Infosys Limited reported Q3 FY26 revenue of $5,099 million, a 1.7 % year‑over‑year increase in constant currency and a 0.6 % sequential rise, bringing total revenue to ₹45,479 crore. Adjusted operating margin expanded to 21.2 % from 20.8 % in the prior quarter, while IFRS operating margin stood at 18.4 %. Free cash flow reached $915 million, equal to 112.8 % of adjusted net profit, and the company generated $965 million in adjusted free cash flow. Net profit fell to ₹6,654 crore, down 2.2 % YoY and 9.6 % QoQ, largely due to a ₹1,289 crore exceptional charge related to new labor codes.
The revenue lift was driven by strong demand in the financial services segment, which contributed 28.2 % of total revenue and grew 4.8 % YoY. Manufacturing, communication, and retail also posted solid growth of 10.8 %, 11.6 %, and –3.8 % respectively, while hi‑tech and life sciences saw modest declines of 2.6 % and 3.1 %. Infosys’s AI‑first strategy, highlighted by the Topaz platform, helped secure large deal wins totaling $4.8 billion in total contract value, reinforcing the company’s position as a preferred AI partner for enterprise clients.
Margin expansion in the adjusted figures reflects a favorable mix shift toward higher‑margin AI and consulting services, offsetting cost inflation in sales and operating expenses. The 0.2 % sequential rise in adjusted operating margin contrasts with the 0.2 % contraction in IFRS margin, which was pressured by the labor‑code charge and higher cost of sales. Management noted that the exceptional item reduced net profit but did not materially affect operating performance, as the core operating margin remained robust.
Net profit decline was primarily a one‑time effect. The ₹1,289 crore labor‑code charge, recorded as an exceptional item, reduced earnings, while cost inflation in sales and operating expenses added pressure. Despite the hit, the company’s core profitability remained strong, with adjusted operating margin and free cash flow both improving year‑over‑year.
Infosys raised its FY26 revenue guidance to 3.0 %–3.5 % in constant currency, up from the previous 2 %–3 % range, and maintained its operating margin guidance at 20 %–22 %. CFO Jayesh Sanghrajka said the guidance reflects “strong demand in financial services and a healthy pipeline of large deals.” CEO Salil Parekh emphasized that the company’s AI‑first strategy continues to drive market share gains and that reskilling initiatives are accelerating adoption of AI solutions across clients.
The market reacted positively, with Infosys ADRs surging over 8 % on the day of the results. Analysts cited the upward revenue guidance, the robust large‑deal pipeline, and the company’s continued AI leadership as key drivers of the rally. The beat in revenue and the guidance upgrade signaled renewed confidence in the company’s growth trajectory, despite the net‑profit decline caused by the one‑time labor‑code charge.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.