Mphasis Q4 FY26: AI-led pipeline, $2.1bn TCV

What Mphasis reported for Q4 and FY26

Mphasis announced results for the quarter and financial year ended March 31, 2026, highlighting higher deal wins, a larger AI-led pipeline, and steady margins. Management said sustained investment in AI and a new IP platform helped expand the company’s pipeline to 2.6 times its initial size since the launch of “Emphasis AI”, reaching an all-time high by the end of March. The company also pointed to a structural change in demand, with 69% of its pipeline described as AI-led.

On deal wins, Mphasis reported its highest-ever annual net new total contract value (TCV) of over USD 2.1 billion, a 68% year-on-year increase. In Q4 FY26, the company reported net new deal TCV wins of USD 407 million, including four large deals, with 64% of wins described as AI-led.

Pipeline expansion and what is driving it

Management attributed the pipeline expansion to “new IP-led solutions” embedded across offerings and supported by a “full stack AI approach.” The company said overall pipeline increased 38% year-on-year, with momentum across verticals.

Within segments, it said the VFS segment led with an 89% increase, and that expansion continued across non-BFS sectors as well. From a solution mix perspective, Mphasis pointed to modernization and “ZAP archetypes” as the strongest drivers of pipeline growth, describing them as early-stage opportunities as clients re-architect their technology and operating models.

The company also framed the pipeline as broadly distributed across deal sizes. It said large deals with total contract value above USD 20 million grew 40%, while midsize and smaller deals below USD 20 million increased 34%, indicating AI-related transformation demand across enterprise sizes.

Deal conversion: record annual TCV and Q4 wins

Mphasis said pipeline strength is translating into “tangible outcomes,” with annual net new TCV above USD 2.1 billion. It also highlighted client additions in higher annualized categories, stating it added four new clients in the USD 20 million category, two in the USD 50 million-plus category, and one each in the USD 75 million and USD 100 million-plus categories.

In the quarter, it reported USD 407 million in net new deal TCV wins. The company described AI as a central driver in deal conversion, with 64% of Q4 wins being AI-led.

Revenue performance: Q4 FY26 and direct business mix

For Q4 FY26, Mphasis reported revenue of USD 463 million, up 2.5% quarter-on-quarter and 7.1% year-on-year in constant currency terms. For the full year, it said revenues grew 6.7% in constant currency terms.

The company emphasised the role of its direct business. Direct revenue for the quarter was USD 456 million, contributing 98.6% of total revenue and crossing an annualised run rate of USD 1.8 billion. Direct revenue grew 3.3% sequentially and 9.2% year-on-year in constant currency during the quarter, and 8.7% for the full year.

Separately, the provided results summary also stated that full-year revenue grew 11.6% year-on-year on a reported basis, and Q4 revenue increased 14.4% year-on-year, alongside a 6.0% sequential rise in Q4.

Service lines: enterprise apps growth, non-core scale-down

Mphasis said enterprise applications remains its core growth engine, contributing 76.5% of total revenue. Direct revenue in this service line grew 5.1% sequentially and 14.8% year-on-year in constant currency terms, which the company linked to AI-led modernization programs.

It also reported that the “IDEO” service line declined 21.6% year-on-year, attributing the drop to a strategic decision to scale down a non-core ATM business and reallocate resources toward higher-value AI opportunities.

Vertical performance: BFSI leads, TMT softness, healthcare boosts “Other”

Mphasis said BFS and insurance continued to lead growth, driven by execution and rising adoption of AI-led transformation programs. It highlighted AI-driven decisioning use cases across underwriting, claims, and risk operations as a key area of traction.

For TMT, management noted near-term softness due to project completions and delayed decision cycles amid macro and geopolitical uncertainty. It said it expects this segment to return to sequential growth in coming quarters.

The “Other” segment grew 5.3% sequentially in constant currency terms, driven by recent large deal wins in healthcare.

Client concentration and mining: top accounts expanded

Mphasis reported stronger growth in large accounts. The top 10 accounts grew 13.7% year-on-year and 3.6% sequentially, while the next 20 accounts grew 15.2% year-on-year and 3.3% sequentially. It also said its top client outperformed company average growth for the third consecutive quarter in Q4.

Management said it is proactively engaging these clients with AI-led propositions and cited participation in emerging spend areas such as SDLC transformation, AI infrastructure buildouts, and modernization of foundational tech stacks.

Margins, profit, EPS and cash flow

Mphasis said it continued to operate within its stated margin band while investing for growth. Q4 FY26 EBIT margin expanded by 20 basis points sequentially to 15.4%, while full-year EBIT margin remained stable at 15.3%.

Operating profit for the quarter grew 7.2% quarter-on-quarter and 15% year-on-year to INR 6,525 million. EPS rose 8.6% sequentially and 13.7% year-on-year to INR 26.7.

Operating cash flow for the quarter was USD 21 million, which management said was temporarily impacted by around USD 17 million due to system-related delays in customer remittances. It said collections were realised in early April, and that normalized operating cash flow for the quarter was approximately USD 38 million.

Dividend and margin band reiterated

The board recommended a dividend of INR 62 per share for FY26. The company reiterated its EBIT margin band of 14.75% to 15.75%, and management commentary referenced continued investment in its “NIO” platform and AI stack buildout, particularly in decision intelligence.

The summary text also stated that Mphasis completed the acquisition of Theory and Practice (TAP) to enhance decision intelligence capabilities.

Key numbers at a glance

Market impact: what the disclosures signal to investors

The numbers emphasise two themes investors typically track in IT services: deal momentum and conversion into revenue. Mphasis linked record annual net new TCV (over USD 2.1 billion) and the Q4 win flow (USD 407 million) to its AI-led positioning, and also reported a pipeline that is now predominantly AI-led (69%).

At the same time, the quarter’s revenue growth in constant currency was described as 2.5% sequential and 7.1% year-on-year, while direct revenue stayed dominant at 98.6% of total revenue. Margin expansion in Q4 to 15.4% and the reiterated 14.75% to 15.75% band provide a defined profitability framework alongside continued platform investments.

Analysis: why the AI-led mix matters in this cycle

Mphasis is framing AI demand as a “structural shift” in client buying, pointing to the share of pipeline and wins that are AI-led. The company’s disclosures also suggest the AI push is not restricted to mega contracts, with growth reported in both deals above and below USD 20 million.

The concentration of growth drivers in enterprise applications, and the scale-down of a non-core ATM business within the IDEO service line, indicates a portfolio tilt toward areas the company associates with AI-led modernization. Sector commentary, including BFSI strength and healthcare-related wins in the “Other” segment, shows where Mphasis is seeing deal traction, while TMT softness highlights that decision cycles remain uneven in parts of the market.

Conclusion

Mphasis ended FY26 with record net new TCV above USD 2.1 billion and said its pipeline has expanded sharply since the launch of its AI initiatives, with 69% now AI-led. The company said it will keep investing in its platform stack, focus on pipeline-to-revenue conversion, and maintain margins within its stated band as it enters FY27.