Q2 FY 27
Filed Oct 23, 2026Differentiated AI strategy and a sharp focus on value unlock propels 29% sequential growth in AI revenues; robust Q2 large deal TCV at $5.2 billion with 62% net new; FY 27 revenue guidance revised to 1%-2% and margin guidance retained at 20%-22%.
Large-deal TCV and AI revenue growth were strong, while reported revenue growth remained modest, quarterly net profit declined year on year, free cash flow declined, and FY 27 constant-currency revenue guidance was revised to 1%-2%.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q2 revenueother | $5.14B | – | 1.3% |
| Q2 revenue growth in constant currencyother | 1.5% | 1.2% | 1.5% |
| Q2 cost of salesother | $3.55B | – | – |
| Q2 gross profitother | $1.60B | – | – |
| Q2 selling and marketing expensesother | $260M | – | – |
| Q2 administrative expensesother | $259M | – | – |
| Q2 total operating expensesother | $519M | – | – |
| Q2 operating profitother | $1.08B | – | – |
| Q2 operating marginother | 21.0% | – | – |
| Q2 other income, net of finance costother | $77M | – | – |
| Q2 profit before income taxesother | $1.16B | – | – |
| Q2 income tax expenseother | $337M | – | – |
| Q2 net profit before non-controlling interestother | $819M | – | – |
| Q2 net profit after non-controlling interestother | $817M | – | – |
| Q2 basic EPSother | $0.20 | – | decline of 0.3% |
| Q2 diluted EPSother | $0.20 | – | – |
| Q2 free cash flowother | $928M | – | decline of 15.7% |
| Q2 free cash flow conversionother | 113.3% of net profit | – | – |
| Q2 large deal TCVother | $5.2B | – | – |
| Q2 net-new share of large deal TCVother | 62% | – | – |
| Q2 AI revenueother | 10.5% | 29% quarter-on-quarter | – |
| H1 revenueother | $10.23B | – | 2.1% |
| H1 revenue growth in constant currencyother | 1.9% | – | 1.9% |
| H1 cost of salesother | $7.03B | – | – |
| H1 gross profitother | $3.20B | – | – |
| H1 selling and marketing expensesother | $531M | – | – |
| H1 administrative expensesother | $517M | – | – |
| H1 total operating expensesother | $1.05B | – | – |
| H1 operating profitother | $2.15B | – | – |
| H1 operating marginother | 21.0% | – | – |
| H1 other income, net of finance costother | $168M | – | – |
| H1 profit before income taxesother | $2.32B | – | – |
| H1 income tax expenseother | $680M | – | – |
| H1 net profit before non-controlling interestother | $1.64B | – | – |
| H1 net profit after non-controlling interestother | $1.64B | – | – |
| H1 basic EPSother | $0.40 | – | growth of 1.7% |
| H1 diluted EPSother | $0.40 | – | – |
| H1 free cash flowother | $1.88B | – | decline of 5.1% |
| H1 free cash flow conversionother | 114.9% of net profit | – | – |
FY 27 outlook
- RevenueRevenue growth of 1%-2% in constant currency
- NoteOperating margin of 20%-22%
Capital returns
- The Board has announced an interim dividend of 26 per share, an increase of 13% from last year.
What drove it
- Q2 large deal TCV was $5.2 billion, with 62% net new, including a mega deal of over $2 billion.
- AI revenue was at 10.5% and grew 29% quarter-on-quarter.
- Infosys cited cost and operational efficiency measures while making required investments as supporting stable operating margins.
- Client activity disclosed in the release included collaborations or agreements with Mondelez International, Crocs, Inc., Knorr-Bremse, Metsä Group, NTN Corporation, Telia, KnitWell Group and Investec.
Concerns
- Q2 reported revenue growth was 1.3% YoY, and Q2 constant-currency revenue growth was 1.5% YoY.
- Q2 net profit after non-controlling interest was $817 million versus $839 million in the prior-year quarter.
- Q2 free cash flow declined 15.7% YoY.
- FY 27 revenue guidance was revised to 1%-2% in constant currency.
- Q2 other income, net of finance cost was $77 million versus $100 million in the prior-year quarter.
What to watch
- Execution and conversion of the $5.2 billion Q2 large-deal TCV, including the mega deal of over $2 billion.
- Whether AI revenue, reported at 10.5% and growing 29% quarter-on-quarter, continues to expand.
- Progress toward FY 27 revenue growth guidance of 1%-2% in constant currency.
- Operating-margin delivery within the retained FY 27 guidance range of 20%-22%.
- Free-cash-flow performance following the Q2 decline of 15.7% YoY.
Balance sheet and cash flow
- Cash and cash equivalents: 2,541 (In $ million) as at September 30, 2026; 2,341 (In $ million) as at March 31, 2026.
- Current investments: 1,436 (In $ million) as at September 30, 2026; 1,365 (In $ million) as at March 31, 2026.
- Trade receivables: 3,634 (In $ million) as at September 30, 2026; 3,715 (In $ million) as at March 31, 2026.
- Unbilled revenue, current: 1,733 (In $ million) as at September 30, 2026; 1,633 (In $ million) as at March 31, 2026.
- Total current assets: 11,035 (In $ million) as at September 30, 2026; 10,912 (In $ million) as at March 31, 2026.
- Property, plant and equipment and Right-of-use assets: 2,069 (In $ million) as at September 30, 2026; 2,057 (In $ million) as at March 31, 2026.
- Goodwill and other Intangible assets: 2,013 (In $ million) as at September 30, 2026; 1,576 (In $ million) as at March 31, 2026.
