Infosys Q1 2026: Navigating Contradictions in Revenue Guidance, AI Pricing, and Macroeconomic Impact

Macroeconomic uncertainty and revenue guidance, AI impact on pricing and margins, third-party cost trends, large deal pipeline and revenue growth, and impact of macroeconomic uncertainty on clients are the key contradictions discussed in Infosys's latest 2026Q1 earnings call.

Revenue Growth and Enterprise AI:
- Infosys Limited reported that their revenues grew 2.6% sequentially and 3.8% year-on-year in constant currency terms.
- The growth was driven by strong demand for enterprise AI and consolidation projects for clients.

Large Deal Wins:
- The company secured large deals totaling TCV of $3.8 billion, including 55% net new deals.
- This was due to clients selecting Infosys for consolidations and leveraging their leadership in enterprise AI and other technology services.

Operating Margin and Cost Management:
- Infosys's operating margin was 20.8%, down 20 basis points sequentially and 30 basis points year-on-year.
- The decline was attributed to compensation increases and currency movements, partially offset by increases in realization and lower third-party costs.

Free Cash Flow and Margin Guidance:
- The company reported free cash flow of $884 million, representing 109% of net profit.
- The strong cash flow was supported by robust operations and effective cost management. Infosys maintained an operating margin guidance of 20% to 22% for the financial year.