Infosys shares fell sharply in New York after the technology services group lowered its revenue guidance, citing softer demand, pricing pressure and greater offshoring despite $5.2bn in quarterly deal wins.
Infosys ADRs fell sharply on Friday in New York after the Indian IT services group trimmed its revenue growth outlook and highlighted weaker client spending, offsetting a better-than-expected pipeline of new business. The shares dropped as much as 7% in early trading before recovering some ground, underscoring investor unease over slower demand and pressure on profitability.
The company said its revenue growth guidance for the year had been reduced to 1% to 2% in constant currency terms, down from 1.5% to 3%. Management blamed softer volumes, pricing pressure and a more uncertain macroeconomic backdrop, with weakness most visible among retail and high-tech customers that have been delaying or scaling back discretionary projects. Chief financial officer Jayesh Sanghrajka also pointed to greater offshoring, which has weighed on the outlook.
That caution overshadowed a mixed set of quarterly results. Revenue rose 2.14% sequentially to Rs 49,244 crore, while net profit increased slightly to Rs 7,823 crore. Operating margin slipped to 20.97% from 21.08% in the previous quarter, a modest decline that still added to concerns about earnings quality. Infosys also reported $5.2 billion in large deal wins in the quarter, with 62% of them classed as net new business, but investors appeared more focused on how quickly those contracts can translate into revenue.
Artificial intelligence remains both a support and a complication for the business. Infosys said AI-related revenue reached $540 million in the quarter, up 29% from the previous three months and equal to 10.5% of total revenue. Management has described AI as a growth engine, but one that can also compress traditional services revenue as clients demand more efficiency and lower delivery costs. The company added 4,000 employees in the quarter and hired 8,000 freshers, while keeping its broader hiring plans intact.
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