- Non-current investments: 875 (In $ million) as at September 30, 2026; 942 (In $ million) as at March 31, 2026.
- Unbilled revenue, non-current: 224 (In $ million) as at September 30, 2026; 183 (In $ million) as at March 31, 2026.
- Other non-current assets: 844 (In $ million) as at September 30, 2026; 776 (In $ million) as at March 31, 2026.
- Total non-current assets: 6,025 (In $ million) as at September 30, 2026; 5,534 (In $ million) as at March 31, 2026.
- Total assets: 17,060 (In $ million) as at September 30, 2026; 16,446 (In $ million) as at March 31, 2026.
- Trade payables: 469 (In $ million) as at September 30, 2026; 500 (In $ million) as at March 31, 2026.
- Unearned revenue: 1,234 (In $ million) as at September 30, 2026; 1,248 (In $ million) as at March 31, 2026.
- Employee benefit obligations: 370 (In $ million) as at September 30, 2026; 372 (In $ million) as at March 31, 2026.
- Other current liabilities and provisions: 3,517 (In $ million) as at September 30, 2026; 3,396 (In $ million) as at March 31, 2026.
- Total current liabilities: 5,590 (In $ million) as at September 30, 2026; 5,516 (In $ million) as at March 31, 2026.
- Lease liabilities: 516 (In $ million) as at September 30, 2026; 634 (In $ million) as at March 31, 2026.
- Other non-current liabilities: 565 (In $ million) as at September 30, 2026; 456 (In $ million) as at March 31, 2026.
- Total non-current liabilities: 1,081 (In $ million) as at September 30, 2026; 1,090 (In $ million) as at March 31, 2026.
- Total liabilities: 6,671 (In $ million) as at September 30, 2026; 6,606 (In $ million) as at March 31, 2026.
- Total equity attributable to equity holders of the company: 10,333 (In $ million) as at September 30, 2026; 9,786 (In $ million) as at March 31, 2026.
- Non-controlling interests: 56 (In $ million) as at September 30, 2026; 54 (In $ million) as at March 31, 2026.
- Total equity: 10,389 (In $ million) as at September 30, 2026; 9,840 (In $ million) as at March 31, 2026.
- Total liabilities and equity: 17,060 (In $ million) as at September 30, 2026; 16,446 (In $ million) as at March 31, 2026.
- Q2 free cash flow: $928 million, decline of 15.7% YoY; free cash flow conversion: 113.3% of net profit.
- H1 free cash flow: $1,883 million, decline of 5.1% YoY; free cash flow conversion: 114.9% of net profit.
Analysis
Infosys reported Q2 revenue of $5,145 million, up 1.3% YoY in reported currency. Constant-currency revenue growth was 1.5% YoY and 1.2% QoQ. H1 revenue was $10,227 million, up 2.1% YoY in reported currency, while H1 constant-currency revenue growth was 1.9% YoY. The filing therefore shows modest underlying growth despite positive sequential momentum.
Demand indicators were stronger than the revenue growth rate. Q2 large-deal TCV was $5.2 billion, with 62% net new, and included a mega deal of over $2 billion. Management also reported that AI revenue was at 10.5% and grew 29% quarter-on-quarter. The disclosed client activity spans supply chain, IT transformation, cloud adoption, network and cybersecurity operations, customer engagement, and digital banking.
Profitability held steady at the operating level. Q2 operating profit was $1,079 million compared with $1,065 million in the prior-year quarter, and operating margin was 21.0%. H1 operating profit was $2,151 million versus $2,093 million, with a 21.0% operating margin. Management attributed stable margins to cost and operational efficiency measures alongside required investments. However, Q2 net profit after non-controlling interest was $817 million versus $839 million, while other income, net of finance cost was $77 million versus $100 million.
Cash generation remained substantial but declined on the reported comparison. Q2 free cash flow was $928 million, down 15.7% YoY, with free-cash-flow conversion of 113.3% of net profit. H1 free cash flow was $1,883 million, down 5.1% YoY, with conversion of 114.9% of net profit. The Board announced an interim dividend of 26 per share, an increase of 13% from last year.
For FY 27, Infosys revised revenue guidance to growth of 1%-2% in constant currency and retained operating-margin guidance of 20%-22%. The central earnings tension is between strong bookings and AI momentum on one hand and low reported revenue growth, lower Q2 net profit, and lower free cash flow on the other. Execution against the large-deal pipeline and the FY 27 revenue range will be the key reported milestones.
Management, verbatim
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. Our AI revenue was at 10.5% and grew 29% quarter-on-quarter. As enterprises move to AI adoption at scale, the strong growth in AI revenues is a recognition of our differentiated market positioning and client confidence.
Salil Parekh, CEO and MD
We delivered operating margins of 21.0% in Q2 amidst heightened volatility. Focus on cost and operational efficiency measures while making the required investments, have led to stable margins.
Jayesh Sanghrajka, CFO
Free cash flow of $928 million, representing 113.3% of net profit, underscores the financial strength of the business. The Board has announced an interim dividend of 26 per share, an increase of 13% from last year.
Jayesh Sanghrajka, CFO
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so comparison of actual results with prior guidance is unavailable.
- No reportable operating segment revenue or segment profitability was provided.
- Gross margin was not reported.
- Operating cash flow was not reported.
- Debt, borrowings, net debt and share repurchases were not reported.
- A tax-rate metric was not reported.
- Prior-quarter financial-statement comparatives were not provided for revenue, profit, EPS, cash flow, or balance-sheet line items.
- The currency of the interim dividend of 26 per share was not specified in the filing text.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.