INFY

Image source: The Motley Fool. Thursday, July 23, 2026 at 6:00 a.m. ET Chairman of the Board - Nandan Nilekani Chief Executive Officer - Salil Parekh Chief Financial Officer - Jayesh Sanghrajka CEO Designate - Ashish Dash Operator: Ladies and gentlemen, greetings, and welcome to Infosys Limited Q1 FY '27 Earnings Conference Call. Please note that this conference is being recorded. I now hand the Conference over to Mr. Sandeep Mahindroo. Thank you, and over to Mr. Mahindroo. Sandeep Mahindroo: Thank you, everyone, and welcome to this earnings call to discuss Infosys Q1 FY '27 financial results. Joining us on this call is Chairman of the Board, Mr. Nandan Nilekani; CEO Mr. Salil Parekh, CFO Mr. Jayesh Sanghrajka, along with other members of the leadership team. We'll start the call with some remarks by Nandan, followed by remarks by the performance. Subsequent to that, we'll open up the call for questions with Kindly note that anything we say which refers to our future outlook is a forward-looking statement that must be read in conjunction with the risk that the company faces. A full statement explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov. I'd now like to pass on the call to Nandan. Nandan Nilekani: Thank you, Sandeep, and it's really a pleasure to talk to all of you. I joined this call to make an important announcement. As you know, Salil has done a stellar job as the CEO for almost 10 years. And under his leadership, the company has grown from $10 billion to $20 billion. He's done the transition to the digital era. And he's laid the foundation for a differentiated AI strategy, which will serve the company in good stead for many more years. However, his time is coming to an end on March 31, 2027. And the Board has decided today to appoint CEO -- a new CEO who is coming from inside Infosys from within an internal candidate. His name is Ashish Dash. Asish Dash has been in Infosys for more than 31 years. Since he joined as a software engineer from . And he has -- he has all-around experience of Infosys -- he has worked in delivery for many years. He has worked on account management. He has been involved with starting a DC in Bubanesh where he has been in sales. And of course, he has been a sales , segment head for many years running the sure practice, which has many verticals. And he is an outstanding person. He's very good at his job. He's very collegial. He's very good collaborative. He's accepted and liked by everybody in the company. He has a quintessential Infosys values -- at the same time, he's focused on the market and being able to get good deals at good revenue and good margin. And because of his technical background, he understands the AI, what is happening and that will help him in the future. So the Board has appointed Mr. Dash as the CEO Designate. He will work with sell over the next few months -- next 2, 3 months, we'll focus on getting more coaching and training on being a CEO. And then for 6 months, he will work as a mentee under Salil's leadership, who will grow him for the complex job of managing a $20 billion company at a very transformational time. So we are all very excited by the choice. It has got a very good response internally and with customers. And you will get to see him in a few months. So you can maybe keep that in mind. Maybe I now I'll ask Salil to add a few words on Dash. Salil Parekh: Thanks, Nandan. Good morning, good evening, everyone. It's an absolute pleasure for me to have Dash be the next CEO of the company. I've had the opportunity to work with him over the last several years. in my mind, he's a fantastic leader and very good with the people around. He's worked very closely with clients and build a portfolio, which is, I think, quite strong and exceptional on the growth dimension and the way it's managed operationally and economically -- so all of the ingredients which make for a successful business. In addition, to his leadership, Dash is a very good friend, and I'm delighted for this. Congratulations to him. And then I look forward to working with him over the next -- the course of the next few months, as Nandan mentioned, in the way we transition in a smooth transition there. So look forward to all of that. And as Nandan said, you will get to meet Dash in the coming quarters as well. Nandan Nilekani: So thank you, and I'll excuse myself and Salil and Gareth, the team will continue the quarterly call. Thank you very much. Salil Parekh: Thanks, Nandan. Good evening and good morning to everyone on the call. Thank you for joining us. Let me start off with the update for the business in this quarter. Our revenue growth for Q1 was 2.4% year-on-year and 1% quarter-on-quarter in constant currency terms. We had a onetime revenue impact of a client decision during this quarter. Our AI services revenue was 8.2% of overall revenue. Our large deals were $3.6 billion with a net new of 61%. And operating margin was 21.1%, free cash flow at $955 million, and our earnings per share were higher by 15% in Q1 in rupee terms. We saw a strong acceleration in our AI business, as I shared earlier, with AI revenues for the quarter at 8.2%. And -- this is growing at double-digit quarter-on-quarter over the last several quarters. With this momentum, we see long-term relevance of our services for our clients. From a delivery team, over 80,000 employees are working today on coding tools such as Cloud Codex for our clients and for some projects in side. We saw strong traction across the 6 areas of growth in our AI strategy, Hexagon -- we see client work, for example, in building agents for processes, work on data, in AI, in modernization and, of course, encoding tools. For a health care company, we implemented AI agents to automate Medicaid eligibility verification and operation support. The solution reduced eligibility verification time from -- which was about 6 to 8 days to approximately 4 minutes. We are building a team of frontier engineers to support our client work -- our plan is to have 6,000 frontier engineers over the next few years. We built a platform to pass fabric that allows our clients to get benefits of while keeping the sovereignity of their data and company knowledge with themselves. Our clients are able to work with any foundation model closed, open weight, on cloud, on the server to pass fabric provides a harness to a client to enable them to more fully deploy the benefits of the foundation models into their organization. Our clients are also able to optimize their token cost by ensuring appropriate models are used for appropriate tasks. Overall, we see a good pipeline for AI services, and that gives us a good view for continued AI work with our clients. Outside of that, we continue to see the macro environment remaining uncertain. With our Q1 results and a view of the rest of the financial year, we changed our revenue guidance revenue growth guidance to 1.5% to 3% year-on-year growth in constant currency terms. Our operating margin guidance remains the same at 20% to 22%. I -- thank you. And with that, let me hand it over to Jayesh for his update. Jayesh Sanghrajka: Thank you, Salil. Good morning, good evening, everyone, and thank you for joining the call today. We entered FY '27 against a backdrop of a dynamic and evolving business environment, which is reflected in lower-than-expected volumes. Clients continue to prioritize investments in AI modernization, cloud and productivity initiatives while remaining selective in discretionary spending. Our focus remains on disciplined execution supporting clients' transformation agenda and delivering sustainable financial performance. Q1 revenues were at $502 million, an increase of 1% sequentially and 2.4% year-on-year in constant currency terms. Acquisition contributed approximately 1.1% sequentially. Our AI revenue momentum is very strong with AI revenues at 8.2% of our overall revenues, growing at a strong double digit sequentially over the last many quarters. We are seeing strong traction across all 6 value pools with higher share of revenues coming from process AI, AI strategy and engineering and data for AI. Q1 revenue growth was lower than our expectations, mainly due to one-off 50 basis point impact on account of program termination by an client during the quarter. This was not factored in the earlier guidance. Volumes were soft and weaker than expectations and also versus the historical Q1 trends. Additionally, client expectation on productivity, along with high competitive intensity is resulting in softer increase in price versus our expectations. Sequential revenue growth was also impacted by higher offshoring to derisk our business model, along with lower revenues from a European manufacturing client, as I mentioned in the last earnings call. Despite lower-than-expected growth, gross margins improved by 60 basis points sequentially. Operating margin improved by 20 basis points sequentially to 21.1%. Major components of the change are as low tailwinds of 70 basis points from rupee depreciation, 20 basis points from project Maximus, 20 basis points net benefit due to amortization of costs on intangibles incurred in Q4, offset by impact of new acquisitions in Q1. Headwinds of 50 basis points from investment in AI sales and marketing, 40 basis points from onetime revenue impact arising out of program termination. We also had onetime cost benefit of approximately 30 basis points, which was offset by 20 basis points due to increase in various other expenses. Our tight focus on improving operational efficiency led to utilization, excluding trainees, improving by 1.9% to 84.9%. On-site mix, excluding new acquisitions, dropped by 30 basis points. However, including acquisitions, it remained flat. We expect on-site mix excluding new acquisitions to reduce by 75 basis points to 1% for the year. reduced by 4 days sequentially to 63%. DSO, including unbilled net of unearned was 76 days versus 78 in Q4. Headcount reduced by 500 employees after adding over 2,000 employees from acquisitions. -- attrition increased slightly to 13% versus 12.6% sequentially in line with Q1 seasonality. We plan to give salary hikes to most of our employees effective October while the rest of the employees will be covered in January '27. We expect effective tax rate for the year to be in the range of 29% to 30%. EPS for the quarter stood at INR 19.19 up approximately 15% year-on-year. Q1 yield noncash investment balance was at 6.8%. Our balance sheet continues to be strong and debt-free. Consolidated cash and cash investments were at $3.9 billion at the end of the quarter after returning more than $1 billion to the shareholders through dividends. Free cash flow was strong at $955 million at 16.5% of net profit. Large deal wins were strong at $3.6 billion with high net new of 61%, reflecting the relevance of our value proposition. Out of the 22 large deal one, we had three deals worth $400 million each. We have been on the positive side of vendor consolidation, with 20% of the total large deal CCV being from new vendor consolidation deals. Vertical-wise, we won five deals in financial services and communications, four in EURS, three in manufacturing, two in retail, one each in life science, high-tech and others. Region-wise, we signed 11 deals in North America, 8 in Europe and three in the rest of the world. Coming to verticals. In financial services, uncertainty and geopolitical instability is causing some clients' hesitancy as spending patterns are taking a more cautious approach. -- client priorities are centered on efficiency, productivity and modernization with being evaluated more carefully. We see momentum across banking, payments, capital markets and wealth management. AI adoption has been incrementally incremented an additive with clients increasingly engaging us to support their AI journeys across strategy, platforms, engineering and operations. This is reflected in our strong deal wins this quarter with approximately $1 billion in large deal TCV or largely in net new TCV, GCCs continue to expand, and we are partnering with our clients both in setup and . Growth in manufacturing continues to be impacted due to lower revenue from a large client. Clients remain cautious on discretionary spend and decision-making is elongated, especially in European auto. The impact of tariffs, geopolitical uncertainty and energy cost is keeping budgets tightly controlled. While AI adoption is creating new opportunity areas, it is also raising productivity expectations from clients. We are getting better pricing on AI skills and consulting. We remain focused on supporting clients through digital AI modernization and consolidation initiatives while balancing growth opportunities with disciplined deal selection and sustainable pricing. EURS segment was impacted by one-off client termination, adjusted for which the growth was strong. Macroeconomic uncertainty continues to influence client spending patterns and decision-making time lines. Clients are driving business priorities, including cost optimization, operational resilience, productivity improvements and regulatory compliance. Generative AI is emerging as a strong growth catalyst, driving process reimagination and productivity initiatives. Our partnerships with hyperscalers and AI native companies is allowing us to experiment and ideate faster. In retail and CPG, consumer spend remains muted and budgets are tightly controlled due to geopolitics, inflation and talent. -- spend is shifting towards AI modernization and productivity-led programs funded through operational efficiency and cost optimization. Clients are asking for productivity commitments leading to new pricing structures. We are leveraging our native knowledge of the clients' business