IT major Infosys on Thursday posted a weak set of Q4 numbers with the revenue guidance for FY24 coming at a six-year low owing to an uncertain demand environment amid global banking crisis and IT budget cuts. One time revenue impact coupled with unplanned project ramp downs dragged Infosys’ fourth quarter numbers, reflecting an uncertain demand environment going ahead.
For FY23, the company fell a tad short of its revenue guidance, while operating margin came at the lower band of its guided range.
The Bengaluru-headquartered company posted 8% year-on-year (YoY) growth in its consolidated net profit in Q4 at Rs 6,128 crore. Its consolidated revenue for the period increased by 16% to Rs 37,441 crore. Revenue in dollar terms stood at $4.55 billion, which was a decline of 3.2% in constant currency, compared to the previous quarter. In contrast, TCS reported 0.6% rise in revenue in constant currency (CC) terms.
For the whole fiscal, revenue came at $18.2 billion, a rise of 15.4% in CC terms. The company earlier projected its FY23 growth to be in 16-16.5% range.
Given the uncertain demand environment, the company gave a conservative revenue growth guidance of 4-7% for FY24, which was one of the lowest in the last six years. Operating margin is expected to be in the range of 20-22%.
“During the quarter, we saw unplanned project ramp downs and delays in decision-making, which resulted in lower volumes. In addition, we have some one-time revenue impact. While we saw some signs of stabilisation in March, the environment remains uncertain. Despite a strong deal pipeline, we are factoring in the uncertain economic environment, which is reflecting in our guidance,” said CEO of Infosys, Salil Parekh.
According to the management, project ramp downs were seen in telecom, hi-tech, retail and financial services verticals in the fourth quarter.
The company reported an operating margin of 21% for FY23 and while margin contracted by 50 basis points sequentially, during the fourth quarter.
“We are working on various cost optimisation measures. For instance, changing the employee pyramid, subcontracting cost and utilisation are some of the levers available to us,” said Nilanjan Roy, Chief Financial Officer of Infosys.
Despite low volumes in Q4, deal pipeline of Infosys remained robust. It bagged TCV (total contract value) deals worth $2.1 billion in Q4 while for FY23, the total deal wins were at $9.8 billion.
Among verticals, the banking crisis in the US and Europe took a toll on the financial services vertical, which grew 0.4% YoY basis. Communication was another vertical that witnessed a marginal growth of 0.3%, while hi-tech grew 3.7%.
Among geographies, growth in the US remained subdued at 6%, while Europe grew 20.3% over the previous year.
In line with the market trend, Infosys continues to witness fall in its attrition, which fell a record 3.4% at 20.9% in Q4. The company saw a net reduction in its headcount by 3,611 employees in the fourth quarter, taking its total headcount to 3,43,234 by the end of FY23.
“We have many freshers on the bench and are getting trained. So, fresher hiring in FY24 will depend on the demand environment and project execution,” said Nilanjan Roy, Chief Financial Officer of Infosys.
Meanwhile, the company announced a final dividend of Rs 17.50 a share for the financial year ended March.