Frontier Telos are built for constant change. One that's human-led and autonomous by design, by aligning teams around outcomes and empowering them with real-time intelligence. Frontier Telco navigating enterprise autonomy.
My name is Jameson Fowler. I'm the chief digital officer here at Sentara Healthcare in Virginia in the United States. I believe that we're in the abacus phase of the possibilities of AI and the companies who leverage AI effectively will be the companies who provide the greatest services to their constituencies. The pace of change is going to be so rapid that we need partners who operate at scale with expertise and thought leadership to help us keep pace with this tidal wave of technology that is coming towards us. When I look at AI, I think I have two primary concerns that we're trying to address. First of all, obviously is to treat the patient and member as a consumer. Healthcare tends to feel very disjointed. It's one of the most important things that happen in people's lives and yet can be one of the most highly regulated and disjointed experiences in our industry. We have a saying on the provider side of our industry called pajama time. And what a lot of folks don't know is that when a physician takes off the lab coat and heads home, they still might have three or four more hours of paperwork to do. As we continue to advance our digital strategy here at Sentara, our partnership with Infosys allows us to approach AI in a manner that's scalable and thoughtful. The collaboration between Infosys and Sentara allows us to deploy AI in ways that genuinely improve the way that our hospitals operate, the way that our members and our patients are served, and will make positive improvements in our community at the pace that AI is going to require us in the future.
Thanks. It's tricky out here. You're telling me. I can help you reach the top. Okay, come on. Let's go.
If you think about what our customers are used to in their day-to-day lives, everybody's interacting on mobile now. Everyone wants things instantly and AI is fueling a lot of that. I'm Michael Rutledge. I'm the CIO at Citizens Financial Group. Citizens Bank is a very well established bank, 200 years old. It's really a full service bank. You know, when I think about the journey we've been on, we've certainly been on a rapid modernization at Citizens. Over the last, you know, seven years, we implemented what we call our next generation strategy to really modernize the bank. You know, we've moved 100% of our applications into the cloud. Infosys has been a terrific partner and certainly the AI journey, but they've been instrumental in really helping us think through what we need to do there.
I am Bal Mukunla. I am chief transformation officer for financial services sector globally within Infosys as a strategic partner of the bank. We already have been using our Leap platform. We're using it further to expand it in the AI landscape. We have also set up AI innovation hub in Bangalore which can also scale now for the AI use cases the banks as we think about what tools to use in the landscape and how to improve software productivity. We've actually developed an AI and agentic AI platform that is really agnostic to provider so I can leverage the best in breed technology, didn't get locked into one vendor or another and certainly with their Leap Topaz platform Infosys have helped us really think through how should we design that, how should we think about guardrails, logging, how should we think about security so they've definitely helped us in those areas.
Frontier Telos are built for constant change. One that's human-led and autonomous by design. By aligning teams around outcomes and empowering them with real-time intelligence. Frontier Telco navigating enterprise autonomy.
My name is Jameson Fowler. I'm the chief digital officer here at Sentara Healthcare in Virginia in the United States. I believe that we're in the abacus phase of the possibilities of AI and the companies who leverage AI effectively will be the companies who provide the greatest services to their constituencies. The pace of change is going to be so rapid that we need partners who operate at scale with expertise and thought leadership to help us keep pace with this tidal wave of technology that is coming towards us. When I look at AI, I think I have two primary concerns that we're trying to address. First of all, obviously is to treat the patient and member as a consumer. Healthcare tends to feel very disjointed. It's one of the most important things that happen in people's lives and yet can be one of the most highly regulated and disjointed experiences in our industry. We have a saying on the provider side of our industry called pajama time. And what a lot of folks don't know is that when a physician takes off the lab coat and heads home, they still might have three or four more hours of paperwork to do. As we continue to advance our digital strategy here at Sentara, our partnership with Infosys allows us to approach AI in a manner that's scalable and thoughtful. The collaboration between Infosys and Sentara allows us to deploy AI in ways that genuinely improve the way that our hospitals operate, the way that our members and our patients are served, and will make positive improvements in our community at the pace that AI is going to require us in the future.
Thanks. It's tricky out here. You're telling me. I can help you reach the top. Okay, come on. Let's go.
