Infosys Q1 results: From net profit to FY25 revenue guidance, key highlights from June quarter earnings

In its quarterly earnings report for the first quarter of FY25, the company reported robust deals and an improvement in cash flow in Q1FY25.

Revenue and PAT growth In Q1FY25

In Q1FY25, Infosys posted a growth of 3.6% year-on-year in its revenue at ₹39,315 crore compared to ₹37,933 crore in the corresponding quarter of the preceding fiscal. Sequentially, the company’s revenue grew 3.7% from ₹37,923 crore in the quarter ended March of FY24.

The IT services company also reported a 7.1% rise in its net profit in Q1FY25 to ₹6,368 crore, compared to ₹5,945 crore in the same quarter of the preceding fiscal year. However, on a quarter-on-quarter basis, the company’s net profit fell 20.1% from ₹7,969 crore in the March quarter.

The company’s free cash flow in Q1FY25 stood at ₹9,155 crore, increasing 59% compared to ₹5,749 crore in Q1FY24. Its free cash flow also increased 30% QoQ from ₹7,032 crore in Q4FY24.

FY25 revenue guidance raised

Infosys has raised its revenue growth guidance for the full financial year from 1-3% to 3-4% in constant currency (CC) terms. In the previous quarter, Infosys slashed its guidance to 1-3% amid weakness in the discretionary segment.

Revenue contribution from regional markets

North America, Infosys's largest revenue contributor, saw a year-on-year and quarter-on-quarter decline in its contribution to revenue in Q1FY25. Revenue from its largest market decreased to 58.9% in June quarter from 60.8% in Q1FY24 and 59.6% in Q4FY24.

Europe remained Infosys' second-biggest revenue contributor. In Q1FY25, European markets made up 28.4% of the total revenue earned by the global IT firm, marginally rising from 26.8% in Q1FY24. Revenue from India witnessed growth on both a quarter-on-quarter and year-on-year basis, at 3.1% in Q1FY25, compared to 2.7% in Q1FY24 and 2.2% in Q4FY24.

Attrition rate

Infosys’ total employee strength (headcount) decreased by 6.23% in Q1FY25 to 3,15,332 compared to 3,36,294 in the same quarter of the preceding fiscal. The company’s total number of employees decreased marginally by 0.60% in Q1FY25 compared to 3,17,240 in Q4FY24.

The company’s voluntary attrition rate improved to 12.7% in Q1FY25 on a year-on-year basis compared to 17.3% in Q1FY24. The voluntary attrition increased marginally QoQ in Q1FY25 from 12.6% in the March quarter of FY24.

Women’s participation in Infosys’ workforce fell to 39.2% in Q1FY25 compared to 39.3% in Q4FY24 and 39.5% in Q1FY24.

Large deals and clients

Infosys posted a marginal decrease of 0.84% in its active clients in Q1FY25 at 1,867 compared to 1,883 in Q1FY24. The company’s active clients also decreased 0.79% sequentially from 1,882 in the March quarter of FY24.

The IT services provider added 87 new clients in Q1FY25. The company mentioned that its number of large deal wins was the highest ever at 34 in Q1FY25 with a Total Contract Value of $4.1 billion, 57.6% being net new.

Infosys also completed the acquisition of in-tech, a leading engineering research and development services provider, in the first quarter of FY25. Infosys Limited will acquire the entire shareholding in in-tech Group India Private Limited, a step-down subsidiary of in-tech Holding GmbH.

Management Commentary

Salil Parekh, CEO and MD of Infosys said that the company generated its highest-ever cash flow in the June quarter of FY25 and also experienced broad-based growth.

“We had an excellent start to FY25 with strong and broad-based growth, operating margin expansion, robust large deals, and highest ever cash generation. This is a testimony to our differentiated service offerings, enormous client trust, and relentless execution”, said Salil Parekh, CEO and MD.

“We had the highest ever FCF generation at $1.1 bn and ROE increased to 33.6% due to higher payouts to investors. Our relentless drive on cost optimisation through Project Maximus, a comprehensive margin expansion program, is reflected in the all-round improvement in key operating metrics leading to 1.0% growth in operating margin in Q1”, said Jayesh Sanghrajka, CFO.

Infosys share price reaction

Shares of Infosys closed 2.2% higher at ₹1,764.05 apiece on Thursday, July 18, before the company posted its Q1FY25 results. As the Q1 earning report was released after market hours on Thursday, the impact on the share price will be seen on Friday, July 19.