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Infosys Q1 Earnings Miss Estimates, Revenues Increase Y/Y
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Key Takeaways
Infosys' Q1 earnings rose 3.8% and revenues gained 2.8%, but both fell short of estimates.
Soft volumes, modest pricing gains and a client program termination weighed on Infosys' revenue growth.
Infosys narrowed FY27 revenue growth guidance to 1.5-3%, while keeping margins at 20-22%.
Infosys (INFY - Free Report) 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.
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' Cash Flow Details
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 Updates FY27 Guidance
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.
INFY’s Zacks Rank and Stocks to Consider
Currently, Infosys carries a Zacks Rank #4 (Sell).
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.
View the Zacks #1 Rank List
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Infosys Q1 Earnings Miss Estimates, Revenues Increase Y/Y
Key Takeaways
Infosys (INFY - Free Report) 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 and EPS Surprise
Infosys Limited price-consensus-eps-surprise-chart | Infosys Limited Quote
Infosys’ Q1 Details
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' Cash Flow Details
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 Updates FY27 Guidance
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.
INFY’s Zacks Rank and Stocks to Consider
Currently, Infosys carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader Zacks Computer and Technology sector are Analog Devices (ADI - Free Report) , Applied Materials (AMAT - Free Report) and Cisco Systems (CSCO - Free Report) , 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.