Infosys — Q4 FY26 earnings call

Call held 23 Apr 2026

Management summary

Infosys delivered a strong FY26 with 3.1% constant currency revenue growth and stable 21% operating margins, driven by robust large deal wins totaling $14.9 billion. The company sees significant opportunities in AI services, which are growing strongly, and has provided FY27 revenue growth guidance of 1.5% to 3.5% in constant currency, with operating margins expected between 20% and 22%. While facing headwinds from AI productivity impact, competitive intensity, and a specific client ramp-down, Infosys remains confident in its strategic AI roadmap and ability to drive growth.

Highlights

  • FY26 revenue grew 3.1% in constant currency, reaching $20 billion.

  • Q4 FY26 revenue grew 4.1% year-on-year in constant currency.

  • Full year large deal wins totaled $14.9 billion, a 28% increase over prior year, with Q4 contributing $3.2 billion.

  • Operating margin for FY26 remained stable at 21%, with Q4 at 20.9%.

  • Strong growth observed in Financial Services, Communications, Manufacturing, and Europe.

  • AI services are growing 'very nicely' and 'much more growth' than Q3's 5.5% revenue contribution.

Concerns

  • FY27 revenue growth guidance of 1.5% to 3.5% in constant currency is lower than FY26's 3.1% growth.

  • Headcount declined by 8,000 sequentially in Q4 FY26, though up 5,000 YoY.

  • A 0.75% to 1% reduction in FY27 revenue is expected due to lower revenue from one large European manufacturing client.

  • Acquisition-related amortization impacted Q4 margin by 50 basis points.

  • Competitive intensity and AI productivity impact are noted as ongoing factors.

Key financials

3 periods

Headline

  • DSO
    78 days

Q4 FY26

  • Revenue Growth (YoY CC)
    4.1%
  • Revenue Growth (Sequential CC)
    -1.3%
  • Operating Margin
    20.9%
  • EPS Growth (INR)
    23.8%
  • Free Cash Flow
    882 Mn
  • Utilization (excl. trainees)
    83%

FY26

  • Revenue Growth (CC)
    3.1%
  • Operating Margin
    21%
  • EPS Growth (INR)
    11%
  • Free Cash Flow
    3.5 Bn
  • Utilization (excl. trainees)
    84.4%
  • Utilization (incl. trainees)
    81.1%

What they filed

Q1 FY27: revenue up 13.3%, net profit up 18.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue34,257 34,915 34,136 35,275 36,907 +8%37,996 +9%38,641 +13%39,957 +13%
EBITDA8,401 8,554 8,379 8,446 8,848 +5%9,170 +7%9,548 +14%9,961 +18%
Net profit6,813 6,358 6,628 6,114 7,759 +14%7,363 +16%7,975 +20%7,249 +19%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Financial Services
    4.4% FY26 Growth (CC)
  • Communications
    — FY26 Growth (CC)— Q4 Growth (YoY CC)
  • Manufacturing
    — FY26 Growth (CC)
  • Europe
    — FY26 Growth (CC)
  • EURS
    — Q4 Growth (YoY CC)
  • Life Science
    — Q4 Growth (YoY CC)

Order book

high confidence

Total value

$14.9 Bn

as of 2026-03-31 quantified

28% YoY

Inflow this quarter

$3.2 Bn

Composition

  • Large Deals (>$50mn) (deal size) $14.9 Bn
  • Net New Deals (deal type) 55%
  • Financial Services (Q4) (vertical)
  • Manufacturing (Q4) (vertical)
  • Retail (Q4) (vertical)
  • Life Science and Communication (Q4) (vertical)
  • EURS (Q4) (vertical)
  • Europe (Q4) (geography)
  • America (Q4) (geography)
  • Rest of the World (Q4) (geography)

Pipeline

deal pipeline tcv

Large deal pipeline continues to remain strong.

Cancellations & deferrals

  • renegotiated: Reduction in revenue from one large European manufacturing client due to lower spend and conscious decision not to pursue certain deals.
Large deals were very good, $14.9 bn for the full year, $3.2 bn for the fourth quarter. The full year was 28% higher than it was in the previous year.

