Infosys delivered its Q4FY25 earnings on Thursday, revealing a 12% year-on-year (YoY) decline in net profit, which amounted to Rs 7,033 crore for the quarter, compared to Rs 7,969 crore in the same period last year. The decline, though notable, was marginally less than what analysts had anticipated, highlighting some resilience in the face of global economic challenges.
The company's revenue for Q4FY25 reached Rs 40,925 crore, reflecting a year-on-year growth of 8%, compared to Rs 37,923 crore in Q4FY24. In constant currency terms, revenue grew by 4.8% YoY, indicating strong demand for its services despite the overall pressures in the global technology market. However, the sequential decline of 3.5% from Rs 41,764 crore in Q3FY25 shows some signs of slowing down in the quarter-on-quarter performance.
Despite the YoY decline in net profit, Infosys showed improved profitability on a quarter-on-quarter basis, with net profit rising 3.3%, from Rs 6,806 crore in Q3FY25. This indicates the company's ability to adapt to the changing market conditions and maintain operational efficiency, especially considering the headwinds faced by the IT sector globally.
Infosys also posted an operating margin of 21%, which represents a 0.9 percentage point increase YoY from the 20.1% reported in Q4FY24. However, there was a slight dip of 0.3 percentage points sequentially, reflecting the challenges the company has faced in maintaining profitability amid global inflation and supply chain disruptions.
Looking ahead to FY26, Infosys has guided for revenue growth of 0% to 3% in constant currency, with an expected operating margin of 20% to 22%. This cautious outlook reflects ongoing challenges in the tech industry, particularly with the uncertainty surrounding global tech spending, but also underscores Infosys' strategic initiatives in key growth areas like artificial intelligence (AI), cloud computing, and digital transformation services.
Despite these pressures, Salil Parekh, CEO and Managing Director of Infosys, expressed confidence in the company’s future prospects, emphasizing that Infosys had built a resilient organization that focuses on client-centricity, cost-efficiency, and market responsiveness. He attributed the company’s strong revenue performance, expansion in operating margins, and record-high free cash flow generation to its strategic investments in areas like AI, cloud, and digital solutions. He highlighted that these areas, along with Infosys' expertise in automation and process consolidation, would be key to navigating the evolving demands of the technology sector.
In its shareholder-focused approach, Infosys also announced a final dividend of Rs 22 per share for FY25, reinforcing its commitment to generating returns for investors despite the ongoing pressures in the tech industry. The dividend payout will take place on June 30, 2025, following the Annual General Meeting on May 30, 2025. This move is indicative of Infosys' focus on balancing growth with investor satisfaction, even in a challenging economic environment.
Infosys' continued focus on AI, cloud services, and cost optimization is expected to help it navigate the challenging landscape, especially as companies across the globe are increasingly looking for automation and cloud-based solutions to drive efficiencies and innovation. The company's investments in cutting-edge technologies and its robust portfolio of digital services are expected to position it well for future growth, despite any short-term challenges.
The outlook for Infosys in FY26 remains cautious yet optimistic. The guidance for modest revenue growth and an operating margin of 20%-22% signals the company’s confidence in its strategic direction, even in the face of uncertain market conditions. Would you like to explore more on how Infosys is leveraging its AI and cloud capabilities, or perhaps a deeper dive into its focus on cost-efficiency and automation?
