Infosys Q1 earnings beats estimates, raises revenue growth guidance

Infosys Q1 earnings: Infosys, the country's second largest information technology (IT) services company, on Thursday reported revenue of Rs 39,315 crore, marking an increase of 3.67 per cent from Rs 37,923 crore in the previous quarter, beating LSEG estimate of Rs 38,915 crore. On an annual basis, its revenue rose 3.64 per cent from Rs 37,933 crore. The uptick in revenue came on the back of growth in its financial services business which contributed 27.5 per cent towards total revenue during the quarter.

The Bengaluru headquartered company also raised its revenue growth guidance for the current financial year to 3 per cent to 4 per cent from its previous guidance of 1 per cent to 3 per cent. The company has guided for operating profit margin of 20 per cent to 22 per cent.

“We had an excellent start to FY25 with strong and broad-based growth, operating margin expansion, robust large deals, and highest ever cash generation. This is a testimony to our differentiated service offerings, enormous client trust, and relentless execution”, said Salil Parekh, CEO and MD.

“With our focused approach for generative AI for enterprises working with their data sets on a cloud foundation, we have strong traction with our clients. This is building on our Topaz and Cobalt capabilities” he added.

In dollar terms, Infosys revenue clocked revenue of $4,714 million against Nomura’s expectations of $4,617 million. In constant currency terms, Infosys recorded sequential growth of 3.6 per cent.

Its profit, however, declined 20 per cent sequentially to Rs 6,368 crore but was better than street estimate of Rs 6,253 crore. On an annual basis, Infosys’ profit rose 7.11 per cent from Rs 5,645 crore.

Operationally, the country’s second largest IT company reported strong numbers as it clocked operating profit margin of 21.1 per cent registering expansion of 100 basis from the previous quarter.

During the quarter, Infosys recorded its highest ever 34 large deal wins with total commercial value of $4.1 billion, with 57.6 per cent being net new deals.

Infosys Q1 earnings snapshot

• Revenues in constant currency terms grew by 2.5 per cent year on year (YoY) and by 3.6 per cent quarter on quarter (QoQ)
• Reported revenues at Rs 39,315 crore, growth of 3.6 per cent YoY
• Operating margin at 21.1 per cent, growth of 0.3 per cent YoY and 1.0 per cent QoQ
• Basic EPS at Rs 15.38, increase of 7.0 per cent YoY
• Free cash flow (FCF) at Rs 9,155 crore, growth of 59.2 per cent YoY
• FCF conversion at 143.6 per cent of net profit

“Our relentless drive on cost optimization through Project Maximus, a comprehensive margin expansion program, is reflected in the all-round improvement in key operating metrices leading to 1.0 per cent growth in operating margin in Q1”, said Jayesh Sanghrajka, CFO. “We had the highest ever FCF generation at $1.1 bn and ROE increased to 33.6 per cent due to higher payouts to investors”, he added.

Infosys' attrition witnessed a marginal uptick of 100 basis points which came in at 12.7 per cent. Its total headcount at the end of June quarter stood at 3,15,332 employees.

Infosys shares ended 1.93 per cent higher at Rs 1,759 ahead of its earnings announcement.