Infosys Limited American Depositary Shares
INFY · NYSE
Next quarter
Expected to report Jan 13, 2027 — estimated from last year’s reporting date.
Consensus is $0.20 EPS for Dec 2026 across 4 estimates, ranging $0.19 to $0.20.
INFY Sep 2026
- 4.76%
- $0.21
- $0.20
- —
- —
Highlights
- Growth slowed: Q2 revenue was $5.145 billion, up 1.5% year over year and 1.2% sequentially in constant currency; management said growth came in below expectations.
- EPS missed consensus: Reported EPS was $0.20 versus the $0.21 consensus, a 4.76% shortfall. Net profit was $819 million, down from $840 million a year earlier and $820 million in Q1.
- AI gained share: AI revenue grew 29% sequentially to 10.5% of revenue, up from 8.2% in Q1; management described it as new revenue.
- Deal wins were strong: Infosys signed 19 large deals worth $5.2 billion, with 62% net new. A net-new deal worth more than $2 billion is expected to contribute over 1% of company revenue growth in FY2028.
- Full-year growth outlook was revised: FY2027 revenue growth guidance is now 1%–2% in constant currency, while operating margin guidance remains 20%–22%.
- Margin held near plan: Operating margin was 21.0%, down 0.1 percentage point sequentially; free cash flow was $928 million, or 113% of net profit.
- Demand and pricing pressured the quarter: Softer volume, lower-than-expected price increases, and cautious discretionary spending weighed on results, particularly in retail and high tech.
- Dividend increased: The board declared an interim dividend of ₹26 per share, 13% above the prior-year ₹23.
Analysis
Infosys delivered a modest-growth quarter that fell short of management’s expectations and missed the supplied EPS consensus: reported EPS was $0.20 versus $0.21 expected. Revenue reached $5.145 billion, up 1.5% year over year and 1.2% sequentially in constant currency, but net profit of $819 million was below both the year-ago $840 million and Q1’s $820 million. Management attributed the revenue shortfall to softer volumes, pricing increases that did not materialize amid heightened competition, and weaker discretionary spending in some sectors. FY2027 revenue growth guidance was revised to 1%–2% in constant currency; the release and call do not quantify the prior range.
The standout positives were AI momentum and bookings. AI revenue rose 29% sequentially and reached 10.5% of revenue, while $5.2 billion of large-deal wins included a net-new deal above $2 billion that management expects to add over 1% to FY2028 revenue growth. Operating margin remained at 21%, within unchanged 20%–22% guidance, and free cash flow was $928 million. The contrast defining the print is therefore weak near-term growth against stronger AI adoption and deal bookings, with management expecting cautious spending and competitive pricing to continue shaping results.
Growth and guidance
Management said revenue growth was below expectations as volume softened and anticipated price increases failed to come through amid high competitive intensity. Selective discretionary spending also tempered the usual Q2 seasonal growth. The revised full-year range reflects softer-than-expected first-half performance and the company’s assessment of the remainder of the year.
- Revenue: $5.145 billion, up 1.5% year over year and 1.2% sequentially in constant currency; acquisitions contributed about 0.4% to sequential growth.
- First half: Revenue growth was 1.9% in constant currency and 2.1% as reported.
- FY2027 outlook: Revenue growth guidance is 1%–2% in constant currency, with the lower end assuming further macro deterioration and the upper end an improvement. Operating margin guidance is unchanged at 20%–22%.
- Headwinds: H2 includes compensation increases, weaker seasonal revenue, ongoing sharing of AI productivity benefits with clients, and large-deal ramp-up; Project Maximus is expected to partly offset them.
AI revenue
AI was the clearest growth engine management highlighted, but it has not yet offset the pressures on the broader business. The company said AI revenue represents new work, with adoption broadening from experimentation toward enterprise-wide deployment. Infosys cited its Topaz Fabric, partnerships with frontier-model companies, and ability to work across models as elements of its offering; it did not disclose AI revenue margins or year-over-year growth.
- Scale and momentum: AI revenue grew more than 29% sequentially and represented 10.5% of total revenue, compared with 8.2% in Q1.
- Client examples: An AI-enabled invoicing platform for a food-services company delivered 40% faster time to market, 80% less rework, and 30% more defects caught before go-live; AI agents helped an education-technology client reduce modernization effort by 40%.
Large deal bookings
Bookings provided a stronger forward signal than current-period revenue. Infosys described the quarter’s total as its second-highest quarterly large-deal TCV in five years and said its pipeline includes additional mega deals. Management expects transition of the largest new contract to begin in the second half of Q4; it said the deal would not materially affect margins during this year’s transition.
- Quarterly wins: 19 large deals totaled $5.2 billion, of which 62% was net new.
- Net-new mega deal: A deal worth more than $2 billion runs for seven years and is expected to contribute over 1% of company revenue growth in FY2028.
- Renewal: A separate mega deal worth $1 billion renewed with an existing financial-services client.
- First-half total: Large-deal wins reached $8.8 billion, up 28% year over year, with 62% net new.
Margins and cash flow
Operating margin was resilient despite the soft growth environment, though the sequential bridge included offsetting pressures and benefits. Management maintained its full-year margin range, while noting compensation hikes and seasonal softness will weigh on H2. Free cash flow remained strong, and the balance sheet was described on the call as debt-free.
- Operating margin: 21.0%, down 0.1 percentage point sequentially and at the midpoint of the full-year 20%–22% range.
- Sequential factors: A 70-basis-point headwind from post-sales customer support and 20 basis points from additional acquisition consolidation were partly offset by 40 basis points from currency, 20 from Project Maximus, and 20 from more calendar and working days.
- Free cash flow: $928 million, equal to 113% of net profit.
- Operations: Onsite mix declined to 22.6%; utilization including trainees rose 0.5 percentage point sequentially to 85.4%.
Sector demand
Performance varied across industries. Financial services and energy-related work were relatively strong, while retail and high tech faced pressure from lower discretionary spending, client-specific reductions, or lower third-party revenue. Management also cited caution around geopolitical uncertainty, inflation, tariffs, and interest rates, alongside demand for cost optimization, modernization, vendor consolidation, and AI-led transformation.
- Financial services: Q2 revenue was ₹13,774 crore, up from ₹12,320 crore a year earlier; the company signed more than $3.5 billion of large deals in the vertical.
- Energy, utilities, resources and services: Revenue rose to ₹6,975 crore from ₹5,945 crore a year earlier.
- Retail: Revenue fell sequentially to ₹5,664 crore from ₹6,172 crore, primarily due to lower third-party revenue and softer consumer demand.
- Hi-Tech: Revenue declined to ₹3,332 crore from ₹3,703 crore a year earlier, reflecting lower third-party revenue and reduced spending at some large clients.
