Infosys (NASDAQ:INFY) has revised its sales forecast for the financial year, indicating that corporations are still cutting back on spending for software and IT projects.
The company now anticipates revenue growth of 1% to 2.5% through March 2024, down from its earlier projection of 1% to 3.5% in July. Analysts, however, had estimated growth of 5%.
CEO Salil Parekh highlighted the ongoing trend of clients reducing or discontinuing digital programs and discretionary work while emphasizing a keen interest in cost efficiency and automation.
Infosys is strategically focusing on higher-margin technologies as the software services sector in India faces an uncertain growth outlook.
Despite the challenging market environment, Infosys reported strong fiscal second-quarter revenues that came in ahead of analyst estimates. Revenues rose 3.6% year-over-year to $4.72 billion, exceeding the estimated $4.61 billion. The company also reported a 2.5% year-over-year growth and a 2.3% quarter-over-quarter growth in constant currency.
Total Contract Value (TCV) for large deals reached $7.7 billion, with 48% from net new deals. However, the operating margin saw a decrease of 30 basis points to 21.2%. Infosys maintained a solid liquidity position with $4.17 billion in cash and generated a free cash flow of $670 million, showcasing a YoY increase of 13.8%.
CEO Parekh attributed the firm’s 2Q performance to the growing adoption of their Generative AI offering, Topaz.
Infosys shares were down around 6.5% on Thursday morning in New York.