Infosys Reports Robust Q1 Results, Cuts FY24 Growth Forecast Amid Global Uncertainty

In its latest financial report, Infosys, India’s leading software services exporter, showcased steady progress despite facing challenging global conditions. The company reported a 10% YoY growth in consolidated revenue for the June quarter, amounting to Rs 37,933 crore. However, the bottomline came in lower than expected, at Rs 5,945 crore, as per the ET Now poll, falling short of the anticipated Rs 6,150 crore.

Despite the uncertain world atmosphere, Infosys demonstrated resilience by sharply revising its revenue growth estimate for FY24. Initially projected to rise between 4-7% in constant currency terms, the new forecast indicates a more modest growth range of 1-3.5%. This cautious approach reflects the company’s adaptability to the dynamic market conditions.

Mr. Salil Parekh, CEO and MD of Infosys, expressed confidence in their performance and future prospects, stating, “We had a solid Q1 with a growth of 4.2% and large deals worth $2.3 billion, setting a strong foundation for future growth.”

Infosys’ ability to secure substantial deals, margin improvement programs, and holistic measures adopted by the leadership team have played a pivotal role in their continued success. Notably, in the June quarter, the company won significant deals worth $2.3 billion, surpassing the $2.1 billion deals secured in the previous quarter.

Despite the evident success, Infosys acknowledged the challenges of a significant slowdown in business, particularly due to the prevailing global macroeconomic headwinds. The consolidated sales only grew by 1.3% sequentially, and net profit experienced a slight dip of about 3%. In constant currency terms, the revenue increased by merely 1% quarter-on-quarter (QoQ), emphasizing the impact of the uncertain market conditions.

While the earnings remained muted on a sequential basis, Infosys managed to maintain its operating margin guidance of 20-22% for FY24. This outcome reflects the company’s relentless focus on cost optimization and operational discipline, leading to better productivity and higher utilization rates.

One of the crucial aspects contributing to Infosys’ growth trajectory is the attrition rate, which has been steadily decreasing. In the first quarter, the 12-month trailing attrition rate was recorded at 17.3%, a notable improvement from 20.9% just one quarter ago. This decline indicates improved employee retention strategies, fostering a stable and productive work environment.

Segment-wise, Infosys experienced diverse revenue trends. The financial services vertical, being the largest, saw a 4.7% YoY drop in revenue. In contrast, the communication vertical reported a 6.1% decline, while the manufacturing and life sciences sectors enjoyed a double-digit YoY growth.

Geographically, Infosys faced challenges in the North American market, witnessing a mere 2.3% YoY growth in the quarter. However, the European market showcased an 11% growth, indicating the company’s ability to capitalize on opportunities in different regions.

As Infosys treads through uncertain waters, it remains committed to enhancing its margin improvement program by adopting a holistic approach. The leadership team, in collaboration with its dedicated workforce, will focus on five key areas to ensure continued growth in the short, medium, and long-term.