Infosys NYSE: INFY executives used the company’s fourth-quarter media call to highlight what CEO Salil Parekh called a “strong performance” in fiscal 2026, while outlining how artificial intelligence (AI) services, large-deal wins, and a margin protection program are shaping its outlook for fiscal 2027.
Fiscal 2026 growth and large deals
Parekh said Infosys posted 3.1% revenue growth for fiscal 2026 in constant currency, with Q4 year-over-year growth of 4.1% in constant currency terms. He pointed to strength in financial services, communications, and manufacturing, as well as strong performance in Europe.
Large deal activity was another key theme. Parekh said the company recorded $14.9 billion in large deals for the full year and $3.2 billion in Q4, adding that the full-year total was 28% larger than the prior year. Later in the call, he said net new large deals were “pretty large,” and Jayesh Sanghrajka, CFO, added that large deals for the year were 55% net new.
Addressing questions about quarter-to-quarter variability, Sanghrajka said the prior quarter included a mega deal with a U.K. client, which made comparisons “lumpy.” “If you take that deal out, the numbers are comparable,” he said.
FY2027 guidance and what’s influencing it
Looking ahead, Parekh gave revenue growth guidance of 1.5% to 3.5% year-over-year in constant currency for fiscal 2027, with operating margin guidance of 20% to 22%. He said the company expects an acceleration of growth in financial services and in the energy, utilities, resources and services vertical.
Parekh also described the environment as a mix of opportunity and pressure. He cited “large opportunities in AI services,” but also said the company expects “continued competitive intensity” and “an AI productivity impact.” He characterized the situation as largely consistent with the prior quarter, saying Infosys is not seeing an unusual change in conditions.
On geopolitical issues, Parekh said the company initially saw the global environment improving early in the calendar year, but said the “Iran war” changed the economic environment. He added that the company is now seeing “paths towards things stabilizing,” and said client conversations point to resilience in key economies.
AI strategy, partnerships, and disclosure
Parekh repeatedly tied Infosys’ growth strategy to AI, referencing the company’s recent AI Investor Day and six focus areas he outlined:
- AI strategy
- Engineering
- Data
- Process
- Legacy modernization
- Physical AI
- Trust
He said Infosys’ Topaz Fabric platform for AI and its Cobalt cloud platform are operational and being used with clients across these areas.
Pressed for more detail on AI revenue, Parekh said the company has not disclosed the AI services revenue number externally, though he confirmed that the 5.5% figure referenced from the prior quarter was accurate and said AI revenue is “growing” and was “higher than 5.5%” in the fourth quarter. He declined to provide a specific Q4 number and also declined to say whether AI had reached 10% or more of revenue.
Parekh said the company has projects moving beyond pilots, citing “large scale projects” and referencing examples shared at the AI Investor Day. He also discussed recent partnerships, saying Infosys announced an OpenAI partnership “yesterday” and an Anthropic partnership “a few weeks ago,” positioning those relationships as enablers across Infosys’ six AI service areas.
Margins: resilience, investments, and headwinds
Infosys reported a full-year operating margin of 21%, and Sanghrajka said the quarterly margin was 20.9%. In discussing quarterly movements, he cited several factors, including:
- 50 basis points impact from acquisition-related amortization
- 30 basis points one-off benefit in Q3 (making Q4 a relative headwind)
- 20 basis points related to compensation matters
- 40 basis points currency benefit
- 30 basis points from what he called “our Maximus performance”
On sustainability, Parekh credited a margin expansion/protection program led by Sanghrajka. Sanghrajka said Infosys maintained margins while absorbing headwinds and increasing investment, noting sales and marketing costs rose 40 basis points and the company invested in AI capabilities and partnerships and in talent. He also flagged additional pressure ahead, saying acquisition-related costs could impact margins by 60 to 70 basis points, alongside general market competitiveness.
Acquisitions, hiring, wages, and client-specific items
On acquisitions and their contribution to guidance, Sanghrajka said Infosys announced two acquisitions and a joint venture. He said the insurance-related acquisition Stratus is closed and included in guidance, contributing about 25 basis points. He said the Optimum acquisition is not included because it has not closed and is awaiting regulatory approvals, and the joint venture with an Australian client is also awaiting approvals and not included in guidance.
On a separate question about regulatory delays for the Versent acquisition, Sanghrajka said the company has received questions from the regulator and responded, describing the process as “at times…unpredictable.”
Infosys also discussed workforce trends. Sanghrajka said headcount fell by 8,000 sequentially, but increased by 5,000 year-over-year. He attributed the quarterly decline to softer volumes and the demand-supply equation tied to utilization. Regarding campus hiring, he said Infosys hired more than 20,000 freshers in fiscal 2026 and expects to hire at least 20,000 freshers in fiscal 2027 as well.
On wage hikes, Sanghrajka said no decision has been made yet on timing or quantum, and that decisions consider factors including company performance, industry practice, growth expectations, inflation, and morale.
Parekh also addressed questions about client dynamics and AI’s impact on services. He said AI is creating both “compression” in some areas and growth in others, with compression seen in areas where foundation models and tools are more efficient, including some tech services and BPM work. He emphasized that Infosys is seeing growth outweigh compression overall, and said financial services clients are moving quickly to adopt AI, citing use cases such as KYC and AML agents, credit-related work, and legacy modernization.
When asked about a specific client and account wind-down, Parekh said he had “no specific comment,” while Sanghrajka noted that manufacturing is facing a challenging environment, particularly in the European automobile sector, and said the company has “certain headwinds from a particular client” winding down toward the end of the year, which he said is baked into guidance.
Finally, Parekh declined to comment on questions regarding his tenure and succession planning, responding “No comment” to multiple inquiries.
About Infosys NYSE: INFY
Infosys Ltd. is a digital services and consulting company, which engages in the provision of end-to-end business solutions. It operates through the following segments: Financial Services, Retail, Communication, Energy, Utilities, Resources, and Services, Manufacturing, Hi-Tech, Life Sciences, and All Other. The company was founded by Dinesh Krishnan Swamy, Senapathy Gopalakrishnan, Narayana Ramarao Nagavara Murthy, Raghavan N. S., Ashok Arora, Nandan M. Nilekani, and S. D. Shibulal on July 2, 1981 and is headquartered in Bangalore, India.
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