A very good evening everyone and thank you for joining us today at our fourth quarter financial results. My name is Rishi and on behalf of Infosys, I'd like to welcome all of you. Once again, apologies for the delay. As always, we request one question from each media house, but I know we're delayed, so we may accommodate a little more. We don't know. But with that, let me invite our chief executive officer, Mr. Salil Parekh, for his opening remarks. Over to you, Sal.
Thanks Rishi and thank you all for being here. Sorry we are late. We delivered a strong performance in financial year 2026. We had growth of 3.1% for the full year in constant currency terms. On Q4, our growth year on year was 4.1% in constant currency terms. We had strong growth in financial services, in communications, in manufacturing from the industry side and Europe the geography side. Large deals were very good, 14.9 billion for the full year, 3.2 billion for the fourth quarter. The full year was 28% larger than it was the previous year. We shared our AI strategy during the AI investor day a few weeks ago. We see a large addressable market for AI services across the six areas that we mentioned: AI strategy engineering, data process, legacy modernization, physical AI and trust. With our Topaz fabric platform for AI and our Cobalt platform for cloud, we have differentiated capabilities, the capabilities that are operational today and that are working with our clients across each of these six areas of the AI landscape. As we look ahead to the financial year 2027, we see large opportunities in AI services. We also see continued competitive intensity and we see an AI productivity impact. A combination of these things with a clear AI strategic roadmap and a real-world toolkit of Topaz fabric, we are well positioned to support a client's transformation technology and operations objectives. Our revenue growth guidance for the financial year 2027 is 1.5% to 3.5% growth year on year in constant currency terms. We expect acceleration of growth in financial services and in energy utility resources and services vertical. Our operating margin guidance for financial year 27 is 20% to 22%. With that, let's open it up for questions.
Thank you Salil. Joining Salil is Mr. Jesh Sanghvi, Chief Financial Officer, Infosys. The first question is from Ritu Singh from CNBC TV18.
Hi Salil. Hi Jesh. Salil, first on your guidance itself, 1.5 to 3.5%. If you could break up for us, there are a bunch of acquisitions you've made at the end of the quarter. By when do you expect them to close? Will it be sometime during the course of FY27 and if yes, how much of that is baked into these numbers? And especially on the discretionary spend environment, because we've heard from your peers like HCL Tech for instance talking about how there were two large US telecom clients that had cut down on spends, there were cancellations of two SAP projects and so on. Wipro again giving a similar sort of commentary. So what are you seeing from your clients and some of the verticals you had highlighted the last time that were seeing weakness, what sort of guidance you have there? Secondly, on your margin, 21%, if you could break up for us how much was the tailwind from currency etc., what portion have you reinvested, what the philosophy there is. And Jesh, 20,000 was the figure you gave us for hiring for the last fiscal, what's the plan for this year, what are the wage hikes that you've planned and the time period for that. And Sal, if I may, there's been some speculation about your tenure here at Infosys. Your current term ends in March next year. Has there been a discussion at the board level about a potential extension and would you wish to continue for a full term? What's been the talks around there?
So, let me start with the industry view on the guidance of the revenue. Jesh will give a little bit of the color with that acquisition what you mentioned, what the way we have made the guidance and some other market outlook. So what we are seeing right now is financial services, we are seeing an acceleration of our growth next year. So we had growth in financial year 26, we're seeing more growth in energy utilities services resources vertical, similar good, more growth there. What we are seeing in terms of projects, we see that at the AI investor day we shared that our AI services revenue was growing nicely. We see on the large deals the net new is pretty large for the full year at 55% so that gives us support for growth and we see the compression that we mentioned in that AI investor day and earlier just now as a combination. We are not seeing something that has unusually changed from that last quarter to this quarter in the sense these are the scenarios we were seeing, it's not either become more or less, it's that sort of a scenario. Good growth on those industries I mentioned, good growth both in the AI and compression and there's competitive intensity and all that put together with a little bit of like a color on the acquisition is where the guidance comes out. And then on margin also Jesh will give some view.
