Q3 2023 Infosys Ltd Earnings Call
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Ladies and gentlemen, good.
Good day and welcome to the Infosys Limited earnings Conference call.
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I now hand, the conference over to Mr. Sandeep Mahindra, Thank you and over to you Sir.
I've been down there they don't I'm very convinced that there's a need for them to discuss Q3, FY 'twenty financial results.
With that I'd like to think that would be one of Eddie happening yet joined.
Joining us on this call as CEO and administer for anybody.
Goodbye.
The senior management team.
We've got the debit send them up on the performance of the company by selling in the London subsequent to that you can open up the call for questions.
Please note that anything which we say that that's what you're after you said I would like to get that up making chicken because that's where they didn't conjunction but better said the company faces.
Okay.
Second our businesses have been living in a filing with the FTC, which can be found on www SEDAR jewelry online like the pathogen dependent.
Thanks, Andy.
Good morning, everyone.
Thank you for joining us.
We are delighted to share with you that our Q3 performance was strong with year on year, a group of 13, 7%.
Quarter on quarter growth of two point focus on.
This in a seasonally weak quarter for us and then there's a changing global economy.
We continued to gain market share.
Growth in Q3 was broad based with most industries and geographies growing in double digits.
Got it.
In constant currency for nine months of FY 'twenty two.
17, 8% compared to the same period all of FY 'twenty two.
I love the value was $8 3 billion the highest in eight quarters.
We plan to launch this is the largest number of large deals in our history.
36% of this isn't it.
Our pipeline of large deals remain strong.
I think he can do that.
<unk> grew at 22% in the quarter at constant currency and are now close to 63% of our overall revenue.
So this is a revenue grew at two 4%.
We are seeing growth in both areas of our business digital and cloud services.
This is a testament to our industry, leading digital capabilities.
Eating our COBOL cloud capability, and our industry, leading automation capabilities.
Both of which are resonating with our clients.
Our lives do you buy a plane is seeing increased traction for automation and cost efficiency programs.
Our results reflect a deep rooted client relationships, coupled with client centric strategy.
Differentiated digital and cloud capabilities strengthen observation and the ability to pivot our business rapidly to changing client needs.
Our cloud revenues continue to have healthy growth this quarter.
Our clients are focused on accelerating the digital and cloud transformation.
Good to go and to become more operationally efficient.
It just got to partner with them through the complexities of managing this change because of that differentiated capabilities.
Our industry, leading cloud offering cobalt is playing a key role in helping them navigate their digital transformation.
Examples of this.
<unk> is helping accelerate business growth in Brazilian for large telco.
And the decision, making more data driven.
We're supporting a leading aerospace company, but automation all the customer experience.
Leveraging our modernized technology infrastructure driving material cost efficiency.
Strong growth was accompanied by stable operating margin of 21, 5%.
This was driven by healthy revenue growth and cost optimization benefits.
Our operating margins for the first nine months was up by 23 out of 21% in line with our margin guidance.
Our voluntary quarterly annualized attrition continues to decline steadily introduced by six percentage points sequentially to well below 20% for this quarter.
We are encouraged by the immense confidence and trust that clients have enough.
The signs at island us around the slowing global economy a visit.
Some areas, such as mortgages and investment banking and financial services industry.
Cool high Tech and retail are more impacted and that is leading to delays in decision, making and uncertainty in spending in these areas.
We are confident that the strength of our digital and cloud capabilities and automation capabilities will continue to position us well in the market.
They are keeping a close watch on the global economy.
Driven by a growth of 17, 8% in constant currency for the first nine months of FY2023.
And so large D value for Q T G.
We are increasing our revenue guidance, which was that 15% to 16% Oh Dear.
16% to 16.5%.
Despite the change in global economic conditions.
We're retaining our operating margin guidance for FY2023 of 21% 22%.
I anticipate to be at the lower end of this range.
Thank you and with that let me request the lung into sure.
Thankfully a good evening, everyone and thank you for joining this call. Let me start by looking everyone, a very happy and what he thinks he.
Let's see what other quarter, there isn't isn't performing well revenues grew by 13, 7% year on year and two 4% sequentially in constant currency terms, despite seasonal weakness most of our business segments and you grew in double digits you're on your own.
Constant currency.
Manufacturing grew by 36%.