Source: Prepared remarks

Capital allocation

high confidence
  • Dividend ₹25/share (final)
    In line with our capital allocation policy, board has proposed a final dividend of INR25 per share which will result in a total dividend of INR48 per share, an increase of 11.6% over last year, once the final dividend is approved by the shareholders.
  • M&A Stratus Acquisition · Closed

    Contributed approximately 25 basis points or a quarter point to guidance. Impact on operating margin will be approximately 0.7% on a full year annualized basis post closure (combined with Optimum and Versent).

    The acquisition with an insurance company which is Stratus, which is already closed and it is baked in the guidance. What is baked into the guidance is approximately 25 basis points or a quarter point of the guidance.
  • M&A Optimum Healthcare Acquisition · Pending regulatory

    Not baked into guidance yet. Impact on operating margin will be approximately 0.7% on a full year annualized basis post closure (combined with Stratus and Versent).

    The other acquisition was Optimum, which is not baked in because we have not closed it yet. We are still awaiting certain regulatory approvals. And once that is closed is when we will bake in.
  • M&A Australian client JV Joint venture · Pending regulatory

    Not baked into guidance yet. Impact on operating margin will be approximately 0.7% on a full year annualized basis post closure (combined with Stratus and Optimum).

    The third one is a JV with an Australian client of ours which is also pending regulatory approvals right now. So, we have not baked in both of that in the guidance at this point in time.
  • Liquidity Cash $4.5 Bn

Guidance & targets

Revenue

  • Revenue Growth (Constant Currency) Revenue · FY27 · High confidence 1.5% to 3.5%
    Our revenue growth guidance for the financial year 2027 is 1.5% to 3.5% growth year-on-year in constant currency terms.

    — Salil Parekh, Chief Executive Officer and Managing Director

  • Revenue Reduction from European Manufacturing Client Revenue · FY27 · High confidence 0.75% to 1%
    Reduction of 0.75% to 1% due to lower revenue from one of our large European manufacturing client.

    — Jayesh Sanghrajka, Chief Financial Officer

Profitability

  • Operating Margin Profitability · FY27 · High confidence 20% to 22%
    Our operating margin guidance for financial year '27 is 20% to 22%.

    — Salil Parekh, Chief Executive Officer and Managing Director

Hiring

  • Freshers to be hired Hiring · FY27 · High confidence at least 20,000
    This year also, we are expecting at least 20,000 freshers to be hired.

    — Jayesh Sanghrajka, Chief Financial Officer

Tax Rate

  • Effective Tax Rate Tax Rate · FY27 · High confidence 29% to 30%
    We expect effective tax rates for the FY27 to be in the range of 29% to 30%.

    — Jayesh Sanghrajka, Chief Financial Officer

Mix

  • Onsite Mix Reduction Mix · FY27 · High confidence 0.75% to 1%
    Further reduction in onsite mix by 0.75% to 1%, we expect third-party cost for FY27 to remain at similar levels as FY26.

    — Jayesh Sanghrajka, Chief Financial Officer

Cost

  • Third-party Cost Cost · FY27 · High confidence similar levels as FY26
    Further reduction in onsite mix by 0.75% to 1%, we expect third-party cost for FY27 to remain at similar levels as FY26.

    — Jayesh Sanghrajka, Chief Financial Officer

What to watch in Q1 FY27

Optimum Healthcare Acquisition Closure

next quarter
Current Pending regulatory approvals
Target Closed

Why it matters

Closure will add to revenue guidance and impact margins (0.7% headwind combined with other deals post closure).

The other acquisition was Optimum, which is not baked in because we have not closed it yet. We are still awaiting certain regulatory approvals. And once that is closed is when we will bake in.

Risks & concerns

  • Competitive Intensity and AI Productivity Impact

    high

    Increased competitive intensity and the impact of AI productivity gains (often passed to clients) are creating margin pressures, though offset by value creation and Project Maximus.

    Management acknowledged

  • Geopolitical Conflicts (Iran war, Middle East)

    medium

    Geopolitical tensions, including the Iran war and Middle East conflict, are causing continued uncertainty and delayed decision-making in client spending.

    Management acknowledged

  • Client Spending Caution and Discretionary Spend Cuts

    medium

    Client spending remains guarded, with a greater focus on cost optimization and operational resilience rather than growth-led transformation, impacting discretionary spend.

