Infosys (NYSE: INFY)
FY25 and Q4 Financial Analysis | April 22, 2025
Executive Summary
Infosys, a global leader in next-generation digital services and consulting, has reported its financial results for the fiscal year 2025 and fourth quarter ended March 31, 2025. The company delivered annual revenue of $19.28 billion with growth of 4.2% in constant currency, while expanding operating margin to 21.1%. Free cash flow reached a record $4.09 billion, representing a significant increase of 41.8% year-over-year. This report analyzes Infosys's financial performance, key drivers, and future outlook based on the company's latest quarterly and annual reports.
FY25 & Q4 Highlights
Financial Performance
Infosys demonstrated resilient performance in FY25 with revenue growing 4.2% in constant currency to $19.28 billion, despite a challenging macroeconomic environment. The company's focus on operational efficiency through its Project Maximus initiative led to operating margin expansion of 0.5% to 21.1%. While basic EPS slightly declined by 0.3% to $0.76, the company achieved record free cash flow of $4.09 billion, surging 41.8% year-over-year with a strong FCF conversion rate of 129.3% of net profit.
Quarterly Performance Trends
In Q4 FY25, Infosys reported revenue of $4.73 billion, representing growth of 4.8% year-over-year in constant currency and 3.6% in reported terms. While there was a sequential decline of 3.5% in constant currency terms, the operating margin improved by 0.9% year-over-year to 21.0%. The quarterly performance indicates typical seasonality patterns, but with solid year-over-year growth. The 15.2% decline in basic EPS to $0.20 was partly influenced by tax-related factors, as the company experienced a one-time tax benefit in the comparable quarter of the previous year.
Cash Flow and Balance Sheet
Cash Flow Highlights
Balance Sheet Strengths
Infosys reported exceptional cash generation in FY25, with free cash flow reaching a record $4.09 billion, up 41.8% year-over-year. The FCF conversion rate of 129.3% of net profit demonstrates the company's ability to efficiently convert earnings into cash. The balance sheet remains robust with total assets of $17.42 billion and cash, cash equivalents, and investments totaling $4.32 billion. This strong financial position has enabled Infosys to increase its dividend by 13.2% over the previous year, returning value to shareholders while maintaining flexibility for strategic initiatives.
FY26 Guidance & Outlook
FY26 Guidance
Strategic Focus Areas
Management Perspective
"We have built a resilient organization with sharp focus on client-centricity and responsiveness to the market, thanks to the trust of our clients and dedication of our employees. Our performance for the year has been robust in terms of revenues, expansion in operating margins and highest ever free cash generation. Our depth in AI, cloud and digital and strength in cost efficiency, automation, and consolidation position us well for the needs of our clients."
— Salil Parekh, CEO and MD, Infosys
Business Highlights & Key Wins
Key Client Wins
Industry Recognition
Infosys continued to expand its client relationships and win new business across diverse industries in FY25. The company secured large deals with a total contract value of $11.6 billion, with 56% representing net new business. Strategic collaborations with major enterprises like Citizens, Siemens AG, Lufthansa Group, and LKQ Europe underscore Infosys's ability to deliver digital transformation and innovative solutions. The company's launch of an open-source Responsible AI Toolkit demonstrates its commitment to ethical AI adoption while addressing associated challenges and risks.
Conclusion
FY25 Achievements
- 4.2% revenue growth in constant currency to $19.28 billion
- Operating margin expansion of 0.5% to 21.1%
- Record free cash flow of $4.09 billion, up 41.8% YoY
- Large deal TCV of $11.6 billion with 56% net new
- 13.2% increase in dividend year-over-year
Strategic Positioning
- Strengthened capabilities in AI, cloud, and digital services
- Enhanced focus on cost efficiency and automation
- Disciplined execution of Project Maximus
- Expanded client relationships across industries
- Continued recognition as an industry leader and top employer
Summary
Infosys delivered a resilient performance in FY25, demonstrating strong revenue growth, expanded operating margins, and record free cash flow despite challenging market conditions. The company's focus on operational efficiency through Project Maximus has yielded positive results, while strategic investments in AI, cloud, and digital capabilities position it well to address evolving client needs. With a conservative but steady guidance for FY26, Infosys appears well-prepared to navigate market uncertainties while continuing to drive value for clients and shareholders. The company's strong balance sheet and cash flow generation provide flexibility for future investments and shareholder returns.