processes and technology landscapes and augmenting it with AI. Large deal pipeline is healthy, but decision cycles are longer. In Communications, operating environment remains challenging as clients continue to exercise discipline on discretionary spending and closely scrutinize investment decisions. AI is reshaping spending patterns, enterprises are increasingly prioritizing initiatives that deliver near-term gate. is undergoing significant transformation with consolidation and M&A with increased investments, especially for OEMs. We remain focused on aligning our offerings to these evolving client priorities and helping enteprise realize measurable business outcomes. Considering lower-than-expected Q1 revenues and revised view of the rest of the year, we are revisiting our revenue guidance to we are revising our revenue guidance to 1.5% to 3%. This includes approximately 1.7% contribution from recently closed acquisitions of care and slightly over 1% impact from large European manufacturing clients due to reduced client spend along with our conscious decision to not pursue certain deals that were not aligned to our return expectations approximately 0.75% to 1% impact from shift towards offshore. Overall business environment continues to remain volatile. The lower end of the guidance assumes further deterioration in macro top end of the guidance assumes an improvement in macro, although lower than what we had assumed in April guidance. FS and EURS are expected to grow higher than the company average. The underlying fundamentals of our business remains strong. We continue to see healthy client engagements leading to a robust pipeline. We are taking decisive actions to capitalize on the opportunities ahead, especially on six identified AI value pools. Spending is shifting towards areas with clear business cases such as AI modernization, cost transformation, cybersecurity, cloud optimization and vendor consolidation. As we look at the rest of the year, we remain confident in our strategy, discipline in our investments and focus on delivering stronger performance. Margin guidance is maintained at 20% to 22%. This assumes headwind from wage hikes productivity pass-throughs, AI investments and 50 basis point impact from acquisitions of optimum health care and strategies. These headwinds will be partly offset by initiatives under project maximums and currency benefits. With that, we can open up for the questions. Thank you. Kumar Rakesh: My first question was a bit of a clarification around the guidance, especially the like-to-like guidance what we had given last quarter versus this quarter. If I'm looking at the new guidance that is at the midpoint, suggesting 2.25% sort of growth, which I understand you indicated includes acquisition of about 1.7%. So that would imply and organic growth of about 0.5% or slightly higher than that versus 2.5%, which was in the last quarter. So is that about 2 percentage point of cut at the midpoint in the guidance or am I reading that wrong? Jayesh Sanghrajka: Kumar, so the last quarter would be -- midpoint would be around [2.2%]. In the guidance because, as you say -- as you remember, we had said 20 basis points was the status, which was already baked in, in the guidance, which was 1.5 to 3.5. Kumar Rakesh: Okay. Got that. So in that case, like to like this time, it would be about 8 points sort of a number, excluding the incremental acquisition that we have baked in. Jayesh Sanghrajka: Yes. Kumar Rakesh: Got that. And looking into the second quarter, given some of the impact that we have seen in this quarter with lower-than-expected volume and onetime client-related decision as well, how much of that you are expecting that to flow into second quarter as well? And how you are looking at the demand environment and the growth momentum? Jayesh Sanghrajka: So Kumar, as you know, Typically, whatever happens in Q1, it will have a cascading effect in Q2. And especially if the volumes have been softer through the Q1, automatically, it will have some impact on Q2 and therefore, the rest of the year. That kind of largely explains the guidance change. As I said earlier, the multiple reasons on the change in guidance is, first of all, one-off that we had in 1 of the EURS plants the volumes that were softer with the cash-cutting effect, the ask of productivity from clients and increased competitiveness competition in pricing that reflected in a lower-than-expected pricing this quarter, which will again have effect on the rest of the year. And as I had called out at the beginning of the year, we expect our on-site mix to be lower by roughly around 0.75% to 1%, which will have impact on a year-to-year comparison, if you're doing. We had called out a European manufacturing clients impact between 0.75% to 1% last time, which is now clearly above 1% as we have progressed on certain other deals as well. So that is an additional headwind as well. So all of that is baked in the revised guidance. Kumar Rakesh: Just one clarification around the onetime client decision which you spoke about, if you could give some context to that, that would be great. That's all from my side. Jayesh Sanghrajka: Thanks so much. So this is with respect to a client, which has terminated a project in the ERS vertical. Yu Lee: You mentioned that softer volumes and pricing contributed to Q1 alongside the premium termination and at the upper end of the prior guide assumed macro stabilization, that's not materialized. Can you walk us through how the quarter progressed relative to internal expectations, whether April, May and June trended differently when the program termination was communicated to you and whether decision-making velocity and discretionary spend deteriorated or stabilized through the quarter? And what have you seen in the first 2 weeks of July that may inform your shape of Q2? Jayesh Sanghrajka: So Jonathan, sorry, I wasn't very clear with the question, but from whatever I understood the question is whether we saw the change through the quarter and the increase in volatility. The softness that we saw in terms of volumes was through the quarter, the one-off impact that we saw was mainly on account of a client termination, which happened towards the end of the quarter. And the additional -- the deal that we talked about, European client that was also towards the end of the quarter. So I think all of those factors reflected in the revised guidance, if that is what you're looking at. Yu Lee: And given your commentary on pricing, particularly around the competition has been building for several quarters and MAXIMUS explicitly includes value-based selling. Why were pricing headwinds not more fully contemplated in the April outlook what has changed over the last 3 months? Is the pressure concentrated in specific verticals or deal types of renewals versus the new? And what gives you visibility that pricing may actually stabilize from here? Jayesh Sanghrajka: Jonathan, we are not saying that we are not seeing a price increase. What I'm saying here is we haven't seen the as much price increase that we envisaged at the beginning of the year. on the back of the productivity ask of the clients, plus the intensifying competitive competitiveness in the market. But we are still seeing a net increase in the pricing. Gaurav Rateria: My first question is on the multiple client-specific issues, one is the European automotive that we highlighted last quarter than this quarter on the EURS vertical -- how should we think about all these like our completely disconnected issues and just happened to take place at the same time coincidentally, or there are certain common links, which basically could be early renewals, competitive pricing, et cetera, going on because of the technology change. So just trying to understand how much of it is led by underlying changes in technology happening and driving clients to take these decisions and creating competitiveness in the market? Or is -- are they completely disconnected events? Jayesh Sanghrajka: So Gaurav, there are two parts of the question. One is the European manufacturing client that you talked about it, we knew certain part of the deals that we had we knew at the beginning of the year, which was in April, and there was additional deals that happened in Q1 of this year. Both of these were the deals where we did not -- we decided not to pursue the deals beyond a certain point because it was not economical -- it did not make economic sense for us a commercial sense for us -- and that is -- that's the reason that has nothing to do with the client behavior in terms of AI, et cetera. The other deal is a contract where the client has terminated the contract for various reasons. Again, nothing to do with AI here. It's a termination of the contract. And therefore, a reduction in revenue. Gaurav Rateria: Got it. My second question is on your margin outlook. I know that you maintained your outlook on the bank, but now that you have announced the wage hike for second half for the company as a whole. So there will be incremental headwinds around that. So just wanted to understand what would be some levers that will help you to offset these pressures in the second half? And would it be fair to say that our aspiration will be to just hold on the margin level compared to the last year in this year? Jayesh Sanghrajka: Gaurav, at this point in time, we have given a guidance of 20% to 22% let me say that at the outset, we are very confident of that guidance. Of course, as I called out at the beginning of the year, we will have a headwind coming out from the acquisition that we have done from -- in terms of amortization of intangibles and retention be out of to the founders or the management team, et cetera, or the acquired entities. But we also have tailwinds coming from currency coming from project maximums. As you see this quarter also, we've got 20 basis points of tailwinds from project maximum, 70 basis points of currency -- so all of those are tailwinds. As we look forward, as I said earlier as well in the call, we will have 75% to 1% reduction in on-site mix. So that is -- so all of those are tailwinds. -- puts and takes all of that put together, we are still very confident of maintaining our margin guidance. Abhishek Pathak: I think my question is on deal wins. It does look like we've had a pretty decent quarter on deal TCV net new seems to be decently strong as well as compared to historical levels. But clearly, that's not kind of translating into kind of guidance. So -- how is the TCV versus ACV dynamic playing out? Are we seeing extended TCV sort of or extended 10 years right now, which is leading to lower ACV? Or are we seeing sort of delayed ramp-ups, but clients are still coming in to spend, that will be help to understand with regards to the conversion of the deals that we are winning. Jayesh Sanghrajka: So Abhishek, if you look at the deal typically, the terms of the large deals have not gone up. They still remain between on an average between 3 to 5 years. Of course, when you look at some of the mega deals, the terms are -- could be longer. But in the current year, the -- we have most of the deals which are not made -- the deals that we signed, most of -- while most of them were less than $500 million. We did have some deals between $400 million to $500 million, 3 of them. What we also need to remember is whenever the deal comes up for renewal, we always used to have the additional productivity asked from the client, which is how traditionally this industry has been -- on the back of AI, there is a deflation on -- additional deflation on the AI deflation as we call it. So that's a headwind that's there. That's only on the large deal portion that's also there on the non-large deal portion. So that is what is getting offset by the net new business that we are seeing. Abhishek Pathak: Understood. And could you quantify the deflation, if you can? I know it's -- I mean, it's so dynamic, but just a clarification about the depletion would be helpful. And lastly, how do we define AI-led revenues? Is this AI implementation or are infused just a broad sort of sense of that will also be very helpful. That's from my side. Salil Parekh: This is Salil. On the AI line, and I'll come to the other one after that. I think what we are seeing on the AI revenues is these are revenues which are coming from the strategic framework we described at the Investor Day, which are the six areas that we see new growth, the new addressable market of $300 billion. For example, process AI, for example, making AI engineering strategy work. For example, data, which is needed the data layer for AI. And each of those six areas, we see a good growth. This revenue is 8%, 8.2%, growing double-digit Q-on-Q over the last several quarters. And that's the primary AI revenue. Internally, we also look at AI revenue, which you referenced like infused augmented or where AI is and part of an existing work stream that becomes more AI. But this specific one that we shared externally is what we see from the AI strategy that we put together. On the -- so on the quantification, we don't quantify that compression part externally, but we acknowledge that, of course, there is a compression. And internally, we track it to see how that works. Now in many cases, when there is the compression, we typically given the work we are doing with clients, have the opportunity to do more work in other areas. So the contract terms, scope, et cetera, gets really fine. And in many cases, we see adjacent to that other pieces of work, not related to that, which come through. So it's very -- it's not easy to simply say like-for-like in many cases, but they're definitely we see a compression. Jayesh Sanghrajka: So