If you think about what our customers are used to in their day-to-day lives, everybody's interacting on mobile now. Everyone wants things instantly and AI is fueling a lot of that. I'm Michael Rutledge. I'm the CIO at Citizens Financial Group. Citizens Bank is a very well established bank, 200 years old. It's really a full service bank. You know, when I think about the journey we've been on, we've certainly been on a rapid modernization at Citizens. Over the last, you know, seven years, we implemented what we call our next generation strategy to really modernize the bank. You know, we've moved 100% of our applications into the cloud. Infosys has been a terrific partner and certainly the AI journey, but they've been instrumental in really helping us think through what we need to do there.
I am Bal Mukunla. I am chief transformation officer for financial services sector globally within Infosys as a strategic partner of the bank. We already have been using our Leap platform. We're using it further to expand it in the AI landscape. We have also set up AI innovation hub in Bangalore which can also scale now for the AI use cases the banks as we think about what tools to use in the landscape and how to improve software productivity. We've actually developed an AI and agentic AI platform that is really agnostic to provider so I can leverage the best in breed technology, didn't get locked into one vendor or another and certainly with their Leap Topaz platform Infosys have helped us really think through how should we design that, how should we think about guardrails, logging, how should we think about security so they've definitely helped us in those areas.
Frontier Telos are built for constant change. One that's human-led and autonomous by design. By aligning teams around outcomes and empowering them with real-time intelligence. Frontier Telco navigating enterprise autonomy.
My name is Jameson Fowler. I'm the chief digital officer here at Sentara Healthcare in Virginia in the United States. I believe that we're in the abacus phase of the possibilities of AI and the companies who leverage AI effectively will be the companies who provide the greatest services to their constituencies. The pace of change is going to be so rapid that we need partners who operate at scale with expertise and thought leadership to help us keep pace with this tidal wave of technology that is coming towards us. When I look at AI, I think I have two primary concerns that we're trying to address. First of all, obviously is to treat the patient and member as a consumer. Healthcare tends to feel very disjointed. It's one of the most important things that happen in people's lives and yet can be one of the most highly regulated and disjointed experiences in our industry. We have a saying on the provider side of our industry called pajama time.
A very good evening everyone and thank you for joining Infosys's first quarter financial results. My name is Rishi and on behalf of Infosys I'd like to welcome all of you today. I would first like to invite our chairman Mr. Nandan Nilekani and our chief executive officer Mr. Salil Parekh for an important announcement which will then be followed by our business updates. Kindly note Nandan will not be taking any questions. Sir over to you.
Thank you. It's great to be here all of you. I thought I would make an important announcement. As you know, Salil has been CEO for almost 10 years. He came, I don't know how many were there 10 years back, but he came in slightly unstable and he got in focus to the company from 10 billion to 20 billion, completed the transformation for the digital era and started the implementation and the service comes to an end on March 31st 2027. And has been looking at his succession and today I'm delighted to tell you that the board has appointed his successor, a new CEO who will take over on April 1st 2027. He's from Infosys. He's been somebody who is a true blue Infoscion. He has worked in Infosys for 31 years. He's worked in every part of Infosys, be it in delivery, be it in sales, be it in account management, starting a new DC in Bhubaneswar, everything. And he's someone who I think everybody likes, respects. He's an uncomplicated guy who focus on what needs to be done. His name is Ashish Dhawan. So Ashish is based out of LA. He's been there for some time. He will move back to India and he will in the next two three months he will get do some CEO coaching or whatever and then from October 1st Salil will take him on as his mentee and prepare him for the role so that he can take on this role of managing a complex 20 billion company in a very, you know, transformational time. So I just wanted to let you know that Ashish will be the new CEO and I'd now like to request Salil to say a few words about Ashish.
Thanks Nandan. So first welcome everyone. This is an incredible time for us as Nandan shared. I've known Dhawan for a very long time working closely with him. A huge congratulations to him and in making sure everything he does works well into the future. He's had an amazing portfolio the way he's built it, the way he's crafted it in terms of the clients he's worked with, in terms of the people he's worked with and there's a tremendous set of opportunities from that onto the overall company, the learnings from that as we apply to the overall company. Ashish Dhawan also a very collaborative individual working well with all of the various components within Infosys and having been here for a long time has made sure he's learned everything and also understood how all different parts of the company work. So huge huge congratulations to him and looking forward to working with him as we do the transition over the next few months.
