Infosys Cuts Annual Revenue Forecast Despite Q2 Earnings Beat

Infosys trimmed its annual revenue growth forecast on Friday after reporting its second-quarter earnings, reflecting lingering caution among global enterprises regarding major information technology investments. India's second-largest IT services provider adjusted its revenue growth guidance for the fiscal year ending March 2027 to a range of 1% to 2% in constant currency, down from its previous projection of 1.5% to 3%.

During the July-September quarter, Infosys posted consolidated revenue of 492.44 billion rupees ($5.19 billion), marking a 10.7% increase from the same period last year and marginally beating analysts' average estimates of 491.32 billion rupees. Consolidated net profit rose 6.2% year-over-year to 78.23 billion rupees, though this figure fell slightly short of the 79.29 billion rupees anticipated by market analysts surveyed via LSEG data.

Following the announcement, American Depositary Receipts of Infosys fell 7.5% in pre-market trading to $12.25. The weaker guidance amplified concerns that global economic uncertainties and heightened competition from automation technologies are prompting corporations to curb spending on traditional IT outsourcing services.

Despite the lowered outlook, the Bengaluru-based company highlighted strong momentum in artificial intelligence adoption. AI-related revenue accounted for 10.5% of the total revenue during the quarter, registering a 29% sequential increase from the previous three-month period. CEO and Managing Director Salil Parekh emphasized that the firm secured large deal wins totaling $5.2 billion, which includes a mega deal valued at over $2 billion.

"We had strong large deals of $5.2 billion, including a mega deal of over $2 billion, reinforcing our position as a trusted partner in the marketplace when clients embark on large and complex transformation programs," Parekh said. He added that the company is actively advising major global enterprises on their AI integration strategies.

Chief Financial Officer Jayesh Sanghrajka reported that operating margins remained stable at 21.0% amid ongoing macroeconomic volatility, supported by strict cost management and operational efficiency measures. Free cash flow reached $928 million, prompting the company's board to announce an interim dividend of 26 Indian rupees per share.

On the employment front, Infosys expanded its workforce by adding 4,480 employees during the quarter, bringing its total headcount to 332,542 at the end of September. Meanwhile, voluntary IT services attrition dropped to 12.7%, down from 13% in the preceding quarter, pointing to a modest improvement in employee retention.