IT giant Infosys on Thursday reported weak results for the third quarter as it was dragged down by weak demand from clients amid global economic uncertainty.
The company’s consolidated net profit fell 7.3 per cent year-on-year (YoY) to Rs 6,106 crore in the seasonally weak Q3FY24, in comparison to Rs 6,586 crore reported in the same period last year. This is lower than what analysts had estimated.
Meanwhile, the Bengaluru-based company’s revenue from operations during the third quarter rose by 1 per cent to Rs 38,821 crore, compared with Rs 38,318 crore in the corresponding quarter of last year.
Infosys revises revenue guidance
The company has revised its revenue guidance to 1.5-2 per cent in constant currency terms from 1-2.5 per cent earlier. Infosys has raised its estimate to 1.5 per cent in its FY24 forecast, but reduced the upper limit to 2 per cent.
However, it is worth mentioning that the company has retained its operating margin target of 20-22 per cent.
Meanwhile, during the third quarter, the company’s revenue in constant currency terms declined 1 per necr YoY; operating margins during the period also fell 1 per cent YoY.
The IT company bagged $3.2 billion worth of large deals (TCV) in the third quarter, with 71 per cent of the same coming from net new deals.
Salil Parekh, the CEO and MD, expressed satisfaction with the company’s resilient performance in the third quarter, attributing large deal wins to the strength and relevance of their diverse portfolio, encompassing generative AI, digital solutions, cloud services, and cost-effective automation.
During the third quarter, Infosys also demonstrated steady cash generation, with Free Cash Flow (FCF) registering a noteworthy 17 per cent year-on-year growth, amounting to Rs 5,548 crore. The FCF conversion to net profit for Q3 reached an impressive 90.6 per cent.
The attrition rate at Infosys witnessed a further decline, reaching 12.9 per cent on a 12-month trailing basis, down from 14.6 per cent in the September 2023 quarter and 24.3 per cent a year ago. The net employee headcount marginally decreased to 3,22,663 during the October-December period.
In terms of segment-wise revenue, the financial services vertical experienced a nearly 6 per cent year-on-year decline in constant currency terms. The communications segment saw an 8 per cent drop in constant currency revenue. On the other hand, the retail and manufacturing segments showed positive trends, with a 0.4% rise and a substantial 10.6 per cent increase, respectively, during the reporting period.
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