You have it by 25, 9% and Europe grew by 25, 3% digital revenue constitutes 62, 9% of total revenues and grew by 21, 7% year on year in constant currency.
Wherever you thought about what sort of growth, reflecting the accelerated client focus on cost takeout.
Client metrics remained strong with year on year increases in client counts across revenue bucket.
That's 15 million clients increase by 15 to 17 nine number of 200 million clients increased by five Y number of 300 million clients increased by three over the same quarter last year, reflecting a strong ability to mind uptime during.
During the call that'd be I didn't have any clarity from your client utilization excluding trainees it used to be the one 7%, reflecting seasonality and employees joining the bench both completion of the training.
If that mix remained stable at 24, 5%.
Globally I'd love, if there shouldn't continue to trend downwards and reduced further by another 6% during the quarter. This is the lowest quarterly annualized attrition in the past seven quarters.
Sequentially LTM attrition reduced to 24, 3% as compared to 27, 1% in Q2, we expect attrition to reduce further in the near term.
Well, if you go to a 17, 8% in constant currency.
Nine month FY2023 operating margin for the same period was 21% in line with the lower end, although I forget guy did that called out earlier.
Q3 operating margins remained steady at 21, 5% the major component of margin movement that follows.
So let me 30 basis points due to benefit from the pre depreciation and costs have been offset by lower benefit from revenue I did 70 basis points from lower class.
No problem cost optimization, including yours upon before.
This was offset by headwinds of 30 basis points from higher D&A and the balance 80 basis points due to seasonal weakness in the operating parameters.
Bobby.
Petrobras Q.
Q3, EPS grew by 13, 4% in rupee terms on a year on year basis.
The airplane feedback three days sequentially to 68, reflecting higher billing during the quarter.
Our balance sheet continues to remain strong and debt free auto increased by two 2% year on year to 32, 6%.
Cash flow for the quarter was $3 million to $576 million at conversion up 72% of them, let up at all or ITD be about $1 8 billion between planar conversion at 81% of net profit.
I mean that cash balances increased to six 3% in Q3.
You would see most appropriate consecutive quarter of delivering positive forex income despite the volatile currency environment.
Holidays had cash and investments declined from $4 79 billion last quarter to a cheaper at nine 1 billion consequent to 132 billion to be returned to investors towards interim dividend and buyback we initiated the buyback on December 7th and till date has bought back one 3 million shares what could be a full 790.
51, 5% of the total authorization of 9300 clubs at an average price of approximately 15 31 rupees per share compared to the maximum buyback price of repeats 18 50 per share.
Coming to segment performance.
Signed 32 large deals in Q3, which is the highest ever D. C. V was $3 2 billion the highest in the last eight quarters with 36, but then let me.
Seven light deal, where ingredient six week in financial services and communication five each in U E L F and manufacturing to in life Sciences, and running high Tech we did revise the substrates by 'twenty five MV America five in Europe , and two in the rest of the world.
Growth in financial services was impacted due to a higher than normal and that's a big project.
The pipeline continues to be strong and oriented towards cost take out and take all the transformation our competitive position and then that's demonstrated the pop kids. The name is very strong.
We do like that.
I didn't see in consumer spending as a result of high inflation high interest rates et cetera.
Enemy.
At the same time direct to consumer and digitally quite most of opening up many new opportunities on the back of a growing presence in leading E. Commerce platform and also a very interesting even though we had heavy deal flow in the communications segment, along with continued steady pipeline, however, especially when economic concerns continue on the client side impacting.
Excuse me by the end.
And then D utilities or stuff like that so.
Services segment reported strong growth along with healthy level of large deal wins during the quarter. The deal pipeline is strong and an increasing trend with the previous quarter, giving medium term growth visibility.
Manufacturing segment continues to be robust supported by healthy pipelines are building, both traditional and new technology areas. Yeah, it's been clients across engineering Iot like in cloud ERP and digital transformation, including helping clients accelerate their journey to the cloud we continue the peak offering around budgets and spending for them to do more than the high Tech segment.
Especially around discretionary spend areas.
You could do service capabilities and quote activity had been ranked as Vito and Kevin Great things for our cloud services digitally engineering services and Salesforce implementation services, we have also.
Being positioned as a major player in seven dating for Iot and engineering security and automation services.
