier guidance of 10%-10.5%.
• Infosys stops promotions, salary increments and fresh hiring.
• To provide guidance only after visibility improves.

Bengaluru based IT giant Infosys on Monday reported a sequential decline of 1.4% in its fourth quarter revenues, which stood at $3,197 million. The company finished the year ending March 31, 2020, with revenue of $12,780 million which translates a growth of 8.3% on a reported currency term and 9.8% in constant currency.

The company in the previous quarter had revised its revenue guidance to 10%-10.5% for FY20.  

On the suspension of guidance, Infosys CEO Salil Parekh said "Given the uncertain environment due to the global pandemic and client businesses marred by volatility, we do not feel it would be appropriate for us to provide an annual guidance at this stage."

A note by Emkay Global Financial Services said, "Infosys has not provided any annual revenue guidance for FY21 for now, in line with our expectations of possibility of Indian vendors not providing an outlook given significant fluidity in the environment. We see marginal cuts to our earnings estimates for Infosys prima facie."

Also Read: Coronavirus effect: Infosys defers promotions, salary hikes; to honour all new job offers

Salil Parekh , CEO also added  that though in the short term the business is slowing, however, in the medium term there is encouraging client conversations around increased virtualisation, cloud transformation and consolidation of business deliveries.

With some clients seeking extension of credit given the current environment "from a near term perspective there could be margin pressure coming in from the top line and on the cost side, But we have already taken some no regret moves," said Nilanjan Roy, CFO.  

He further added that while the company will look at several cost levers, currently, it has suspended hiring and promotions temporarily alongside salary hikes  as a part of its ' no regret move'. 

Also Read: Infosys FY20 net profit climbs 8% to Rs 16,639 crore; skips revenue guidance for FY21

Pravin Rao, COO, however said that all offers that have already been rolled out be it campus or lateral will be honoured.

After a handful of Infosys' employees tested positive for COVID-19 across the world, the company said in order to minimise any risk to the staff's health, every reasonable precaution - from recommissioning facilities, adopting more rigorous cleaning routines, and stocking essentials such as masks and sanitisers, to implementing social distancing best practices - have already been under taken. With nearly 93% the  global workforce working from home, the company said  small teams of mission-critical  employees continue to work out of the company's workplaces to deliver on specific business continuity plans for clients in critical infrastructure and service industries.