Robust Volumes drive Strong Performance in Q2 (Revised)

MUMBAI, India, Oct. 13, 2017 /PRNewswire/ -- Tata Consultancy Services (BSE: 532540, NSE: TCS), the leading IT services, consulting and business solutions firm reported its consolidated financial results according to IFRS and Ind AS for the period ending  September 30, 2017.

Financial Highlights for Quarter Ended September 30, 2017

• Revenue at $4,739 million, +8.3 % Y-o-Y; +3.2% Q-o-Q
• Net Income at $1 billion, +1.6% Y-o-Y; +8.4% Q-o-Q
• Operating Margin at 25.1%, an expansion of 1.7% Q-o-Q
• Net Cash from Operations at ` 5,809 crore i.e. 90.1% of Net Income
• Earnings Per Share at $0.52
• Dividend per share of  ` 7.00
  Proposed record date 26/10/17; Payment date 01/11/17

Business Highlights for Quarter Ended September 30, 2017

• Digital revenue at 19.7%, +31% Y-o-Y; +5.9% Q-o-Q (CC)
• 1 new client in $100M+ band; 6 clients each added in $50M+, $20M+ and $10M+ bands
• 28 clients added in $1M+ band
• IT Attrition rate (LTM) down further by 0.3% to 11.3%
• Total employees: 389,213; Gross addition: 15,868 employees

Commenting on the Q2 performance, Rajesh Gopinathan, CEO and MD, said: "We experienced robust volume growth in Q2, driven by good demand across multiple industry verticals. Strong, broadbased client metrics this quarter demonstrates our increasing success with newer customers. Large deal wins this quarter, a good pipeline, and bottoming out of the Retail sector softness positions us well."

Mr Gopinathan added: "We continue to gain share in the fast growing Digital spend of our customers, evident in our industry-leading Digital growth in Q2. By sharpening our focus on individual components of the Digital service stack, we have been able to bring to bear the full power of our contextual knowledge, research and innovation, and investments in location-independent agile, automation and cloud on our customers' transformational imperatives and become a trusted partner in their Business 4.0 journeys."

N. Ganapathy Subramaniam, Chief Operating Officer & Executive Director, said: "It has been a very satisfying performance this quarter, striking a good balance between pursuing revenue growth, particularly in Digital opportunities, while tightening our execution to deliver greater efficiency. Our client-centricity and business depth are resulting in industry-leading customer satisfaction levels and strong client metrics. With the sectoral headwinds slowly abating, we expect steadier and stronger growth ahead."

V. Ramakrishnan, Chief Financial Officer, said: "Rigor and discipline in our operations helped accomplish an impressive margin performance and progress along the profitability path we had outlined earlier. Our investment program remains geared for growth. Continued investments in digital design and transformational capabilities are paying off, and it shows in the strong growth in our Digital business."

Q2 Segment Highlights¹

Industries:  Strong revenue growth was visible across verticals in the September quarter. With the exception of Retail and CMI, all industry verticals grew above the company average, led by Travel & Hospitality (up 8% Q-o-Q), Energy & Utilities (up 7.2% Q-o-Q) and Life Sciences & Healthcare (up 3.6% Q-o-Q). On a year on year basis, all industry verticals – with the exception of BFSI and Retail – grew above 9.5%.

Markets: Growth was led by Europe (up 5.3% Q-o-Q), Latin America (up 5.7% Q-o-Q), APAC (up 3% Q-o-Q) and UK (up 2.5% Q-o-Q). North America grew by 1.4% Q-o-Q with continued softness in Banking and Retail.

Services: The reorganized service lines successfully completed their transition in Q2, and are experiencing strong demand in their respective domains. Key highlights:

• Consulting & Service Integration: Newly launched strategic offerings which combine consulting and multiple service lines saw more than 10 major wins in Q2 across Enterprise Agility, M&A, Global Shared Services, Supply Chain and Front Office Customer Experience Transformations.
• Cognitive Business Operations: The value proposition around leveraging cognitive technologies to simplify and streamline business operations is gaining strong traction. 2 large deals powered sales momentum in Q2
• IoT: The practice saw double digit quarterly growth as the mainstreaming of IoT deployments gathered steam, with several wins in this quarter including a Digital Twin and AI-based remote monitoring and optimization solution for a Japanese heavy industrial equipment manufacturer.
• Enterprise Application Services: Experienced robust growth in Q2, driven by transformational wins around newer Cloud Platforms from SAP, Oracle, Salesforce, Microsoft & others. We also expanded our partner footprint in specialized areas.