We believe that it's actually that's a medium to long term growth for the industry remain intact and infosys is well positioned to support our customers and their concentration is done.
What's driving that.
And first nine months of the year with every new guidance last like when you see this change of 16% to 16, 5%.
Operating margin guidance remains at 21% to 22% per year and as mentioned previously we expect to be at the lower end up really well that we can open the call for questions.
Thank you very much.
Well now begin the question and answer session.
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Ladies and gentlemen, we will wait for a moment, while the question queue assembles.
The first question is from the line of Moshe <unk> from Wedbush Securities. Please go ahead.
It looks like Mr. Countries line has dropped in the Meanwhile, we will move to our next question. That's from the line of Nathan Padmanabhan from Investec. Please go ahead.
Yeah, Hi, good evening and.
Thank you for the opportunity.
My question was around the Oh.
Cleveland costume software packages.
More $6 million to $9 million frequency.
How should we think of this costs do you think it is.
This incremental <unk> nine will be a sticky numbers out there are I do think it's sort of a person's though he'd been undergoing you'd sort of comes off going forward.
And is this a sort of a pass through in nature that'd be thinking sort of clarification on be thinking Oh. Thank you.
Yeah, they're pretty full I think these 69 million is a combination of softbank.
We do we have that services et cetera. It could be in fact suggests to me that by the way integrated services offering right. So he's come with that.
Manpack component and sometimes they also come with a you know our debt that went up the services. So that's the way we do it it's an integral part of our service offering and I think the only thing that would be that to see where we ended up the quarter. Both but I think this is part of our overall I'll figure it was actually giving up the traction in the market in many of our service lines.
Sure. There is this a startup so it is a pass through in nature in a way Oh is that correct and basically at least early on in the past you had suggested that the new level, what sort of sustained so in the new operating model. This is sort of still keeping that continues.
The pet Ramadan.
I think like I said this is integrated with our services offering. So they are not good standalone needed redo their copy with the service element is what I would say that's the way you have to look at these deals.
Sure Fair enough. Thank you so much and all the best.
Thank you our.
Our next question is from the line of Bryan Bergin from Cowen. Please go ahead.
Hi, Good evening. Thank you I wanted to just clarify some comments around demand. So I'm curious if you would say there is a material change in the way that clients are behaving now versus three months ago. When you reported Q Q because the areas, you're citing weakness I think for the same ones the pockets of weakness that you talked about.
I was just trying to understand if you think there's been any real change to spending and contracting there or more broadly the same.
Oh, hi, Thanks for the question this is felipe.
What we are seeing today are in addition to what we said last quarter footings.
For example in financial services.
Beyond mortgages, we see the investment banking side of our clients as well as showing an impact of the economic environment.
And then in telco high Tech and.
And Ruth duty in some some clients.
We don't see a material change there that are.
Within financial services or one area that we see some of the impact coming in and.
Having said that we have for example clients in energy utilities and manufacturing industries.
Looking quite strong in terms of the outlook.
Yeah.
Okay. Okay. That's helpful. And then on the large deals so renewals were a big component of that P. C V and you've also cited benefits from consolidation and the commentary are you taking any different approach as it relates to proactive renewals to try to drive more vendor consolidation opportunities.
Yeah.
Some lives. These are as you pointed out we've had a very strong result, $3 3 billion and couldn't do deals.
D C.
The focus which we had on transformation.
Continue.
Outside of the industries that we discussed before where there is some impact.
We see huge cost automation cost efficiency plays across all all.
All industry segments, and then do you have.
We believe very strong capability, which is helping us.
And within all of those discussions we see areas, where there is vendor consolidation.
The approach we've put in place is a similar to walk through that in the past.
However are.
We see given our market share gain over the last several quarters.
Many clients are looking at us.
And then they stopped to narrow the list and the vendor consolidation.
Yeah.
Okay. Thank you very much.
Thank you.
The next question is from the line of Affordable Prasad from <unk> Securities. Please go ahead.
Good evening. Thank you for taking my question Southern I'm, not asking for any guidance for 'twenty.
20, Florida head, but would appreciate your comments and generally the visibility that you have for the year ahead. So so how different would it be versus typically this time of the order.
So perhaps any comments on pipeline or pipeline to D. C V conversion.
Thanks for the question I think.
As you likely said we're not.