On AI for instance, you told us in your investor briefing that 5.5% of the revenue in the third quarter came in from AI, the total addressable market is about 300 to 400 billion. In the fourth quarter is there a number you could provide us, annualize what is the number you see, if there's more clarity you could give us and or what market share do you target from this 400 billion figure.
So we are targeting a very good market share from that number which was for 2030 what we had given the addressable market from an external study. The growth in AI services is very strong but we have not disclosed that revenue number externally yet. 5.5% in the third quarter is that number.
Yeah, in the fourth quarter, no, it's growing, it's much, much more, much more growth in the fourth but we're not giving the number but it's growing very nicely.
So it's higher than 5.5%?
I'll let Jesh answer the other questions.
Yeah. So, if you look at the revenue guidance and I'll just maybe come back to the full year revenue numbers, the 3.1% growth was after absorbing lower third party related revenue which was 1.1% and the lower on-site mix which was 70 basis points. So we should look at the revenue numbers in that context. Both of that impacted the revenue from the overall revenue growth perspective. In terms of the guidance for the next year, we had three acquisitions or two acquisitions and a JV that we announced last year. The acquisitions with an insurance company which is Stratus which is already closed and it's baked in in the guidance. What is baked in in the guidance is approximately 25 basis points or a quarter point of the guidance. The other acquisition was Optimum which is not baked in because we have not closed it yet. We are still awaiting certain regulatory approvals and once that is closed is when we'll bake in. The third one is a JV with an Australian client of ours which is also pending regulatory approvals right now. So we have not baked in both of that in the guidance at this point in time.
Sorry. So only Optimum is 25 basis points?
The Stratus is 25 basis points at this point in time.
The margin break up and the hikes.
Yeah. So if you look at the margins, the full year margins is at 21%, the quarterly margins also 20.9, very close to 21%. If you look at the puts and takes of the margin walk from the last quarter, we got 50 basis points impact from acquisition related amortization that we absorbed. There was a 30 basis points of one-off benefit that we got in Q3. So when you compare that's a headwind and 20 basis points on account of comp related matters. That was partially offset by 40 basis points of currency benefit and 30 basis points came from a Maximus performance.
Thank you. I think the question on hiring.
Yeah. And the last question was hiring. The last year we had announced 20,000 for FY26 and we have hired more than 20,000 freshers from the market. This year also we are expecting at least 20,000 freshers to be hired.
Right, thank you Ritu. We'll now move to Mani Dawi from ET Now.
Good evening Salil and Jesh, pleasure talking to you. My first question is on the margin sustainability where margins have remained resilient despite multiple headwinds. So what gives you confidence in sustaining the same going forward? And the next question would be on the global uncertainties which we have seen these days. So global uncertainties like the geopolitical tensions and cautious client spending, let's say what early signals are you seeing for FY27. Do you expect the growth acceleration or another year of consolidation moving ahead? Thank you.
Let me start on the margin. Jesh will have much more color. I think some time ago Jesh started the program on the margin expansion or margin protection and that is one of the main reasons why the company has been able to remain resilient on the margins. So we have been fairly consistent across the large number of years. The program is very strong and is being executed well. We will continue to see there are also great pressures but we are confident with the guidance that we've given this year for the margin between 20 and 22. And then Jesh will give a little bit more color. But on the global environment what you asked, I think what we are seeing there is, at the start of this year, at the start of the calendar year we were starting to see the global environment, the growth especially in our strong markets looking good and even in the markets where we are now making a bigger movement for example Japan and all was growing quite nicely. Now with the situation with the Iran war, there was a change in the economic environment. Now from what we are seeing, there seems to be paths towards things stabilizing. We hope everyone sort of gets there. From then what we understand, like just talking to people in the market and the clients, is that the underlying resilience of some of the economies where we have the big markets is pretty good. The economies are doing well, there's good investments, AI is growing well and we have a good strategic approach on AI services. So my sense is that will definitely help but we'll see how it plays out. So we've given the guidance of the growth based on what we are seeing today. We'll see whether some of this comes true or some of this changes as the year goes.
