Infosys (INFY) Q2 FY2027: Organic Growth Stalls as Revenue Guidance Is Cut Again

Infosys (INFY) reported fiscal 2027 second-quarter results on October 23, 2026, in a press release and a results press conference, and cut its full-year revenue guidance for the second time this fiscal year [1][2]. The quarter covered July to September 2026, and most of its revenue growth came from acquisitions.

The results answer three questions that framed the quarter. The first was whether revenue was still growing once two recent acquisitions are stripped out. The second was whether financial services and energy and utilities could offset spending cuts at manufacturing clients. The third was whether the operating margin could hold before the wage increase through operating efficiency rather than currency alone. Organic growth was roughly zero, energy and utilities recovered while manufacturing turned negative year over year, and the operating margin held at 21.0% mainly because of currency [1][3][2]. New growth sources are visible but will not turn into revenue until next fiscal year, and the second-half wage increase will test the margin.

Infosys is an Indian IT services company whose clients are mainly large enterprises in North America and Europe; it provides consulting, systems development and maintenance, cloud operations and process outsourcing [4]. It bills clients by effort or by delivered outcomes, and employee pay is its largest cost, so margins depend on utilization, the offshore share of work, the timing of pay increases and the rupee exchange rate [5].

Organic revenue stalled and Infosys cut FY2027 guidance again

Revenue grew modestly while full-year guidance moved lower. Second-quarter revenue was $5.145 billion, up 1.5% year over year in constant currency, and first-half revenue grew 1.9% [1]. Infosys lowered its FY2027 revenue growth guidance from the July range of 1.5%-3.0% to 1%-2% [1][6]. On a rough calculation from the first-half rate, that implies second-half growth of about 0.1%-2.1% year over year.

Acquisitions accounted for most of the growth. In July, management said the two acquisitions added about 1.1% to sequential growth [7], when they had been consolidated for only about two months [2]. On the same basis, a full quarter of consolidation contributed about 1.6-1.7 percentage points in the second quarter, leaving organic growth near zero or slightly negative. Infosys did not disclose acquired revenue, so this figure is an estimate.

Management attributed the cut to volume and pricing. The CFO said volumes were soft and remain soft, that competition and client demands for productivity are pushing prices down, and that discretionary spending by retail and high-tech clients was lower than expected; the CEO said AI is also compressing existing revenue [2].

New contracts mainly support next fiscal year. Large-deal signings totaled $5.2 billion, with 62% net new [1]. Management said one net-new mega deal worth more than $2 billion over seven years is expected to add more than 1% to growth next fiscal year, but it will only start ramping late in the fourth quarter [2]. AI revenue rose from 8.2% to 10.5% of total revenue [1][2], yet overall growth did not rise, which means at least part of the AI gain is offset by shrinking existing work.

Energy and utilities led while manufacturing turned negative

Industry segments diverged, and the leaders did not offset the laggards. In rupee terms, second-quarter revenue rose 17.3% year over year in Energy, Utilities, Resources and Services (EURS), 11.8% in financial services and 7.7% in manufacturing, against 10.7% for the company [3]. Converted to US dollars, the three segments grew about +7.4%, +2.4% and -1.4%. Segment constant-currency growth was not disclosed, so these are converted figures.

EURS recovered clearly, while the lead in financial services was narrow. In the first quarter the two segments grew only 1.3% and 2.4% in constant currency [8]. In the second quarter EURS grew about 6 percentage points faster than the company, while financial services was about 1 point ahead and included consolidation of Stratus.

Manufacturing revenue and profit both declined. Manufacturing grew 1.0% in the first quarter [8] but fell about 1.4% year over year on a converted dollar basis in the second quarter, and segment profit declined from 1,752 crore rupees to 1,694 crore [3]. That is consistent with the reduced spending by a large European manufacturing client that management flagged in July [9]. Management described manufacturing as strong [2], and the segment did improve sequentially, but it remained negative year over year. High-tech revenue fell from 3,703 crore to 3,332 crore [3] because of ramp-downs at specific US clients [2].

The 21.0% operating margin held, mainly on currency

The margin was stable, but operating improvement contributed little. The second-quarter operating margin was 21.0%, compared with 21.1% in the first quarter, and the 20%-22% full-year margin guidance was unchanged [1]. The CFO's bridge showed -70 basis points from post-sale customer support, which swung from a reversal to a charge, and -20 basis points from acquisition amortization, offset by +40 from currency, +20 from working days and +20 from the Project Maximus cost program [2]. Utilization is about 85%, which management called near optimal, and the second half will bring wage-increase pressure [2].

Cash conversion stayed strong: free cash flow was $928 million, or 113.3% of net profit, and the interim dividend rose 13% year over year [1].

Conclusion

The quarter weakens the case for Infosys's revenue growth this fiscal year, while profit and cash have held for now. More than half of the full-year guidance comes from acquisitions, and the mega deal and AI revenue improve next fiscal year rather than this one. The margin relies mainly on currency, and its cushion narrows after the wage increase. Free cash flow still exceeds net profit.

Organic growth and manufacturing growth are both estimates, and management comments come from a media press conference. The assessment would improve next quarter if year-over-year growth is at least about 1.1%, manufacturing stabilizes and the mega deal ramps on schedule; it would weaken further if growth approaches zero or guidance is cut again.

Sources

[1] INFY 6-K filed 2026-10-23 · Q2 FY27 IFRS USD press release and FY27 guidance, 2026-10-23, 6-K, https://www.sec.gov/Archives/edgar/data/1067491/000106749126000042/exv99w02.htm

[2] INFY Q2 FY27 results press conference 2026-10-23, 2026-10-23, earnings-call, https://www.infosys.com/investors/reports-filings/quarterly-results.html

[3] INFY 6-K filed 2026-10-23 · Q2 FY27 Ind-AS audited results and segment information, 2026-10-23, 6-K, https://www.sec.gov/Archives/edgar/data/1067491/000106749126000042/exv99w03.htm

[4] INFY 20-F filed 2026-06-15 · revenue by geography and currency FY2026, 2026-06-15, 20-F, https://www.sec.gov/Archives/edgar/data/1067491/000119312526270520/infy-20260331.htm

[5] INFY 20-F filed 2026-06-15 · onsite-offshore effort, contract mix and utilization FY2026, 2026-06-15, 20-F, https://www.sec.gov/Archives/edgar/data/1067491/000119312526270520/infy-20260331.htm

[6] INFY 6-K filed 2026-07-23 · Q1 FY27 press release and FY27 guidance, 2026-07-23, 6-K, https://www.sec.gov/Archives/edgar/data/1067491/000106749126000034/exv99w02.htm

[7] INFY Q1 FY27 earnings call 2026-07-23 (6-K filed 2026-07-28) · CFO on revenue drivers and AI revenue, 2026-07-28, earnings-call, https://www.sec.gov/Archives/edgar/data/1067491/000106749126000038/exv99w05.htm

[8] INFY 6-K filed 2026-07-28 · Q1 FY27 fact sheet revenue by segment and geography, 2026-07-28, 6-K, https://www.sec.gov/Archives/edgar/data/1067491/000106749126000038/exv99w04.htm

[9] INFY Q1 FY27 earnings call 2026-07-23 (6-K filed 2026-07-28) · CFO on FY27 guidance bridge, 2026-07-28, earnings-call, https://www.sec.gov/Archives/edgar/data/1067491/000106749126000038/exv99w05.htm