In a position to provide our guidance for the year, which starts in April our pipeline do you have a very strong large deal pipeline.
We are feeling good that the pipeline is at a level, which is in good shape, we see a good traction of large deals than we've seen.
Martin.
And relevance are connected with our clients on the cost efficiency and automation. Please.
And in the areas in the industries.
There's economic support a good traction of Kibali and the digital transformation. So the pipeline is looking quite good today are based on what we've seen the beach, Florida.
Got it and and suddenly called out I'd be more goods and parts of telecom high Tech and retail but is there any vertical trend fog to use between transformation. The ones that are transformational in nature and deals that are more on the cost optimization across the board because that in a second part to that.
Is do you see any moderation in new client acquisition channel.
With more vendor consolidation deals happening like this this was something which had very strong traction more recently.
On the first part.
We've seen some of the.
Group's transformation play is impacted in those industries that we talked about for example.
Mortgage investment banking retail high tech et cetera, the cost efficiency plays everywhere.
So we see that even in our programs there and let's see.
In the energy sector are manufacturing a day and in many places we see.
Essentially clients looking to.
Use the cost.
Efficiency to fund the transformation because in many cases, they still need to drive digital and cloud transformation to keep their market growth or the client connect customer connect are going after that that's how we see that play right now.
[noise] and sell it and the other part on.
The new client acquisition with motor vendor consolidation deals.
Yeah, they're on you're starting a new clients, we've seen while we don't disclose the number we've seen a very good new client acquisition.
In Q3.
Then the consolidation of discussions.
Where are we.
So there's a contradiction in those two at least those are carrying on with them, but in a series of expansion and new client acquisition continues to be important Israel.
And then the consolidation what we're seeing is.
Uncertain discussions.
Clients are looking, especially if they have a six or seven oh vendors they want to narrow it down to a one or two or three and we are appearing to be beneficiaries are in quite.
Quite a few of those discussions.
Got it thank you and all the best.
Thank you.
Our next question is from the line of smokers Garg from multilateral financial services. Please go ahead.
Thank you.
Hum.
On the OTT side.
Oh your audio is a bit muffled.
Speakerphone, Please wichita handset something like California.
I hope this is better.
Kim.
Sure. So Oh, no I had two questions. So first on the one of the strong D. C. We witnessed this quarter a little can you.
Qualify a how much of those trends.
Was on account of share gains that you guys have made the.
What is the resilience, which is D or on the technology spend though because if you look at the.
Broader market commentary and Oh, you have also highlight good retail is one of the areas where it is you got seven large deals in retail. So if you can just help us break out. These two are to get a sense of the momentum.
I'll start with that and this is Sally I think.
The large deal momentum for us is really a function of what.
What we've seen that we've put in place.
These prudent is it in this mix of three 3 billion.
As a digital transformation deal.
And we have cost efficiency automation DS.
What we mean by some of the industry called out for example, redo. Our telco is there are some clients there's not everyone in that industry, but there are some clients, which are getting impacted by the economic environment.
Do you mean.
Right focus or do you have a broader portfolio. So for example, you saw that in retail we had those large deals are there.
It's a mix between jobs formation and cost efficiency automation and so many times when clients are feeling.
And in fact of the economic environment.
Might be a greater need for the cost efficiency play as well.
We are ensuring that both of those engines.
We need to work ready with our clients.
Yeah.
Yeah.
And and the other question was on the margin side. You know you saw drove margins and can do attitude to do battle with the minimal just towards the lower end.
Can you just help us the D. What are the what you are seeing on the profitability you wouldn't there be some place in that he was using rapidly.
Is there some portion also did they showed a minimum which is on account of the higher share of constitutions, you'd do which you guys are winning with initial ramp up cost.
Because if you look at Q4, obviously Q2 also had beats a pass through business, which got impacted up I'm, assuming you know as Lindon mentioned, there was some seasonality to that.
Yeah. So I think kind of like we mentioned that even for Q3 margins. We wanted to give him a big down. So as we looked ahead to see the leverage we have learned as far as utilization rates and you've seen them at any one point in time. This is probably I think at least in the last three to four you think that'd be nil in the lowest but that's one of the victory lap.
And as we start putting new fixtures onto the production floor that you wouldn't get a pyramid automatically epidemic benefit right. So that'd be a double without any impact for us.
