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Call sheet · Q1'26

Infosys (INFY)

Q1'26 earnings call · held 2025-07-23 · compared with the Q4'25 call · management-credibility review
5/12
Disclosure score
1 high, 4 medium, 3 low flags
Financial quality
Bottom line
The sleeper story is Europe saving Infosys while North America stagnates, with Europe now 30% of revenue and growing 3x faster, driven by mega consolidation deals that competitors lost. The market sees 'AI leadership' and record sequential growth, but management just abandoned their improvement scenario after one quarter, signaling visibility has actually worsened. The binding constraint is North America's tepid 2.9% growth in their largest market, which no amount of AI agents can fix. As Jayesh admitted: 'Clients still remain on a wait and watch.' My view changes if North America returns to high single-digit growth or if they quantify AI revenue contribution above 5% of total.

The 30-second version

  • Europe is quietly becoming Infosys's growth engine while everyone obsesses over AI agents
  • Record sequential growth masks a concerning guidance cut: top end lowered from 3% to 3%
  • Third-party revenue vanishing act: 60bp headwind that management barely explained

What changed this quarter

MetricQ4'25Q1'26Change
Revenue (Constant Currency)-3.5% QoQ, +4.8% YoY+2.6% QoQ, +3.8% YoY+610 bps sequential acceleration
Operating Margin21.0%20.8%-20 bps compression despite strong growth
EPS (Rupee Terms)+1.8% YoY+8.6% YoY+680 bps acceleration
Large Deal TCV$2.6B (63% net new)$3.8B (55% net new)+46% QoQ surge but net new ratio declining
Europe Revenue Growth15% YoY in CC12.3% YoY in CCStill 3x company average but decelerating
North America Sequential GrowthNot disclosed+2.9% QoQ in CCAhead of company but concerning given size
Financial Services Growth+12.6% YoY+5% YoY-760 bps deceleration in key vertical
Manufacturing Growth+14% YoY+10% YoYDouble digits but slowing
Free Cash Flow$4.1B annually (129% of NP)$884M quarterly (109% of NP)Strong conversion but absolute dollars declining
Headcount323,578323,788Essentially flat (+210) despite growth

Accountability tracked

7 new promises made6 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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