Infosys Q3 results: Revenue guidance to dip in profit — 6 key highlights from IT major's earnings

Infosys Q3 earnings: IT major Infosys declared its December quarter (Q3FY24) performance on Thursday. The firm posted a consolidated net profit of ₹6,106 crore, down 7.3 percent from ₹6,586 crore in the year-ago period. Its consolidated revenue was flat, up just 1.3 percent to ₹38,821 crore versus ₹38,318 crore in the same period last year.

The expectations had remained subdued from the IT sector as a whole and also from Infosys during the third quarter of FY24. The rise in furloughs, weak macros, wage hikes impacting margins and weak demand environment were the key reasons for analysts maintaining a weak outlook. 

Infosys FY24 revenue guidance was further revised to 1.5%-2.0% as it maintained its operating margin guidance at 20%-22%. 

The company said that its performance remained resilient. 

“Our performance in Q3 was resilient. Large deal wins were strong at $3.2 billion, with 71% of this as net new, reflecting the relevance and strength of our portfolio of offerings ranging from generative AI, digital and cloud to cost, efficiency and automation,” said Salil Parekh, CEO and MD. “Our clients are leveraging our Topaz generative AI capabilities and our Cobalt cloud capabilities to create long-term value for their businesses,” he added.

Also Read- Infosys Q3 Earnings: FY24 revenue guidance revised to 1.5-2%; PAT down 7% YoY to ₹6,106 crore

Here are five key highlights of Infosys' Q3 scorecard:

1. Revenue and profit numbers 

Infosys posted a consolidated net profit of ₹6,106 crore, down over 7 percent from ₹6,586 crore in the year-ago period. Its consolidated revenue was flat, up just 1.3 percent to ₹38,821 crore versus ₹38,318 crore in the same period last year.

On a sequential basis as well, its profit fell 1.7 percent from ₹6,212 crore in the September 2023 quarter and revenue was down 0.4 percent sequentially from ₹38,994 crore.

Revenues in Constant Currency terms declined by 1.0% YoY and sequentially too. 

2. Margins, EPS, Free Cash flows

Total operating profits for the company at ₹7,961 crore declined 3.4% YoY and 3.8% sequentially. The operating margin for the quarter came in at 20.5 percent, down 70 bps sequentially and 100 bps YoY. 

Basic EPS stands at Rs14.76, a decline of 6.1% YoY. 

The free cash flows, as per the company release, at ₹5,548 crore marked a growth of 17.0% YoY. FCF conversion is at 90.8% of net profit.

3. Attrition 

The attrition declined further to 12.9%. The voluntary attrition for IT services declined from 14.6% in the previous quarter.  It was significantly lower than 24.3% in the year-ago quarter.

4. FY24 revenue guidance tightened further

Infosys, however, tightened its revenue guidance for the year. Infosys FY24 revenue guidance was revised to 1.5%-2.0% and operating margin guidance at 20%-22%.

At the end of Q2 FY23, it had trimmed its revenue growth to 1-2.5% in constant currency terms for FY24. 

It has retained the operating margin guidance of 20-22% for the year. 

At the end of  Q1FY24 also  Infosys had cut FY24 revenue guidance to 1-3.5% from 4-7%.

5. Major deals and collaborations

Large deal TCV for the quarter was $3.2 billion, with 71% being net new.

Infosys entered into a collaboration with smart Europe GmbH for five years to bring sustainable electric mobility to customers.

Infosys announced a strategic long-term collaboration with TK Elevator (TKE) to help consolidate, harmonise, and modernise its digital landscape.

Infosys collaborated with LKQ Europe to help integrate and standardise its disparate business processes and systems, to enable synergies and achieve economies of scale. 

Also Read-TCS Q3FY24 Result: Revenue grows 4% YoY, PAT rises 2% YoY

6. Acquisition

Infosys announced signing a definitive agreement to acquire InSemi, a leading semiconductor design and embedded services provider.

This strategic investment further strengthens Infosys’ engineering R&D capabilities and demonstrates its continued commitment to co-create with global clients to help them navigate their digital transformation journey. 

InSemi offers end-to-end semiconductor design services with expertise across electronic design, platform design, automation, embedded and software technologies. It serves leading global corporations across semi-conductor, consumer electronics, automotive, and hi-tech industries.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions