Q3 2026 Infosys Ltd Earnings Call

January 14, 2026

Speaker #1: Ladies and gentlemen, good day and welcome to Infosys Limited Q3 FY26 Earnings Conference Call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator: Ladies and gentlemen, good day, and welcome to Infosys Limited Q3, FY26 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I'll hand the conference over to Mr. Sandeep Mahindroo. Thank you, and over to you, Mr. Mahindroo.

Speaker #1: Should you need assistance during this conference call, please signal an operator by pressing star, then zero, on your touch-tone phone. Please note that this conference is being recorded.

Speaker #1: And I'll hand the conference over to Mr. Sandeep Mahindroo. Thank you, and over to you, Mr. Mahindroo.

Speaker #2: Hello, everyone, and welcome to the Infosys earnings call for Q3 FY26. Let me start by wishing all of you a very Happy New Year. Joining us on this call is CEO and MD, Mr. Salil Parekh.

Sandeep Mahindroo: Hello everyone, and welcome to Infosys earnings call for Q3, FY26. Let me start by wishing all of you a very happy New Year. Joining us on this call is CEO and MD, Mr. Salil Parekh, CFO, Mr. Jayesh Sanghrajka, along with other members of the leadership team. We'll start the call with some remarks on the performance of the company, subsequent to which the call will be opened up for questions. Please note that anything we say that refers to our future outlook is a forward-looking statement that must be read in conjunction with the risks that the company faces. A complete statement and explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov. I'd now like to pass on the call to Salil.

Q3 2026 Infosys Ltd Earnings Call

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Q3 2026 Infosys Ltd Earnings Call

INFY

Wednesday, January 14th, 2026 at 12:30 PM

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Speaker #2: CFO, Mr. Jayesh Sanghrajka, along with other members of the leadership team. We'll start the call with some remarks on the performance of the company.

Speaker #2: Subsequent to which, the call will be opened up for questions. Please note that anything we say that refers to our future outlook is a forward-looking statement that must be read in conjunction with the risks that the company faces.

Speaker #2: A complete statement and explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov. I would now like to pass on the call to

Speaker #2: Salil. Thanks,

Salil Parekh: Thanks, Sandeep. Good evening and good morning to everyone on the call. Thank you for joining us. Warm wishes to you for the New Year. We had a strong performance in Q3. Our revenues grew 0.6% sequentially and 1.7% year-on-year in constant currency terms. Our large deals were at $4.8 billion, with 57% net new. This was across 26 deals. Our adjusted operating margin was 21.2%. We generated free cash flow of $915 million. One of the most significant large deals we won was with the National Health Service in the UK. This $1.6 billion deal expands our work in the healthcare sector. We will help NHS leverage AI to streamline operations and improve patient care for UK citizens. We've deepened our Topaz AI capability with an agent services suite called Topaz Fabric. This suite helps our clients manage and implement AI agents across the enterprise.

Speaker #3: Sandeep: Good evening, and good morning to everyone on the call. Thank you for joining us. Warm wishes to you for the New Year. We had a strong performance in Q3, as revenues grew 0.6% sequentially and 1.7% year-on-year, in constant currency terms.

Speaker #3: A large deal was at $4.8 billion, with 57% net new. This was across 26 deals. Our adjusted operating margin was 21.2%. We generated free cash flow of $915 million.

Speaker #3: One of the most significant large deals we won was with the National Health Service in the UK. This $1.6 billion deal expands our work in the healthcare sector.

Speaker #3: We will help NHS leverage AI to streamline operations and improve patient care for UK citizens. We've deepened our Topaz AI capability with an agent services suite called Topaz Fabric.

Speaker #3: This suite helps our clients manage and implement AI agents across the enterprise. We are expanding our strategic partnerships with AI companies, and recently announced a partnership with Cognition.

We are expanding our strategic partnerships with AI companies. We recently announced a partnership with Cognition. Here, we will combine Cognition's Devin software agent with Infosys' knowledge of the client landscape and industry expertise. We are already working with them across clients. Industry analysts recognize Infosys for its leadership in AI. In financial year 2026, we were recognized as a leader across 12 ratings. We had strong momentum in AI adoption across our client base. Today, we work with 90% of our 200 largest clients to unlock value with AI. We're currently working on 4,600 AI projects. Our teams have generated over 28 million lines of code using AI. We built over 500 agents. We are scaling our forward-deployed engineer team. Our clients are turning to us as trusted partners to drive value realization from AI investments.

Speaker #3: Here, we will combine Cognition's Devin software agent with Infosys' knowledge of the client landscape and industry expertise. We are already working with them across clients.

Speaker #3: Industry analysts recognize Infosys for its leadership in AI. In financial year 2026, we were recognized as a leader across 12 ratings. We had strong momentum in AI adoption across our client base.

Speaker #3: Today, we work with 90% of our 200 largest clients to unlock value with AI. We are currently working on 4,600 AI projects, and our teams have generated over 28 million lines of code using AI.

Speaker #3: We built over 500 agents. We are scaling our forward deployed engineer team. Our clients are turning to us with trusted partners to drive value realization from AI investments.

Speaker #3: Some of the areas they focus on are fragmented data, legacy application landscape, and business workflows that are not conducive for AI. We bring together a deep understanding of clients' technology landscape, strong data engineering, and process reimagination capabilities to help them capture value at scale from AI.