I now invite Jayesh to join Salil on stage to commence the quarter updates. As always for this section I will request one question from each media house. But with that let me invite Salil for his remarks. Over to you Salil.
Thanks Rishi and thanks Nandan for that. So good afternoon everyone. Thank you for being here. Our revenue growth for Q1 was at 2.4% year-on-year and 1% quarter-on-quarter in constant currency terms. We had a one-time revenue impact of a client decision during the quarter. Our AI services revenue was 8.2% of overall revenue in Q1. Our large deals 3.6 billion at 61% net new, operating margin at 21.1%, free cash flow at $955 million. Our earnings per share were up 15% year-on-year in rupee terms. We saw strong acceleration in our AI work as I shared earlier with AI revenues at 8.2%. This is growing at double digit quarter-on-quarter for the last several quarters. With this momentum, we see long-term relevance of our services for our clients which are all driven through AI. From our delivery team, over 80,000 employees are working on coding tools such as Claude, Code or Codex or several others for our clients for our work inside. We see strong traction across the six areas of growth. The new growth that we see in AI are hexagon for AI strategy. We see client work for example in building agents for processes, work on data modernization and using coding tools. We are building a team of frontier engineers to support our client work. Our plan is to have 6,000 frontier engineers over the next few years. We built a platform Topaz Fabric that enables our clients to get the benefits of AI while keeping the sovereignty of their own data within their company. Our clients are able to work with any foundation model, closed, open weight or on the cloud on their own servers. Our clients are able to optimize token cost which has become very critical now to make sure it's the appropriate for the type of work they're doing and not out of hand. Overall we continue to see the macro environment remaining uncertain. With our Q1 results and a view for the rest of the financial year we are changing our revenue growth guidance to 1.5% to 3% year-on-year growth in constant currency terms. Our operating margin guidance remains the same at 20% to 22% operating margin. Thank you and with that let's open it up for questions.
Thank you Salil. We will now open the floor for questions. The first question is from Ritu Singh from CNBC TV18.
Thank you very much. I know you've asked for one question but if I may Salil, you've given us a big news in this quarter. You know to begin with, you know since you speak about how you've brought in and you know Mr. Nilekani spoke about how you brought in calmness at a time when you know the company was going through quite a bit even now you're speaking of this global uncertainty because of which you've had to again, you know, pull down your guidance as well why decide to leave at a time like now instead of perhaps, you know, looking at an extension. I wanted to understand and with the new CEO coming in, any mandate for the new CEO that you could highlight for us more clearly and perhaps that's something the investors would also want to know. And then on the earnings of course, you know, the reason for this revision down is, you know, if you could give us a little more color on what you're seeing in the environment, where's the weakness, where's momentum picking up. You know, some of your competitors like TechM have been talking about irrational competitive pricing. Wipro's also, you know, spoken about that a bit. So, what are you seeing in the environment and with a 1% kind of a growth in the first quarter? Do we assume the second half will be meaningfully better if you to reach that upper end of the 3% guidance you're speaking about? And just on AI if you could update us, you know, how the revenue is moving is it proceeding as per, you know, what your expectations were any updates you could share on that front as well as far as revenue contribution from AI is concerned.
So let me start with the first one. I think you've had that question collectively for some time now we have the answer. As I look at it I'm really delighted with the role I've played here. We've taken the business as Nandan said from 10 billion to 20 billion. It's working very well, the digital transformation now the AI transformation is launched so I'm really delighted working well with our clients and with an incredible team that we have inside so that's what I would like to say on the first one. On the second, I think what we are seeing is an environment where a little bit sort of combining the third piece as well AI services is growing extremely well. Double-digit growth if you look at it like quarter-on-quarter. If you look at it over several quarters in the past, we see that those six areas that we have identified like the process, the agents, the data, the engineering, all of those are working extremely well with our clients. So we are now looking at revenue growth in each of those areas. Our pipeline is even larger than the 8% which is the revenue today. So we see good traction in that. Therefore, we feel there's a good long-term relevance of our services to our clients because this is going to continue to grow as we look out into the future. Now the question on the guidance, we had a one-time impact that I shared with a client decision. There are factors related to what is going on in the macro environment which we talked about. There are factors related to the volumes in the quarter. But we look at the large deal number 3.6 billion 61% net new. So we see a lot of support in that. We see I think there are six of those deals which are consolidation deals that we have been the beneficiary in as an example. There are four deals which are just under the $500 million range. So just like a mega deal. So we see, you know, really good traction. The pipeline there is looking good. So all the when we balance we decided to look at our guidance in a different way. The upper end of the guidance was really based on if the macro was improving. We now see the macro it may improve but not at the level that we were thinking initially and so that's how we really constructed the guidance but we have tremendous view that this is a good place for Infosys to operate with AI the way it's looking and all of the work that we're doing on large deals gives us continued traction.