We love to have a constant daily dramatically reduced us upon literally three quarters, we've had 11% plus seven.
<unk> historically been at seven a M.
If you look at our pricing has been quite stable at historically, even before one lever we pull it back down.
Leave it to them discounts on renewals they picked off and as of now we haven't seen that at all are we continuing to push with clients on a you know they're all we can get price increases.
The other thing that the nation in terms of our own workforce continuing to upgrade that doesn't necessarily leave of it yet, but we are continuing to see do you vote on.
So.
I really bad and we will continue to deploy them.
But is it fair to assume that the minute we should see a.
Better profitability in the next quarter.
So we have a number of years.
With us.
Yeah. So we've given a guidance for the year are you seeing out you know when the first nine months and actually give you a good indication of you know.
Yeah, good Q4.
Fair enough. Thanks for taking my question now you've gotten back into the queue.
Thank you. Our next question is from the line of Gabelli.
Lee from <unk>.
Asset management. Please go ahead.
Yeah. Good evening gentlemen, thanks for the opportunity and congrats on a good quarter.
Getting some off the previous macro uncertainties like Brexit are within a few weeks up to what we had seen come up quite a large claims canceling them ramping down projects are the same even on the tough comps on the pace of growth moderation is much lower than what many people have been anticipating and many probably looking indicators like building pipeline and see I wish that we were still.
Continue to be very strong even 11 months into this macro concerns.
I haven't seen the previous three to four macro downturn, how do you Ah nuance the cutting cycle, especially on the video below Brazilian soccer IP service expense.
Yeah.
So thanks for the question.
It's always difficult to sort of compare across cycles.
From the perspective of Infosys.
But my sense is what you mentioned earlier, which is.
You ask are you seeing the pace of.
Change when there is change within an industry at a time.
To be not a rapid and we are also seeing that the opportunities for cost optimization and efficiency.
Expanding our were doing within our the work that we're doing.
So in many ways.
We are in a good position to be able to work on both sides.
Sure.
It's difficult to predict what the way they had the situation in the economy, we're in as well.
It's quite balanced.
Our sales team is quite agile.
With it quite quickly and develop various sort of points of view.
Different efficiency scenarios and different industries, that'd be feeling comfortable that the pipeline.
Looking good at this stage and we will continue to work on that.
Sure. Thanks, Alan So are you is it right understanding to say that we are now in a much better position to navigate this macro weakness.
Probably through <unk>.
You know more than in half compensation from the cost efficiency that you kind of under control.
Is that correct interpretation.
The way we see it is we absorbed for components of at least the two large components of our clients are looking for AR, we have good industry, leading capability. So it's really a function of how you know a specific industry or sub industry.
And we live on.
But we are positioned ourselves to make sure that we can support our clients in that area.
Sure Thanks, Alan ALDA expert to future.
Thank you. Our next question is from the line of Moshe I got three from Wedbush Securities. Please go ahead.
Hey, Thank you and happy new year, and congrats on a strong execution in a pretty tough environment.
I have a three part question first.
March guidance upgrade it's pretty unusual from a seasonality perspective, and given the macro concerns.
So it seems like you have better visibility now.
Can you share any views on on on the budget cycle itself, we were kind of concerned over slippage as maybe a month or two budget delays are you seeing any of that or do you think the.
Yeah.
Thanks Moshe this is salaried on on the <unk>.
Budget.
So so far we've.
We've seen.
In some clients, especially in the industries, we called out.
Some areas, where there has been slowness in deciding or some.
So the changes, especially on some discretionary work. So we mentioned a high Tech for example, our mortgages are Bang investment banking. So all of those are the ones that we mentioned before that we don't see a broad based change equally we do see good.
Sort of.
Let's say behavior with the budgets moving I had.
As in the past a weak energy utilities manufacturing so it's not like a one right answer, but it's a little bit by industry or sub industry somewhat different.
Understood and then you in the press conference you mentioned that about a third of your you arent third of T. C. V came in from new logos can you remind us is this within the range of what you've seen in the past in terms of mix of new logos versus renewals.
Yeah.
Yeah.
Oh, sorry, I'm, sorry, you defend the lodge due 3.2 billion that was 36% net new that's in the range of where we do some quarters, it's lower or some quarters.
Hi.
No there's nothing unusual there.
