Categories Concall Highlights, Earnings, Technology

Infosys Ltd Q4 FY24 Earnings Conference Call Insights

Key highlights from Infosys Ltd (INFY) Q4 FY24 Earnings Concall

  • Generative AI
    • Seeing excellent traction for generative AI work across software, optimization, support, advisory.
    • Working with open and proprietary LLMs.
    • Generated over 3 million code lines using generative AI models.
    • Trained models on client data for specific use cases.
    • Rolled out generative AI platform for 60,000 users at US client.
  • Headcount
    • Headcount at Q4 end was over 3,17,000, leading to increase in utilization excluding trainees to 83.5%.
    • LTM attrition for the quarter reduced by 0.3% to 12.6%.
    • INFY to leverage remaining utilization headroom along with fresher/lateral hiring.
  • Cash Flows
    • FY24 free cash flow was $2.9 billion, up 14% year-over-year.
    • Strong Q4 free cash flow of $848 million, highest in 11 quarters.
    • Unbilled revenue down $291 million in FY24, aiding cash flows.
    • Dividend payout at 85% of FY24 free cash flow.
  • Large Deal Ramp
    • INFY cited discretionary/digital spend slowdown offsetting large deal ramp benefits.
    • Large deals helping in cost efficiency and consolidation areas.
  • Contract Rescoping
    • 1%+ Q4 revenue impact from renegotiating financial services client contract.
    • Reflects amount of work done that got rescoped, not full 15% contract portion.
    • Margin impact from revenue loss, not penalty.
  • Margin Expansion Timeline
    • INFY reiterated mid-term margin improvement endeavour via cost optimization program.
    • Highlighted headwinds like compensation and tailwinds like utilization, subcons, automation.
  • BFSI Vertical Performance
    • INFY attributed to higher discretionary exposure, mortgage softness.
    • Expects better BFSI performance in FY25 versus FY24.
    • Contract renegotiation impact fully reflected in Q4, no further impact.
  • Utilization Trends
    • INFY highlighted utilization increase to 80.7% from 77%, with headroom till 84-85%.
    • Wage hikes to factor inflation, peer practices when decided later.
  • Generative AI Productivity
    • Seeing productivity benefits but no client negotiations for lower rates yet.
    • Benefits currently focused on narrow client/enterprise software capabilities.
    • Able to retain part of the savings currently, future evolution unclear on gen AI savings.
  • Discretionary Spend Outlook
    • The discretionary spending environment is similar to Q3 and Q4 of the previous fiscal year.
    • The company sees outlook similar to recent quarters.
    • Discretionary/digital transformation spend expected to remain at current reduced levels.
  • Third-Party Costs
    • INFY cited procurement needs for large deals, seeing it as sticky long-term business.
    • Overall deal margins more important than isolating third-party cost component.
  • Subcontractor Utilization
    • INFY views 5-6% as optimal range, having reduced from peak by 3%.
    • Believes there is some further scope for reduction under cost optimization program.
  • Margin Guidance
    • The company aims to expand margins from the current level in the mid-term.
    • Factors like business mix, pricing pressure, and employee costs have impacted margins over the years.
    • Tailwinds like lower provisions and non-recurrence of visa costs will support margins in the near term.

Most Popular

Cochin Shipyard Ltd (COCHINSHIP) Q4 FY22 Earnings Concall Transcript

Cochin Shipyard Limited (NSE:COCHINSHIP) Q4 FY22 Earnings Concall dated May. 26, 2022 Corporate Participants: Madhu S Nair -- Chairman & Managing Director Jose V J -- Director Finance Analysts: Vastupal Shah

All you need to know about Antony Waste Handling Cell in one article

Can you guess the name of the company that was listed during the IPO frenzy in 2020 and is the second largest player in the Indian municipal waste management industry?

Demystifying the Leading Non-Ferrous Recycling Company of India

“Hey, how is the market doing today?” “Oh!, its falling tremendously since morning” I am sure news like these might be a common topic of discussion for you nowadays. Interestingly,