Infosys Cuts FY2027 Revenue Growth Forecast to 1%-2%, Maintains Operating Margin Outlook
Key Facts
Infosys on October 23, 2026, cut its fiscal 2027 revenue growth forecast to 1%-2% in constant currency, from a range of 1.5%-3%, and maintained its operating margin outlook at 20%-22%. The revision followed the announcement of second-quarter results, as technology services companies face demand shaped by clients shifting spending toward AI projects and pressure to lower prices. The company said revenue was $5,145 million in the quarter ended September 30, up 1.5% year on year and 1.2% sequentially in constant currency. At the same time, the company reported strong demand for its new contracts and announced an interim dividend higher than a year earlier.
The forecast cut reflects a lower estimate of the company's revenue growth trajectory for the fiscal year, while the target margin range was unchanged. The lower end of expected growth was reduced from 1.5% to 1%, and the upper end from 3% to 2%, according to the comparison reported by Reuters. Operating margin was 21.0% in the second quarter, the same level recorded in the first half, according to an Infosys disclosure. First-half revenue grew 1.9% year on year in constant currency. This performance separates the company's full-year guidance from results achieved through the end of September: the actual margin remained at 21.0% while the expected revenue growth range was cut.
On demand, the total contract value of large deals won by Infosys reached $5.2 billion in the second quarter, 62% of which was new business, the company said. The chief executive said the tally included a mega deal worth more than $2 billion. The new contracts offer an indication of the volume of business the company secured during the quarter, alongside limited overall revenue growth. But the contract value did not prevent the company from trimming its annual forecast, highlighting the gap between signing projects and converting them into revenue within the specified period. The disclosure did not provide a timeline for converting these contracts into revenue in the available information.
In AI, Infosys said the business accounted for 10.5% of its revenue in the second quarter and grew 29% compared with the previous quarter. The expansion came alongside total revenue growth of 1.5% year on year in constant currency, reflecting the different pace of growth in the business compared with the company overall. Reuters reported that clients are redirecting spending toward AI projects while seeking productivity gains and lower prices, putting pressure on the traditional outsourcing model. These shifts put technology companies in a position of facing demand for new services alongside pricing pressure on existing business. The company did not directly link the rate of AI growth to its reduced annual guidance in its disclosure.
The chief financial officer said operating margin was 21.0% in the second quarter amid elevated volatility, attributing its stability to a focus on cost and operational efficiency while continuing necessary investments. This explanation provides context for maintaining the fiscal-year margin range at 20%-22% despite revising the revenue growth forecast. However, the CFO expected pricing pressure to continue in the second half, alongside the impact of wage increases on margins from October to March. These pressures follow a stable margin of 21.0% in the second quarter and first half, according to the company disclosure. The second half therefore includes an operational challenge combining pricing pressure and wage costs, according to Informist's report on the company's press conference.
The forecast cut quickly affected U.S. trading: Infosys shares listed in the United States fell 7.5% in premarket trading on October 23, Reuters reported. The decline followed the new guidance, despite the company reporting quarterly revenue of $5,145 million and winning large deals worth $5.2 billion. Infosys also announced an interim dividend of 26 rupees per share, up 13% from a year earlier. The quarterly results thus combined limited revenue growth, a stable operating margin, and momentum in contracts and AI, while the market's response remained focused on the cut to the fiscal-year forecast.