Okay and then the final question is for on their lunch and when we met in Bangalore back in December you pointed to pivot in the nature of the new deal flow towards as you said cost optimization vendor consolidation obviously.
This is what you're saying.
Are these deals typically less dependent on clients' budgets given the fact that we're kind of taking over a specific function.
With the objective of kind of reducing delivery costs.
And and then or is there any difference in profit and profitability levels here in terms of these projects versus some of those projects that you've been doing in the past few years. Thank you.
Okay.
So on that I think are there.
You describe it these are not.
<unk>.
Not fully correlated with the budget of our clients.
Instances these are areas, where given the evolving economic situation.
Clients are looking to do.
The views that tech spend across the enterprise in many cases use some of that savings to fund our transformation programs.
It sometimes gets coupled with a vendor consolidation so lets you know.
There are times, when they have five or six vendors.
When we benefit from the consolidation, we see tremendous efficiency that can be created out automation tools become quite useful.
Add automation on our ongoing programs, we've given annual benefit that when we see something of scale, where we've not been in well earlier.
And the ability to provide.
Much greater benefit in that.
Again, the profitability of these deals is within the range of the rest of our company and especially has been more and more over time leverage the automation tools and I capabilities, we see these becoming a stable and a high profit.
That's very helpful. Thank you.
Thank you.
Next question is from the line of Pankaj Kapoor from CLSA. Please go ahead.
Yeah, Hi, thanks for the opportunity. So my first question is on the smaller deals which are less than 50 million P. C. V. If you can give some qualitative color.
How do you win and pipeline in that basket has been moving is it.
Let's see what it was six months back.
Yeah.
So on that thanks for the question, we don't typically disclose a much about those those deals overall.
We have a good healthy pipeline when we publicly disclose that amount about the larger deals.
Understand and sell it and my second question is on these cost eco deals can you give some sense on how the pricing is such Divas behaving how you're seeing the pressure did.
More than normal either because clients are pushing for more discounts or because of competitive intensity.
Sure Dan.
The pricing in Q3, we've seen quite stable within within the mix, we have not seen a change.
They can be.
It's really a function of you know what type of focus that clients have a rich industry that in but we've not seen at least in Q T. A in the deals that we have clubs in the discussions we've had a big big change on that is it looks stable at this stage.
Understood. Thank you and wish you all the best for 'twenty four.
Thank you.
Our next question is from the line of uncles withdraw from J P. Morgan. Please go ahead.
Hey, Thank you and then I think the headline strong numbers that are just.
Just a couple of questions I wanted to understand some of the big bedroom I think one of the comments that you made earlier.
Thank goodness question a different way.
Mentioned in previous calls over the last year, but the mix has been.
They were smaller deals and that is showing up in strong who despite headline PBT declining.
So how does that fit on Jennie O.
We can't we couldn't do anything until we will have to go and.
The handset or something we couldn't hear you well I feel very muffled.
Okay is this better.
Yeah.
Okay. Thank you. So I was saying that you know I'm Gonna tried bunker question in a different way you'd mentioned in previous calls that the mix of deals was changing in favor of smaller deals.
And that's why the headline PCP was declining but growth was still quite healthy at this time of course bolted on to that do you think the mix of deals is still the same as it was in the last year before this quarter.
Oh, Hi, uncle, tying this is Sally I'm not clear on the mix of deals from the previous discussion but.
But just looking backwards.
We see the mix of dues.
They are in good shape across our across the board.
There are some quarters in which did a you know a disproportionate number of a larger size deal, but in general we don't have a pattern in that at least that's evident in Q3.
Okay Alright. The next question I wanted to check a sudden again was on the U S business, you had language seems to sort of slipped down to close to low double digits.
That's the key to growth has been led by very strong performance in Europe and in manufacturing do you worry about the U S business, it's sort of slower than Europe . It just not the case with the rest of the industry and many of your peers.
Yeah.
Sure Dan.
Uh huh.
Views you know visa had a very strong growth in the U S and over 10% in Q3 constant currency.
Europe of course, there's been a standout in the growth that we've had a we've seen the traction the pipeline the work remains pretty strong.
As we've described earlier across the two dimensions.
The transformation and cost across the geographies.
You look at the economic situation, we do see the European side, let me know impacted.
We see good traction on the pipeline side, you had a very successful the other program over the last 18 24 months and that's also helping us with the growth in this quarter.
