Infosys (NS:INFY), the global digital services and consulting leader, reported its Q2 revenues on Thursday, showing robust growth despite an uncertain macro-environment. The company's revenues rose 3.6% YoY to $4.72 billion, surpassing the estimate of $4.61 billion. This represents a YoY growth of 2.5% and a QoQ growth of 2.3%.
The company's large deal Total Contract Value (TCV) reached a high of $7.7 billion, with net new deals making up 48% of the total. According to InvestingPro data, Infosys has an adjusted market cap of $72.18 billion and a P/E ratio of 24.32, indicating a strong market position.
However, Infosys' operating margin saw a decrease of 30 basis points to 21.2%, in contrast with the sequential increase reported earlier on Thursday, which had put the margin at 21.2% following a 40 bps rise. This is consistent with the InvestingPro data, which shows an operating income margin of 21.21%.
In terms of liquidity, Infosys held $4.17 billion in cash and equivalents and generated a free cash flow of $670 million. This signifies a YoY increase of 13.8%, and an 89.2% net profit conversion rate. The company's strong liquidity position is further highlighted by InvestingPro Tips, which point out that the company's cash flows can sufficiently cover interest payments.
Infosys' earnings per share (EPS) remained steady at $0.18, aligning with consensus estimates. The company also announced an interim dividend of ₹18 per share, marking a YoY increase of 9.1%. This consistency in maintaining dividend payments aligns with one of the InvestingPro Tips, indicating that Infosys has maintained dividend payments for 24 consecutive years.
CEO Salil Parekh attributed the strong performance to the growing adoption of their Generative AI offering, Topaz, which has been delivering transformation, productivity, and cost savings at scale amidst an uncertain macro-environment. This aligns with another InvestingPro Tip which states that Infosys is a prominent player in the IT Services industry.
Despite this robust performance, Infosys trimmed its FY24 revenue outlook to a growth range of 1.0%-2.5% in CC terms against a consensus expectation of $18.71 billion for FY24. This revised forecast was down from the earlier guidance provided on Thursday which had set the FY24 revenue growth range at 1.0%-2.5%, while maintaining the operating margin guidance at 20%-22%.
Following the announcement, INFY shares traded lower by 2.90% to $17.10 in premarket trading. The attrition rate at Infosys continued its decline, reaching 14.6%. For more insights, metrics, and tips, readers can explore the InvestingPro platform here.
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