Infosys slashes FY25 revenue guidance to 1-3%

Infosys, India's second-largest IT company, has revised its revenue guidance for the fiscal year 2025 downward to 1-3 percent, falling below analyst estimates. This adjustment comes as the company continues to face challenges in discretionary and digital projects.

The latest announcement marks the sixth revision in revenue growth guidance over the past five quarters, reflecting the uncertain demand environment. For the financial year 2024, Infosys experienced a decrease in headcount by 25,994, marking the first decline in at least 23 years.

In January, Infosys narrowed its revenue growth guidance for the full year to 1.5-2 percent, following previous reductions in September to 1-2.5 percent from the initial projection of 1-3.5 percent. Prior to that, the company had revised its guidance to 1-3.5 percent from 4-7 percent, reflecting the increasingly challenging demand landscape.

CEO Salil Parekh acknowledged the company's traction in cost efficiency and consolidation nature of large deals but expressed concern over the lack of visibility in digital and discretionary deals. Despite significant deal wins totaling over $17 billion for FY24, Infosys' revenue growth remained subdued, growing by 1.4 percent for the fiscal year and remaining flat for the fourth quarter on a year-on-year basis in constant currency terms.

The company's headcount for FY24 decreased by 7.5 percent compared to the previous year, with a fifth consecutive quarter of decline in quarterly headcount, totaling 5,423 fewer employees.

Infosys CFO Jayesh Sanghrajka highlighted the shift in the hiring model towards more agile campus hiring in recent quarters and years, with over half of fresher hiring now conducted off campuses.

Despite the downward revision in revenue guidance, Infosys maintained its operating margin guidance at 20-22 percent for FY25, consistent with the previous fiscal year. Operating margins for Q4 saw a sequential decline of 40 basis points, settling at 20.1 percent.