Yeah. If you look at the margin program and like Sal was saying, I think it's done well. In the first year we expanded margins by 50 basis points. This year while we have maintained margins at 21%, I think we have absorbed a lot of headwinds and we have also invested a lot in the business. Our sales and marketing cost has for instance gone up by 40 basis points. We have invested in all the AI related capabilities and the AI partnerships. We have invested in talent. So I think we have absorbed all of those and delivered 21% margin. That is what gives us confidence of way forward. But at the same time there are going to be headwinds, right. There is competitive intensity in the market. There is acquisition that we have done. The acquisition related cost will impact margins by another 60 to 70 basis points. So those are headwinds that we will have to absorb while we talk about the margin program and our endeavor is to improve margins on a medium to long-term period but this year we are confident of delivering 20 to 22%.
Thank you. The next question is from Chandra Shekhar from Moneycontrol.
Hi Salil. Hi Jesh. Sal, you mentioned BFSI and energy and utilities a couple of times. I just wanted to understand what is giving you so much of confidence there. And as Ritu pointed out, some of your peers have spoken about client specific issues and how discretionary spending continues to be a challenge. So what is working for you in terms of the normal business as well as AI business? And AI also, because you mentioned last time that it's now 5% of revenues for you, if you can give us a sense of where things stand now it'll be really useful. In terms of acquisitions, do you see opportunities in AI startups? Is that something that you will look at? And how do you see Mythos impacting your business? If you can give us some color on that. Jesh, some details on the wage hikes for this year. How are you thinking about it? And I think after five six quarters we've seen employee count actually decline by over 8,000. So why have the number of employees declined? Thanks.
So let me start on the financial services and that sort of environment what you mentioned. So what we are seeing is, and some of this we shared in that AI investor day, like if you look at many all of our industry groups with our largest clients we are already the AI partner of choice and that's giving us a lot of traction. Now you look, I mentioned financial services, energy, utilities but you look at manufacturing, you look at telco, some of the work we are doing in those industries, there are large programs in the pipeline for things which was within that six grouping. So take an example of building agents, take an example of legacy modernization. We are also seeing a lot of discussions with clients which are a combination of tech services and operations, a tech and ops type of businesses and there again we are in a good position which is in the pipeline. So that is giving us the feeling that this is looking similar to where we were, like it's not something has suddenly changed in that sense in that at least with our client base and so on at this stage what we see here. Then I think on acquisitions you've seen we did two acquisitions. The thing with that is, you know, we, the pipeline again, we have Jesh and Ravi are looking at a very strong pipeline but we have a very careful approach, strategic fit, cultural fit, value fit. So it has a lot of an integration, like we have to know how it's going to integrate into where and so on. So all that keeping in mind we could see suddenly a lot but suddenly it could be three quarters of nothing also but we are in it, meaning we are looking. And what we did on acquisition was like healthcare, you know, healthcare we see a good market, we have a good business, we think we can do more so it was a good way to expand and it's a good company there in the sense of we will be integrating and culturally it's aligned. Same on insurance, you know, that's a company which is working with the Guidewire platform package. So that is something which we are very keen on expanding. So like that acquisitions will continue. On Mythos, I think there are multiple things. So what, because not everything is released to everyone but we have some let's say good relationships with the company to understand a little bit from the outside. It is exposing more vulnerabilities than one thought possible previously. However, other models are also exposing vulnerabilities. A question of running those models in that way. My sense is it may also open up opportunities for work for Infosys which is to help clients who say look how can we make sure that you don't succumb to that vulnerability. So we are looking at it and both ways and my, it's early, very early discussions but my sense is if we build a good capability in that we could help our clients to say look let's make sure that your vulnerabilities are better and quickly protected.
AI revenue, yeah exactly.
