Infosys gives revenue guidance of 1-3% for FY25

Infosys

India’s second-largest IT company Infosys slashed its revenue guidance for the fiscal 2025 to 1-3 percent, below analyst estimates, as weakness continued in discretionary and digital projects.

On the headcount front, Infosys’ headcount for the financial year 2024 declined by 25,994. This is also the first time in at least 23 years that the company's headcount has decreased.

The Bengaluru-based company has revised its annual revenue growth guidance five times in the previous five quarters, amid an uncertain demand environment.

In January, it narrowed its revenue growth guidance for the full year to 1.5-2 percent for the full year. The move came after it had previously slashed revenue guidance in September to 1-2.5 percent from 1-3.5 percent.

Before that, the company had reduced its revenue guidance for the fiscal to 1-3.5 percent from 4-7 percent, amid an increasingly challenging demand environment.

"Good traction with cost efficiency and consolidation nature of large deals, we are yet to see visibility in digital and discretionary deals," said chief executive officer Salil Parekh.

Its revenue grew by 1.4 percent for the fiscal year 2024 and was flat for the fourth quarter year-on-year, in constant currency terms. The weak guidance stands in stark contrast to its deal wins, which increased by $4.5 billion in the fourth quarter. For FY24, Infosys won over $17 billion.

Parekh said that while the deal pipeline continues to be robust, discretionary spending is still not out of the woods.

The total headcount for the FY24 stood at 317,240, this is a 7.5 percent decrease from the previous year’s numbers.

On a quarterly basis, too, Infosys added 5,423 fewer employees, a drop for the fifth consecutive quarter.

"Our hiring model has changed significantly in the last few quarters, last few years. We are now in a more agile kind of campus hiring. We do more than half the fresher hiring from off the campuses," said chief financial officer Jayesh Sanghrajka.

The Salil Parekh-led company maintained its operating margin guidance at 20-22 percent for FY25, similar to the previous fiscal year.

Operating margins declined 40 basis points (bps) sequentially in Q4 and came in at 20.1 percent.

(This is a developing story, please check back for updates)