just to add to what Salil saying, the AI first revenue is everything that is around the Hexagon and AI augmented revenue is what we presented on the also. That is not part of this. While we track it internally, that is still not part of this. So first is everything that we do in terms of Hexagon and the subservices that we called out at Hexagon. We have a very robust process inside the company of identifying these other child subproject level. and tracking it and monitoring it. It is growing at a very strong double-digit growth. Ankur Rudra: I'm just curious to start with on the demand environment worsening especially from a PI product to pass through demand that we've been getting. Can you talk about how secular this is across our industries and geographies? And how often do you see... Is this clear now? Sure. So my question was on the worsening demand environment from an EI productivity pass-through perspective. How secular is this across industries and geographies -- and how often do clients ask for productivity increases in the middle of a contract as opposed to on renewal. Salil Parekh: This is Salil. Ankur, I think -- what we are seeing is there is a demand for AI productivity, which is across most industries. Now if you look at where AI is most getting used -- we probably see telcos, we see financial services. We see even on retail utilities. That's where their usage is pretty high, especially with the foundation models, the modernization, the coating tools. On the productivity side, it's a broad sort of coverage that we see. And it typically at least in the recent past has come up as there's progress made by the AI foundation model companies or there's a perception that, that sort of a benefit can be achieved the discussion stats. And of course, at the renewal time, it's definitely time. Sometimes it does come in between the time frame of the contracts renewal as well there. Ankur Rudra: Okay. I just wanted to sort of follow up on AI revenues, which have been growing at a very high pace like you've been highlighting. -- if we think this out a few years, at what size of your overall portfolio do additive to be so that you can overcome the deflation of the compression in the rest of the portfolio in thought set. Salil Parekh: So we don't have a view in that sense externally on what you're sort of referencing -- but I think if we are able to execute on this AI transformation, as we have done in the last few quarters, we get this sort of momentum -- it's not that difficult to see that in the coming few quarters, it will start to become more and more larger part of our overall revenue and that will drive the growth of the overall company. If I go back to how we saw it, not that it's the same thing, but there's some lessons maybe on the digital, we saw that there was a way that at one stage, we were at 20% and then over a few years, we then went to 60% of our revenue becoming digital. So if that sort of path becomes followed we can see a big sort of a transformation and a long-term sort of support to the view that what we are doing remains relevant in terms of services for our clients. Now here, there are strong partnerships with the foundation model companies. There is extremely strong internal work on topaz fabric. We are building things where clients can use multi-model scenarios within topaz fabric, where they can use different models for different types of work, so the token cost is optimized. We have an ability to provide a harness so that they can build what they want to build and keep the soverenity of the data and like the knowledge of the company more within themselves. So to me, all of that points to that, it's a nice growth area for the long term. And we are now looking at 8%. It's fairly sizable, and we're looking at it becoming more and more sizable in the quarters to come. Ankur Rudra: Just one last clarification. Jayesh Sanghrajka: Sorry, I could just one additional data point I would want to add is, if you remember, in February, we talked about revenue, which was 5.5% for Q3. And in 2 quarters, it's already become 8.2%. So you can -- you can imagine the rate at which is growing. And it's -- even if you look at a longer 5-, 6-quarter view, it's growing at a strong double digit and that kind of gives us the confidence that this is becoming our growth engine. Ankur Rudra: I appreciate it. Maybe just one clarification, Jayesh. Can you confirm that the program termination was fully absorbed in Q1? Or will it have an impact in the second quarter also from a sequential basis. Jayesh Sanghrajka: So Ankur, the program has been terminated. What we know has been -- has obviously been taken in Q1 at this point in time. Ankur Rudra: So no follow-through in Q2 in terms of that program specifically. Nitin Padmanabhan: Yes. What we know at this point in time has been considered in this . Bryan Bergin: First sill congrats to you and congrats to Dash. My first question is on AI talent and competition. I'm curious what your view is on hyperscalers like AWS, Microsoft recently announcing new investment in their own FTE practices. Just considering arise use of the services channel around cloud deployment, they seem to be a bit more surprising and OpenAI or Anthropic doing it. So what are your thoughts there? And you've announced plans to add 6,000 frontier engineers. -- but it seems everyone is looking to add that base of talent. So can you just talk about how you plan to navigate that elevated competition for top tier talent. Salil Parekh: So first, thank you I think on the -- with other companies launching services companies to help large enterprises with making AI work. At a high level, I see that as a positive for Infosys because it reconfirms that what we do and now with the AI revenue growth that we are demonstrating that we have sort of relevance for the long term for our clients. What I think works for us is we have over 300,000 employees. We have deep knowledge and context of select clients that we work with, and that becomes the way to really ensure that AI gets leveraged into that environment, which is typically quite complex. We are also in a position where we are partnering with some of the companies you named, and I've spoken with them as they have launched their programs -- and the intent and the idea is really, in terms of scale, a few hundred or a couple of thousand is not going to be the same as 300,000 from Infosys. But there is a way to partner and make all of that work for the benefit of the client. That's how at least we're looking at it for now. And there's a similar type of models existed, as you probably know well in the past when there were software companies, which have their own small services businesses. In terms of talent, first, we have already people within Infosys who are operating at the level of frontier engineers. And so we have put together a program to bring all of that together to make them at the same type of a global level. Then we have training for the people that we will recruit and build out to be like that frontier engineers. And then, of course, we will look externally but the primary method is recruitment in college training and taking internal people who are doing some of that type of work. and making sure they're fully deployed into the frontier engineer work. So we feel that we have a decent start to it. It's not that we are going to, tomorrow morning, recruit 6,000 from the outside. But equally, we also have, as has been always the case with Infosys, the approach of training the people from ground up, so building out that skill set, which is slightly longer, and that's why I've sort of said it's not it's over a few years, we want to build it out and make sure that we support our clients in that. Bryan Bergin: Okay. Okay. That's clear. My follow-up on AI productivity. Can you just give us a sense of how much of your existing backlog has been repriced the higher levels of market productivity. I'm trying to understand how long the company may face outsized compression as you renew the installed base of work where there wasn't any meaningful GenAI-driven efficiencies before? Salil Parekh: So as you can imagine, it's something we look at internally, but it's not something we share externally. Vibhor Singhal: Just two questions from my side. One question, Salil, on the -- basically the overall environment in which we are operating. Some of our peers have kind of called out, and I think it's kind of what is also the concept which is gaining traction is that more and more believe that enterprises might not just basically look to deploy the premier large language models for their enterprise needs and they might be now going more towards more like customized small language models, the which can be basically cater to their own specific needs. And to that extent, more and more deals and large deals specifically are all basically making their way into the market towards the players -- is that also that we are also seeing our noncomposition with the clients? Do we see some of those kind of deals on the horizon? And do you see that basically playing out over the next few quarters? Salil Parekh: So there, I think the way you describe it, what we are seeing it is the large companies, large enterprises are becoming more sensitive to -- what is the foundation model like best equipped for and for the various tasks and activities and processes that they have inside the company, which model should be used for which thing? So can we use like a company might think like a less parameter model, also less expensive model like an even an older version of some of the big company models for some last and the most recent one for like some very specific, let's say, high-end type of task, which needs it. So that optimization is going on. And that's where we think what we have built in Topaz Fabric allows the company to do this in a very efficient way. Then it also looks at companies also looking at, okay, I will use for the simpler task, a slightly older model or less expensive. Then let me also then look at the cost of token usage for that model. And even there, there's a way for the same effectiveness, you can get a lower token cost approach in the model this whole approach of this multi-model is critical for the task and the cost. At least we are seeing the large companies are being sensitive to that. And that's where what we have built and how we can work with them today, we are working in Topaz Fabric with 15 different models. So let's say, you come as a large company, Global 100, and you want to do something, you don't even have to decide by looking at the task we will decide between the 15, where to put it and give you the most efficient outcome. So those are things like that will help the companies to do the things in a better way we feel Vibhor Singhal: Got it. Got it. So overall, this should basically -- I mean, if I were to, let's say, take a top few of this, this would mean that there is an increasing level of that or, let's say, a specific requirement that each client would require rather than more of a standardization to begin with? Salil Parekh: It depends also a little bit like some companies might say, this is available. But some companies might say, look, I want Model X. I want to build deep capability in that Model X, like company X will have three models. They can go with an older model in the company X it's not like there's one answer, meaning people are all doing different things, but the flexibility exists today. So depending on how the company wants to do it. Vibhor Singhal: Got it. Got it. Just 1 last question on the margin spend. ash, if I could just bother you on that. In FY '26, we had the wage hike, which was spread over Q4 FY '25 and Q1 FY '26. So we just probably had a -- basically half of the impact of the wage hike in FY '26. In FY '27, we're able to give the wage hike in Q3 and Q4. So the entire impact is going to be absorbed by in this year itself, plus we have the acquisition impact, which you called out in the call. So are we looking at more headwinds this year on the margins than FY '26. I know we are in that same guided range of 20% to 22%. But vis-a-vis effect or dare we looking at more headwinds than FY'26? Salil Parekh: So ever, if you look at FY '26, we had a full year impact of the wage hike that we gave in January as well as in April, right? Of course, whatever we gave in January, the flow-through of that was for 3 quarters. But whatever we gave in April, the full year impact of that came in, in the year versus in FY '27, we have only half year impact of whatever we do in October and 1 quarter impact of what I will do in January. So to that extent, the relative impact is going to be lower in FY '27 versus FY '26. And of course, there would be a 50 basis point impact on account of the acquisition that we have called out on acquisition, but if you look at the tailwinds that I called out, there is a currency tailwind, at least as we stand today versus the last year, the project maximum is still creating value. We have seen pricing benefit a bit a little lesser than what we estimated at the beginning of the year. Utilization has gone up quarter-on-quarter significantly. Our on-site mix is going to go down. So I think there are puts and takes on both sides. Keith Bachman: Good evening, good morning. I wanted to ask about your thoughts on head count growth trends through FY '27. And I'm not looking for specifics, but just generalities. Is head count going to grow, be flat, reduce as you look at the next 12 months. And even if you find on the next few years, how do you see the head count growth in relation to revenue growth? Salil Parekh: This is Salil. So first, what we saw in the last financial year, as