Infosys Q3 Results Highlights: Profit jumps 11.4% YoY to ₹6,806 crore; IT major raises FY25 revenue guidance

Infosys Q3 Results Live: American Depository Receipt (ADR) shares of India's second-largest software services provider witnessed a sharp decline on the New York Stock Exchange (NYSE) after declaring its October-December quarter results for fiscal 2024-25 (Q3FY25). Infosys ADR crashed six per cent to $21.515 on the American stock exchange even after the IT major hiked its FY25 revenue growth guidance for the third straight quarter to 4.5-5 per cent today.

“We had another quarter of strong performance with revenue growth across segments and operating margin expansion, leading to 11.4% EPS growth year on year in rupee terms. Our structured approach to operating margin expansion yielded more results in Q3, particularly due to benefits from improving realization and scale benefits,” said Jayesh Sanghrajka, CFO. “Our sharp focus on cash flow is reflected in free cash conversion to net profits of 157% in Q3, with free cash generation for 9 months of FY25 surpassing that of the entire FY24,” he added.

• Revenues in CC terms grew by 3.9% YoY
• Reported revenues at ₹122,064 crore, growth of 5.5% YoY
• Operating margin at 21.2%, growth of 0.3% YoY
• Basic EPS at ₹47.52, growth of 7.7% YoY
• FCF at ₹26,812 crore, growth of 59.3% YoY; FCF conversion at 136.0% of net profit

“Our strong revenue growth sequentially in a seasonally weak quarter and broad-based year-on-year growth, along with robust operating parameters and margins, is a clear reflection of the success of our differentiated digital offerings, market positioning, and key strategic initiatives. We continue to strengthen our enterprise AI capabilities, particularly focusing on generative AI, which is witnessing increasing client traction,” said Salil Parekh, CEO and MD. “This has led to another quarter of strong large deal wins and an improved deal pipeline, giving us greater confidence as we look ahead,” he added.

Infosys raised FY25 revenue growth guidance for the third straight quarter to 4.5%-5.0% in constant currency. It stood at 3.75%-4.5% at the end of the second quarter. The company maintained operating margin guidance of 20%-22%.

Free cash flow for Q3 was the highest ever at $1,263 million, growing 90% year on year. TCV of large deal wins was $2.5 billion, with 63% net new, growing at 57% sequentially.

Voluntary attrition in LTM - IT Services increased to 13.7% from 12.9% in the September 2024 quarter and December 2023 quarter. Total employees increased to 323,379 from 322,663 on a YoY basis.

India revenue growth climbs 38% YoY; North America and Europe too see decent growth while revenue regrowth witnessed in rest of the world 

Manufacturing segment revenue witnessed the highest growth of 10% YoY

• In constant currency terms, Infosys Q3 revenue rose by 1.7% on QoQ basis and 6.1% on YoY basis.
• In dollar revenue terms, the revenue stood at $4,939, up 5.9% YoY and 0.9% QoQ.

The opearting profit for Q3 FY25 stood at ₹8,912 crore, up 11.9% YoY and 3% QoQ. Meanwhile, operating margin profit came in at 21.3%, up from 20.5% YoY and 21.1% QoQ.

Infosys' revenue from operations witnessed a 7.6% increase to ₹41,764 crore during the third quarter of FY25 from ₹38,821 crore in the same period last year.

IT major Infosys posted a 11.4% growth in its consolidated net profit for the third quarter of FY25 at ₹6,806 crore as against ₹6,106 crore in the same period last year.

The IT giant is expected to post muted revenue growth in traditionally a soft quarter due to seasonal furloughs, with a marginal 0.8% increase to ₹41,331 crore. EBIT is forecasted to rise 1.3% to ₹8,762 crore, maintaining stable margins at 21.2%. Net profit could climb 4.3% sequentially to ₹6,787 crore, beating prior ₹6,506 crore figures.

Infosys share price ended at ₹1,920.90, down 1.48% on the BSE today ahead of its December quarter earnings announcement. Infosys is expected to announce its results shortly.

• Any changes to FY25 revenue and margin guidance; likely client budgets
• Large deal TCV; any uptick in net new deal wins; progress on large deal pipeline
• Update on smaller deal pipeline; outlook on discretionary spend environment, especially in BFSI and retail

• We expect revenue growth to be +0.8% QoQ in CC terms and flat QoQ in USD terms.
• EBIT margin is likely to improve by ~30bp QoQ, driven by Project Maximus, partially offset by furloughs.
• We expect Infosys to upgrade FY25 revenue growth guidance to 4.25–4.75% CC YoY (from 3.75-4.5%) and maintain margin guidance of 20–22%.

• We expect a 90bps QoQ cross-currency headwind.
• We estimate a c.130bps impact of furloughs on INFO.
• Besides furloughs, stabilisation in large deal ramp, which aided 1H growth, could restrict sequential growth.
• Lower transition costs associated with large deals could benefit margin, though lower growth will limit the extent of expansion.
• Expect Infosys to revise its guidance to 4%-4.5% YoY CC.

Infosys raised its revenue guidance for FY25 in Q2, driven by a broad-based recovery in demand, especially from key clients in the financial sector. This was the second consecutive quarter when the company increased its full-year revenue forecast. It pegged constant currency revenue growth at 3.75% to 4.5% for the current fiscal year, up from the previous guidance of 3% to 4% set in July.

Infosys reported a 4.7% increase in consolidated net profit for the second quarter of FY25, reaching ₹6,506 crore, up from ₹6,212 crore in the same quarter last year. The revenue from operations for the second quarter grew by 5.1%, totalling ₹40,958 crore, compared to ₹38,994 crore in the corresponding period of the previous year.

We expect Infosys to report flattish to low single-digit growth on the revenue front, largely impacted by the seasonal furloughs. We anticipate an uptick in margin, driven by the absence of a wage hike and project Maximus, potentially offsetting the seasonal impact. We also expect an improved TCV during the quarter, supported by optimistic demand commentary. Management’s commentary on demand trends of key verticals and outlook for discretionary spending would be key.

• Revenue growth is likely to be 1.0% QoQ CC, impacted by seasonal furloughs. We expect 2H to be weaker than 1H as growth was partially front-ended.
• Operating margin is expected to dip by 30bp due to furloughs, offset by tailwinds from pricing improvements, sub-con cost optimization, and Project Maximus, with a projected margin of 20.8%.
• However, we expect deal TCV to remain robust in 3Q, and demand commentary to improve. We expect flow business to recover in CY25, aiding growth.
• Expect Infosys to maintain its guidance of 3.75% to 4.5% for the full year.

Shares of Infosys dropped 0.5% ahead of the Q3 results today. The stock was trading at ₹1,940 apiece as against its previous close of ₹1949.80. The stock's 52-week high stood at s 2006.80.

Infosys has announced that its leadership team will hold a press conference at 4:30 p.m. IST on January 16, 2025. During the conference, the executives will answer questions from the media. The event will be streamed live on Infosys's website in the Investor Relations section.

Infosys (NSE, BSE, NYSE: INFY), a global leader in next-generation digital services and consulting, will announce results for the third quarter ended December 31, 2024 on Thursday, January 16, 2025 around 3:45 p.m. Indian Standard Time (IST) (5:15 a.m. ET; 2:15 a.m. PST; 10:15 a.m. London time; 6:15 p.m. Singapore/Hong Kong time).

Infosys Q3 Results Live: Infosys, the second largest IT services company in India, is set to announce its Q3 results today. The board of directors of Infosys are scheduled to meet today, January 16, to approve the financial results for the third quarter of FY25.