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Revenue
₹38,994 Cr
verified against source
Revenue YoY
2.5%
reported change
EBITDA
Pending
latest reported figure
Source
screener in
record provenance
Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
Infosys reported Q2 FY24 revenue growth of 2.5% YoY in constant currency, with operating margin at 21.2%, up 40 bps sequentially. Large deal TCV hit a record $7.7 billion, with 48% net new, including four mega deals. However, the company cut its FY24 revenue guidance to 1%-2.5% CC (from 1%-3.5%) due to persistent softness in discretionary spending and slower ramp-up of large deals. Management highlighted strong pipeline and market share gains in cost-efficiency and automation, but near-term headwinds from financial services, telecom, and retail verticals persist. The margin guidance of 20%-22% was maintained, supported by Project Maximus cost optimization. Key risk: discretionary spending may not recover in calendar 2024, delaying revenue conversion from large deals.
Colored figures show movement against the previous available record.
Guidance to track
- Infosys lowered its constant currency revenue growth guidance for FY24 from 1%-3.5% to 1%-2.5%, citing continued softness in discretionary spending and slower large deal ramp-ups.
- The company reaffirmed its operating margin guidance band of 20%-22% for FY24, supported by Project Maximus cost optimization initiatives.
- The margin improvement program, with 5 pillars and 20 tracks, is expected to deliver benefits over the next 18 months, with early gains from utilization and overhead optimization.
- Management indicated that the record large deal signings will support revenue acceleration in FY25, as ramp-ups are expected to materialize over the coming quarters.
Risks flagged
- Clients continue to cut discretionary and transformation projects, with no expected recovery in calendar 2024, which could further pressure revenue growth.
- Mega deals are taking longer to start contributing revenue due to rebadging, regulatory approvals, and transition periods, potentially delaying growth inflection.
- Compensation hikes effective November 1 and increased third-party pass-through costs could offset margin gains from Project Maximus.
- Financial services, telecom, and retail continue to face headwinds, and any further deterioration could disproportionately impact Infosys given its exposure.
Key quotes
- Our growth was 2.3% quarter-on-quarter and 2.5% year-on-year in constant currency. Our operating margin was at 21.2%. Large deals was of the highest ever for us at $7.7 billion, and 48% of this was net new.
- We are changing our growth guidance for this financial year to be growth of 1% to 2.5% in constant currency. Our operating margin guidance for the financial year remains unchanged at 20%-22%.
- These large and mega deal wins help us to build a strong foundation for our future. We continue to see the overall environment where digital transformation programs and discretionary spends are low and decision-making is slow.
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