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Robust Volumes drive Strong Performance in Q2 (Revised)

Digital revenue at 19.7% up 5.9% Q-o-Q; 31% Y-o-Y (CC)

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.

Tata Consultancy Services.(PRNewsFoto/Tata Consultancy Services) (PRNewsfoto/Tata Consultancy Services)

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:






Consulting & Service Integration

  • Selected by a leading North America based global information services firm for a consulting engagement to create an omni-channel experience for its customers through the development of an end-to-end digital customer experience platform.
  • Chosen as the strategic partner for the largest UK based banking firm to lead their Devops transformation program using Agile methodologies.
  • Partnered with a North America based leading technology company to provide consulting services to reduce costs by making systems smarter through analytics and automation technologies.
  • Selected by a North America based global hotel brand to lead digital transformation initiatives across all available platforms and systems to enhance the customer experience.

Digital Interactive

  • Strategic partner for a North America based multinational semiconductor manufacturer to revamp the digital design for all handheld devices controlling autonomous vehicles.
  • Engaged by a European logistics service provider to revamp their multi-channel digital communications program using digital interactive technologies.

Internet of Things

  • Partnered with a leading Japanese power systems company to develop a Boiler Digital Twin, leveraging AI control and industrial analytics to enable far more efficient operations.

Analytics & Insights

  • Engaged by an APAC based leading Telecom provider to migrate their existing systems to a Hadoop environment and build an analytics framework using big data technologies.
  • Selected by a leading North America based power generation company to improve their accounts receivables by predicting invoice outcomes through advanced analytics and machine learning techniques.

Enterprise Application Services

  • Chosen by a Europe based multinational auto manufacturer for Salesforce service cloud implementation, leading to an enhanced global customer experience.

Cloud Application Services

  • Engaged by a British airline to facilitate API-fication and enhanced interactions with partner systems using cloud technologies.
  • Strategic partner for a leading UK based financial services provider to create secure and innovative payment systems driven by API-fication transformation programs.

Cyber Security Services

  • Chosen by a North America based multinational conglomerate for their Applications Vulnerability Management and Remediation.






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:






Business Leadership:

  • Recognised as a prominent 'Technology Partner' at the Manufacturing Leadership 100 Awards for the fourth time
  • Ranked among the Most Honored Companies in Asia, and rated the Best Investor Relations Professional, Best Investor Relations and Best IR website in the region in Institutional Investor's 2017 Annual All Asia Executive Team rankings
  • Won Gold and Two Silver Stevies® at the 2017 Great Employers AwardsSM
    • Gold Stevie® for Achievement in Employee Engagement in the Americas,
    • Two Silver Stevies® for Achievement in Recruitment and Employer of the Year
  • TCS' Singapore Marathon App Wins Best Mobile App for Media, Entertainment & Social Media at GSMA's Asia Mobile Award 2017.
  • TCS New York City Marathon App wins Gold at Best in Biz Awards 2017 International.

Partner:

  • Cloudera Global Partner of the Year Award
  • Veritas AMS Global Strategic Partner of the Year Award
  • Dell Boomi European, Middle East and Africa Region Implementation Partner
  • Won multiple awards at the Oracle Excellence Awards 2017
    • Oracle Global Partner of the Year Award for PaaS/IaaS Cloud Specialty
    • Oracle Customer Advocacy Award for EMEA
    • Oracle 2017 Specialized Partner of the Year - INDIA Regional Partner of the Year


Sustainability:

  • Ranked #30 in Fortune's annual list of the Top 50 Companies that are changing the world, for mKrishi, an innovative digital solution that is helping make a positive impact on marginalized communities
  • Listed in the Dow Jones Sustainability Index (DJSI) 2017, and in the FTSE4Good Emerging Index
  • Won the Social Responsibility Project of the Year award at the North American Employee Engagement Awards
  • TCS BridgeIT won the Project of the Year – Contribution to the community at the PMI India Awards 2017
  • TCS Awarded the Gold rating certificate for leading CSR practices by EcoVadis, a world-leading independent CSR Advisory firm for the fourth year in a row




 

Unaudited Condensed Consolidated Statements of Comprehensive Income
For the three-month periods ended September 30, 2016, June 30, 2017 and September 30, 2017
(In millions of USD, except per share data)



Three-month
period ended
September 30,
2016

Three-month
period ended
June 30, 2017

Three-month
period ended
September 30,
2017

 Revenue

4,374

4,591

4,739

 Cost of revenue

2,470

2,683

2,733

 Gross margin

1,904

1,908

2,006

 SG & A expenses

766

835

818

 Operating income

1,138

1,073

1,188

 Other income (expense), net

157

145

127

 Income before income taxes

1,295

1,218

1,315

 Income taxes

309

294

312

 Income after income taxes

986

924

1,003

 Minority interest

2

1

3

 Net income

984

923

1,000

 Earnings per share in USD

0.50

0.47

0.52

 

Unaudited Condensed Consolidated Statements of Financial Position
As of March 31, 2017 and September 30, 2017
(In millions of USD)



As of March 31, 2017

As of September 30, 2017

Assets

 Property and equipment

1,811

1,809

 Intangible assets and Goodwill

581

591

 Accounts Receivable

3,498

3,785

 Unbilled Revenues

825

1,050

 Investments

6,474

4,514

 Cash and Cash equivalents

555

654

 Other current assets

1,119

872

 Other non-current assets

1,385

1,424

 Total Assets

16,248

14,699

Liabilities and Shareholders' Equity

 Shareholders' Funds

13,619

11,804

 Long term borrowings

11

9

 Short term borrowings

34

3

 Other current liabilities

2,204

2,495

 Other non-current liabilities

323

332

 Minority Interest

57

56

 Total Liabilities

16,248

14,699


About Tata Consultancy Services Ltd (TCS)
Tata Consultancy Services is an IT servicesconsulting 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 ITBPS, infrastructureengineering 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

 

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