Conference Call with Infosys Management and Analysts on Q1FY21 Performance and Outlook. Listen to the full earnings transcript.
Key Highlights from CEO Salil Parekh
We had an exceptionally good quarter. I'm extremely proud of what we have achieved. Our Q1 results, especially growth was strong across multiple parameters.These are a clear testimony to the relevance of our service offerings and deep understanding of clients’ business priorities which is resonating with them in these times. It also demonstrates the remarkable dedication of our employees and leadership during this period. Our confidence and visibility for the rest of the year is improved by our Q1 performance and large deal wins.
Revenues grew 1.5% Y-o-Y on constant currency terms, declined Y-o-Y by 0.3% in USD.
Digital revenues at $1,389 million (44.5% of total revenues), year-on-year growth of 25.5% in constant currency. Operating margin at 22.7%, increase of 220 basis points year-on-year.
Free Cash Flow at $728 million; year-on-year growth of 50.1%. Voluntary attrition for IT services declined to 11.7% from 20.2% in Q1 20. FY21 Revenue growth guidance in the range of 0%-2% in constant currency. Operating margin for FY21 to be in the range of 21%-23%
Large deal wins were $1.7 billion dollars over the quarter. Voluntary attrition in IT services is down to 11.7%.Our balance sheet is strong at $3.8 billion of cash and investment positions with no debt.
Our majority workforce in the US is now from the US as we ramped up local hiring, and this will help us manage regulatory challenges as we move ahead.
Notwithstanding large stimulus programs in Europe and the US, there are still large economic uncertainties as we go forward. But we believe our brand resilience and trust with customers will keep us growing. With this in mind we will reinstate our guidance for the year. Our revenue growth guidance for the full FY is 0-2% YoY in constant currency. Our operating margin guidance is 21%-23%.
Geography wise, Europe grew by 4.4% year-on-year in constant currency while North America remained stable. As expected, utilization in quarter one was lower. However, onsite utilization remained steady for quarter one, after a drop in early part of the quarter. This was due to our extended focus on cost optimization and hiring freeze. Onsite offshore effort mix deteriorated slightly from quarter four but was better than quarter one FY20 by 70 bps. Only 10% of the revenue impact in quarter one FY21 was due to supply side issues as we have achieved remote work enablement for over 99% of our employees.
Large deal wins were healthy at $1.74 billion for Q1. This excludes the largest ever deal signed in Infosys history that we have closed in quarter two. We won 15 large deals in Q1, out of which 5 deals were in financial services, 3 deals in retail, energy, utility and services and hi-tech, and one deal in manufacturing. Region wise, 13 were from Americas and 2 were from Europe. Share of new deals was 19%.