you know, is we recruited 20,000 college graduates for the full year. This year, we have a plan to recruit 20,000 college graduates. In the first quarter, we have recruited over 4,000 already. Our plan is to continue to bring in talent, make them more and more AI, well verse and then have them work with our clients. What we are seeing with the 8% revenue of the AI is that to make many of these things work, it's a combination of foundation model, agents and people. Of course, there's more efficiency. So the same amount of work can be done maybe with a few people, but there's more work. So overall, at least right now, we are seeing that. We don't have an exact external view on the India headcount, but we continue to look at recruitment. We think it looks like it will be part of -- the head count will be part of our future as our revenue grows as well. Keith Bachman: Okay. Okay. And it will be interesting to see how I understand the recruitment process, it will be interesting to see how your net head count trends unfold. Can I go to the dislocation? You talked about 20% of your CCV was vendor consolidation deals. Could you provide some context on really the economics associated with those deals, what I mean by what was the leverage that enabled you to win those deals. In particular, you talked about price was a little more aggressive this quarter. How are pricing trends during the enabling you to win those deals? Just any kind of attributes that you could throw out such as was it more competitive? Or was price down? Anything along those lines? That tones many things. Salil Parekh: I'll start, and Jayesh will add a little bit more to it. What we saw like in the reasons for winning a consolidation deal, typically, what we are noticing is a complex tech environment, and the clients are seeing that what we have done for them over the past in terms of delivering value is very significant, more reliable and that's typically when we are the beneficiaries of the consolidation deals. In terms of pricing for those specific deals, there's always productivity benefits because that is in the nature of the discussion in this period. But the reason primarily for the wins are more about the depth of delivery, understanding of technology. Jayesh Sanghrajka: Just to add to this, what Salil said. On an aggregate level, all of these consolidated deals came at a very healthy margins even when you compare to our overall large deal portfolio. As I said earlier, we will compete aggressively in the market but we are not going to underwrite uneconomic productivity assumptions. And in those cases, we would prefer to not pursue those deals further when it doesn't make economic sense to us. James Friedman: So well done piloting the company in . We look forward to working together. I had a bigger picture question back to the strategy Hexagon be interested in your perspective on the supply side, what sort of rising reskilling does that require? And on the demand side, Salil mentioned what you're finding is resonating most obviously, is performing well. Is there anything though that needs to be adjusted? So supply and demand question about the strategy at Hexagon? Salil Parekh: Thank you for that. On the supply side, first, we have taken a view, and I'm sure you know that. We have not done any staff restructuring in the company, we have done essentially all reskilling. And that is a significant work for the company. But I think we see a benefit of that over time. What we are seeing is -- and has another reason for doing the college graduate hiring because what we see from colleges up people coming in with a lot more native understanding of the AI landscape and the tool set. And then building -- like training them on our Fabric Topaz is the next step after that and also training them on our tools, which are pre-AI so that we have a sense of how software development works. So we think we will be able to manage a lot of that supply side with the people we bring in. But there are also specialized things where there will be some accelerations needed -- I mean a specific tool is very much in demand. And for that, of course, we have some recruitment, which is more lateral as well. Even there, we need a little bit of reskilling or training, but not massive. There's good understanding. But that, of course, is in short supply. So we will still rely more heavily on bringing in from college training, which is by design is a longer duration process. On the demand side, we are now tracking each of the six areas pretty granularly as Jayesh mentioned earlier, we have good traction on the process AI side, it's going pretty well. On the AI engineering, it's going pretty well. meaning in terms of scale, all of them are growing very fast, but those things are pretty scaled already. The data AI part is going pretty well. And so the whole work of building agents doing the coding, doing the modernization, doing the data. Those things are really scaling up, meaning have a decent scale today, and we think those will continue going pretty well. Salil Parekh: Thank you. So first, thanks, everyone, for joining. A couple of points to summarize from my side. Overall, in the quarter, we had neutral revenues, strong margins, strong free cash flow and very strong large deals. The more critical thing, AI services revenue, 8%, growing across quarters, Q-on-Q, double digit and becoming more and more of scale for us and showing us therefore, that there is a long-term relevance of what we are doing for our clients. And that gives us a tremendous benefit given the client connects that we have across the different industries and across the different markets. So thank you all for joining in, and we'll catch up at the next quarterly call. Operator: Thank you very much, members of the management. And ladies and gentlemen, on behalf of Infosys Limited, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines. Thank you. Before you buy stock in Infosys, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Infosys wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $369,577!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,301,557!* Now, it’s worth noting Stock Advisor’s total average return is 908% — a market-crushing outperformance compared to 208% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of July 23, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Infosys (INFY) Q1 2027 Earnings Call Transcript was originally published by The Motley Fool

Infosys INFY reported first-quarter fiscal 2027 results, wherein both earnings and revenues missed the Zacks Consensus Estimate. For the fiscal first quarter, the company reported adjusted earnings of 20 cents per share, which missed the consensus estimate of 21 cents. The bottom line increased 3.8% year over year. In the trailing four quarters, INFY’s earnings beat the Zacks Consensus Estimate twice, matched once and missed once, with an average surprise of 3.8%. Infosys’ fiscal first-quarter revenues increased 2.8% year over year to $5.08 billion from the year-ago quarter’s revenues of $4.94 billion. The top line missed the Zacks Consensus Estimate of $5.12 billion. Soft volumes, modest pricing gains and a client program termination weighed on growth. AI revenues represented 8.2% of total revenues. Management said results included a one-time impact of roughly 50 basis points from the termination of a program by an Energy, Utilities, Resources and Services client. Further, volumes were weaker than expected and below typical first-quarter trends. Higher offshore delivery also reduced reported revenues, while client demands for AI-led productivity and intense competition limited pricing improvement. Infosys Limited price-consensus-eps-surprise-chart | Infosys Limited Quote Revenues across Europe and the Rest of the World recorded a year-over-year increase of 4.8% and 1.9%, respectively, on a reported basis. Revenues across North America increased 2.7%, while India registered a decline of 12% year over year on a reported basis. On a constant currency (cc) basis, Europe increased 2.8%, while Rest of the World declined 1.6%. On a cc basis, North America increased 3.2%, while India declined 4.2%. INFY delivered year-over-year growth across most verticals in the first quarter. Financial Services remained the largest contributor, generating $1.42 billion, up 2.9% year over year. Manufacturing revenues increased 1.8% to $809 million, while Energy, Utilities, Resources & Services rose 1.3% to $680 million. Life Sciences revenues climbed 26.2% to $405 million, and Communication sales increased 2.4% to $610 million. Hi-Tech revenues increased 1.6% year over year to $391 million, while Retail declined 1.4% to $651 million. The Others business unit’s revenues decreased 12.7% year over year to $117 million. Infosys added 155 clients in the fiscal first quarter. The company reported that its clients, worth more than $100 million, now add up to 41, unchanged from the year-ago quarter and remained flat sequentially. Gross profits increased 4.9% year over year to approximately $1.6 billion. The gross margin expanded 62 bps on a year-over-year basis to 31.5%. The company’s operating income increased 4.3% year over year to $1.07 billion. The operating margin expanded 30 bps to 21.1% year over year. Infosys ended the fiscal first quarter with consolidated cash and investments of $3.92 billion, down from $4.54 billion recorded in the previous quarter. During the fiscal first quarter, the company generated a free cash flow of $955 million. Infosys now expects fiscal 2027 constant-currency revenue growth of 1.5-3%, narrower than the prior band of 1.5% to 3.5% growth in constant currency. Operating margin for fiscal 2027 is still expected between 20% and 22%. The Zacks Consensus Estimate for fiscal 2027 revenues and earnings is currently pegged at $20.47 billion and 83 cents per share, respectively. Currently, Infosys carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader Zacks Computer and Technology sector are Analog Devices ADI, Applied Materials AMAT and Cisco Systems CSCO, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Shares of Analog Devices have rallied 39.3% year to date. The Zacks Consensus Estimate for ADI’s fiscal 2026 earnings is pegged at $12.42 per share, down by a penny over the past seven days, indicating an increase of 59.4% year over year. Shares of Applied Materials have skyrocketed 123.9% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $12.14 per share, up by 4 cents over the past 30 days, indicating a rise of 28.9% year over year. Cisco Systems shares have surged 45.6% year to date. The Zacks Consensus Estimate for CSCO’s fiscal 2026 earnings is pegged at $4.28 per share, unchanged over the past 30 days, indicating an increase of 12.3% year over year. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American Noble Gas Inc. (INFY) : Free Stock Analysis Report Analog Devices, Inc. (ADI) : Free Stock Analysis Report Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report Applied Materials, Inc. (AMAT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Investing.com -- Infosys drew fresh analyst downgrades from JPMorgan and HSBC after its first-quarter earnings missed expectations, management cut its fiscal 2027 revenue growth guidance for a second consecutive quarter, and announced a CEO transition, reinforcing concerns over slowing business momentum. JPMorgan downgraded the IT services company to Neutral from Overweight, lowering its price target to ₹1,050 from ₹1,200, while HSBC cut its rating to Hold from Buy and reduced its target price to ₹1,110 from ₹1,340. Both brokerages said the company's near-term growth outlook has deteriorated despite relatively inexpensive valuations. The brokerages cited weaker demand, AI-driven pricing deflation, contract-related headwinds including a termination in the Energy, Utilities, Resources and Services segment and reduced work from a manufacturing client, alongside slower revenue conversion from strong deal wins. JPMorgan said these factors have hit Infosys' growth momentum even as large-deal signings remained healthy. Infosys lowered its FY2027 constant-currency revenue growth guidance to 1.5%-3.0% from 1.5%-3.5%, while its organic growth outlook was reduced to -0.2% to 1.3%. JPMorgan described the cut as sharper than expected and now forecasts the company to lag key peers on growth this year. HSBC also warned that the revised guidance may still not be conservative enough, citing management's comments about weakness spilling into the second quarter. Both firms noted that first-quarter revenue growth missed expectations, although operating margins remained resilient and the company maintained its FY2027 EBIT margin guidance of 20%-22%. Infosys also reported $3.6 billion in large-deal total contract value during the quarter, highlighting continued demand despite slower revenue realization. Separately, Infosys announced that Ashiss Kumar Dash, currently head of the Energy, Utilities, Resources and Services business, will succeed Salil Parekh as chief executive from April 2027. Both JPMorgan and HSBC viewed the appointment of an internal candidate as supportive of a smoother leadership transition, though JPMorgan cautioned that broader management churn could persist in the near term. Related articles Infosys downgraded by JPMorgan, HSBC after earnings miss and weaker growth outlook Goldman expects lower but still attractive stock market returns in 2026 As Claude disrupts stock market, Anthropic researcher warns ’world is in peril’

