Infosys Ltd Q4 2022 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ravi Menon - Macquarie Research - Analyst : Just to further clarify on this pass-through costs. Should we not think of this as like a margin tailwind whenever these pass-through costs reduce? Because I assume that your customers have the option, let's say, if it's ServiceNow software, they can procure it themselves. So I would assume that these are done at 0 markup. Would that be correct?

Question: Ravi Menon - Macquarie Research - Analyst : But my question was whether what should we assume for the -- as a margin for this? I mean, should we assume that this is a margin tailwind? Should we think of this and adjust for the margins accordingly? I assume that this is a 0 margin because the client can actually procure that and just ask you to implement it, correct?

Question: Ravi Menon - Macquarie Research - Analyst : So are you saying these are software that you own? This is your intellectual property? I thought these are third-party items bought for service delivery?

Question: Ravi Menon - Macquarie Research - Analyst : And I think -- I'll take this offline. That's fine. Second question is on, if you look at the incremental revenue this quarter, we've added about [$13 million]. Last quarter, we added north of [$250] million, if I remember correctly. And this quarter the increase in pass-through costs is $40 million. So if I adjust for that, your services revenue has actually dropped in a surprisingly strong demand environment. So how should we think about it? I mean, has it -- is it that certain projects have come to an end? And this is across the board, right? I mean we've seen decline in Life Sciences both in North America and Europe, but it's not as if there is one vertical that's dragged you down or a particular client. I mean, it seems to be revenue -- incremental revenues dropped across the board. So what -- how should we think about that?

Question: Ravi Menon - Macquarie Research - Analyst : Hello?

Question: Ravi Menon - Macquarie Research - Analyst : I'm sorry, Nilanjan. I think I lost you. I had a technical difficulty here. So one last question, on the utilization. You're talking about cooling it down a little. What would be a good range that we should think about? Would it be coming down to about 85% or so, would that be sufficient? Or should we think a bit lower? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 13, 2022 / 12:30PM, INFY.NS - Q4 2022 Infosys Ltd Earnings Call

Question: Kumar Rakesh - BNP Paribas, Research Division - Analyst : My first question was more around the margin and the guidance which we have reduced a bit. So is this a reflection of some of the transient impacts which we are seeing, especially about some of the things which you talked about, supply side constraint and investments which we are making? Or is there a structural change in some of the cost structure of the deals which we are making? So while we have strong growth, some of the additional cost which comes along with that through third-party and other things are essentially pushing our margin down.

Question: Kumar Rakesh - BNP Paribas, Research Division - Analyst : Got it. On large deals, since we reported, have been steady between $2 billion, $2.5 billion for the last few quarters. I understand a lot of the deal activity is also happening in the smaller size, which is not getting reflected here. So would you give a sense on the overall deal size, how that's been trending? Or would you consider sharing that data on an ongoing basis?

Question: Kumar Rakesh - BNP Paribas, Research Division - Analyst : Great. One final thing, I heard that you talked about 85% fresher hiring, which you have done this fiscal year. Any target which we have set for next fiscal year?