Infosys Q2 Results: Infosys announced its July-September quarter results for fiscal 2024-25 (Q2FY25) on Thursday, October 17, reporting a rise of 4.7 per cent in consolidated net profit at ₹6,506 crore, compared to ₹6,212 crore in the corresponding period last year. India's second-largest information technology (IT) service provider's revenue from operations in the second quarter of the current fiscal rose 5.1 per cent to ₹40,958 crore, compared to ₹38,994 crore in the year-ago period.
“We had strong growth of 3.1 per cent quarter-on-quarter (QoQ) in constant current in Q2. The growth was broad-based, with good momentum in financial services. This stems from our strength in industry expertise, market-leading capabilities in cloud with Cobalt and generative AI with Topaz, resulting in growing client preference to partner with us”, said Salil Parekh, CEO and Managing Director (MD), Infosys.
1.P&L Account: Income, Revenue
On a sequential basis, Infosys' net profit rose 2.2 per cent compared to ₹6,368 crore in the preceding April-June quarter. Revenues in constant currency (CC) terms rose 3.3 per cent YoY and 3.1 per cent sequentially. Earnings before interest and tax (EBIT) stood at ₹8,649 crore, up 4.4 per cent sequentially, compared to ₹8,288 crore in the preceding June quarter. EBIT margin for the September quarter remained flat at 21.1 per cent.
The results indicate a steady increase in client spending at the leading software services exporter, which earns over 80 per cent of its revenue from Western markets. Revenue in US dollar terms stood at $4.894 billion, registering a growth of 3.8 per cent from the preceding June quarter.
Free cash flow for Q2 was at $839 million, growing 25.2 per cent YoY. The basic EPS during the September quarter stands at ₹15.71, growing of 4.7 per cent YoY. H1 revenues grew 2.9 per cent YoY in constant currency.
2.Dividend, stock grants
The IT major's board declared an interim dividend of ₹21 per equity share and fixed October 29, 2024, as the record date for the dividend. Infosys also said November 8, 2024, is the payout date for the interim dividend. In FY24, the company had given a final dividend of ₹20 per share, a special dividend of ₹8, and an interim dividend of ₹18.
In the previous fiscal, Infosys had paid a total dividend of ₹46 per share. Infosys has declared 51 dividends since October 2000. In the past 12 months, Infosys Ltd. has declared an equity dividend amounting to ₹46.00 per share. At the current share price of ₹1,968.1000, Infosys dividend yield is 2.34 per cent.
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Based on the recommendation of the Nomination and Remuneration Committee, the board also approved the grant of 22,880 restricted stock units (RSUs) to six eligible employees under the 2015 Stock Incentive Compensation Plan effective from November 1, 2024. These RSUs will vest over a period of two to four years.
3.Revenue Guidance
The Sahil Parekh-led tech giant raised its revenue guidance for FY25 on broad-based recovery in demand, particularly from its key financial industry clients. The bellwether has raised its revenue guidance for the full fiscal year for the second consecutive quarter. It now expects constant currency revenue growth between 3.75 per cent and 4.5 per cent for the current fiscal, higher than its earlier guidance of 3 per cent to 4 per cent pegged in July.
The company had raised its guidance in the June quarter from the 1 per cent to 3 per cent range it started the year with. The upward revision comes on the back of a ramp-up of mega deals. For the full year, Infosys, however, maintained its margin guidance. It expects EBIT margins or operating margin for the fiscal to be between 20 per cent and 22 per cent.
Also Read: Infosys Q2 Results Preview: Revenue growth seen at 3.7% on deal ramp-ups; PAT may rise 5.8% QoQ
Explaining the increase in the full-year outlook, Parekh said: "We look at it based on what we have done in the quarter, then we look at the pipeline and what we anticipate, and based on all those factors as we sit today and look at Q3 and Q4, we have increased our revenue growth guidance."
4.Vertical segment growth, deal wins
Earnings growth was led by manufacturing, energy, and financial services. Growth was projected to be driven by the ramp-up of large deals, increasing traction in generative AI deals, and cost optimisations.
Among sectors, while financial services are looking "strong and stable" on discretionary spending, especially in capital markets, cards, and payments, in Europe, the automotive segment is showing signs of weakness.
The discretionary spending in retail, hi-tech, or telco is still constrained, with cost and efficiency discussions in focus. Newer growth markets like Japan and the Middle East are showing traction, although they are still small in scale. The large deals' TCV (total contract value) was $2.4 billion. The sub-USD 50 million deal pipeline also increased in double digits, contributing to the guidance lift.
“Our large deals at $2.4 billion in Q2 reflect our differentiated position. I am grateful to our employees for their unwavering commitment to our clients as we further strengthen our market leadership," said Parekh. On the deal outlook, the CEO said the pipeline for large deals "is still quite robust." However, the contract type is more about cost and efficiency than digital transformation.
5.Attrition rate, headcount
Headcount, a key metric for company performance, increased for the first time in seven quarters. Infosys added nearly 2,500 employees in the September quarter after ending the previous one with almost 2,000 fewer. The attrition rate rose to 12.9 per cent compared to 12.7 per cent in the preceding June quarter.
Infosys said it is on track to onboard 15,000-20,000 freshers in FY25, and many of them have been onboarded in the first half. The IT giant emphasised it would onboard all the freshers it had committed to in the past. Infosys said the wage hike in Q4 will be phased in, with some of it effective in January and the balance in April.
