Infosys (INFY) Q1 24/25 earnings summary

Executive summary

• Q1 FY25 delivered strong performance with 3.6% sequential and 2.5% year-on-year revenue growth in constant currency, margin expansion, record large deal wins, and highest-ever free cash flow at $1.1 billion.

• 34 large deals were closed with a total contract value (TCV) of $4.1 billion, with 57.6%–58% being net new business.

• Financial services segment grew 7.9% sequentially, marking a turnaround after six quarters of stagnation, with improvement in client spend in North America.

• Generative AI and cloud services continue to drive differentiation, with significant investments in AI-first solutions and workforce upskilling.

• Free cash flow reached a record $1.1 billion (₹9,155 crore), up 59.2% YoY, with FCF conversion at 143.6% of net profit.

Financial highlights

• Q1 revenue was $4.7 billion (₹39,315 crore), up 3.6% sequentially and 2.5% year-on-year in constant currency.

• Operating margin improved by 1% sequentially to 21.1%, with gross margin at 30.9% and net profit rising 7.1% YoY to ₹6,368 crore.

• Free cash flow reached a record $1,109.4 million, a 29% sequential increase, with cash and equivalents at $4.3 billion after $1.4 billion dividend payout.

• EPS grew by 7% in INR and 5.4% in USD year-on-year; basic EPS at ₹15.38.

• Return on equity increased by 1.5% QOQ to 33.6%, up from 32.8% YoY.

Outlook and guidance

• Revenue growth guidance for FY25 revised upward to 3%-4% in constant currency.

• Operating margin guidance maintained at 20%-22%.

• Management expects to return ~85% of free cash flow over five years via dividends and/or buybacks.

• First half of FY25 expected to outperform the second half, with guidance reflecting this seasonality.