Understood.
So what are the two large deals this quarter for any phase II clear medical so okay.
We have a very strong pipeline that.
Understood maybe a last question of Oh here was on our pricing and contract profitability in the projects are getting right now, especially the large number of big deals at this time you sign them hows that trending is that improving staying the same or maybe you could becoming a bit lower than before.
You talked about the new these tiny yeah, the new deal signings. This quarter, how is that trending versus before I don't think anything unusual yes, absolutely new deals I mean, so many clients want the productivity efficiency that frankly, we always see that you know.
The initial part of these new builds will be lower than portfolio margins, but like there showing the positive at the same time, our existing be argued are reaching high profitability and that offset some of the especially with just coming from the movie.
Indeed, the margins will typically be Louis, but nothing unusual on the trends.
Okay. I appreciate thank you for the color and best of luck.
Thank you. Our next question is from the line of divorcing go from <unk>. Please go ahead.
Hello, Yeah, Hi, Thanks for taking my question and congrats on a solid quarter.
So some of my questions. So just two questions.
One I wanted to basically get an idea on.
<unk> seen attrition coming down in this quarter are quite sharply and as you mentioned and you don't think the market as well so.
I mean.
How do you see the trend of this attrition wing for want of course downwards and how do you believe the the benefit of this could actually particularly to our margins again not asking for a solid.
Our guidance of a number but in terms of the direction do you think it's going to either margins or do you think most of the impact of this is already built into the numbers that we have currently on my second question was immediately on the geography of Europe . So Bob just wanted to pick your brain on how the conversations with clients what happening in that part.
The only geography, specifically, if you could maybe break up between Continental Europe , Eastern Europe , and maybe U K and which pockets of those geography do you think are looking more softer or is there more of their decision making.
And in that part of the geography.
Okay I'll take the first one on the a note Christian I will give you a theme that's coming down and like we've said even in the future in the next quarter at least in terms of getting the latest initiative because you are seeing that's coming down.
Absolutely that stood at about positive impact on margins I mean during the year.
The effect of adding one letters whether it was the compensation hikes, we did.
That really impacted our year on year margin story, So looking ahead and nutrition as an impact both of the macroeconomic and also the internal policies. We are doing in terms of promoting to them et cetera.
Shouldn't benefit that's lifting IDE.
On the euro.
I think.
The baby's see some some color first 25% of our business.
And there are a few countries.
And in the countries we operate in.
We see some slowing some economic impact in Germany.
There is some in the U K.
Less so in the.
Nordic countries at this stage, but overall the coloring is a little bit more by the industries.
We mentioned earlier in the call.
Which are other cros sort of run a global perspective, but relatively a Europe seems a little bit more impacted today.
And then certainly the U S.
Got it got it so if I can just maybe drill down just a little bit more any specific color that you can provide on European retail and European manufacturing segments.
So there.
We don't necessarily provide that much of a granularity there sort of a same comments on a global level on manufacturing that we mentioned earlier and and for energy, which is looking stronger.
And sort of let's say attention to the economy on retail in this case.
Got it got it and the softness in retail do you believe it is as of now are confined to the retail stores and what maybe portfolio and you can answer if he got in your discussions with clients do you see possibly being down to the CPG companies and probably other one person.
Now it's limited to the more of the retail stores that we're talking about.
So we didn't need to him and he's not call out any specific sub sub segment at least in our commentary.
<unk> gone down to that rather than doing a public statements.
Got it great. Thanks for taking my question and I wish you all the best.
Thank you. Thank you. Our next question is from the line of <unk> from.
Prudential asset management. Please go ahead.
Thanks, Don Washington D C and so just one question I know you'd hope again. So are you, saying that you are coming to your own adhesions.
In North America versus Europe , you'd hopefully it looks more cautious or whatnot, but if I look at performance for last few quarters I think Europe has been performing better than North America.
So do you think this this impact off the consciousness is get to sneak it in the numbers and you will see more crude.
Cool.
It would be more affected going forward.
You know, it's hard to say on that thanks.
Yeah.
I think in Europe , there is.
Due to different things.
Things that are very strong the other program both on transformation and cost over the last 18 24 months. So some of that comes through in the benefits we see even in this quarter.
M T.
He has more to share what we've seen I guess in the economic activity.
And again you know we.
