Also in this letter:
■ DoT intends to regulate OTT communication players only
■ FrontRow fires 130 employees in second round of layoffs
■ Car-sharing platform Zoomcar to go public via SPAC
Infosys Q2 results: net profit jumps 11% YoY to Rs 6,021 crore
Infosys on Thursday reported a 23.4% year-on-year (YoY) jump in consolidated revenue to Rs 36,538 crore in the September quarter. Net profit rose 11% to Rs 6,021 crore.
Both the topline and bottomline were above expectations in an ET Now poll, which pegged them at Rs 36,520 crore and Rs 5,860 crore, respectively.
Buyback, dividend: The board also approved a buyback of shares worth Rs 9,300 crore at Rs 1,850 each, and announced an interim dividend of Rs 16.50 a share.
Like HCL Technologies, which announced its results on Wednesday, Infosys surprised Dalal Street by raising its constant currency sales growth guidance for FY23. The company now sees sales growing 15-16% in FY23 compared to 14-16% earlier. It also narrowed its margin guidance for FY23 from 21-23% to 21-22%.
In constant currency terms, sales grew 18.8% YoY in Q2, compared with 21.4% in Q1. The erosion in profitability seems to have bottomed out, as Infosys saw its operating margin increase by a huge 150 bps sequentially to 21.5%.
Deal wins: Deal wins for Infosys also picked up from Q1. The company’s large TCV deal wins stood at $2.7 billion, compared with $1.7 billion in Q1. The number of deal wins in Q2 was the highest in the past seven quarters, the company said.
Attrition falls: Infosys also saw attrition levels drop during the quarter. The attrition rate came in at 27.1%, down from 28.4% in Q1.
No to moonlighting: CEO Salil Parekh weighed in on the moonlighting controversy, saying Infosys did not support dual employment. Over the past few months, most IT services companies have taken a tough stance against moonlighting, and Wipro has sacked 300 employees found to be working for competitors.
Mindtree results: Mindtree also announced its Q2 results on Thursday. The company reported a 31.5% YoY rise in consolidated revenue for the September quarter to Rs 3,400 crore. Net profit increased 27.5% to Rs 509 crore.
DoT intends to regulate OTT communication players only
The Department of Telecommunications (DoT) intends to regulate only over-the-top (OTT) communication apps like WhatsApp, Signal and Telegram and not those that offer content and ecommerce services under the proposed telecom bill, officials told us.
In addition, OTT communication apps will be regulated from a security perspective, and the rules won’t focus on revenue-raising measures such as licence fees as the aim is not to hurt the sector’s growth, they added.
State of play: According to DoT officials, the draft telecom bill – which has been put up for public consultation until October 20 – requires changes to clarify points of confusion, including definition of ‘OTT communication services’. Apart from OTT, other issues or concerns raised by stakeholders will also be addressed.
Catch up quick: We reported on Wednesday that the draft telecom bill has sparked concern that non-communication OTT players such as food aggregators and streaming services may be subject to licensing and regulation by the telecom department.
Policy experts told us the definition of telecom services in the bill is overly broad and could include all internet-enabled services, not just communication apps such as WhatsApp, Signal and Telegram.
KYC for WhatsApp? Bringing OTT communication under telecom means companies platforms such as WhatsApp and Signal may need to conduct know-your-customer (KYC) verification of their users, just as telecom operators do.
There is no provision to force decryption of encrypted messages in the draft telecom bill, but there is a clear mechanism for interception, based on a Supreme Court judgement, said officials.
Communications minister Ashwini Vaishnaw said last month, “[The] distinction between voice calls and data calls has disappeared. KYC needs to be done for all [all such] platforms and the services have to come under the same law.”
FrontRow fires 130 employees in second round of layoffs
A day after Byju’s said it would lay off about 5% of its 50,000 employees to achieve profitability this fiscal year, another online education startup has followed suit.
Driving the news: FrontRow, which is focused on non-academic learning, has sacked 130 employees – almost 75% of its workforce – across marketing, sales, engineering, and product.
This is the second round of layoffs at FrontRow after it sacked about 145 full-time and contractual employees in May. The company’s total headcount is now just 40-45.
Quote: Ishaan Preet Singh, cofounder of FrontRow, told us, “Over the last few months, Indian edtechs, including ours, had bulked up their sales and marketing functions. We realised it was not a sustainable model, and that it would not create value. So, when you change your acquisition model, you sort of start thinking of things from scratch. We will be driven by product-led growth moving forward.”
Edtech in turmoil: After years of hypergrowth, most edtech firms are rethinking their cost structures and businesses. Large edtech firms such as Byju’s, Unacademy and Vedantu are among those that have fired employees amid the crippling downturn this year.
Car-sharing platform Zoomcar to go public via SPAC
Indian car-sharing platform Zoomcar has reached an agreement to go public via a merger with blank-check firm Innovative International Acquisition Corp, Bloomberg reported, citing people familiar with the matter.
Such blank-cheque firms, technically known as special purpose acquisition vehicles (SPAC), were hugely popular during the bull run in public markets in 2021 but have fallen out of favour of late.
What’s a SPAC? A SPAC is essentially a shell company created with the sole intention of merging with a private business. These firms list on the stock exchanges without any real business and raise money from investors. They then typically buy private firms and help them go public quickly without the hassle of a traditional IPO. A SPAC has two years to find a company to acquire before it must return the funds to investors.
Details: The merger with the special purpose acquisition company implies a pro forma enterprise value of about $456 million for Zoomcar, Bloomberg’s sources said.
The company is part of a small but growing number of firms such as San Francisco-based Turo that have extended the ride-sharing model to the vehicle itself.
Tweet of the day
Crypto hackers set for record year after stealing over $3 billion
Cryptocurrencies may have crashed this year but they remain a digital cash machine for one potent constituency: hackers.
At least $718 million has been stolen so far in October alone, taking the gross tally for the year past $3 billion and putting 2022 on course to be a record for the total value hacked, according to blockchain specialist Chainalysis.
DeFi under attack: Most of the targets are so-called decentralised finance (DeFi) protocols, which deploy software-based algorithms to let crypto investors trade, borrow and lend on digital ledgers without the need for a central intermediary, such as a bank.
Hackers have become adept at exploiting weaknesses in the security, coding and structure of DeFi marketplaces. That’s putting the onus on crypto players to find solutions given that DeFi is touted as important for crypto adoption.
“October is now the biggest month” for hacking activity in 2022, Chainalysis said Thursday on Twitter, adding that bridges between blockchains are a big vulnerability too.
Also Read: Can crypto’s blockchain tech survive the test of time?
Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Gaurab Dasgupta in New Delhi. Graphics and illustrations by Rahul Awasthi.
