TCS slips on revenue, beats estimates, sees better FY26

The earnings season for the technology industry began on a gloomy note, with India's IT bellwether seeing revenue slip sequentially for the second successive quarter on account of a key India deal nearing completion.

- Jas Bardia

This resulted in slowest full-year revenue growth for Tata Consultancy Services (TCS) in four years despite beating analyst expectations.

TCS delivered FY25 revenues of $30.2 billion, beating a Bloomberg poll of 47 analysts, which predicted $29.6 billion revenue for the fiscal. However, the top line saw a year-on-year (y-o-y) fall of 3.78%, the worst show since March 2021, when it had reported 0.7% year-on-year growth.

As for the latest quarter, the Mumbai-headquartered company's Q4 revenues declined 0.98% sequentially and grew 1.39% on a year-on-year basis to $7.47 billion.

The results come in the backdrop of the company being buffeted by the winds of uncertainty over trade tariffs and due to its deal with state-run telecom operator, Bharat Sanchar Nigam Ltd, nearing its end. TCS had signed a 4G network deployment deal with BSNL worth $1.83 billion in May 2023 as part of which it set up data centres for the telecom operator across India.

A squeeze in discretionary spends from tight-fisted clients in its biggest geography—North America—did not help either, although TCS's management highlighted that the company's international business, which is more than 90% of its overall business, grew 0.6% sequentially.

Worryingly, for investors, TCS's management underlined uncertainty on account of macroeconomic challenges although it said that its order book value of $39.4 billion gives it confidence that FY26 will be better than FY25.