Infosys ends FY25 with profit dip, but strategic focus on AI, cloud and cybersecurity signals resilience

Bengaluru: India’s second-largest IT services firm, Infosys, wrapped up the financial year 2024–25 with a mixed performance — one that balanced operational resilience with strategic foresight.

For the quarter ending March 31, 2025 (Q4FY25), Infosys reported a 12 percent year-on-year (Y-o-Y) decline in net profit to ₹7,033 crore, even as revenue rose 7.9 percent Y-o-Y to ₹40,928 crore.

The Bengaluru-based tech giant, led by CEO Salil Parekh, attributed the dip in profits to shifting client priorities, ongoing macroeconomic headwinds, and a broad recalibration of discretionary tech spending in key markets, including the US and Europe.

However, the company highlighted solid progress in margin expansion, free cash generation, and deal ramp-ups — marking it as a year of strategic repositioning more than one of just topline growth.

“We have built a resilient organisation with a sharp focus on client-centricity and responsiveness to the market,” said Parekh in a post-results statement.

“Our depth in AI, cloud and digital, and our strength in cost efficiency, automation, and consolidation position us well for the evolving needs of our clients.”

Dividend declaration and shareholder cheer

Despite profit pressures, Infosys’ board approved a final dividend of ₹22 per equity share for FY25, underscoring its commitment to shareholder returns.

The record date for the dividend and the Annual General Meeting (AGM) is May 30, 2025, with payouts scheduled for June 30, 2025.

On the Bombay Stock Exchange (BSE), Infosys shares showed mild volatility during the day’s trade, opening at ₹1,404.85 and dipping to ₹1,378.60 before recovering to close at ₹1,428.10 — a 1.07 percent gain.

However, the stock remains down by 25 percent year-to-date, largely due to a sector-wide drag caused by US tariff policies and delayed enterprise IT spending cycles.

Performance snapshot: Quarter and year in review

The company posted a sequential profit growth of 3.3 percent, even as quarter-on-quarter (Q-o-Q) revenue dipped 2 percent. A comparison with the previous quarter (Q3FY25) paints a fuller picture: net profit stood at ₹6,806 crore in Q3, while revenue was ₹41,764 crore — suggesting a modest Q4 decline in topline despite profit resilience.

For the entire fiscal year (FY25), Infosys reported a 4.2 percent growth in revenue, missing its lower-end projection of 4.5–5 percent. The subdued performance reflects the cautious environment in which the firm operated, as clients scrutinized budgets, delayed large transformation projects, and leaned towards vendor consolidation.

“The environment is uncertain, and we will execute our plans with agility by keeping a close watch on the changes,” Parekh stated.

“We are seeing the deals that we did in the recent quarters are continuing to ramp up,” he added.

Weak guidance, strong bision

Infosys’ forward guidance for FY26 has set a conservative tone, with projected revenue growth between 0% and 3%, one of the lowest forecasts in recent years.

The company cited macroeconomic uncertainties, tariff-related anxieties, and limited demand visibility as key constraints.

However, it reaffirmed its operating margin guidance of 20–22 percent, signalling a strong internal cost structure and efficiency-focused delivery.

While the soft outlook led to Infosys’ American Depositary Receipts (ADRs) sliding around 3 percent in early NYSE trade, industry watchers believe the company’s long-term strategy remains intact.

Strategic Bets: AI, Cybersecurity, and Energy Trading

Infosys continues to invest in high-growth, high-value segments — with a clear bias towards AI-driven services, cloud infrastructure, and cybersecurity.

During Q4, the company announced two targeted acquisitions to bolster its digital capabilities:

MRE Consulting (USA) – Acquired for $36 million, this Houston-based firm specializes in energy and commodity trading and risk management (E/CTRM). The acquisition is expected to deepen Infosys’ presence in the energy sector and offer advanced analytics for trading operations.

The Missing Link (Australia) – Acquired for $58 million, this cybersecurity firm brings to Infosys specialized expertise across Red Team, Blue Team, and GSOC (Global Security Operations Centre) domains. The deal is expected to expand Infosys’ managed security services and incident response capabilities globally.

Both acquisitions reflect Infosys’ evolving portfolio strategy: move up the value chain, capture niche markets, and offer end-to-end digital trust solutions.

Industry trends and market sentiment

Infosys’ cautious commentary mirrors a broader sentiment across the IT industry, where top players are seeing a slowdown in digital transformation spending and a rise in demand for cost-efficient, AI-enabled solutions.

With enterprise clients revisiting their tech budgets and evaluating returns more closely, Indian IT majors are pivoting towards automation-first delivery models, platform-based services, and AI-powered IT operations.

While Infosys may be entering FY26 with lowered expectations, analysts point to a robust deal pipeline, internal cost levers, and a disciplined approach to expansion as reasons for cautious optimism.

Conclusion: A pause, not a retreat

Infosys’ Q4 and FY25 results reflect a company recalibrating amid complexity — balancing short-term headwinds with long-term positioning. With sustained investment in strategic capabilities and a strong balance sheet, Infosys is not retreating, but rather consolidating and preparing for the next wave of tech disruption.

For investors and analysts, the message is clear: Infosys may be moving slower today, but it’s steering steadily towards a future-ready, AI-led digital enterprise model.