Oh, right. Meaning we are not sharing the number but it's growing.
Meaning we are not sharing the number but it's growing.
Sharing because last quarter you disclosed for the first time. So why are you not disclosing it?
No, what we did was in the AI investor day, it was a strategic sort of a outlook. So we wanted to just make sure that we communicated that it is in a material way and it is growing nicely. At one stage we will but today we are not sharing it.
Has it touched double digit of your revenue like is it now 10% of Infosys revenues?
Is it 10% or 50%? We're not sharing the number.
I think the couple of questions for Jesh.
Yeah. So if you look at the headcount, our headcount sequentially has gone down by 8,000 employees. But if you look at on a year-on-year basis, it's still grown by 5,000. There's always some quarterly seasonality. But if you keep that aside for a moment, headcount is, you know, as a function of the number of people that you have, the utilization that you have, the volumes that you see. This quarter the volumes were softer and you know that equation is what we'll end up net hiring plus the fresher that you have in the system. So I think it's all the demand supply equation and that's how it'll play out, you know, the output is a result at the end of the day in my mind. So that's how the headcount will play out. You don't really think it's going to be a sequentially number which will keep going down, you know, at the end of the day it's one of the things. I think the way you should look at it is a full year basis where we have still grown 5,000 as a headcount. On the wage, we haven't really made a decision at this point in time in the quantum and the timing of it. Once we decide we will let you know.
Thank you. Thanks Chandra. The next question is from Shilpa Phadnis from the Times of India.
Hello sir. If succession planning at Infosys is a slow buildout, the archetype of the reinventor CEO is going to look very different, AI native, consulting led. Do you have some of the internal contenders for the next leg of succession? Some of them are in the room. Previously you disbanded the president structure. Do you think you're going to reintroduce that just to prop up the internal slate for the succession planning?
Okay. Sir, also if you can talk about if you just revisit your deal pipeline today, what part of it lends itself to AI deflation and how are you going to offset those especially when clients are very demanding when it comes to productivity gains.
So there, you know, what we shared in that AI investor day is how we are looking at it. We have really three areas which we see like growth areas. So one was we talked a little bit about the AI services which are growing quite nicely. One I mentioned the large deals and the net new part of the large deals which gives us the expansion, the next year revenue of that. Then the third which we have been working on internally and is growing well is we are expanding into clients where we have a smaller presence today but which are very strong relationships of Infosys. So this is different from the large deals which are with more larger presence and there we are seeing a very good growth. What Jesh mentioned, there are investments we've done especially on AI and on this program where we look at large companies where we have a smaller presence. So those are the three areas of growth and then what you mentioned is the AI productivity which is what clients are looking at and where we are participating. We have because of what we have built with the Topaz fabric a very good idea of what is doable now, what is doable in the future and a lot of the tech and ops deals bring that to play right away. Typically we are also seeing in those, not all but in many of those deals in the pipeline there is given the credibility of Infosys and trust we see something adjacent which gives us an expansion of scope. So while it's a productivity improvement in some but overall scope expansion or what they call the consolidation. So based on all of that first we grew in last year and if you sort of Jesh's points there were some additional things like grew even more than 3.1%. With that we are going to grow in terms of our forecast for next year and that shows us that while there is compression the growth part of our work is larger today than the compression which is why we are growing it.
Sir and one last thing on your Daimler account if you can help us, that was one of your flagship accounts. With that winding down if you can help us understand was the assessment largely around the capability gap there and how would you look at backfilling those revenues and was that factored in your guidance which is slightly broad-based for the current financial year.
So I have no specific comment on any specific client. But maybe on the manufacturing you have something on the guidance.
Yeah. So you know, manufacturing per se is going to be going through a challenging environment especially the auto, the European auto sector and within that we do have certain headwinds from a particular client which will wind down towards the end of the year. That is baked in in the guidance right now. So our guidance is two points generally and that is baked in already in the guidance, it's not an expanded guidance per se.
