Infosys reclaims leadership, outpaces peers with strong financial services and India performance
Infosys Ltd has kicked off the financial year ending March 2025 on a high note, demonstrating industry-leading growth
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Infosys Ltd has kicked off the financial year ending March 2025 on a high note, demonstrating industry-leading growth driven by a resurgence in its financial services segment and a robust India business.
For the quarter ending in June, Infosys reported revenue of $4.7 billion, marking a 3.3% increase from the previous quarter. This growth was largely fueled by the financial services sector, which contributed $91 million to the overall revenue increase of $150 million. The financial services business generated $1.3 billion, accounting for 28% of Infosys's total revenue in the first quarter.
“We had a strong performance in Q1 in terms of volumes, particularly in the financial services sector in the US,” said Salil Parekh, CEO of Infosys, during a post-earnings briefing in Bengaluru. “Additionally, our performance on large deals provides us with greater visibility for the rest of the financial year.”
This positive start contrasts with Infosys's lackluster performance last year, where it reported its slowest-ever dollar revenue growth of 1.9%. The company exceeded expectations, with revenue surpassing the $4.65 billion forecasted by 29 analysts polled by Bloomberg.
Parekh expressed optimism about the company's future, citing an improving macroeconomic environment. “As the macro environment evolves and companies increase their spending on large technology programs, Infosys is well-positioned to benefit,” he stated.
Infosys's performance outpaced its peers in the first quarter, with Tata Consultancy Services Ltd reporting a 1.93% sequential revenue growth to $7.5 billion, and HCL Technologies Ltd experiencing a revenue decline to $3.4 billion.
The company has projected a revenue growth of 3-4% in constant currency terms for the fiscal year, suggesting it could achieve $19.3 billion in revenue by year-end. Constant currency measures eliminate the effects of currency fluctuations.
Manik Taneja, Executive Director for IT services at Axis Capital, commented on the positive revenue growth driven by the India business. “We expect Infosys's growth to continue throughout the year, bolstered by its deal wins,” Taneja said.
Infosys's revenue from its Indian operations increased by $46 million sequentially to $146 million, while the North American market remains its largest revenue contributor.
During the first quarter, Infosys secured 34 large deal wins, its highest ever, with more than half being new contracts. This achievement was well-received by investors, with Infosys shares rising 4% to $21.4 in pre-market trading on the New York Stock Exchange following the announcement.
Despite the strong revenue growth, Infosys reported a 20.4% sequential decline in net profit to $763 million, slightly above the $748.93 million forecasted by Bloomberg analysts. The company's operating margin improved by 100 basis points to 21.1%.
However, Infosys continued to reduce its headcount, cutting 1,908 positions to end the quarter with 315,332 employees. This reduction follows last year’s significant decline in headcount, which Taneja warned could pose challenges moving forward.
Infosys also completed its largest-ever acquisition, purchasing In-Tech, a German engineering, research, and development firm, for $480 million. In-Tech had generated $181 million in revenue the previous year.
While Parekh did not disclose specifics on revenue from generative artificial intelligence (Gen AI), he noted the company's significant work in this area. In contrast, Tata Consultancy Services reported a $1.5 billion Gen AI pipeline for the quarter.
“We are not yet in a position to disclose and quantify our revenue from Gen AI externally. However, the work we are doing is quite incredible, focusing on what enterprises are achieving with generative AI,” Parekh concluded.