    Management acknowledged

  • Revenue Reduction from Specific European Manufacturing Client

    medium

    A 0.75% to 1% reduction in FY27 revenue is expected due to lower spend from a large European manufacturing client, partly due to challenging macro environment and conscious decision not to pursue certain deals.

    Management acknowledged

  • Regulatory Delays for Acquisitions

    low

    Two acquisitions (Optimum and an Australian JV) are pending regulatory approvals, delaying their closure and inclusion in current guidance.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
FY27 Guidance, Acquisitions, Margins, Hiring, and CEO Tenure Partial
So, what we are seeing right now is Financial Services, we are seeing an acceleration of our growth next year. So, we had growth in financial year '26, we are seeing more growth. In Energy, Utilities, Services, Resources vertical, similar, good, more growth there. What we are seeing in terms of projects, at the Al Investor Day, we shared that our Al services revenue was growing nicely. We see on the large deals, the net new is pretty large for the full year at 55%. So that gives us support for growth. ... No comment. [on CEO tenure]

A comprehensive question covering multiple key financial and strategic points, including specific numbers for acquisitions and margin components, and a notable non-answer on CEO tenure.

Asked by Ritu Singh, CNBC TV18

AI Revenue Quantification Evasive
The growth in Al services is very strong, but we have not disclosed that revenue number externally here. ... No, it is growing. It is much more growth but we are not giving the number, but it is growing very nicely here. ... Is it 10% or 50%, we are not sharing the number.

Highlights management's selective disclosure on a key growth area (AI), indicating strong growth but unwillingness to quantify it regularly, raising questions about transparency.

Asked by Chandra R. Srikanth, Moneycontrol

Headcount Decline and Wage Hike Plans Direct
So if you look at the headcount, our headcount sequentially has gone down by 8,000 employees but if you look at on a year-on-year basis it has still grown by 5,000. ... On the wage, we have not really made a decision at this point in time on the quantum and the timing of it. Once we decide we will let you know.

Addresses a key concern for the IT sector (headcount trends) and clarifies the status of wage hikes, a significant cost component, which impacts future margins.

Asked by Ritu Singh, CNBC TV18

AI Deflation Impact on Deal Pipeline and Client Productivity Demands Direct
So, there you know, what we shared in that Al Investor Day is how we are looking at it. We have really three areas which we see like a growth areas. So, one was we talked a little bit about the Al services which are growing quite nicely. ... With that we are going to grow in terms of our forecast for next year. And that shows us that while there is compression, the growth part of our work is larger today than the compression which is why we are growing.

Directly addresses the core sector risk of AI-led deflation and how Infosys is navigating it, emphasizing growth drivers offsetting compression.

Asked by Shilpa Phadnis, The Times of India

BFSI AI Adoption, Regulatory Hurdles, and Revenue Cannibalization Direct
So, in Financial Services what we are seeing is clients are moving very quickly to adopt Al. So, as an example, if you look at a bank, if they are doing the KYC process, AML process, there is a lot of agents being built for that process which is growing our revenue. ... So, it is a combination of those two, but despite that we are seeing the growth of the financial services.

Provides specific examples of AI use cases in a critical vertical (BFSI) and reiterates the balance between AI-driven growth and compression, confirming overall growth in the segment.

Asked by Padmini Dhruvaraj, The New Indian Express

Sequential Contraction in Large Deal TCV Direct
When you say TCV, it must be large deals. I thought we had a good large deals, the $3.2 bn for the quarter. We did not see I would say nothing unusual in that. The large deals are always a little bit variable. And $3.2 bn is a large number for large deals for the way we look at it, larger than $50 mn deal value. And the number of deals was good, the overall year at $14.9 bn is much larger than what we had last year as well. So, we did not see something change so much in the actual large deal value for us.

Clarifies the context of large deal performance, addressing a potential red flag by explaining the lumpy nature of mega deals and confirming the overall strength of the full-year TCV.

