Infosys Q2 FY27 Results: AI Revenue Reaches 10.5%

Quarter highlights

Infosys reported 1.5% year-on-year revenue growth in constant currency terms for the second quarter of FY27. Sequential constant-currency revenue growth was 1.2%. The company announced the results for the quarter ended September 30, 2026, on October 23, 2026. Management identified AI revenue and large deal wins as the key features of the quarter. AI revenue accounted for 10.5% of company revenue, compared with 8.2% in the preceding quarter. Operating margin remained stable at 21%. Free cash flow for the quarter stood at $0.922 billion. Infosys also revised its full-year constant-currency revenue growth guidance to 1% to 2%.

AI revenue gains share

AI revenue grew 29% sequentially during the quarter, according to CEO and Managing Director Salil Parekh. Its share of revenue increased by 2.3 percentage points from the previous quarter. The disclosure indicates that AI-related work became a larger part of Infosys' quarterly revenue mix. Management did not provide an absolute AI revenue figure in the earnings-call remarks. It also did not break down AI revenue by industry, geography, or client type. Still, the sequential growth rate was materially higher than the company's overall sequential constant-currency revenue growth of 1.2%. This makes AI-related engagements an important disclosed contributor to the quarter's performance. The revenue-share metric will remain relevant for investors tracking the scale of AI adoption in Infosys' service portfolio.

Large deals total $5.2 billion

Infosys recorded large deal wins worth $5.2 billion in Q2 FY27. The total included two mega deals. One was a net-new contract valued at more than $2 billion with a large international company. That contract has a seven-year duration. Management said it is expected to contribute more than 1% to revenue growth in the next financial year. The second mega deal was a $1 billion renewal. Infosys said its large-deal pipeline remained healthy and included other mega deals. No further client names, sector details, or deal start dates were provided during the remarks.

Financial metrics at a glance

Margin and cash flow remain steady

Operating margin was 21% in the second quarter. This was within Infosys' full-year operating margin guidance range of 20% to 22%. Management described the quarterly margin as stable. Free cash flow was $0.922 billion, which the company described as strong. These figures show that Infosys reported stable profitability and cash generation alongside modest constant-currency revenue growth. The company did not provide additional operating-cost or working-capital details in the supplied earnings-call extract. It also did not disclose a quarter-on-quarter comparison for free cash flow. The reported metrics nevertheless provide the main financial markers cited by management for the quarter.

Revised FY27 revenue outlook

Based on its Q2 performance and revised expectations for the rest of the year, Infosys set FY27 constant-currency revenue growth guidance at 1% to 2% year-on-year. The operating margin guidance was retained at 20% to 22%. The revenue outlook places the company's expected full-year growth range close to its reported first-half-quarter growth rate, though the call extract did not give first-half figures. The retained margin range signals no change in the profitability framework communicated for the year. Guidance is expressed in constant currency, which excludes the effect of exchange-rate movements from the reported growth measure. Investors will assess later quarterly updates for progress against both ranges. Management did not provide a numerical outlook for free cash flow or AI revenue share for the full year.

Comparison with earlier Q2 disclosures

Infosys' FY27 Q2 growth rates were lower than figures cited in the supplied FY26 and FY25 Q2 call excerpts. In Q2 FY26, the company reported 2.2% sequential and 2.9% year-on-year constant-currency revenue growth. In Q2 FY25, it reported 3.1% sequential and 3.3% year-on-year growth in constant currency. The FY27 quarter, however, included a larger disclosed large-deal total of $5.2 billion. The FY26 extract cited $3.1 billion in large deals, while the FY25 extract cited $2.4 billion. These are company disclosures from different periods and should not be treated as a like-for-like measure of future revenue. Deal values can differ by contract duration, scope, renewals, and net-new work.

What the deal mix means

The more than $2 billion net-new agreement is notable because Infosys expects it to add more than 1% to revenue growth in the next financial year. Its seven-year duration also gives the contract a longer delivery horizon than a short-term assignment. The $1 billion renewal demonstrates continuing work with an existing customer, although the call extract did not identify the client. Together, the two mega deals represented a significant portion of the $5.2 billion quarterly large-deal total. A healthy pipeline with additional mega deals was also cited by management. But a pipeline is not the same as signed business, and the company did not provide its value. The contribution from signed contracts will depend on their implementation and revenue-recognition schedules.

Investor focus after the earnings call

For investors, the Q2 FY27 update combines modest overall growth with rapid sequential expansion in the disclosed AI revenue category. The increase in AI revenue share to 10.5% gives a measurable indicator of the business mix discussed by management. Large deal wins may support future revenue, especially the net-new seven-year contract expected to contribute in the next financial year. At the same time, Infosys' 1% to 2% full-year constant-currency growth guidance sets the stated operating context for the remainder of FY27. The stable 21% quarterly operating margin remains inside the company's 20% to 22% target range. Free cash flow of $0.922 billion adds a cash-generation measure to the quarterly update. Infosys said the call replay would be available until October 30, 2026, and the archived webcast and transcript were scheduled to follow the event. Subsequent company disclosures will provide the next confirmed updates on guidance delivery, deal execution, margins, and AI revenue trends.