Infosys Sees Surge in Discretionary Spending from US Clients
Third-Time’s the Charm: Infosys Ups Annual Revenue Forecast
India’s second-largest software services exporter, Infosys, has raised its annual revenue forecast for the third time this financial year, driven by a significant increase in discretionary spending from its US banking and retail clients.
A Shift in Sentiment
The company’s optimistic outlook echoes that of its peers, Tata Consultancy Services and HCLTech, which have also reported early signs of discretionary spending picking up and an improvement in the demand environment. According to CEO Salil Parekh, the retail and consumer product industry in the US is showing signs of improvement, with discretionary challenges easing.
Revenue Expectations Soar
Infosys now expects its annual revenue to rise by 4.5%-5%, up from its prior outlook of 3.75%-4.5%. The company’s confidence is bolstered by the US inflation outlook and the Federal Reserve’s planned rate cuts, which suggest that the US market will “remain strong”.
North American Revenue Sees Uptick
After five quarters of decline, Infosys reported a rise in North American revenue, which accounts for 60% of its total revenue. The company’s revenue in the October-December period rose 7.6% to 417.64 billion rupees ($4.83 billion), beating analysts’ average estimates.
Analysts Weigh In
Gaurav Parab, an analyst at tech research firm NelsonHall, noted that Infosys’s results show significant positives, including the continued focus on large deals and strategic cost-takeout engagements. Parab also found Infosys’s comments on Agentic AI, a technology that powers AI agents or bots, “encouraging”.
Segment-Wide Growth
Improved demand from US clients helped all eight business segments at Infosys post higher growth, with its mainstay financial services arm notching 6.1% revenue growth. This contributed to Infosys’s third-quarter profit rising 11.4% to 68.06 billion rupees, topping analysts’ average estimates.
Large Order Bookings on the Rise
Large order bookings, or deals over $50 million, stood at $2.5 billion during the quarter, versus $2.4 billion in the previous quarter and $3.2 billion in the year-ago period.
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