Analysis of Revenue guidance - Infosys

1. Revenue Guidance Analysis
Sarasvathi.T.A
Christ University

2. Infosys' performance as against its
guidance
Year 2003 -2011

3. Cont..

4. Trend on QoQ Revenue 02’-10’
QoQ Revenue
1400
1200
1000
800
QoQ Revenue
600
Linear (QoQ Revenue)
400
200
0
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 10 10
-200

5. Revenue Forecasting 08’-11’
Accuracy Level
1400
1350
1300
1250
1200
Actuals
1150
1100
Projectio
1050
n
1000
950
900
850
800
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
08 08 08 08 09 09 09 09 10 10 10 10 11

6. Revenue Outperformance 08’-11’
Outperformance
7.00%
6.20%
6.00%
5.00% 4.90%
4.40%
4.00% 4.10%
3.00% 3.00%
Performance
2.50%
2.00%
1.70%
1.00% 1.00%
0.70%
0.30%
0.00%
-0.30%
-1.00%
-2.00% -2.20%
-2.40%
-3.00%
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11

7. How does Infosys forecast its Revenue?
 1.What is the split up of its revenue?
 How the revenue is segmented?
 Revenue by Geography
 Revenue by Industry
 Revenue by service offering
 Revenue by project type
 2.How is client revenue segmented?
 How many clients does Infosys have?
 What is the split up of client contribution to revenue?

8. Revenue by Geography
Revenue by
geography FY10 FY09 FY08 FY07
North America 66% 63% 62% 63%
Europe 23% 26% 28% 26%
India 1% 1% 1% 2%
ROW 10% 9% 9% 9%
Total 100% 100% 100% 100%
•North America accounts for more than 65% of revenue
• North American Market plays a key role in Revenue
Forecasting

9. Revenue by Industry
Revenue by Industry FY10 FY09 FY08 FY07
% % % %
Insurance, banking & Financial 34 33.9 35.7 37.4 35
Insurance 7.7 7.2 7.2 7.2 %
Banking & Financial services 26.3 26.7 28.5 30.2
Manufacturing 19.8 19.7 14.7 13.5 17
Retail 13.3 12.6 11.8 10 %
Telecom 16.1 18.1 21.6 19.3
Energy & Utilities 5.9 5.7 5.2 5.3
Transportation & Logistics 2 2.3 2.5 2.4
Services 5 5.2 6.6 8.1
Others 3.9 2.5 1.9 4
Total 100 100 100 100
•Banking & Financial services, Manufacturing are the two
industry segments which accounts for more than 50% of
revenue
•These two segments play a significant role in revenue

10. Revenue by service offering
Revenue by service offering FY10 FY09 FY08 FY07
% % % %
Application Development &
Maintenance 41.3 42.4 45.4 48
Application Development 18 20.5 21.7 23.1
Application Maintenance 23.3 21.9 23.7 24.9
Business process Management 6.1 6 5.7 4.7
Consulting services and package
implementation 24.4 24.9 23.8 21.1
Infrastructure Management 7.2 6.3 4.9 4.4
Product Engineering Services 2.2 2.2 1.6 1.6
System integration 4.2 3.6 2.8 2.3
Testing Services 6.4 6.8 7.5 6.9
Others 4 3.9 4.7 7.1
Total services 95.8 96.1 96.4 96.1
Products 4.2 3.9 3.6 3.9
Total 100 100 100 100
•More than 60% of revenue comes from Application Development &
Maintenance and Consulting services & Package Implementation
•ADM & CSP service offering influence revenue forecasting

11. Revenue by Project Type
Revenue by Project Type FY10 FY09 FY08 FY07
% % % %
Fixed Price 38.5 35.4 31 26.7
Time & Materials 61.5 64.6 69 73.3
Total 100 100 100 100
•The Trend of fixed price project is going upward
•The Trend of Time & Materials project is going downward

12. Additionally…
•Revenue Generators •Accounts for expenditure
•Increase in billable employees
•Reduction in Sales & support workforce

13. Client Data

14. Client Data Inference
 Total number of Clients : 575
(as of March 2010)
 Average number of Clients:40
added in each quarter
 Repeat business: 97%
 Accounts receivable period: 60 days
 Client contribution to revenue:
 Top Client:4.6%
 Top 5 Client:16.4%
 Top 10 Client:26.2%
•Revenue guidance is largely based on Repeat business

15. Revenue guidance
 Is based on
 Repeat business which is around 97%
 North America
 BFSI,Manufacturing
 ADM,Consulting projects
Factors in Repeat Business
 Current number of projects which are work in progress
 Time line for completion of projects
 Revenue from existing contracts
 New Contracts from
 New Clients
 Existing Clients

16. Other factors concerning
guidance
 Conversion rate on one US Dollar
 Currency fluctuations
 Government policies
 State of Economy
 New Clients and agreed revenue for new
projects
 Wage Hikes

17. Thank You