Infosys Limited (NSE:INFY) revised its fiscal 2027 constant-currency revenue guidance downward to a range of 1.5% to 3.0%, narrowing the upper end from the previous 3.5%. The adjustment came despite a significant surge in artificial intelligence-related revenue, which initial estimates put at roughly $417 million for the June quarter—a 49% increase from the December quarter.
The company's U.S. American Depositary Receipts fell 3.8% to $10.52 in after-hours trading following the announcement. The Indian stock market had already closed before the earnings release, with Infosys shares ending the regular session at 1,047.40 rupees, down 0.45% on the day.
AI Revenue Growth Outpaces Overall Performance
While total dollar revenue remained nearly flat at $5.082 billion, the AI segment's share expanded to 8.2% of revenue from 5.5% in the December quarter. Excluding AI, non-AI revenue is estimated to have declined by 3.2% to $4.665 billion, highlighting the sector's growing importance to Infosys's top line.
CEO Salil Parekh noted that "AI momentum is now rapidly converting into revenue," but acknowledged that the previous guidance range assumed a more favorable economic environment that has yet to materialize. The company maintained its operating margin guidance of 20% to 22%.
Quarterly Results and Deal Activity
Revenue for the June quarter rose 14% year-over-year to 482.11 billion rupees, slightly below consensus estimates by about 0.3%. Net profit increased 12.2% to 77.69 billion rupees, also falling short of forecasts by roughly 0.8%. Under IFRS, revenue totaled $5.082 billion, with constant-currency growth of 2.4% year-over-year and 1.0% sequentially. The operating margin came in at 21.1%, and free cash flow reached $955 million.
Large deal bookings amounted to $3.6 billion, with 61% representing net new contracts. While this figure marked a 12.5% increase compared to the March quarter, it reflected a 5.3% decline from the same period last year.
Competitive Landscape and Leadership Change
Infosys's results come after competitors Tata Consultancy Services (NSE:TCS) and HCL Technologies (NSE:HCLTECH) both exceeded estimates for the quarter, benefiting from financial-services demand and a softer currency. This puts added pressure on Infosys to improve its deal conversion rates.
The company also announced the appointment of Ashiss Kumar Dash as CEO-designate, with his transition scheduled for April 2027. HFS Research CEO Phil Fersht described Dash as "a safe, execution-focused appointment."
Market Reaction and Outlook
The NSE stock declined 3.2% over the past week, compared to a 0.8% drop in the Nifty 50 index. On Thursday, the benchmark slipped 0.53% as Brent crude surpassed $98 per barrel. The ADR decline provides an initial indication of market sentiment, though after-hours trading could alter the picture.
Looking ahead, investors will monitor estimate revisions, deal conversion rates, and AI updates. The outlook remains uncertain: accelerated AI adoption or a rebound in client spending could boost growth, while further project delays, tougher pricing conditions, or currency volatility could exacerbate the downturn. The initial local price reaction will be observed when Indian markets open on Friday.