Asked by Shristi Achar, The Economic Times

North America vs. Europe Growth Trends and Other Geographies Direct
If you look at Europe, we have had multiple large and mega deal wins in Europe, that is pretty much contributing to the faster growth in Europe. ... Some of the industries I mentioned before, we have a smaller business, but like some of the new geographies like Japan, we are doing quite well.

Explains geographical shifts in revenue contribution, highlighting specific deal wins and market strengths in Europe and other emerging regions.

Asked by Sai Ishwar, Reuters News

AI Productivity and Pricing Dynamics Direct
So, on the first one, the models and the technology is moving with great innovation. We have not seen in one or two quarters, the change that you referenced, though what we are seeing is that competitive intensity is pretty high. ... If you look at little elevated level, despite the softer volume through the year most of our growth came from the realization. That reflects in what we have been able to get on the back of Al, that reflects in the value that we are creating for our clients.

Addresses the ongoing impact of AI on pricing and productivity, a critical sector-wide theme, and how Infosys is managing it through value creation and Project Maximus.

Asked by Bryan Bergin, TD Cowen

3 min read 7 chapters

Detailed narrative

Strong FY26 Performance and Q4 Momentum

Infosys concluded FY26 with a strong performance, achieving 3.1% constant currency revenue growth for the full year, reaching $20 billion. Q4 FY26 saw a 4.1% year-on-year constant currency growth, though sequentially, revenues declined by 1.3% due to seasonality and slower decision-making in March. The company maintained a stable operating margin of 21% for FY26, with Q4 at 20.9%, demonstrating financial discipline despite a challenging environment.

Robust Large Deal Wins and Pipeline Health

The company secured significant large deal wins, totaling $14.9 billion for FY26, marking a 28% increase over the previous year. Q4 alone contributed $3.2 billion in large deals, with 55% being net new. The large deal pipeline continues to remain strong, indicating continued demand and future growth potential, particularly across AI strategy, engineering, data, process, legacy modernization, physical AI, and trust. The number of $50mn+ and $100mn+ clients also increased in FY26.

AI Strategy and Growth Acceleration

Infosys's AI strategy, leveraging its Topaz Fabric and Cobalt platforms, is resonating well with clients across six key AI areas. While specific AI revenue figures were not disclosed for Q4, management confirmed strong growth, stating it is 'much more growth' than Q3's 5.5% contribution. The company anticipates large opportunities in AI services to drive future growth, offsetting some of the competitive intensity and AI productivity impacts, and is well-positioned with its strategic roadmap and real-world toolkit.

FY27 Guidance and Headwinds

For FY27, Infosys provided a revenue growth guidance of 1.5% to 3.5% in constant currency terms and an operating margin guidance of 20% to 22%. This guidance incorporates headwinds such as a 0.75% to 1% revenue reduction from a large European manufacturing client and the impact of acquisition-related amortization (50 basis points on Q4 margin). The company expects growth acceleration in Financial Services and Energy, Utility, Resources, and Services verticals, with H1 stronger than H2 due to normal seasonality.

Headcount Dynamics and Talent Management

Infosys reported a sequential headcount decline of 8,000 in Q4 FY26, though the full-year headcount increased by 5,000 to over 328,000. The company plans to hire at least 20,000 freshers in FY27, similar to FY26, calibrating requirements based on growth expectations and attrition trends. Voluntary attrition reduced to 12.6% for the year. Management stated no decision on wage hikes has been made, but it will consider various factors including performance, industry practice, and employee morale.

Capital Allocation and Acquisitions

Infosys returned over $4 billion to shareholders in FY26, with consolidated cash and investments standing at $4.5 billion. The board proposed a final dividend of INR 25 per share, bringing the total FY26 dividend to INR 48 per share, an 11.6% increase YoY. The company closed the Stratus acquisition, which contributed 25 basis points to guidance, but two other acquisitions (Optimum and an Australian JV) are pending regulatory approvals and are not yet included in the FY27 guidance.

Market Environment and Competitive Landscape

Management noted a cautious client spending environment, with a focus on cost optimization and operational resilience. While competitive intensity is high, Infosys believes its differentiated AI capabilities and strong large deal performance position it well. The company is seeing positive trends in Europe and specific pockets within the US, as well as new geographies like Japan and Nordic markets, contributing to growth despite macro uncertainties and geopolitical conflicts.

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