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Prolonged discretionary spending slowdown
View Risks →Infosys — Q2 FY24
Infosys reported Q2 FY24 revenue growth of 2.5% YoY in constant currency, with operating margin at 21.2%, up 40 bps sequentially.
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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.
इन्फोसिस ने Q2 FY24 में राजस्व में 2.5% की बढ़ोतरी दर्ज की, जो पिछले साल की तुलना में है। ऑपरेटिंग मार्जिन 21.2% रहा, जो पिछली तिमाही से 0.4% ज्यादा है। कंपनी ने 7.7 बिलियन डॉलर के बड़े सौदे जीते, जिनमें 48% नए ग्राहकों से हैं। लेकिन कंपनी ने अपने सालाना राजस्व अनुमान को घटाकर 1%-2.5% कर दिया, क्योंकि ग्राहक खर्च कम कर रहे हैं और बड़े सौदों में देरी हो रही है। प्रबंधन ने कहा कि लागत बचत और ऑटोमेशन में मांग अच्छी है, लेकिन बैंकिंग, टेलीकॉम और रिटेल क्षेत्रों में कमजोरी बनी हुई है। मार्जिन 20%-22% के बीच रहने का अनुमान है। मुख्य जोखिम: ग्राहकों का खर्च 2024 में भी नहीं बढ़ सकता, जिससे बड़े सौदों से कमाई में देरी होगी।
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Read Transcript →Quarter Snapshot
Large Deal TCV
$7.7B
+48% net new
Record quarterly large deal total contract value, with 48% from net new business.
Headcount
328,000
-2.2% QoQ
Employee count declined sequentially as utilization improved to 81.8%.
Attrition (LTM)
14.6%
-170bps YoY
Annualized attrition continued to decline, indicating improved retention.
GenAI Programs
90+
New metric
Over 90 active generative AI programs with clients, leveraging Topaz platform.
What Changed vs Last Quarter
NEW
Project Maximus margin improvement over 18 months
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.
NEW
Large deals to drive growth beyond FY24
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.
UPDATED
FY24 revenue growth guidance revised to 1%-2.5% CC
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.
UPDATED
FY24 operating margin guidance maintained at 20%-22%
The company reaffirmed its operating margin guidance band of 20%-22% for FY24, supported by Project Maximus cost optimization initiatives.
DROPPED
Two-year margin expansion program launched across five pillars
Program includes pyramid efficiency, automation, portfolio improvement, indirect cost reduction, and value-based pricing.
NEW RISK
Large deal ramp-up delays
Mega deals are taking longer to start contributing revenue due to rebadging, regulatory approvals, and transition periods, potentially delaying growth inflection.
NEW RISK
Concentration risk in soft verticals
Financial services, telecom, and retail continue to face headwinds, and any further deterioration could disproportionately impact Infosys given its exposure.
RISK GONE
Delayed mega deal revenue realization
Mega deals signed are taking longer to transition and generate revenue, pushing benefits to later in FY24 or beyond.
RISK GONE
Competitive intensity in large deals
Intense competition in large and mega deals could compress pricing or reduce win rates, though management noted no change in win rate.
Fast read
Guidance and risk preview
Infosys lowered its constant currency revenue growth guidance for FY24 from 1%-3.5% to 1%-2.5%, citing continued softness in discretionary spending...
Clients continue to cut discretionary and transformation projects, with no expected recovery in calendar 2024, which could further pressure revenue...
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