News ArticleInfosys Posts 1.5% YoY Revenue Growth in Q2 FY2026-27, AI Revenues at 10.5% with $5.2 Billion Large Deals Booked
Two mega deals including a $2 billion new contract and a $1 billion renewal bolster large deal total; operating margin steady at 21%
Infosys announced a 1.5% year-on-year revenue growth for Q2 FY2026-27, with AI-related revenues growing sequentially by 29% to represent 10.5% of total revenue. The company secured $5.2 billion in large deals including two mega deals, one net new $2 billion deal over seven years and a $1 billion renewal. Operating margin remained stable at 21% and free cash flow was strong at $928 million.
Infosys Limited
Earnings Call Transcript
Infosys reported a 1.5% year-on-year revenue growth for the second quarter of fiscal year 2026-27, driven in part by a 29% sequential increase in AI-related revenues which now constitute 10.5% of total revenue. The company announced a strong $5.2 billion large deal booking including two mega deals, one net new deal worth over $2 billion spanning seven years and a $1 billion renewal.
The large deals pipeline remains healthy with several other mega deals under consideration. The $2 billion net new deal is expected to contribute more than 1% to revenue growth in the next financial year. Operating margin for the quarter remained stable at 21%, reflecting effective margin management amid investments.
Free cash flow was robust at $928 million for the quarter, supporting financial flexibility. Infosys’ AI business saw notable growth as it accounted for over a tenth of total revenues, with emphasis on AI applications such as agents, legacy modernization, process AI, and data AI, supported by its Topaz Fabric platform.
Industries showing strength include Financial Services, Energy Utilities, and Manufacturing, while Retail and High-Tech sectors experienced softness. Infosys adjusted its revenue growth guidance for the full year to 1% to 2% on a constant currency basis, with operating margin guidance maintained between 20% and 22%.
The company highlighted ongoing efforts in AI integration and talent development, including training and certification initiatives, to sustain leadership in large enterprise AI deployments. Pricing pressures and market uncertainties contributed to the revised outlook.
Highlights
- Q2 revenue growth of 1.5% year-on-year in constant currency terms
- AI revenues grew 29% sequentially to 10.5% of total revenue
- Large deals totaled $5.2 billion including a $2 billion new seven-year deal and a $1 billion renewal
- Operating margin stable at 21% for the quarter
- Free cash flow was $928 million
- Revised revenue growth guidance of 1% to 2% for FY2026-27 in constant currency terms
Key Data Snapshot
What happened
- Infosys reported a 1.5% year-on-year revenue growth for Q2 FY2026-27.
- AI-related revenues reached 10.5% of total revenue, growing 29% sequentially.
- Large deals totaled $5.2 billion including two mega deals: a $2 billion new contract and a $1 billion renewal.
- Operating margin held steady at 21%.
- Free cash flow for the quarter was strong at $928 million.
Key details
- The $2 billion net new mega deal spans seven years and is expected to contribute over 1% to revenue growth in the next fiscal year.
- Infosys’ AI capabilities include areas such as agents, legacy modernization, process and data AI, enhanced by the Topaz Fabric platform.
- Industries showing strength include Financial Services, Energy Utilities, and Manufacturing; Retail and Hi-Tech sectors showed softness.
- The revenue growth guidance for the full year was revised down to 1% to 2% on a constant currency basis while operating margin guidance remains at 20% to 22%.
Risks and conditions
- Revenue guidance revision reflects softer volumes and pricing pressures amid competitive intensity.
- Compensation increases and pricing pressures are expected to impact margins during the second half of the fiscal year.
- Retail and High-Tech sectors show signs of demand softness influencing overall outlook.
Business impact
- Infosys is expanding its position as a preferred AI strategy and deployment partner for top clients.
- The company continues to invest in AI talent and ecosystem partnerships to sustain growth in AI-led enterprise transformation.
- Strong large deal bookings underpin confidence despite a cautious demand environment.
Funding and capital details
- Free cash flow for Q2 was $928 million, supporting financial flexibility and investments.
- Investments in AI and talent are ongoing alongside margin management efforts such as Project Maximus.
Highlights
- Q2 revenue growth of 1.5% year-on-year in constant currency terms
- AI revenues grew 29% sequentially to 10.5% of total revenue
- Large deals totaled $5.2 billion including a $2 billion new seven-year deal and a $1 billion renewal
- Operating margin stable at 21% for the quarter
- Free cash flow was $928 million
- Revised revenue growth guidance of 1% to 2% for FY2026-27 in constant currency terms
Disclosures
- BSE Listing Requirements
- NSE Listing Requirements
Source Information
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