A Comprehensive Analysis of Infosys Q4 Results

Infosys, a prominent player in next-generation digital services and consulting, unveiled its fourth-quarter (Q4) results for the fiscal year 2024, showcasing a mixed bag of performance metrics. “We delivered the highest ever large deal value in the financial year 2024. This reflects the strong trust clients have in us. Our capabilities in Generative AI continue to expand. We are working on client programs, leveraging large language models with impact across software engineering, process optimization, and customer support, said Salil Parekh, CEO and MD, on the Infosys Q4 results.

Highlights of Infosys Q4 Results

Here’s an in-depth look at the key highlights and insights gleaned from the report:

Financial Performance:

• Revenue: In the Q4 of FY24, Infosys recorded revenues of $4,564 million, maintaining a year-on-year (YoY) flat growth trajectory while experiencing a sequential decline of 2.2% in constant currency terms. The fiscal year 2024 saw a total revenue of $18.6 billion, marking a modest growth of 1.4% in constant currency.
• Operating Margin: Despite the revenue stagnation, the operating margin for the quarter stood at 20.1%, reflecting a marginal sequential decrease of 40 basis points (bps). However, the full fiscal year maintained a robust operating margin of 20.7%, albeit with a slight decline of 0.4% YoY.
• Earnings Per Share (EPS): Basic EPS witnessed a substantial increase of 30.2% YoY, reaching ₹19.25 for the quarter and ₹63.39 for the full fiscal year.
• Free Cash Flow (FCF): FCF remained resilient, with Q4 FCF reaching $848 million, marking the highest figure in the last 11 quarters. The full fiscal year also saw a commendable growth of 13.7% YoY, amounting to $2,882 million.

Business Highlights:

• Large Deal TCV: Infosys reported its highest-ever large deal Total Contract Value (TCV) of $4.5 billion for the quarter, contributing to a record $17.7 billion for the fiscal year. Notably, 52% of the deals in FY24 were net new.
• Client Collaborations: The company strengthened its partnerships across various sectors, including collaborations with Musgrave, PROG Holdings, Pacific International Lines (PIL), zooplus, and Hasbro, among others, to drive digital transformation and innovation.
• Industry Recognition: Infosys received accolades across multiple domains, reaffirming its leadership position in areas such as AI and Cloud Services, Application Modernization, Unified Communication & Collaboration, Pega Services, Talent Readiness, Blockchain Services, Cyber Resiliency, and more.

Guidance for FY25:

• Infosys provided guidance for FY25, anticipating a revenue growth of 1%-3% in constant currency and targeting an operating margin range of 20%-22%.

Capital Allocation Policy:

• The Board recommended a final dividend of ₹20 per share for FY24 and a special dividend of ₹8 per share. Additionally, Infosys aims to return approximately 85% of free cash flow cumulatively over the next 5 years through dividends, share buybacks, or special dividends.

Taxation and Financial Services Segment:

• Infosys received India Income Tax orders for several assessment years, resulting in the recognition of interest income and reversal of income tax provisions. However, the financial services segment experienced a one-time impact in Q4 due to the rescoping and renegotiation of a large contract.

Overall, Infosys Q4 results reflect a resilient performance amid challenging market conditions, underpinned by its strategic focus on client partnerships, operational excellence, and prudent capital allocation. As the company sets its sights on FY25, stakeholders remain cautiously optimistic about its growth trajectory and ability to navigate evolving industry dynamics.