After reported better-than-expected earnings for the October-December quarter, Infosys CEO Salil Parekh, said that the information technology major's large deals pipeline was going strong, with the underlying sentiment surrounding client's IT spending turning positive.
Infosys reported a large deal Total Contract Value (TCV) of $2.5 billion for Q3, with 63 percent being net new. Despite Q3 being a seasonally weak quarter, the TCV was slightly higher than the previous quarter's $2.4 billion.
In a commentary that might cheer investors on the Street, Parekh revealed in the post-earnings call that Infosys saw a revival in European financial services during Q3." We're seeing an improvement in retail and consumer product industry in the US, with discretionary pressures easing," he added.
"Demand trends remain stable in other industries with clients continuing to prioritise cost takeout over discretionary initiatives. Clients are turning to us as the partner of choice when it comes to enterprise AI to transform their business for growth and to manage operations more efficiently," Parekh said.
Turning optimistic on the overall strong performance in the quarter under review, Infosys also revised its revenue growth guidance for FY25 to 4.5-5 percent in constant currency terms. The guidance upgrade was largely anticipated by the Street, however, the quantum of the revision slightly surpassed estimates. The larger consensus on the Street was leaning towards an upward revision of Infosys' revenue guidance to 4.5-4.75 percent from 3.75-4.5 percent in Q2.
This was also the eighth revision in the revenue guidance in the last nine quarters for Infosys. The guidance on EBIT margin, however, remained unchanged at 20-22 percent.
Meanwhile, Jayesh Sanghrajka, chief financial officer of Infosys also revealed that clients have now started viewing IT investments more favourably following the easing of election-related uncertainty in the US and interest rate cuts in recent months. "While the focus remains on cost optimisation, spending towards new growth areas like AI both areas like AI, cloud adoption, cybersecurity data and analytics is observed," Sanghrajka said.
Sanghrajka also updated that the deal pipeline remains healthy with a mix of large and small deals and a focus on cost-according portfolio rationalisation. In addition, the management also stated that the overall deal pipeline grew in Q3 as large deals showcased stronger growth while other small deals remained stable. "We are seeing some signs of recovery in discretionary expenditure retail and consumer packaged goods (CPG) verticals in the US," Sanghrajka added.
Also Read | Infosys Q3 net profit beats estimate with 11% YoY jump; FY25 guidance raised
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