Infosys Q3 Earnings Surpass Estimates, Revenues Increase Y/Y

Infosys INFY reported third-quarter fiscal 2026 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. For the fiscal third quarter, the company reported adjusted earnings of 21 cents per share, which beat the consensus estimate of 20 cents. The bottom line increased 10.5% year over year.

In the trailing four quarters, INFY’s earnings beat the Zacks Consensus Estimate twice and matched twice, with an average surprise of 2.6%.

Infosys’ fiscal third-quarter revenues increased 3.2% year over year to $5.1 billion from the year-ago quarter’s revenues of $4.94 billion. Key strategic initiatives, market positioning, remarkable growth across segments and unique digital offerings were the company's main drivers of the top line. The top line beat the Zacks Consensus Estimate of $5.08 billion.

 Infosys Limited Price, Consensus and EPS Surprise

Infosys Limited price-consensus-eps-surprise-chart | Infosys Limited Quote

Infosys’ Q3 Details

Revenues across Europe and the Rest of the World recorded a year-over-year increase of 13.3% and 2.4%, respectively, on a reported basis. Revenues across North America and India registered a decline of 1.2% and 6.2% year over year, respectively, on a reported basis. On a constant currency (cc) basis, Europe and the Rest of the World increased 7.2% and 2.5%, respectively. On a cc basis, North America and India declined 1% and 1.8%, respectively. 

Segment-wise, revenues from Manufacturing increased 10.8% year over year to $849 million, Financial Services revenues grew 4.8% year over year to $1.44 billion, and Energy, Utilities, Resources & Services sales increased 1.2% year over year to $674 million. Communication sales grew 11.5% year over year to $619 million.

In the third quarter of fiscal 2026, the company’s Hi-Tech division sales decreased 2.5% year over year to $378 million. Retail segment revenues declined 3.7% year over year to $654 million. Life Sciences revenues declined 3.2% year over year to $366 million. The Others business unit’s revenues decreased 10.3% year over year to $122 million.

Infosys added 121 clients in the fiscal third quarter. The company reported that its clients, worth more than $100 million, now add up to 41, which remained flat year over year and sequentially.

Gross profits decreased 3.7% year over year to approximately $1.44 billion. The gross margin contracted 210 bps on a year-over-year basis to 28.2%. The company’s operating income decreased 11% year over year to $937 million. The operating margin contracted 290 bps to 18.4% year over year.

INFY’s Balance Sheet and Cash Flow Details

Infosys ended the fiscal third quarter with consolidated cash and investments of $3.92 billion, down from $6.17 billion recorded in the previous quarter. During the fiscal third quarter, the company generated a free cash flow of $965 million.

Infosys Revises Fiscal 2026 Guidance

Infosys projects fiscal 2026 revenues to grow 3-3.5% on a cc basis, up from previously announced guidance of 2-3% on a cc basis. It still expects a fiscal 2026 operating margin in the range of 20-22%. The Zacks Consensus Estimate for fiscal 2026 revenues and earnings is currently pegged at $19.97 billion and 80 cents per share, respectively.

INFY’s Zacks Rank and Stocks to Consider

Currently, Infosys carries a Zacks Rank #3 (Hold).

Amphenol APH, Allot Ltd. ALLT and Analog Devices ADI are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Amphenol, Allot and Analog Devices sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Amphenol’s 2026 earnings has moved upward by 2 cents to $4.02 per share in the past seven days, calling for a year-over-year surge of 22.2%. Amphenol shares have soared 46% in the past six months.

The Zacks Consensus Estimate for Allot’s 2026 earnings has been revised upward by 3 cents to 28 cents per share over the past seven days and suggests a year-over-year increase of 24.3%. Allot shares have jumped 25.2% in the past six months.

The Zacks Consensus Estimate for Analog Devices’ fiscal 2026 earnings has been revised upward by 5 cents to $9.79 per share, over the past 30 days, suggesting a year-over-year increase of 25.7%. Analog Devices shares have surged 24% in the past six months.

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This article originally published on Zacks Investment Research (zacks.com).

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