TCS: Strong Share Gains in Europe Stand Out in Seasonally Weak Q3
- Q3 CC Revenue Growth of 6.8% YoY
- Europe (+15.9% YoY), LSHC (+17.1% YoY) Drive Growth
- Operating Margin at 25%
MUMBAI, January 17, 2020: Tata Consultancy Services (BSE: 532540, NSE: TCS), the leading global IT services, consulting and business solutions organization, reported its consolidated financial results according to Ind AS and IFRS, for the quarter ending December 31, 2019.
Financial Highlights for Quarter Ended December 31, 2019
- Revenue at $5,586 million, +6.4% YoY
- Constant currency revenue growth: +6.8% YoY
- Operating Margin at 25%; Net Margin at 20.4%
- Net Income at $1,138 million; Earnings Per Share at $0.3
- Net Cash from Operations at 116.4% of Net Income
- Dividend per share: ₹5.00
Record date 25/01/2020; Payment date 31/01/2020
Business Highlights for Quarter Ended December 31, 2019
- Life Sciences & Healthcare continues to outperform, growing +17.1% YoY; Manufacturing grew +9.2% YoY and Communications & Media grew +9.5%
- Europe grew +15.9% YoY
- Net addition of 22,390 employees YTD
- 93% of the 30K freshers onboarded in H1 deployed in projects
- Continued investments in organic talent development:
- 327K+ employees trained in digital technologies
- 404K+ employees trained in Agile methods
- Industry-leading talent retention: IT Services attrition rate at 12.2% LTM
Commenting on the Q3 performance, Rajesh Gopinathan, Chief Executive Officer and Managing Director, said,“We saw the sectoral trends of the first half of the year continue to play out in the third quarter. Our robust order book during the quarter reflects our ability to pitch innovative technology solutions to address the business needs of different stakeholders in the enterprise, and participate in our customers’ enterprise-wide transformation initiatives. This is also helping deepen and broaden our customer relationships, and make the business more resilient.”
He added,“Our participation in the growth and transformation spends of our customers is most evident in our sustained success in Continental Europe where our revenues have more than doubled in the last five years. Our thought leadership in areas like the Business 4.0™ framework, Enterprise Agility and the Machine First Delivery Model, our domain and technology consulting expertise, investments in research and innovation, and our ability to design complex solutions leveraging multiple capabilities from across TCS, have made us the preferred partner for CEO-level initiatives at progressive organizations.”
N Ganapathy Subramaniam, Chief Operating Officer & Executive Director, said, “In a seasonally weak quarter characterized by furloughs across multiple industry verticals, we focused on execution, while continuing to invest for future growth. Having onboarded over 30,000 trainees in the first half of the year, we worked on driving up utilization in Q3 and had good outcomes. Our client metrics were also very good, with additions across most revenue buckets.”
He added,“Our large core transformation engagements are all progressing very well. At M&G Prudential as well as at Scottish Widows, we crossed important transformation milestones, successfully migrating hundreds of thousands of policies from legacy systems onto our platform, significantly enhancing the customer experience for those policy holders. These are industry-defining engagements, closely watched by other insurance companies. Our achievement of these key milestones adds further impetus to their own transformation plans.”
V Ramakrishnan, Chief Financial Officer, said,“Our ability to expand our margins in a volatile environment speaks of the strength of our business model, strong execution focus and the higher quality revenues we are getting on account of our strong positioning in our customers’ growth and transformation spends.”
IFRS Financial Statements
Unaudited Condensed Consolidated Statements of Comprehensive Income
For the three-month periods ended Dec 31, 2018 and Dec 31, 2019
(In millions of $, except per share data)
|
Three-month period ended Dec 31, 2018 |
Three-month period ended Dec 31, 2019 |
Revenue |
5,250 |
5,586 |
Cost of revenue |
3,056 |
3,275 |
Gross margin |
2,194 |
2,311 |
SG & A expenses |
849 |
913 |
Operating income |
1,345 |
1,398 |
Other income (expense), net |
161 |
83 |
Income before income taxes |
1,506 |
1,481 |
Income taxes |
364 |
340 |
Income after income taxes |
1,142 |
1,141 |
Minority interest |
2 |
3 |
Net income |
1,140 |
1,138 |
Earnings per share in $ |
0.30 |
0.30 |
Unaudited Condensed Consolidated Statements of Financial Position
As of Mar 31, 2019 and Dec 31, 2019
(In millions of $)
|
As of Mar 31, 2019 |
As of Dec 31, 2019 |
ASSETS |
||
Property and equipment |
1,685 |
1,654 |
Right-of-use Assets |
0 |
926 |
Intangible assets and Goodwill |
581 |
576 |
Accounts Receivable |
3,969 |
4,092 |
Unbilled Revenues |
1,298 |
1,456 |
Investments |
4,243 |
3,679 |
Cash and Cash equivalents |
1,045 |
739 |
Other current assets |
2,908 |
2,467 |
Other non current assets |
1,207 |
1,106 |
Total Assets |
16,936 |
16,695 |
LIABILITIES AND SHAREHOLDERS' EQUITY |
||
Shareholders' Funds |
13,243 |
11,949 |
Long term borrowings |
6 |
0 |
Short term borrowings |
3 |
0 |
Other current liabilities |
3,192 |
3,497 |
Other non-current liabilities |
423 |
1,170 |
Minority Interest |
69 |
79 |
Total Liabilities |
16,936 |
16,695 |
About Tata Consultancy Services Ltd (TCS)
Tata Consultancy Services is an IT services, consulting and business solutions organization that has been partnering with many of the world’s largest businesses in their transformation journeys for the last fifty years. TCS offers a consulting-led, cognitive powered, integrated portfolio of business, technology and engineering services and solutions. This is delivered through its unique Location Independent Agile delivery model, recognized as a benchmark of excellence in software development.
A part of the Tata group, India's largest multinational business group, TCS has over 446,000 of the world’s best-trained consultants in 46 countries. The company generated consolidated revenues of US $20.9 billion in the fiscal year ended March 31, 2019, and is listed on the BSE (formerly Bombay Stock Exchange) and the NSE (National Stock Exchange) in India. TCS' proactive stance on climate change and award-winning work with communities across the world have earned it a place in leading sustainability indices such as the Dow Jones Sustainability Index (DJSI), MSCI Global Sustainability Index and the FTSE4Good Emerging Index. For more information, visit us at www.tcs.com.
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