This article first appeared on GuruFocus. Revenue Growth: 2.4% year-on-year and 1% quarter-on-quarter in constant currency terms. AI Services Revenue: 8.2% of overall revenue, growing at double-digit quarter-on-quarter. Large Deals: $3.6 billion with a net new of 61%. Operating Margin: 21.1%. Free Cash Flow: $955 million. Earnings Per Share (EPS): Increased by 15% in Q1 in rupee terms, INR19.19. Revenue Guidance: Revised to 1.5% to 3% year-on-year growth in constant currency terms. Operating Margin Guidance: Maintained at 20% to 22%. Headcount Change: Reduced by 500 employees after adding over 2000 from acquisition. Attrition Rate: Increased slightly to 13% from 12.6% sequentially. Cash and Cash Investments: $3.9 billion at the end of the quarter. Debt Status: Debt-free balance sheet. Warning! GuruFocus has detected 2 Warning Signs with INFY. Is INFY fairly valued? Test your thesis with our free DCF calculator. Release Date: July 23, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Infosys Ltd (NYSE:INFY) reported a strong acceleration in its AI business, with AI services revenue reaching 8.2% of overall revenue and growing at double-digit rates quarter on quarter. The company secured large deals worth $3.6 billion, with a net new of 61%, reflecting the relevance of its value proposition. Infosys Ltd (NYSE:INFY) maintained a healthy operating margin of 21.1% and generated strong free cash flow of $955 million. The company announced the appointment of Ashiss Dash as the CEO designate, ensuring a smooth leadership transition with a focus on AI strategy. Infosys Ltd (NYSE:INFY) is building a team of 6,000 frontier engineers to support AI initiatives, demonstrating its commitment to future growth in AI services. Revenue growth for Q1 was lower than expected, with a year-on-year increase of only 2.4% in constant currency terms. The company revised its revenue growth guidance downward to 1.5% to 3% year-on-year, citing macroeconomic uncertainties and lower-than-expected volumes. Infosys Ltd (NYSE:INFY) faced a one-time revenue impact due to a client decision, which affected its financial performance for the quarter. There was an increase in attrition, rising slightly to 13% from 12.6% sequentially, indicating potential challenges in retaining talent. The company experienced softer volumes and weaker-than-expected pricing, influenced by client expectations on productivity and high competitive intensity. Q: Can you clarify the guidance change and its impact on organic growth? A: Jayesh Sanghrajka, CFO, explained that the midpoint of the guidance now suggests a 2.25% growth, including a 1.7% contribution from acquisitions, implying an organic growth of about 0.5%. The guidance change reflects softer volumes, a one-time client decision, and increased competition affecting pricing. Q: How did the program termination and macroeconomic factors affect Q1 results and future outlook? A: Jayesh Sanghrajka, CFO, noted that the program termination and softer volumes throughout the quarter led to a revised guidance. The termination occurred towards the end of the quarter, and macroeconomic factors like client hesitancy and competitive pricing pressures contributed to the outlook adjustment. Q: What is the impact of AI productivity on pricing and client contracts? A: Salil Parekh, CEO, stated that AI productivity demands are widespread across industries, with significant use in telcos, financial services, and retail. Clients often seek productivity increases during contract renewals, and sometimes mid-contract, due to advancements in AI models. Q: How is Infosys addressing AI talent competition and recruitment? A: Salil Parekh, CEO, emphasized that Infosys is leveraging its existing workforce and recruiting 20,000 college graduates annually to build AI capabilities. The company focuses on training and reskilling internally, while also partnering with AI model companies to enhance service offerings. Q: What are the strategic priorities for AI services and their growth potential? A: Salil Parekh, CEO, highlighted that AI services, now 8.2% of revenue, are growing at double-digit rates. The focus is on six strategic areas, including process AI and AI engineering, which are expected to drive long-term growth and relevance for clients. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Infosys Ltd.? Here are five stocks we like better. Infosys announced a CEO transition: Salil Parekh will retire on March 31, 2027, and the board has named Ashiss Dash as his successor effective April 1, 2027. Parekh will begin mentoring Dash on Oct. 1 as part of the handover. Q1 results were solid but guidance was trimmed: Constant-currency revenue rose 2.4% year over year, supported by $3.6 billion in large deals and a 21.1% operating margin. However, Infosys cut its full-year revenue growth outlook to 1.5% to 3% because of an uncertain macro environment and softer demand trends. AI is becoming a bigger revenue driver: AI-related services accounted for 8.2% of total revenue in the quarter, up from 5.5% earlier this year, and management said the business is growing at a double-digit pace. Infosys also highlighted strong traction in AI tools and platforms, including more than 80,000 employees using coding tools. Infosys stock sets up for growth, supported by AI Infosys (NYSE:INFY) reported modest revenue growth for the first quarter of fiscal 2027 while lowering its full-year revenue outlook, citing softer-than-expected volumes, a client program termination and continued macroeconomic uncertainty. The company also announced a planned CEO transition, naming longtime executive Ashiss Dash as CEO designate. Chairman Nandan Nilekani said Chief Executive Officer and Managing Director Salil Parekh’s term will end on March 31, 2027, after nearly 10 years leading the company. Nilekani said the board has appointed Dash, an internal candidate with more than 31 years at Infosys, to succeed him. → 3 Photonics Companies Making Quantum Tech Possible 5 NYSE-Listed Emerging Market Stocks For Income Investors “Salil has done a stellar job as the CEO for almost 10 years,” Nilekani said, adding that under Parekh’s leadership Infosys grew “from $10 billion-$20 billion” and transitioned into the digital era while laying “the foundation for a differentiated AI strategy.” Nilekani described Dash as an executive with broad experience across delivery, account management, sales and segment leadership. Dash will work with Parekh over the coming months as part of the transition, including a period of coaching and mentoring, Nilekani said. → Could Truth API Become Trump Media’s First Meaningful Revenue Driver? 5 Reasons to Invest in Emerging Markets Now For the quarter, Infosys reported revenue of $5.08 billion, up 1% sequentially and 2.4% year over year in constant currency terms, according to CFO Jayesh Sanghrajka. Parekh said the quarter included a one-time revenue impact tied to a client decision. Sanghrajka said first-quarter revenue growth was below the company’s expectations, mainly because of a one-off 50-basis-point impact from a program termination by a client in the EURS vertical. He said volumes were “soft and weaker than expectations” and weaker than historical first-quarter trends. → AeroVironment’s Stock Is Down, But Drone Demand Is Taking Off Infosys revised its fiscal 2027 revenue growth guidance to 1.5% to 3% year over year in constant currency terms. The company maintained its operating margin guidance at 20% to 22%. Sanghrajka said the updated revenue outlook includes about 1.7 percentage points of contribution from recently closed acquisitions of Optimum Healthcare and Stratus. He also cited a slightly more than 1% impact from lower spending by a large European manufacturing client and the company’s decision not to pursue certain deals that did not meet return expectations. In addition, he said a shift toward offshore work is expected to reduce revenue growth by about 0.75 to 1 percentage point. “Overall business environment continues to remain volatile,” Sanghrajka said. He said the low end of the guidance assumes further macroeconomic deterioration, while the high end assumes improvement, though less than what the company had assumed in its April outlook. Infosys reported an operating margin of 21.1% for the quarter, up 20 basis points sequentially. Sanghrajka said gross margins improved by 60 basis points sequentially despite lower-than-expected growth. Key quarterly metrics included: Revenue of $5.08 billion, up 1% sequentially and 2.4% year over year in constant currency terms. Operating margin of 21.1%. Free cash flow of $955 million, equal to 116.5% of net profit. Earnings per share of INR 19.19, up approximately 15% year over year. Large deal wins of $3.6 billion, with 61% net new. Sanghrajka said Infosys ended the quarter with $3.9 billion in cash and cash investments after returning more than $1 billion to shareholders through dividends. He said the company’s balance sheet remains “strong and debt-free.” The company won 22 large deals during the quarter, including three deals worth about $400 million each. Sanghrajka said 20% of large deal total contract value came from new vendor consolidation deals, adding that Infosys has been “on the positive side of vendor consolidation.” Parekh highlighted artificial intelligence as a growing part of Infosys’ business. He said AI services revenue represented 8.2% of overall revenue in the quarter and has been growing at a double-digit sequential rate over the last several quarters. “We saw strong traction across the six areas of growth in our AI strategy hexagon,” Parekh said, citing work in process agents, data for AI, modernization and coding tools. He said more than 80,000 Infosys employees are working with coding tools such as Claude Code or Codex for client projects and internal initiatives. Parekh gave the example of a healthcare client for which Infosys implemented AI agents to automate Medicaid eligibility verification and operational support. He said the solution reduced verification time from about six to eight days to approximately four minutes. The company also plans to build a team of 6,000 “frontier engineers” over the next few years, Parekh said. He said Infosys’ Topaz Fabric platform is designed to help clients use AI while maintaining sovereignty over their data and company knowledge. The platform allows clients to work with multiple types of foundation models and optimize token costs by matching models to appropriate tasks, he said. In response to an analyst question, Parekh said the externally reported AI revenue refers to “AI first” work tied to the company’s six strategic AI areas, not broader AI-augmented revenue embedded in existing workstreams. Sanghrajka said the company tracks that AI-first revenue at a detailed sub-project level. Sanghrajka said clients continue to prioritize investments in AI, modernization, cloud and productivity initiatives while remaining cautious on discretionary spending. He said spending is shifting toward areas with clear business cases, including AI-led modernization, cost transformation, cybersecurity, cloud optimization and vendor consolidation. By vertical, Sanghrajka said financial services clients are focused on efficiency, productivity and modernization, with discretionary spending being evaluated more carefully. Manufacturing growth remains affected by lower revenue from a large client, particularly amid caution in European automotive, tariffs, geopolitical uncertainty and energy costs. Retail and consumer packaged goods clients are also tightly controlling budgets because of geopolitics, inflation and tariffs, he said. In communications, Sanghrajka said clients continue to scrutinize discretionary spending, while telecom is undergoing transformation related to consolidation and mergers and acquisitions. He said AI is reshaping spending patterns as enterprises prioritize initiatives that can deliver near-term gains. During the question-and-answer session, management said clients are increasingly seeking productivity benefits related to AI. Parekh said those discussions are broad across industries and can occur both at renewal time and during the life of a contract. However, he said Infosys does not externally quantify the amount of AI-related compression in its existing work. Sanghrajka said Infosys plans salary increases for most employees effective October, with the rest covered in January 2027. He said the company remains confident in maintaining its 20% to 22% operating margin guidance despite headwinds from wage hikes, AI investments, productivity pass-throughs and a 50-basis-point impact from the Optimum Healthcare and Stratus acquisitions. He said those pressures are expected to be partly offset by currency benefits and initiatives under Project Maximus, which contributed a 20-basis-point margin tailwind in the quarter. Sanghrajka also said utilization improved to 84.9%, excluding trainees, and that the company expects its onsite mix, excluding new acquisitions, to decline by 75 basis points to 1 percentage point for the year. Infosys’ headcount declined by 500 employees in the quarter after adding more than 2,000 employees from acquisitions. Attrition rose slightly to 13% from 12.6% sequentially, which Sanghrajka said was in line with first-quarter seasonality. Parekh said Infosys still plans to hire 20,000 college graduates during fiscal 2027, including more than 4,000 already hired in the first quarter. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Infosys Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

