Infosys cuts revenue growth outlook to 1%-2% after second consecutive forecast reduction

Key Facts

Infosys cut its constant-currency revenue growth forecast for fiscal 2027 to a range of 1%-2%, from its previous estimate of 1.5%-3%, marking a second consecutive reduction in its guidance, according to coverage of Goldman Sachs notes published on October 26. The new range puts the company’s estimate below analysts’ average forecast of 2.03% for the fiscal year ending in March 2027, according to Bloomberg data published by NDTV. The company announced the cut in a statement on Friday, alongside results for the quarter ended September 30. Coverage of management’s remarks said the decision reflected economic uncertainty, pricing pressure and weak discretionary spending in the retail and advanced technology sectors. The lower guidance puts the trajectory of demand for the company’s services in sharper focus, following a quarter of limited revenue growth.

Second-quarter revenue was $5.145 billion, up 1.5% year on year and 1.2% sequentially, according to an Infosys statement. Operating margin was unchanged at 21.0% during the quarter, the company said. Annual revenue growth puts the quarterly result in the context of the reduced full-year guidance, with the new range at 1%-2%. The company kept its operating margin forecast for fiscal 2027 at 20%-22%. Taken together, the lower growth range and unchanged margin target show that the revenue guidance changed while the stated annual margin range remained intact.

New large deal wins totaled $5.2 billion in the quarter, of which 62% was net new business, Infosys said. The company said its deal pipeline “lays a strong foundation for future growth” and included a mega deal worth more than $2 billion. These figures indicate the scale of business won during the period, alongside annual revenue growth of 1.5%. The company also said AI-related revenue accounted for 10.5% of total quarterly revenue, rising 29% from the previous quarter. This highlights growth in that business within the company, alongside deal expansion, as Infosys lowered its estimate for annual revenue growth.

The announcement quickly affected U.S. trading in the stock: Infosys shares listed in the United States fell 7.5% in premarket trading on October 23, according to Reuters coverage via MarketScreener. Bloomberg, via NDTV, reported that American depositary receipts fell as much as 7.6% in early New York trading on Friday after the guidance cut. The company’s stock, ticker INFY, closed at $12.35 on October 23, according to L7 data. The closing price refers to that day’s session, while the two percentages describe premarket and early trading moves. The market pressure followed the company’s reduction of its annual range from 1.5%-3% to 1%-2%.

On liquidity, free cash flow was $928 million in the second quarter, down 15.7% year on year, according to Infosys’ results. Free cash flow conversion to net profit was 113.3%, the same statement said. The quarterly results thus combine annual revenue growth of 1.5%, an unchanged operating margin of 21.0% and a year-on-year decline in free cash flow. On guidance, the company kept its fiscal-year operating margin range at 20%-22%, alongside a narrower revenue growth range. These figures alone offered no further explanation for the decline in free cash flow, while coverage of management’s remarks attributed the forecast cut to economic uncertainty, pricing pressure and weak discretionary spending in the retail and advanced technology sectors.

Infosys has provisionally scheduled January 13, 2027, for the release of results for the quarter ended December 31, 2026, according to the company calendar. Those will be the next results on its disclosure schedule after the quarter ended September 30, which recorded revenue of $5.145 billion and constant-currency year-on-year growth of 1.5%. The date comes as the company holds its annual operating margin forecast at 20%-22% and cuts its revenue growth range to 1%-2%. The quarterly results also showed large deal wins of $5.2 billion, 62% of which was net new business. The next disclosure will offer a view of third-quarter revenue within the revised annual guidance.