Questions of why you didn't decide to stay on and what the mandates are and, you know, better could clarify all of those points.
So there, I think as I shared earlier, you know, my sense is we've had a tremendous, I've been fortunate to have a tremendous sort of opportunity and what we've done at Infosys over the last many years and having taken the business from about 10 billion to 20 billion. So it's been an incredible journey and that, you know, with the team we have and with the client work we've done that's been a fantastic sort of an outcome. On the mandate I think our AI strategy is well put together and Dhawan has been part of that so our thinking is, you know, that strategy we want to execute on. Of course there will be some things which we will look at in terms of fine-tuning but that's a natural course of evolution but the strategy is very well in place to make sure that that goes into the next phase. Making sure, you know, the partnerships we have with the various models, the Topaz Fabric that we built today on AI it's important that clients see that their own data remains sovereign to them and the way we build Fabric it allows for the clients to do that no matter which model they're using and so that's a very big differentiator we have. For example in AI the token cost, you know, that will be an important factor we think in the future and we have built like Fabric in a way that depending on the task you are using the foundation model for it will use a right model so you don't have to pay for the most simple task like an expensive token cost and so on so we think we're in good position in that. In terms of second half, first half I think we have the guidance for the full year. We expect the normal seasonality that will come. We're not expecting anything unusual there.
Competitive pricing in the market that, you know, some of your peers have spoken about.
Yeah so maybe they are seeing that you should check with them.
Thanks, thanks Ritu. The next question is from Rishabh Shah from Moneycontrol.
Salil, if you could tell us your biggest achievement and what will you miss the most and what's next coming for you? On the performance, quarterly performance how has been the TCV conversion because that's a worry that investors have, you know, on and the second and the third question is two of your peers have highlighted that AI revenue is slightly lumpy and it could be one or two quarters post which you'll have to go and get those deals again so is that something that Infosys is also seeing. Thank you.
So let me start with the second one I'll come back to the first. I think the TCV conversion we see pretty good way of converting. Now what tends to happen is like when you have a consolidation deal, the conversion comes a little bit quicker. When you have a transformation deal, it's a little bit sort of spread out. But that's the normal sort of conversion we see. We don't see that it's suddenly changed like in the last quarter, couple of quarters or so. On the AI revenue, I think it's moving so quickly that it is a bit up and down in a quarter by quarter basis. So our thought is, you know, that's why we saying like look at over the last several quarters we see that double digit type of growth quarter-on-quarter and we will see sometimes it could be a little bit faster but it's growing nonetheless. Meaning if you look at the secular trend we see that is pretty strong and that gives us a little bit of the view that long-term, you know, there's a relevance of what we are doing on AI for the clients. For me I think I'm very focused on, you know, what we have to do here at Infosys. We have a lot of things to get done. I want to make sure we remain in the leadership position. We win in the market. We are leading in AI and I get a smooth transition done. So that's really my focus and after that I'll see what else happens.
Thanks Rishabh. The next question is from Mani Dawar from ET Now.
Hello good afternoon Salil and Jayesh. Nice talking to you Salil. My questions are on client spending, large deals and competitive positioning. So talking about the client spending, client budgets remain selective across industries. Have you started seeing any improvement in discretionary technology spending or are enterprises still prioritizing cost optimization over transformation? Talking about the large deals, Infosys has maintained a healthy large deal pipeline. So how confident are you that these deals will convert into faster revenue growth? Also, every global IT company today is talking about AI. What would you say is Infosys's biggest competitive advantage in this AI-led technology cycle? And please start with this one. Which moment during your tenure best reflects the values and culture of Infosys? Thank you.
