{"id":154847,"date":"2023-10-12T13:12:21","date_gmt":"2023-10-12T17:12:21","guid":{"rendered":"https:\/\/44.250.171.167\/?p=154847"},"modified":"2023-10-12T13:12:23","modified_gmt":"2023-10-12T17:12:23","slug":"infosys-ltd-q2-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/infosys-ltd-q2-fy24-earnings-conference-call-insights\/","title":{"rendered":"Infosys Ltd Q2 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Infosys Ltd (INFY) Q2 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>Financial Performance and Margin<\/strong>\n<ul>\n<li>Q2 FY24 saw strong performance with 2.3% QoQ and 2.5% YoY growth in constant currency.<\/li>\n<li>Operating margin reached 21.2%, an increase of 40 bps sequentially.<\/li>\n<li>Margin expansion driven by cost optimization, improved utilization, pricing.<\/li>\n<li>One-time payouts in quarter also helped boost margin.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Large Deals And TCV<\/strong>\n<ul>\n<li>Q2 large deal TCV was $7.7 billion, highest ever for the company.<\/li>\n<li>48% of large deals were net new.<\/li>\n<li>4 mega deals signed in Q2, excluding the additional $1.5 billion MOU.<\/li>\n<li>Large deal wins indicate market share gains in areas like cost efficiency, automation, and AI.<\/li>\n<li>The conversion of these large deals into revenue would be phased and not an immediate impact.<\/li>\n<li>Seeing slowing decision making on closing new deals.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Headcount And Attrition<\/strong>\n<ul>\n<li>Headcount stood at 328,000 employees, a decline of 2.2% sequentially, showing focus on optimization.<\/li>\n<li>Reduced headcount by 5% over the past three quarters.<\/li>\n<li>Utilization excluding trainees improved from 81.1% to 81.8%.<\/li>\n<li>LTM attrition in Q2 further decreased to 14.6%, with no sequential change in quarterly annualized attrition.<\/li>\n<li>Expects room for further utilization improvement, which can positively impact margins.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Economic Environment And Demand Outlook<\/strong>\n<ul>\n<li>Environment of slow growth, delayed decision making, and low discretionary spend.<\/li>\n<li>The company revised its growth guidance for FY24 to 1-2.5% in constant currency terms due to challenges in discretionary spend.<\/li>\n<li>Financial services seeing spend reductions and project delays.<\/li>\n<li>Communications facing growth challenges and cost pressures.<\/li>\n<li>Manufacturing showing double digit growth but budgets still tight.<\/li>\n<li>Retail focused on cost consolidation despite strong quarter.<\/li>\n<li>The potential budget cycle for 2024 is uncertain, and discussions with clients indicate a continued emphasis on cost and efficiency.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Volume Performance<\/strong>\n<ul>\n<li>Quarterly volume performance was constrained due to the slowing or stoppage of discretionary work and transformation programs.<\/li>\n<li>Q3 and Q4 outlook expects usual seasonality with softer quarters and no major change in volume constraints.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Proprietary Large Language Models<\/strong>\n<ul>\n<li>Infosys is not developing its own LLMs, but working with partners&#8217; proprietary and open source models.<\/li>\n<li>These models have applications in software development, text, voice, and video analysis, both for clients and Infosys&#8217; internal use.<\/li>\n<li>Infosys continues investing in generative AI, especially Topaz platform.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Wage Hikes<\/strong>\n<ul>\n<li>Announced wage hikes, effective from November 1st.<\/li>\n<li>INFY is optimistic that its cost optimization program, Project Maximus, will counterbalance wage increases and enhance margins in the next 18 months.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Industry Softness<\/strong>\n<ul>\n<li>Seeing softness in financial services like mortgages, asset management, and parts of retail.<\/li>\n<li>Similar view of softness as previous quarter in these industries.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Pricing Dynamics<\/strong>\n<ul>\n<li>Like-for-like pricing in the IT services industry has remained relatively stable.<\/li>\n<li>Clients occasionally seeking discounts, but pricing trends haven&#8217;t significantly deteriorated.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Infosys Ltd (INFY) Q2 FY24 Earnings Concall Financial Performance and Margin Q2 FY24 saw strong performance with 2.3% QoQ and 2.5% YoY growth in constant currency. Operating margin reached 21.2%, an increase of 40 bps sequentially. Margin expansion driven by cost optimization, improved utilization, pricing. One-time payouts in quarter also helped boost [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,8],"tags":[8588,10169,5075,9124],"class_list":["post-154847","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-technology-stocks","tag-consulting","tag-earnings","tag-it-services","tag-software-technology-services"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":154817,"url":"https:\/\/alphastreet.com\/india\/tata-consultancy-services-ltd-q2-fy24-earnings-conference-call-insights\/","url_meta":{"origin":154847,"position":0},"title":"Tata Consultancy Services Ltd Q2 FY24 Earnings Conference Call Insights","author":"Praveen","date":"October 11, 2023","format":false,"excerpt":"Key highlights from Tata Consultancy Services Ltd (TCS) Q2 FY24 Earnings Concall Financial Performance TCS reported a 7.9% YoY growth in revenue in rupee terms, 2.8% growth in constant currency terms, and 4.8% growth in dollar terms. 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Booked 14 deals over $30 million in TCV vs 10 last quarter. 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