Infosys Ltd. Q3 FY2026 earnings call

• Strong Q3 performance with revenue growth, large deals like NHS $1.6B in healthcare. - Deepened Topaz AI with Topaz Fabric suite. - 90% of largest 200 clients using AI, 4,600 AI projects, 28M lines of code, 500+ agents. - Scaling forward-deployed engineer team and 6 AI-led value pools identified. - Revised revenue growth guidance for FY to 3%-3.5% constant currency, operating margin guidance remains 20%-22%. - Confidence in demand shown by headcount increase and hiring 20,000 freshers.

Infosys reported revenue growth of 0.6% sequentially and 1.7% year-on-year in constant currency terms. Large deals totaled $4.8 billion with 57% net new across 26 deals. Adjusted operating margin was 21.2%, and free cash flow was $915 million. The company has deepened its Topaz AI capability with Topaz Fabric, works with 90% of its largest 200 clients on AI, has 4,600 AI projects, over 28 million lines of code generated using AI, and built over 500 agents. The 6 AI-led value pools include AI engineering services, data for AI, etc.

• Revised revenue growth guidance for the financial year to 3% to 3.5% growth in constant currency. - Operating margin guidance for the financial year remains the same at 20% to 22%. - Confidence in future outlook due to strong large deals, AI momentum, and positive industry demand.

• Labor code impact: Ongoing impact of approximately 15 basis points annually on margins. - H-1B related: No Infosys employee apprehended by US authorities, but one employee denied entry to the US. - Macro uncertainties: Potential interest rate cuts in the US and other macroeconomic factors that could impact business.

Q: Ritu Singh asked about head count increase, guidance upgrade, margin dip, and AI numbers vs peers.

A: Salil and Jayesh stated headcount increase shows demand confidence, guidance upgrade due to large deals and strong execution, margin breakdown including currency, labor code, and investments.

Q: Mansee Dave inquired about 2026 tech spending, pricing models.

A: Salil said there's good demand outlook, Jayesh mentioned evolving pricing models.

Q: Shristi Achar questioned margin decline beyond labor code, client contribution, H-1B.

A: Jayesh said adjusted margins expanding, client contribution has seasonality, Salil stated no employee apprehension by US authorities.

Q: Chandra Srikanth asked about M&A, labor code impact.

A: Salil spoke about M&A pipeline, Jayesh explained labor code impact absorption.

Q: Haripriya Suresh asked on H-1B, retail softness, succession plan.

A: Salil said on H-1B approach, retail recovery, and no comment on succession plan.

Q: Avik Das asked on BFSI growth, North America, margin outlook.

A: Salil talked about BFSI subsegments growth, Jayesh on large deals and margin trends.

Q: Sanjana B asked on manufacturing/Europe growth, 2026 tech budgets, Cognition collaboration.

A: Salil spoke on manufacturing/Europe growth, discretionary spend, and Cognition partnership.

Q: Jas Bardia inquired about AI software engineers, impact on delivery, billing, hiring.

A: Salil said AI usage across industries, hiring plans, billing tied to value creation.

Q: Poulomi Chatterjee asked on AI acquisitions, talent pool.

A: Salil talked about AI partnerships and acquisitions, talent recruitment and compensation.

Q: Uma Kannan asked on AI GCC model, partnerships, work from office.

A: Salil spoke on AI GCC model progress, partnership plans, and flexible work model.

Q: Padmini Dhruvaraj asked on labor code impact on margins, appraisals, US credit card limit.

A: Salil spoke on US credit card impact, Jayesh on labor code impact and appraisals.