Infosys net profit up 7% in Q1, projects higher revenue growth for FY25
Infosys provided a slightly optimistic picture of future revenue growth as it sees a higher business volume.
Infosys, India’s second-largest IT exporter, reported a 7.1% rise in net profit for the first quarter of the fiscal year. The company is optimistic about the growth ahead as it gave higher revenue guidance.
The IT giant's net profit in the first quarter stood at Rs 6,368 crore. It earned Rs 39,315 crore in revenue—a 3.6% year-on-year (YoY) growth.
On the performance, Infosys CEO Salil Parekh said, “Volume growth has been positive after several quarters and there are early signs of improvement in the financial services segment in the US.”
The big positive for Infosys has been the revision of its revenue guidance to 3-4% from the earlier estimates of 1-3%. This is largely due to an order book of $1.4 billion from large deals, stronger sequential revenue growth, and the acquisition of the German firm, in-tech.
In addition, Infosys also registered a revenue growth on a quarter-on-quarter basis at 3.7% which is a strong rise under the present environment.
However, Infosys CEO cautioned that the macro environment continues to remain the same where the clients are cautious about spending on technology. “Discretionary spend continues to remain under pressure,” Parekh remarked.
This was reflected in its largest market, North America, where Infosys showed a revenue dip of 1.2%. Growth also remained flat in the financial services segment, which is the highest contributor to revenue.
Infosys noted the company's free cash flow stood at $1.1 billion at the end of the first quarter of FY25—its highest ever. The operating profit margins came in at 21.1% compared with 20.8% a year ago.
“Our relentless drive on cost optimisation through Project Maximus, a comprehensive margin expansion program, is reflected in the all-round improvement in key operating metrics leading to 1.0% growth in operating margin in Q1,” said CFO Jayesh Sanghrajka.
On the impact of generative AI, Parekh said, “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.”
At the same time, Infosys continues to see a fall in workforce strength. At the end of the first quarter, the total employee strength stood at 3,15,332—a fall of 20,962 compared with the April-June quarter a year ago. The drop in the headcount was 1,908 quarter-on-quarter.
However, the company said it plans to hire about 15,000-20,000 fresh engineering graduates during the fiscal year.
Edited by Kanishk Singh