Infosys Cuts Annual Revenue Guidance Following Muted Second-Quarter Results
The Indian IT services major reported a modest rise in net profit and expanded its workforce while scaling back its full-year growth outlook due to cautious client spending.
Infosys has lowered its revenue growth guidance for the 2026-27 financial year to between 1% and 2% in constant currency terms, down from its previous forecast of 1.5% to 3%. The adjustment follows a muted revenue performance in the September quarter, reflecting ongoing caution among global enterprises regarding discretionary technology spending.
During the second quarter, the company posted consolidated revenue of ₹49,244 crore, representing a 10.7% increase year-on-year in rupee terms. In dollar terms, quarterly revenue stood at $5.19 billion. Constant currency revenue grew by 1.5% from the same period last year and rose 1.2% sequentially.
Net profit for the quarter reached ₹7,823 crore, marking a 0.7% increase sequentially and a 6.2% rise compared to the previous year, though the figure fell short of some analyst expectations. Meanwhile, operating margin guidance was maintained at 20% to 22%, with the second-quarter operating margin recorded at 21%.
Artificial intelligence initiatives continued to expand, with AI-related revenue growing 29% sequentially and accounting for 10.5% of total revenue. Chief Executive Officer and Managing Director Salil Parekh noted that the firm is actively advising large global enterprises on their AI strategies. However, executives pointed out that productivity gains and cautious spending patterns in the broader tech industry have not yet translated into stronger overall revenue acceleration.
Large-deal momentum remained solid, with total contract value reaching $5.2 billion during the quarter, of which 62% represented net new business. This included a mega deal valued at over $2 billion. Performance across business segments was mixed, marked by strong growth in Life Sciences alongside declines in Hi-Tech and Retail.
In a reflection of shifting workforce dynamics across India's technology sector, Infosys expanded its headcount by 4,480 employees during the quarter, bringing its total workforce to 332,542 by the end of September. Voluntary attrition in IT services eased to 12.7% from 14.3% a year earlier.
Alongside its financial results, the company's board declared an interim dividend of ₹26 per share, representing a 13% increase from the previous year. The record date has been established for November 3, with dividend payments scheduled for November 11.
Sources
- Infosys cuts FY27 revenue growth guidance to 1-2%, Q2 CC revenue growth at 1.5% fortuneindia.com
- Infosys ADRs crash 6% after Q2 results as revenue guidance cut spooks investors economictimes.indiatimes.com
- Infosys Q2: Net profit at Rs 7,823 crore, announces dividend of Rs 26 etnownews.com
- IT workforce diverges in Q2: TCS, HCLTech, Tech M, Infosys add employees as Wipro shrinks hr.economictimes.indiatimes.com
- Oracle commits $1 billion to boost AI solutions across partner network cryptobriefing.com