We see the coloring mom by industry.
Which is a little bit globally as opposed to just specifically across the globe and in the geography.
Yeah.
So the outlook I mean, do you think the outlook that you're giving really will reflect in the numbers and we gave them or are in the next few quarters I mean, because didn't always has been.
I now put forward with us or whatever whatever portfolio right.
Yeah.
So they are.
He he's given.
Our view on the outlook only up until March this year. So we will come up with the guidance for the next financial year.
At the end of this quarter.
Okay. That's it from my side. Thanks.
Thank you our.
Next question is from the line of sight from minimal equities. Please go ahead.
Mr. <unk> could you. Please on mute your line and go ahead with your question.
I just noticed bonds from disconnection.
Our next question that's from the line of Rahul Jain from <unk> capital. Please go ahead.
Yeah, Thanks for the opportunity.
Firstly, you don't we'd come in and take that manufacturing is doing very well actually the world is doing exceedingly well in European regenerated.
It's 2% Y O y.
But it was much weaker in the U S up 7% Y O y.
Or is that are we are doing so well in Europe .
Leaded by a few very crucial deal or it's more of a holistic and why it's different in the U S.
So thanks for the question.
Dana.
Industry, we don't typically comment on the kind of multi client level activity that we do have a good traction.
As you pointed out we're doing within our European business and manufacturing.
Okay and Ah another thing was on the sales revenue for the quarter itself.
But in percent Y O y or let's say D. C would be 'twenty or 'twenty, 1%. This is like a slow rest ever since we've been giving this time series aren't distiller venue.
There's this big dwelling or is it more because of the low than any other factor.
So there are it's partially due to some of the changes that we've been discussing Oh in Iran.
In certain industries or sub industries, we see a much more attention to the economic and I'm.
And.
And the N V C.
Some of the digital transformation work are being.
Do you see much more focus.
Across the board on the coast and automation players.
Got it and lastly, if I can demand didn't impact prefer law was too high in the quarter. How has this shaped up in the current month, all disclaimed the ZIP code normalcy now or the pain remain extended in Q4 as well.
Yeah.
So we'd have to see how the good it's a bit too early to say, what's going to be for Q4 I'll pick them up.
Yeah.
Okay. That's it from my side. Thank you so much.
Thank you. Our next question is from the line of spine from minimal equities. Please go ahead.
Yeah. Thank you for the opportunity I, just wanted to understand or get cost optimization deals are more in the pipeline.
In the D. C V. A how does the average deal Daniel gone up.
Last couple of quarters.
So thanks for the question, we don't typically come in.
Then on the deal Daniel are in in terms of our public statements.
Okay, Oh, I can say that the third party items Ive given you a lot of traction in terms of getting these now the number has gone up from about less than people think that revenue almost like I think if this quarter is in this quarter, it's come through on what that could turn out into revenue.
See this number going up but in the coming quarters and years.
Yes.
Yeah.
But like I said, we are offering is quite realistic and in some cases like I said it.
But many of the cloud based deals come with services there could be licenses are they could be that services.
More and more integrated deal than when you go to Ikea the service.
It really sort of very holistic we could see this but I mean, the three vary from quarter to quarter, you put out some quarter to adopt.
But theres nothing to say that in the long run this is going its bit early to say that.
Okay Lasky from a competitive landscape perspective, and the vendor consolidation deals.
Who are the ones moving out a are these are the global EM and TS are these are typically the O two windows.
Again on those we don't specifically comment on on that.
Yeah, they're getting the benefit of the consolidation.
We are seeing some benefits coming through with large clients.
Well.
Yeah.
Thank you ladies and gentlemen that was the last question I now hand, the conference back to the management for closing comments.
Oh. Thank you. So thank you everyone for joining us this is a really a.
I'll stick to have a Q3 close out a 13, 7% growth was 21, 5% operating margin.
$3 2 billion in large deals are very very happy with that outcome.
We can see our guidance increase on the growth for that and.
And we can see both sides of our business on a transformation digital work and cost services cost automation working well so we feel good with.
The current environment and how we can play.
And support our clients on both sides and thank you all for joining us and look forward to catching up during the quarter. Thank you.
Thank you.
Ladies and gentlemen on behalf of Infosys Limited that concludes this conference. Thank you for joining US and you may now disconnect your lines.