Tata Consultancy Services reported its consolidated financial results according to Ind AS and IFRS, for the quarter ending June 30, 2022.
Highlights of the Quarter Ended June 30, 2022
- Revenue at $6,780million, +10.2% YoY
- Constant Currency revenue growth: +15.5% YoY
- Operating Margin at 1%; contraction of 2.4% YoY
- Net Income at $1,218 million |Net Margin at 18%
- Net Cash from Operations at $1,388 millionie 1% of Net Income
- Net headcount addition of 14,136 |Workforce strength: 606,331
- Diverse and inclusive workplace: Women in the workforce: 5% | 153Nationalities
- Building a G&T workforce: 12 millionlearning hours clocked | 1.7 million competencies acquired
- LTM IT Services attrition rate at 7%
- Dividend per share: ` 8.00 | Record date 16/07/2022 | Payment date 03/08/2022
Rajesh Gopinathan, Chief Executive Officer and Managing Director, said: “We are starting the new fiscal year on a strong note, with all-round growth and strong deal wins across all our segments. Pipeline velocity and deal closures continue to be strong, but we remain vigilant given the macro-level uncertainties. Our new organization structure has settled in nicely, getting us closer to our clients and making us nimbler in a dynamic environment. Looking ahead, we remain confident in the resilience of technology spending and the secular tailwinds driving our growth.”
N Ganapathy Subramaniam, Chief Operating Officer and Executive Director, said: “We are pleased with our execution during the quarter wherein we successfully delivered several transformation programs. The investments we made on people, upskilling efforts and select lateral hiring et al helped manage the talent turnover with minimum impact on our operations. During the quarter, we have resumed in-person meetings, and hosted several clients at our facilities. We are bringing in more of our associates back to our development centres, and it is steadily increasing at all levels. On the sustainability front, we have signed our commitment to SBTi version 5 standards during the quarter and are making steady progress towards our net zero journey with tremendous alignment to this initiative across our associates.”
Samir Seksaria, Chief Financial Officer, said: “It has been a challenging quarter from a cost management perspective. Our Q1 operating margin of 23.1% reflects the impact of our annual salary increase, the elevated cost of managing the talent churn and gradually normalizing travel expenses. However, our longer-term cost structures and relative competitiveness remain unchanged, and position us well to continue on our profitable growth trajectory.”
Milind Lakkad, Chief HR Officer, said: “Our investment in strategic talent development initiatives and the linking of learning to career development have energized our workforce. Following our annual compensation review, employees received salary increases of 5 to 8%, with top performers getting even bigger hikes. Our empowering, performance-driven work culture is helping us attract local talent across all our key markets. Continued hiring momentum resulted in a milestone quarter, with the employee strength crossing the 600,000 mark.”
Q1 Segment Highlights**
Industries: Growth was led by Retail and CPG (25.1%), Communications & Media (+19.6%), Manufacturing vertical (+16.4%) and Technology & Services (+16.4%). BFSI grew +13.9% while Life Sciences and Healthcare grew +11.9%
Markets: Among major markets, North America led with +19.1% growth; Continental Europe grew +12.1% and UK grew +12.6%. In emerging markets, India grew +20.8%, Asia Pacific grew +6.2%, Latin America grew +21.6%, and Middle East & Africa grew 3.2%.
Services: There was strong, broad-based demand across the different services, led by Cloud, Consulting & Service Integration, Cognitive Business Operations and Enterprise Application Services. Key themes driving G&T demand in Q1 were customer experience, cloud transformation and sustainability.
- Consulting & Services Integration: Saw strong growth led by finance and shared services, supply chain, next-gen enterprise transformation and cloud strategy and transformation.
- Cloud Platform Services: Continues to experience strong growth as clients actively invest in hybrid cloud strategies and pursue multi-horizon cloud transformation initiatives. Infrastructure, application and data modernization, operating model transformations and business transformations drove growth. Hyperscaler partnerships continue to strengthen and expand from ongoing joint GTM initiatives.
- Digital Transformation Services: Growth in Q1 was led by cloud ERP modernization using SAP S/4 HANA, Salesforce and digital process management services. TCS’ industry solutions powered by TCS Crystallus™ continued to resonate strongly with clients. TCS Interactive saw strong demand for design-led digital experience services across B2B, B2C and D2C initiatives and digital marketing. In cybersecurity, demand was driven by managed services in security support, upgrades and monitoring & operations, and areas like IAM modernization, Fraud Prevention & Digital Forensics. Cyber Defense Suite continues to gain adoption.
- Cognitive Business Operations: Saw strong demand in areas like datacenter and network services, customer experience management, HR operations, supply chain, digital workplace and verticalized operations. Trends around vendor consolidation and integrated operations deals continue to strengthen. TCS’ contextual knowledge and assets like Cognix™, MFDM™ and ignio™ are helping it gain share in this segment.
** Year on Year Growth in Constant Currency terms
Research and Innovation
As on June 30, 2022, the company has applied for 6,752 patents, including 169 applied during the quarter, and has been granted 2,400 patents.
Human Resources
TCS’ workforce stood at 606,331 as on June 30th, a net addition of 14,136 during the quarter. The workforce continues to be very diverse, comprising 153 nationalities and with women making up 35.5% of the base.
TCS continues to invest in organic talent development as part of its expansion into the growth and transformation opportunity. In Q1, TCSers clocked 12 million learning hours, resulting in the acquisition of 1.7 million competencies.
The company gradually accelerated its return to office program in Q1, with about 20% of the workforce now working from office. IT services attrition was 19.7% on the last twelve months’ basis.
IFRS Financial Statements
Consolidated Statements of Comprehensive Income
For the three-month periods ended June 30, 2021, and June 30, 2022
(In millions of $, except per share data)
|
|
Three-month periods ended June 30, 2021 |
Three-month periods ended June 30, 2022 |
|
Revenue |
6,154 |
6,780 |
|
Cost of revenue |
3,670 |
4,175 |
|
Gross margin |
2,484 |
2,605 |
|
SG & A expenses |
914 |
1,039 |
|
Operating income |
1,570 |
1,566 |
|
Other income (expense), net |
78 |
76 |
|
Income before income taxes |
1,648 |
1,642 |
|
Income taxes |
424 |
419 |
|
Income after income taxes |
1,224 |
1,223 |
|
Non-controlling interests |
3 |
5 |
|
Net income |
1,221 |
1,218 |
|
Earnings per share in $ |
0.33 |
0.33 |
Consolidated Statements of Financial Position
As of March 31, 2022, and June 30, 2022
(In millions of $)
|
|
As of March 31, 2022 |
As of June 30, 2022 |
|
Assets |
||
|
Property and equipment |
1,596 |
1,518 |
|
Right-of-use Assets |
1,009 |
956 |
|
Intangible assets and Goodwill |
665 |
617 |
|
Accounts Receivable |
4,520 |
4,543 |
|
Unbilled Revenues |
1,613 |
1,712 |
|
Investments |
4,027 |
4,144 |
|
Cash and Cash equivalents |
1,650 |
706 |
|
Other current assets |
2,577 |
2,636 |
|
Other non-current assets |
1,315 |
1,237 |
|
Total Assets |
18,972 |
18,069 |
|
Liabilities and Shareholders' Equity |
||
|
Shareholders' Funds |
12,053 |
11,648 |
|
Other current liabilities |
5,593 |
5,158 |
|
Other non-current liabilities |
1,231 |
1,178 |
|
Non-controlling interests |
95 |
85 |
|
Total Liabilities |
18,972 |
18,069 |
