Infosys reports ₹40,986 crore in quarterly revenue, revises FY25 guidance upwards

Bengaluru-headquartered IT services giant Infosys saw sequential revenue growth of 3.8 per cent to ₹40,986 crore in the quarter ended September. The company has also revised its guidance for the seventh time in eight quarters and expects revenue growth of 3.75-4.5 per cent in constant currency (cc) terms in FY25, up from the 3-4 per cent it had guided last quarter.

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In Q2FY25, revenue from operations stood at ₹40,986 crore, an increase from Q1FY25’s revenue of ₹39,315 crore. In the same quarter last fiscal, the company’s revenue was ₹38,994 crore, a growth of 3.7 per cent per cent YoY.

The net profit for the quarter stood at ₹6,506 crore, a growth of 2.2 per cent per cent from Q1’s ₹6,368 crore.

“We look at the revenue growth guidance based on what we’ve done in the quarter. We look at the pipeline and what we anticipate; based on those factors, looking at the rest of the financial year, we look to increase the revenue growth guidance,” said Salil Parekh, CEO and MD of Infosys.

Growth markets

Adding that the company is witnessing traction in newer growth markets like the Middle East and Japan, he said, “We have a strong focus within North America, Europe and Australia. On nearshoring, we see a lot of traction across different nearshore markets in Europe, North America and Asia. We are building nearshore capabilities here, so that’s moving along well.”

About 57.4 per cent of Infosys’ revenue came from North America. The company witnessed growth in the Energy& Utilities and Manufacturing sectors while BFSI and retail de-grew slightly.

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The company’s large deals total contract value (TCV) this quarter stood at $2.4 billion, a significant decrease from last quarter’s $4.1 billion. However, of the large deal wins this quarter, the company claimed 41% was net new.

Free cash flow (FCF) stood at ₹7,010 crore, with a growth of 26.6 per cent YoY. Operating margins for the quarter stood at 21.1 percent, with a flat QoQ growth and decline of 0.1 per cent YoY. Infosys retained its guidance of 20-22 per cent for operating margins.

Jayesh Sanghrajka, CFO, said, “On the margins, in H1, we delivered 21.1%, slightly above the midpoint of our guidance of 20-22 per cent. Looking at contributions from Project Maximus, the value-based selling has been consistently delivering, along with lean and automation; utilisation has hit all-time high levels. We have arrested the margin decline and offset cost headwinds in terms of additional variable pay and more. Despite that, we’ve maintained our margins. We aspire to increase this in the mid-term.”

Headcount up

Infosys’ total headcount was recorded at 3,17,788, an increase of 2,456 from last quarter’s 3,15,332. In the second quarter of FY24, the headcount was 3,28,764, a reduction of 10,976 employees since. Voluntary attrition during the quarter rose to 12.9 per ent from 12.7 per cent in Q1, but fell from Q2FY24’s 14.60 per cent.

“Despite various macroeconomic challenges and discretionary client spending, Infosys managed its financial performance well, achieving a solid 3.1 per cent QoQ growth. The overall outlook for Infosys remains positive, with a strong deal pipeline supporting future growth. We’ve consistently highlighted that this year will bring growth. Significant deal wins in FY24 are expected to drive revenue growth in FY25,” Biswajit Maity, Senior Principal Analyst at Gartner told businessline.

He added that the company, however, needs to ensure it brings its innovation capabilities to all its clients, irrespective of size. “It’s good to see Infosys is working to break the perception of being a purely low-cost technology service provider and be recognized as a leading business transformation service provider. Infosys has a matrixed structure with industry verticals and solution/service lines. It covers all of the major industries, including the public sector in certain countries.”

Shares of the company were up 2.84 per cent during the day and closed at ₹ 1,974.55 per share on BSE. Results were however announced post-market closure. Infy’s ADR was trading at $22.08 on Nasdaq, down by 3.58 per cent at the time of going to press. The company also announced an interim dividend of ₹21 per share, and the record date for the same is October 29.