It has been about a month since the last earnings report for Fair Isaac (FICO). Shares have added about 22.5% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Fair Isaac due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Fair Isaac Corporation before we dive into how investors and analysts have reacted as of late. Fair Isaac posted a strong second-quarter fiscal 2026, with non-GAAP earnings of $12.5 per share, beating the Zacks Consensus Estimate by 13.33% and rising 60.1% from the year-ago quarter. Revenues were $692 million, beating the consensus mark by 10.64% and increasing 38.7% year over year.Results reflected sharp momentum in credit-related activity, highlighted by a 127% year-over-year jump in mortgage originations revenue, alongside continued execution in the company’s decisioning software strategy. Scores segment revenue rose 60% year over year to $475.0 million, underscoring the durability of FICO’s franchise in U.S. credit markets. Growth was led by the business-to-business channel, where revenue increased 72% from the prior-year period, benefiting from higher mortgage origination scores, unit pricing and higher mortgage origination volumes.Business-to-consumer Scores revenue increased 5% year over year, supported mainly by indirect channel partners. Within originations, auto revenue grew 13%, and credit card, personal loan, and other originations increased 6% year over year compared with the year-ago quarter, indicating broader-based demand beyond mortgages. Mortgage originations revenues rose 127% year over year. Software revenue increased 7% year over year to $216.7 million, supported by continued penetration of the FICO Platform. Platform revenue climbed 54% from the prior-year quarter, while non-platform revenue declined 12%, largely due to migrations.Total software annual recurring revenue (ARR) was $789 million, up 10% year over year, with platform ARR of $349 million rising 49% and representing 44% of total ARR. Dollar-based net retention rate was 109%, including 136% for platform and 90% for non-platform, reflecting expansion in platform use cases and volumes even as legacy products face headwinds. Research and development expenses, as a percentage of revenues, contracted 120 basis points (bps) on a year-over-year basis to 7.8%. Selling, general, and administrative expenses, as a percentage of revenues, decreased 330 bps year over year to 20.8%.Non-GAAP operating margin expanded to 65% from 58% in the year-ago period, as revenue growth outpaced incremental spending.Adjusted EBITDA increased 55.8% year over year to $448.5 million in the reported quarter. The adjusted EBITDA margin in the fiscal second quarter of 2026 was 64.8% compared with 57.7% in the fiscal second quarter of 2025. As of March 31, 2026, FICO had $219.4 million in cash and cash equivalents compared with $162 million as of Dec. 31, 2025. Total debt was $3.64 billion. Cash flow from operations was $223 million in the fiscal second quarter compared with $174 million in the prior quarter. Free cash flow was $214.3 million in the reported quarter compared with $165.3 million reported in the prior quarter.FICO continued to prioritize capital returns. The company repurchased 484,000 shares for $605 million at an average price of $1,251 per share, cited as its largest quarterly repurchase in dollar terms. Reflecting the first-half performance, management raised full-year fiscal 2026 guidance. Revenue is now expected to be $2.45 billion, up from the prior view of $2.35 billion.On a non-GAAP basis, earnings are projected to be $40.45 per share. In the past month, investors have witnessed a flat trend in fresh estimates. Currently, Fair Isaac has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy. Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in. Fair Isaac has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Fair Isaac belongs to the Zacks Computers - IT Services industry. Another stock from the same industry, Infosys (INFY), has gained 0.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2026. Infosys reported revenues of $5.04 billion in the last reported quarter, representing a year-over-year change of +6.6%. EPS of $0.23 for the same period compares with $0.20 a year ago. For the current quarter, Infosys is expected to post earnings of $0.21 per share, indicating a change of +10.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +2.1% over the last 30 days. Infosys has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Fair Isaac Corporation (FICO) : Free Stock Analysis Report American Noble Gas Inc. (INFY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Innodata Inc. INOD is slated to release first-quarter 2026 results on May 7, after the closing bell. The upcoming release is expected to reflect continued momentum in generative AI-driven demand, alongside execution-related variability tied to project ramp-ups and investments. In the last reported quarter, Innodata reported solid results, driven by strong demand across generative AI-related services. Revenues rose 22% year over year to $72.4 million, surpassing the Zacks Consensus Estimate by 4.2%, reflecting continued traction with large technology customers and expanding AI programs. On the profitability front, adjusted EBITDA increased 11% year over year to $15.7 million, reflecting improved scale despite continued investments in capacity and innovation. However, adjusted earnings per share (EPS) declined on a year-over-year basis, with earnings coming in at 25 cents per share compared with 31 cents in the prior-year quarter. INOD’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 50.4%, as shown in the chart below. Image Source: Zacks Investment Research The Zacks Consensus Estimate for the first-quarter EPS has remained unchanged at 16 cents over the past 30 days. The estimated figure indicates a 27.3% decline from the year-ago reported EPS of 22 cents. The consensus mark for revenues is pegged at $74.5 million, suggesting 27.7% year-over-year growth. For 2026, Innodata is expected to register a 36% increase from a year ago in revenues. Its EPS is expected to witness 9.8% growth from the year ago. Below is what to expect in the fourth quarter of 2026 and 2027 for INOD stock. INOD EPS Estimate Image Source: Zacks Investment Research INOD Revenue Estimate Image Source: Zacks Investment Research Generative AI Demand and Customer Expansion to Drive Topline: Innodata’s first-quarter performance is likely to have benefited from sustained demand across the generative AI lifecycle, including model training, evaluation and optimization services. The company continues to see strong traction with large technology firms, AI innovation labs and enterprise customers, supporting revenue visibility. Management has indicated that 2026 revenue growth could reach 35% or more, driven by active programs, recent wins and a robust pipeline, with potential upside as projects scale. A key driver in the quarter is expected to be the shift toward higher-value engagements, particularly in pre-training and advanced data engineering workflows. The company has also been expanding its role from a data supplier to a lifecycle partner, which may support larger contract sizes and deeper client relationships. Additionally, growth from customers beyond its largest client is expected to outpace overall trends, contributing to improved diversification. However, top-line performance may have been influenced by timing-related variability. Customer ramp schedules, budget approvals and evolving research priorities can lead to uneven revenue realization, particularly in large and complex AI programs. Investment Cycle and Program Mix to Influence Margins: Margins in the first quarter are expected to reflect a mix of near-term pressure and long-term operating leverage potential. Management has guided for adjusted gross margins in the 35%–40% range early in 2026 as new programs ramp, with normalization toward 40% or higher as scale improves. Ongoing investments in engineering talent, data science capabilities and innovation platforms are likely to weigh on margins in the near term. The company has been carrying capacity ahead of demand and investing in next-generation solutions, including agentic AI systems, evaluation platforms and physical AI data engineering. These initiatives, while margin-dilutive initially, are expected to enhance efficiency and pricing power over time. At the same time, increasing automation, synthetic data generation and platform-based workflows could begin to support operating leverage. As newer, higher-margin innovation-led programs scale, profitability trends are expected to improve. Overall, the first-quarter results are likely to highlight strong demand trends and strategic positioning in the AI data ecosystem, balanced by execution timing and continued investment pressures. Our proven model does not conclusively predict an earnings beat for INOD for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) for this to happen. This is not the case here, as you will see below. Earnings ESP: INOD has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. INOD stock has lost 10.3% year to date (YTD), underperforming the Zacks Engineering - R and D Services industry but performing better than its industry peers. Over the same period, INOD has meaningfully outpaced Cognizant Technology Solutions CTSH, which declined 37.5%, Infosys INFY, which fell 31.3%, and ExlService EXLS, which tumbled 25.2%. While Cognizant Technology Solutions and Infosys have grappled with slower discretionary spending trends, and ExlService has faced sharper investor pullback, INOD has demonstrated relatively stronger price resilience. Compared with Cognizant Technology Solutions, Infosys and ExlService, INOD’s performance highlights a divergence in investor sentiment within the engineering and digital services space. INOD Price Performance (YTD) Image Source: Zacks Investment Research In terms of the forward 12-month price/earnings (P/E), INOD stock is currently trading at a premium to its industry at 36.34X. BBAI’s P/E Ratio (Forward 12-Month) vs. Industry Image Source: Zacks Investment Research Innodata continues to benefit from robust generative AI demand, expanding enterprise relationships and a growing role across the AI lifecycle, which supports healthy revenue visibility and long-term growth prospects. However, earnings are likely to remain uneven in the near term due to project timing variability and ongoing investments in talent, platforms and capacity, which are pressuring margins and EPS growth. With a premium valuation, the risk-reward appears balanced, warranting a wait-and-watch approach. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cognizant Technology Solutions Corporation (CTSH) : Free Stock Analysis Report American Noble Gas Inc. (INFY) : Free Stock Analysis Report ExlService Holdings, Inc. (EXLS) : Free Stock Analysis Report Innodata Inc (INOD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Oct. 16, 2025 at 10 a.m. ET Chief Executive Officer — Salil Parekh Chief Financial Officer — Jayesh Sanghrajka Need a quote from a Motley Fool analyst? Email [email protected] Salil Parekh: Thanks, Rishi. Good afternoon. Welcome, everyone, to the campus here, and welcome to our press conference event. We had a strong performance in Q2. Our revenues for the quarter grew 2.2% sequentially and 2.9% year-on-year in constant currency terms. Our operating margin was 21%. Our large deals were at $3.1 billion, out of which 67% was new or net new work. In addition, we announced a mega deal worth $1.6 billion after the close of the quarter, but before -- today before our results announcement. We've added 8,000 employees during the quarter. Our client interactions are showing a strong focus on deploying AI across the enterprise, both for growth and for cost efficiency programs. In doing this, we are continuing to scale our team of forward deployed engineers. With a strong performance in Q2, we changed our revenue growth guidance for the financial year. The new guidance is growth between 2% and 3% in constant currency terms for the full year. And our operating margin guidance remains the same as in the past quarter at 20% to 22% for the full year. With that, let's open it up for questions. Rishi Basu: Thank you, Salil. We will now open the floor for questions. Joining Salil is Mr. Jayesh Sanghrajka, Chief Financial Officer, Infosys. The first question is from Ritu Singh from CNBC TV18. Ritu Singh: Salil, firstly, on the guidance, the fact that you've tightened it, but not really increased it from 1% to 3% to you've gone to 2% to 3%. And with a 2.2% growth this quarter as well, at the current run rate, you'll at most have a flat growth for the rest of the year for Q3 and Q4 with the current guidance, you'll easily get to the top end. So I wanted to understand, are you not seeing a meaningful recovery, especially when it comes to your manufacturing, retail, these kind of verticals? What kind of headwinds do you continue to see? Because for Infosys, the contribution to revenues is slightly larger than peers. That was one. Also on the H-1B visa issue, if you could give us some details on how many employees you deployed on this visa for this year and the previous maybe a couple of years? And whether you see now this as being something unviable, sending freshers on H-1B visas to work in the U.S. If I may also ask, your peers like HCL Tech have also started to quantify their AI revenues. We've been asking you this for several quarters now, and we understand AI cuts across services and sectors. Could you give us a sense of what exactly you're seeing there? And finally, the Versent Group acquisition, what exactly was the contribution to revenues and whether you're looking at further M&A in the region or outside? Salil Parekh: So let me start, and Jayesh will add in a couple of things. First, on the guidance and the environment. So in the guidance, typically, we have the second half of the year is slower than the first half. That's the normal pattern. So we've continued with that pattern. Having said that, we've