Select Key Wins in Q2

• Engaged by a large UK based global insurer to provide policy administration services to their four million heritage customers using TCS BaNCS' digitally-enabled, end-to-end policy administration platform for Life, Pensions and Investment products
• Selected as a strategic partner by a large North America based global insurer for application services across multiple geographies and lines of business.
• Chosen by one of the world's largest quick service restaurants for global implementation of 'point of sale' software across 58 countries, including country specific localization and hosting services on the cloud.
• Engaged as the single strategic partner for a leading North America based pet specialty retailer to transform and optimize all of its IT, Infrastructure and Business Process Services.
• Partnered with a large APAC based airline to provide technology managed services for IT applications and Infrastructure, enabled by increased automation.
• Chosen by a North America based cable TV provider as a partner for its network and video engineering services.
• Selected by a European headquartered global automotive OEM as its strategic engineering partner to support the design and development of a new range of vehicles.
• Engaged by a Japanese pharmaceutical company to simplify and standardize their IT services delivery.
• Chosen by a large APAC based banking group for a multi-year transformation and maintenance of their Information Management, Social, Mobile, and Digital applications.
• Selected by a North America based global publisher to provide Infrastructure Services and technology transformation to support their growing digital portfolio.
• Chosen by a European communications services provider to implement a business-centric operating model for their applications and shared services.

Key Wins in Digital Services and Solutions in Q2:

Research and Innovation:

TCS' Research and Innovation teams continued to work on various research themes and finding innovative technological solutions to real world problems. Some key highlights:

• The TCS-IIT Kanpur team competed against 16 teams from 10 countries in the Amazon Robotics Challenge held in Nagoya, Japan, and stood third in the 'pick' category and fourth overall, ahead of MIT-Princeton and three other teams.
• TCS won the Physionet Challenge 2017, in the ECG analytics area at the 'Computing in Cardiology' conference in Rennes, France, ahead of teams from ETH Zurich, EPFL, MIT, Oxford University and Georgia Tech

As of September 30, 2017, the company has applied for 3517 patents, including 82 applied during the quarter. Till date the company has been granted 594 patents.

Human Resources:

Total employee strength at the end of Q2 stood at 389,213 on a consolidated basis, with gross addition of 15,868 employees and net addition of 3,404 employees during the quarter. Overseas recruitment continues apace, with 3,725 employees recruited outside India, bringing the total to 6,979 in the first half of the fiscal year.

The company continues to enjoy best in class employee retention rates. The IT attrition rate (LTM) fell by 0.3% in Q2 to 11.3%, while the total attrition rate (including BPS) fell to 12.1%. The percentage of women in TCS continues to rise, hitting 35% in Q2. The total number of nationalities represented in the workforce stood at 133.

"Our progressive policies and investments in upgrading employee capabilities are driving our industry-leading retention rate. Employees see immense value in the learning opportunities afforded by our Digital Learning program, and view it as a critical avenue to realize their potential," said Ajoy Mukherjee, Executive Vice President and Global Head, Human Resources.

Awards and Recognition:

About Tata Consultancy Services Ltd (TCS)
Tata Consultancy Services is an IT services, consulting and business solutions organization that delivers real results to global business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT, BPS, infrastructure, engineering and assurance services. This is delivered through its unique Global Network Delivery Model™, recognized as the benchmark of excellence in software development. A part of the Tata group, India's largest industrial conglomerate, TCS has over 389,000 of the world's best-trained consultants in 45 countries. The company generated consolidated revenues of US $ 17.6 billion for year ended March 31, 2017 and is listed on the BSE (formerly Bombay Stock Exchange) and the NSE (National Stock Exchange) in India. For more information, visit us at www.tcs.com

Follow TCS on Twitter at @TCS_News.

¹ Growth rates mentioned are in constant currency

SOURCE Tata Consultancy Services

Related Links

http://www.tcs.com