Infosys Cuts Revenue Growth Outlook to 1%-2%, Keeps Operating Margin at 20%-22%
Key Facts
Infosys cut its revenue growth outlook for fiscal 2027 to 1%-2% in constant currency and kept its operating margin forecast at 20%-22%, according to its second-quarter results statement issued on October 23. Revenue for the quarter ended September 30 was $5,145 million. Revenue grew 1.5% year over year and 1.2% quarter over quarter in constant currency, while reported dollar revenue growth was 1.3% year over year. These figures reflect modest growth in the quarter in which the company revised its fiscal-year outlook. At the same time, maintaining the margin range indicates the company did not lower its annual operating profitability forecast.
In constant currency, first-half revenue rose 1.9% from the same period a year earlier, while the operating margin was 21.0%, according to the company’s filing with the U.S. Securities and Exchange Commission. In the second quarter, the margin was 21.0%, down from 21.1% in the quarter ended June 30. Chief Financial Officer Jayesh Sanghrajka said cost-control measures and operating efficiency, alongside necessary investments, helped stabilize margins amid elevated volatility. Reported revenue in rupees also rose 10.7% year over year to 49,244 crore rupees. Net profit increased 6.2% year over year to 7,823 crore rupees and rose 0.7% from the previous quarter.
Large deals totaled $5.2 billion in the second quarter, including a mega deal worth more than $2 billion, according to Infosys. On AI, AI-related revenue accounted for 10.5% of total revenue and grew 29% from the previous quarter. The deals indicate the volume of business the company secured during the period, while AI’s share shows the activity’s weight in current revenue. But the quarter-over-quarter growth in this activity did not change the company’s annual revenue growth outlook, which it set at 1%-2%. The fiscal-year operating margin forecast remained at 20%-22%.
In its filing, Infosys said the U.S. Department of Justice is investigating how certain employees who benefited from H-1B visas were classified in immigration documents submitted to U.S. government agencies. The company added that it is discussing the matter with the department and conducting an internal investigation. It said it could not predict the investigation’s outcome or determine whether its impact on the business and results would be material. The investigation is separate from a U.S. Department of Labor action that halted processing of new and pending permanent labor certification applications, known as PERM, for Infosys and other companies. The PERM process is used in most employment-based permanent residency applications, while the suspension does not appear to directly affect current H-1B visa holders.
A suspension of applications linked to the green card program at Infosys and other technology and consulting companies was announced on October 8, according to the Associated Press. In trading on October 26, Infosys shares listed in India fell 2.7% after the revenue growth outlook was cut, according to Reuters. The company’s U.S. depositary receipt closed at $12.43 that day. An analyst at LKP Securities said the share move reflected, in his view, that competitors were better positioned and that Infosys had underperformed since its fiscal 2026 fourth-quarter results. The Reuters report cited pricing pressure from competition and customer demands tied to AI productivity, as well as weak technology spending by retail and advanced technology clients.
Infosys announced its second-quarter results on October 23 and held a press conference at 4:30 p.m. and an earnings call at 6:00 p.m. India time. The investor FAQ page indicates that results for the quarter ended December 31, 2026, will be announced on January 13, 2027. That will be the next scheduled update after the company set its fiscal-year revenue growth outlook at 1%-2% in constant currency. The company kept its operating margin forecast in the 20%-22% range. As for the Department of Justice investigation, the company said it could not predict its outcome or potential impact on its business and results.