seen good traction, and that's how we've actually increased the guidance. The previous guidance was 1% to 3% and now it's 2% to 3%. So in a sense, we have much more confidence with the lower end being increased in what we see into the outlook for the year. In terms of the specific industries you mentioned, we had a good performance on manufacturing, on financial services. We still see constraints in retail. We do see a good pipeline there, and we will see how that plays out in the coming quarters. Keeping all those things in mind and the global environment in terms of the macro, we decided to keep the guidance at 2% to 3% with all of those factors that I mentioned. On the H visa, what we've shared in the past, what we've shared recently, first, our U.S. workforce, the number of people that require Infosys sponsorship for immigration is a minority. So the majority of the people don't require it from our perspective. Second, we've built a large number of centers and hubs, which are focused on digital, on innovation, on technology and AI in the U.S. We have relationships with universities. We have a training facility there. With all of that in mind, we are clear today that we will work with our clients without any disruption to their services and into the future. We don't have any specific information to share on the numbers that you had suggested. Ritu Singh: When you say a minority was dependent on the H-1B visa, could you give us in percentage terms, how many of your employees that you were sending abroad were on these visas? And when you say there won't be any disruption, how exactly would that play out? Salil Parekh: So there, we don't share the specific numbers, but the majority of our employees in the U.S. are employees who don't require any Infosys immigration support. The way we are working with our clients, we reached out to each of them and made sure that we see and they see how their delivery continuity becomes on track and remains the way it is right now. Then on Versent, so first, there's nothing in the quarter -- this quarter. They're going through all the approvals and so on. So the regulatory approval, which is a normal process. We'd anticipated it would come sometime in the coming months. Yes, we are very much looking at other acquisitions. We have a good pipeline. We don't know when those will materialize, but there are some opportunities there, which we are looking at. Ritu Singh: Sorry, the question on Versent was going forward, what kind of contribution to revenue do you expect? And in M&A, what are the areas? What are the geographies where you're looking to fill the gaps? Salil Parekh: On the contribution, we don't have anything to share now. When it closes, we will be in a position to give that information. Is there anything more on Versent? Jayesh Sanghrajka: I think we have given the last year's numbers of Versent already in the stock exchange filings that we did last time when we announced that. So you can make an estimate based on that. But just to add to what Salil was saying on the guidance as well, if you look at the commentary last time when we gave a guidance, we very clearly said that the upper end of the guidance is where we are expecting stability in the environment and the lower end of the guidance is where we are expecting worsening in the environment, right? As we stand today, the environment still remains uncertain. And despite that, on the back of Q2 performance, we have tightened our guidance where again, we are very clearly saying that at the lower end, we expect the worsening of the environment and the upper end, we are expecting stability in the environment, right? Ritu Singh: [indiscernible] Salil Parekh: On AI, I think we are scaling up massively on AI. We have a large team of FTEs. We are doing a lot of projects on enterprise AI with clients, on growth, which is focused like in the sales function or marketing function, on cost, which is focused on many of their processes, optimizing them on customer service, on code development. So there's a broad set of AI work that we are doing with our clients. There's a large number of clients for which Infosys is today the AI partner of choice. So we're going quite well. We have strong partnerships with a lot of different large tech companies. We believe there's a huge amount of opportunity in the enterprise AI space. And with our experience on how to navigate within the enterprise landscape, we are quite well positioned to help with that. Rishi Basu: The next question is from Jude from ET Now. Jude Sannith: Salil, congratulations on that performance. You spoke about scaling up on the AI front. Could I get you to throw some light on what those specific deals are like? What is the AI order book shaping up to be at this point in time? And more importantly, what will your hiring trends be like for the rest of FY '26? And I know for a fact that you have the confidence, which is why you've raised the lower end of the guidance, but what is the overall demand environment shaping up to be like for the fiscal? Salil Parekh: So on AI, I think what we see today is a lot of interest where there's deep work going on, whether it's on a specific knowledge process or it's in credit risk or there's work doing on software development or there's work going on, on customer service. So a broad area of AI projects that we are working on. In some cases, we're working across an enterprise on transforming that enterprise from an AI perspective and making them the leading enterprise in their industry in AI. So good traction there. In fact, we have more and more of this that we want to start to share in the sense of what are the approach that we are taking, how it's working, and you'll see that as we go through in the next few months. On the environment, as Jayesh was sharing, the environment is still uncertain. And what we see today is some changes in where the global environment macro is looking. We still see in some of our large markets that there is growth, but there's also some inflation, there's job creation, which is constrained. In some other markets, there are cost constraints, some industries are seeing that. So that's a mix. Equally, we are seeing a lot of strength, for example, in financial services. Our client base is doing very well. We see extremely good growth. We've seen good growth in manufacturing in this quarter. We have a portfolio where we are -- across all of these different industries, which helps us to deliver the kind of performance that we've delivered for this quarter. On terms of hiring... Jayesh Sanghrajka: Yes. So if you look at our hiring for this quarter, our net addition is already at 8,000. We had given a guidance in terms of the fresh hiring for the year, and we had said 15,000 to 20,000 what we expect. We have hired in the first half, 12,000-plus freshers already. So we are well on our track to hire close to 20,000 this year. Rishi Basu: The next question is from Uma Kannan from Deccan Herald. Uma Kannan: In the last couple of years, Europe has been constantly outperforming for you. So what are the factors driving that? And can you give us some update on Project Maximus and its impact on your performance? And one more on fresher hiring. Have you onboarded all freshers whom you have offered? Salil Parekh: On the Maximus and the hiring, Jayesh will come back. On Europe, I think Europe has done extremely well for us. We made some good investments in different countries across Europe. We've seen also -- especially in the time you mentioned the past 2 years, there's been a lot of opening up of companies in Europe in different countries to looking at the sort of services that we are offering to looking at both transformation and cost efficiency. And there, we've played quite well in those markets. Having said that, we still see the U.S. market is also a very good market, and we will continue to grow. We will continue to make acquisitions. We'll continue to invest in both of those markets and other markets around the world. Jayesh Sanghrajka: Yes. So on hiring, as I said earlier, we have hired net 8,000 employees, and we have hired 12,000 freshers this half already, and they're already being onboarded as we speak. In terms of Project Maximus, I think Project Maximus is continuing to deliver. If you look at last year, we expanded margins by 50 basis points despite multiple headwinds, compensation related. We had a higher variable pay. We had impact coming from the acquisition and multiple mega deals that we signed in the year before they were ramping up. So we absorbed all of those headwinds, and we were able to expand margin by 50 basis points. Even this quarter, if you look at, we expanded margin by 20 basis points sequentially and the Project Maximus has delivered 30 basis points out of that, where pricing gave us a tailwind and that was offset by higher subcon and lower on-site utilization. So the project is in works. Rishi Basu: The next question is from Beena Parmar from The Economic Times. Beena Parmar: Salil, you've seen some reduction in your contribution from your top 5 and 10 clients. Could you give us some sense why that is happening? And how do you see that in the next 2 quarters? And in terms of the hiring, what sort of outlook do you have overall for, say, campus and off-campus hiring, especially because of the way things are moving, while deal pipeline has been strong, market continues to remain uncertain. And secondly, in terms of the pipeline, where is the growth -- where is the deal pipeline coming from? Which sectors is it coming from and which geographies? And lastly, in terms of the margins, what are the levers given that you've already done with your wage hikes, and you also plan to onboard freshers? Salil Parekh: So let me start with the pipeline view and some of the others, Jayesh will look at, you can combine those. So our pipeline remains very strong right now on large deals. What we are seeing is a lot of our clients are quite focused on cost optimization, consolidation. We are benefiting from consolidation plays on automation and on using AI for efficiency. That's the -- let's say, the big focus that we see from our clients across industries, and I'll come to the specific industries. And then we see some attention to using AI for some of their growth activities and what we can do with an AI transformation. Now within all of that, we see some of our industry segments with the pipeline doing well. There are some places, for example, in financial services, where we see good traction with clients. We see good traction in manufacturing. Our pipeline in retail is looking good, and we are looking to see how that can be now converted. The overall sentiment though is a good large deal pipeline with a view to much more focus on cost efficiency and automation and those types of activities. Beena Parmar: On the client contribution... Salil Parekh: Margin hiring. Jayesh Sanghrajka: Yes. So if you look at client contribution, I think that those changes are very marginal. There's not too much to read in that because there are always certain projects that ramp up, ramp down. So that's what it is. It's not anything to note there. In terms of margin tailwinds and headwinds, if you look at as we get into the second part of the year, which is seasonally softer part of the year, we have higher -- lower working days, furloughs, et cetera, which will come as a headwind. We also have Project Maximus and multiple tracks of Project Maximus that will continue delivering. There is pricing, which is a track there. There is a lean and automation, which is delivering -- continues to deliver value there. There are large portfolio, large programs that we are running. We continue optimizing them. So there are multiple tracks that we run there, which will become a tailwind in a way. The fresher that we have hired once they onboarded -- start getting onboarded on the projects, the pyramid starts giving benefit as well. So I think all of those will become a tailwind. Beena Parmar: In terms of the acquisitions, how much has it contributed? And how much will it contribute in terms of the guidance that you've given? Jayesh Sanghrajka: So this quarter, it's only 20 bps out of the 2.2% because 2 months -- we already had last quarter, 2 months baked in already. So that is already baked in, in the guidance. There's nothing additional that is newly baking in the guidance. The project Versent that we talked about, the JV in Australia, that will only get baked in as and when we close it. Beena Parmar: In the guidance also, you expect it to be around 20 bps in the Q3 and Q4? Jayesh Sanghrajka: No. That's already in the run rate. So it's already in the run rate. There's nothing additional that we are baking in from that perspective. Beena Parmar: One last thing. In terms of the AI talk that's going on, your larger rival has kind of announced their AI -- sorry, your immediate smaller rival has announced AI contribution to the revenue. Could you tell us if you would be looking at anything of this sort this year in the next quarter or fourth quarter? And when do you see that happening, if at all? Salil Parekh: So there, our focus has been to mainly share what we are doing on AI externally, and that's what we are doing. We, of course, track all of that internally. And as the right time comes, we will start to share that externally. Rishi Basu: The next question is from Jas Bardia from [ LiveMint ]. Jas Bardia: Just a couple of questions. As per your AI strategy, would you continue with the current asset-light model of embedding AI in your software services? Or are you looking at entering the AI infrastructure play and probably deploying huge amounts of capital? Second question, as part of the