Okay, there was a few. So I'll start with the first was a conversion of the TCV discussion. And I think we see that, you know, the large deals we see a good traction of those. The values over the last few quarters have been strong. This quarter was pretty good. We see the pipeline to be pretty good on the large deals and we feel there's a benefit of the consolidation that we are seeing in some of the large deals which is definitely helping us as we go through it. The conversion whether it's faster or slower it's more I think it's at the same type of a level and we will convert those into revenue with 61% net new it already looks pretty strong in terms of the net new work which we'll see and obviously the renewals are going pretty okay as well. On AI I think there's a huge differentiation that I find from what we are sort of working on. First we have a very clear AI strategy with the six areas of focus. We are investing in it. We've actually taken and Jayesh has shared in the past he'll share also today that we have invested in building out AI capability. We have as I shared earlier 8% revenue growing double digit Q-on-Q over the last several quarters because we have a good pipeline in that area. Then you look at some of the stats, we have 80,000 people working on the tools today for client work. It's not just training and so on. Then what we built with Fabric I feel is very differentiated because it allows clients to maintain control of their data, maintain control of what they want to do with the AI and still use the different models, use lower cost. We have a harness through which they can leverage what they want to achieve with the foundation model. So that is a significant move up in terms of differentiation that we've seen. I think in terms of values, you know, my sense has always been in Infosys it has incredible values and it's really been sort of a privilege to be associated with that and learn from it and contribute to it. So in many ways it's a great great sort of fortunate thing that that could happen in the way that it has happened.
Thank you. The next question is from Shilpa Phadnis from the Times of India.
Can you please give us some color on how your GCC portfolio is doing because some of your peers who are slightly late starters are catching up. They're already looking at a billion dollar in revenue run rate. So I just wanted to understand from you how it's doing. I mean is there a milestone that you have touched and secondly there's also a concern with Vanguard and Daimler and lot of other companies are chipping into the space. They're setting up their own GCCs. How much of that compression are you seeing in the market?
So GCC in fact my sense is you might have seen we launched the like a AI GCC concept some time ago and that we had a client event a few months ago where all the leading GCCs of the country their leadership teams were here in Bangalore on our campus and we did a like a one-day session sharing with them what the latest developments were in overall and also in the AI GCC. So our traction on GCC is looking very strong. We don't like externally share the milestone but our revenue growth is good. Our work with them is good. In the GCC there's always a life cycle. So there are some which are expanding well and there are some in the past where they have exited and we've sometimes participated in that and so on and that continues but the overall GCC work both within the GCC and the work we are doing with them I think both are growing pretty nicely.
I had two questions sir. When do you think AI-led revenues will be material enough to offset productivity-led compression that customers are seeing in the market?
So I think my sense is the AI-led revenues are extremely significant at 8% already and if you look at the growth trajectory and if we execute on that well and the growth trajectory continues we can see now a long-term relevance of AI revenues to our clients from what we are doing. The productivity will also continue but I think it's both of those things because like when we share our strategy and that hexagon and we had outlined like a $300 billion market opportunity addressable market. So that's all new revenue and also the productivity will happen but the significance I think already we can start to see.
And if I can just add, if you look at when we launched our hexagon in February of this year our AI revenue for Q3 was 5.5% of our revenue. Today it's already at 8.2%. So it's already significant. It's growing at a very fast double digit over double digit growth right and at that pace it is already becoming a growth engine in a way. So that little said it's becoming, you know, a long-term play in the way.
But this is not reclassification in any format right?
Okay okay one last thing sir on the status of hikes. You know Infosys has not called that out yet so where are you on that and secondly also on forward deployed engineers there's a lot of talk in the tech ecosystem about this but how difficult is it for a services company to, you know, sort of plug FDEs into the existing workflows. There are several challenges that companies are facing.
Let me start with the second one. We'll come back to the first. On frontier engineers, we have now have a very good plan which has been put in place some time ago to scale that up. We have a lot of capability within
Infosys which are doing similar work. We are making sure that it works in the way that the frontier engineer needs to work with clients. Today we've set the objective of 6,000 to make sure that the teams can work with different clients to make the impact. We feel we have a good understanding of how that works because the capability is really the engineering plus the business context and that's something that Infosys was good at even before the AI wave of work had started and so we are making sure that that becomes very much part of the future. In that, on the compensation increases, we will roll out our compensation increases in October and January in two parts and that's part of something internal that we have announced now.
Yeah. With most of the employees getting increase in October and the senior employees will get it in January.
Thanks Shilpa. The next question is from Avi Das from Business Standard.