legacy modernization deals, are you seeing more business on a net-net basis because of AI tools being used to modernize those applications? Salil Parekh: So on the modernization first, I think, in fact, modernization is a huge opportunity because of AI. So what's happening with modernization is in the past, without the AI tools, you could do modernization, but clients needed a longer time horizon. With some of the AI tools, the time horizon becomes less. And as a consequence, the ROI for the client on that program is much better. So what we anticipate now is, as the AI tools mature, we will see more and more of them being deployed on the modernization programs. On the first part, I think we are comfortable with the strategy that we have today. Rishi Basu: The next question is from Veena Mani from The Times of India. Veena Mani: I want to understand in the backdrop of the H-1B issue. So for the last few years itself, Infosys has been strengthening its nearshore centers. If you could give me a sense on how it has grown? And at this point in time, how many of your employees are based in nearshore locations? And what is your nearshore strategy going to be given that now the U.S. has completely -- has made H-1B norms a lot more stricter now? Also, you talked about the mega deal, if you could give us a sense of which sector it is and what is the AI element embedded in it? And on the fresher hiring, you mentioned 12,000. Out of them, what proportion of the freshers are premium talent in the sense that they're already skilled in something and not just vanilla talent? Salil Parekh: So on the mega deal first, I think there, we've already announced it. It's with U.K. NHS. That's the one you're referring to. We made the announcement just after the close of the quarter. It's a complete transformation of what they are doing. We're supporting it with many new technologies, and AI is very much part of it. It's a huge program in the way that they have trusted us to deliver it. And we work with many different partners to make sure that all of this is delivered effectively for them, but it's just the start. As we go through it, more of that will become public. On the nearshore, so nearshore has been a huge success for us. Many years ago, we started the approach within our strategy of localization in each of our geographies so in Europe, in Australia, in U.S. and that has really matured a lot. So part of that is we are hiring local people in each of the geography. And part of that is we are building the nearshore centers, whether those are in the U.S. and around the U.S. like Canada or Mexico or other places in Latin America or in Europe and so on. So that part has really gone extremely well, and we feel quite confident that, that will scale even further with all the changes there. Rishi Basu: There is a question on fresher hires... Jayesh Sanghrajka: Yes. So on the freshers, we don't really split out how many of them are higher skills and how many of them are the regular skills, but every fresher will go through the certain trainings depending on the requirement and depending on the skill set. So we will execute on that. Rishi Basu: The next question is from Rukmini Rao from Fortune India. Rukmini Rao: Salil, at the Board level, I wanted to understand in extreme uncertain conditions where you don't know what is going to happen tomorrow. For leaders, what is it sort of -- what kind of drawing is happening at the boardroom table on how to deal with it? And also, is there some sort of additions to your contingency plans? The other one was you have also disclosed the DOJ investigation happening on H-1B and you are also internally investigating some sense of clarity on what you -- what is happening, the kind of inquiry that you're doing within the company? And also on the AI piece, with the partnerships that all of you are all doing with hyperscalers, looking at what happened with Deloitte, in terms of these partnerships, right, and given that these technologies are still so newer, is what sort of indemnity comes in these contracts where if something goes wrong with, let's say, any of the hyperscaler platforms that you're working on? Do -- I mean, is the entire risk on you? Or do they also take up any risk? Because if things go wrong, it can be huge monetary risk that can be posed to any of the players? Salil Parekh: So on the first one, I think we are fortunate with our Board to have people, of course, with Nandan there, who are really very experienced in looking at global situations and looking at things over the years. So the Board is quite well prepared. The type of environment is different. But equally, the Board is well prepared to understand and work with what those uncertainties are. The Board looks at different ways and scenarios of what could play out, not from a quarterly business perspective, but much more from how we should look at overall. We, of course, have a risk committee that works extremely well. And in that, many of these different scenarios are looked at carefully and evaluated on a regular basis, but with a lot of attention, as I said, with someone like Nandan being on the Board and many of the other Board members that we have. On the partnerships, so there's a lot of new things happening in AI, and the questions that you ask on liabilities and so on are still not fully clarified from a legal perspective. So we've been quite clear and careful in making sure that we can take on the responsibility for what we have control for. Beyond that, it's difficult to show whether it's in a discussion with the client or with the partner, that's the sort of guideline that we use. And on the investigation, we have no comments at this stage. Rishi Basu: The next question is from Sanjana from The Hindu BusinessLine. Sanjana B: So just wanted to understand, you've made quite a few acquisitions in this calendar year alone. Some commentary on the kind of organic moves you are examining and contributions from such moves to the overall growth? And also, some of your peers as well as you who announced a mega deal in the public sector, some of your peers are also announcing a lot of deals. Do you think that you will be examining this particular sector more closely across your geographies? And also pertaining to the recent buyback announcement, if you could elaborate on the contours of the announcement. What was the size -- sorry, how was the size and the pricing determined? And also some commentary on the outlook for H2 FY '26? Salil Parekh: Okay. Let me start with those. I think on the public sector first, we've always had a good attention to it. Now we are even more focused on it in different markets. We've done pretty well in the public sector in the Australian market. We have a pretty decent small business in the U.S. market. With this, we start to expand more in the U.K. market. So we absolutely have a focus on it. We also find public sector is opening up to this sort of change and the sort of capabilities that we can -- we bring that they have much more interest to. Of course, in India itself, we do, I think, quite incredible work with the income tax, with the GSTN and so on. So we have pretty good experience in that, which we can leverage now globally. The inorganic, I think our focus is very much on making sure that we have a business that's growing well organically and then we have a strategic view on what we should look at in terms of acquisitions. So acquisitions are the main driver in that sense of our growth, but where we see something that can add to our capability either in an industry or in a skill area like a service line or in a geography where we want to expand, those are the ones that we've done, whether it was energy and consulting, whether it was cybersecurity, whether this one, which is focused on digital and AI and cloud. So those are the types of areas we are focused on, and we will continue in that sort of a scale where the primary, of course, is we want to work in the organic sense with our clients. Sanjana B: The buyback? Salil Parekh: The buyback, yes, let me just start and you can add. So the primary approach, we have a capital return policy, and that guides all of our decision-making on that. So in that, we have a policy where we return 85% of our free cash flow over a 5-year period. And then we have in that each year, our regular dividend, and then we have other ways of returning. So that's the guideline. And then Jayesh, you can add more. Jayesh Sanghrajka: Yes. So within that guideline, if you look at we are in the second year right now. Last year, we had a very strong cash flow on the back of tax refund that we got. So we had a headroom in terms of returning additional capital back to the shareholders. And as part of that, we looked at various options, and one of that was buyback, which is what we're executing. The amount is INR 18,000 crores at INR 1,800, which we will be executing. At this point in time, we are awaiting shareholder approval. The postal ballot is already out. Ritu Singh: Salil, Ritu again from CNBC. Since we haven't got a very clear response in terms of your outlook for what happens with these H-1B visas. I mean, very simply to just answer the question, do you think it's viable to continue sending your employees on these visas? Are you going to participate in the next cycle? Or is there going to be a significant pullback even in this minority number that you currently have? Salil Parekh: So there, what I shared earlier, what we have today in the U.S., we have the majority of our people who are not requiring any Infosys sort of immigration support. What we will do in the future will be guided by how we work with our clients, how we scale up what we've been doing there in terms of the discussion we had on nearshore, in the local hiring, the localization that we've been working on. So that's the approach that we will take. And we've been working with our clients over the last few weeks to make sure that they -- the service delivery continuity, business continuity remains current. Ritu Singh: Are you as a company is required to pay that large sum of money to send your employees to the U.S. anymore? Salil Parekh: We -- on the H visa, the response that I have is what I've shared earlier, and that's what we can share. Rukmini Rao: [indiscernible] Is that anything got to do with North Africa market? Or just broadly wanted to understand why that? And also, Jayesh, the subcontracting cost has gone up. So is that very niche? Is that AI skill sort of guys that you are -- has added to this, just to understand? Jayesh Sanghrajka: So the Egypt subsidiary is a particular requirement for a particular project. That is where we had to set up an entity because the client was based -- is based in Egypt, and we had to send some people, and that's how we expand across the globe. So that's where it is. Subcontractor cost is -- keeps going up and down depending on the requirement, how we see the demand environment and how we have the talent that we fulfill. Part of that could be new age skills like AI skills, et cetera. Part of that could be the regular demand that we need to meet depending on the project and the location requirements. Rishi Basu: Thank you. With that, we -- sorry, okay, go ahead. Unknown Attendee: Your fact sheet, yes, your voluntary attrition has marginally dropped from the previous quarter. But if you look at it from the previous year, it has increased. In this sort of a market, what is leading to this increase in the voluntary attrition? That's number one. The other thing is about your Hubli campus. You've been -- you were giving your employees -- Hubli -- giving your employees SOPs to -- cash incentives to move to the Hubli campus. But have you directly recruited there? From what I hear is that Infosys is not directly hiring at the Hubli campus and is going to wait until the next year to get people locally into that campus. If you could tell me a little bit about that? Jayesh Sanghrajka: Yes. So in terms of the campus movement, you always need to have certain senior people move to those campus so that you start meeting the demand requirement. And that's how you incentivize people to move to certain campuses and then you start building the team below that. So that is where we have made incentives to certain employees -- certain of our employees to move to those campuses, right? There's not -- nothing beyond that. And we have and we will continue hiring locally in the Hubli as well. Unknown Attendee: Not yet hiring locally? Jayesh Sanghrajka: We have. We have hired few people in the Hubli. Unknown Attendee: At what [ seniority level ]? Jayesh Sanghrajka: We don't give out numbers by campus. So yes. Unknown Attendee: [indiscernible] January and April? Jayesh Sanghrajka: So yes, we just did it in January and April. We will decide soon. It's generally an annual cycle. So we will look at it in future. We have not decided anything for this year at this point. Yes. Rishi Basu: With that, we come to the end of this Q&A session and the press conference. We thank our friends from media. Thank you, Salil, and thank you, Jayesh. Before we conclude, please note that the archived webcast of this press conference will be available on the Infosys website and on our YouTube channel later today. Thank you, and please join us for some high tea outside. Before you buy stock in Infosys, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Infosys wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $496,473!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,216,605!* Now, it’s worth noting Stock Advisor’s total average return is 968% — a market-crushing outperformance compared to 202% for the S&P 500. 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