Some of the areas they focus on are fragmented data, legacy application landscape, and business workflows that are not conducive for AI. We bring together a deep understanding of clients' technology landscape, strong data engineering, and process reimagination capabilities to help them capture value at scale from AI. We aspire to make AI work for clients, delivering business outcomes for cost, revenue growth, and innovation. We are witnessing six AI-led value pools emerging that could unlock a large incremental opportunity for us. We also see productivity-led benefits that compress some legacy areas. The six value pools of opportunity in AI services we see are AI engineering services, data for AI, agents for operations, AI software development and legacy modernization, AI and physical devices, and AI services.

Speaker #3: We aspire to make AI work for clients, delivering business outcomes for cost, revenue growth, and innovation. We are witnessing six AI-led value pools emerging that could unlock a large incremental opportunity for us.

Speaker #3: We also see productivity-led benefits that compress some legacy areas. The six value pools of opportunity in AI services we see are: AI engineering services, data for AI, agents for operations, AI software development and legacy modernization, AI in physical devices, and AI services.

Speaker #3: We believe we are uniquely positioned to capture market share across these value pools and emerge as the leading AI value creator for global enterprises.

We believe we are uniquely positioned to capture market share across these value pools and emerge as the leading AI value creator for global enterprises. We will share a comprehensive view on our approach at an investor day later this quarter. In financial services, we see good traction in large deals and discretionary projects. In financial services and in energy utilities, resources, and services verticals, we expect acceleration in financial year 2027 over financial year 2026. This is based on good deal wins and AI partner status with 15 of our largest 25 clients in each of these verticals. With a strong performance in this quarter, we have revised our revenue guidance for the financial year. The new revenue growth guidance for this financial year is 3% to 3.5% growth in constant currency. Our operating margin guidance for the financial year remains the same at 20% to 22%.

Speaker #3: We will share a comprehensive view on our approach at an investor day later this quarter. In Financial Services, we see good traction in large deals and discretionary projects.

Speaker #3: In Financial Services and in Energy, Utilities, Resources and Services verticals, we expect acceleration in financial year 2027 over financial year 2026. This is based on good deal wins and AI partner status with 15 of our largest 25 clients in each of these verticals.

Speaker #3: With a strong performance in this quarter, we have revised our revenue guidance for the financial year. The new revenue growth guidance for this financial year is 3% to 3.5% growth in constant currency.

Speaker #3: Our operating margin guidance for the financial year remains the same, at 20% to 22%. With that, let me hand it over to Jayesh for his

With that, let me hand it over to Jayesh for his updates.

Speaker #3: updates. Thank you,

Jayesh Sanghrajka: Thank you, Salil. Good morning, good evening, everyone, and thank you for joining the call today. First of all, a very happy New Year to all of you. Coming to the quarter, our Q3 performance demonstrates continued momentum we saw in the last two quarters, underscoring resilience of our business model, relevance of our offerings, and our disciplined execution. We had another quarter of growth despite seasonal weakness and reduction in third-party costs. The results for Q3, FY26 include a charge associated with change in labor codes in India, which had an impact on operating profit, net profit, EPS, and free cash flow for the quarter. Reference to the adjusted numbers excludes the impacts from the same. Revenue for Q3 was $5.1 billion, up 0.6% sequentially and 1.7% year-on-year basis in constant currency terms. Operating margins, including the impact of change in labor codes, stand at 18.4%.

Speaker #2: Salil: Good morning, good evening, everyone, and thank you for joining the call today. First of all, a very happy New Year to all of you.

Speaker #2: Coming to the quarter, our Q3 performance demonstrates continued momentum. We saw in the last two quarters, underscoring the resilience of our business model, relevance of our offerings, and our disciplined execution.

Speaker #2: We had another quarter of growth despite seasonal weakness and a reduction in third-party costs. The results for Q3 FY26 include a charge associated with a change in labor codes in India, which had an impact on operating profit, net profit, EPS, and free cash flow for the quarter.

Speaker #2: Reference to the adjusted numbers excludes the impact from the same. Revenue for Q3 was $5.1 billion, up 0.6% sequentially, and 1.7% year-on-year, in constant currency terms.

Speaker #2: Operating margins, including the impact of the change in labor codes, stand at 18.4%. Adjusting for the same, it is at 21.2%. The highlights of the quarter are as follows.

Adjusting for the same, it is at 21.2%. Key highlights of the quarter are as follows. We achieved strong revenue growth despite seasonality and lower third-party costs. Third-party is a percentage of revenue reduced by 0.3% sequentially and approximately 2.4% on a year-on-year basis. With three strong quarters of performance, our revenue growth in nine months stood at 2.8%, which is at the higher end of our earlier guided range. This is despite the lower third-party, which has reduced by approximately 1% compared to the same period last year and now stands at 7.3%. Momentum in financial services continues with 3.9% year-on-year in constant currency terms. Among GOs, Europe continued to lead the growth by 7.2% year-on-year in constant currency terms. Volumes continue to remain soft for the quarter and the year.

Speaker #2: We achieved strong revenue growth despite seasonality and lower third-party costs. Third-party as a percentage of revenue reduced by 0.3% sequentially, and approximately 2.4% on a year-on-year basis.

Speaker #2: With three strong quarters of performance, our revenue growth in nine months stood at 2.8%, which is at the higher end of our earlier guided range.

Speaker #2: This is despite the lower third-party, which has reduced by approximately 1% compared to the same period last year and now stands at 7.3%. Momentum in financial services continues, with 3.9% year on year, in constant currency terms.

Speaker #2: Among GOs, Europe continued to lead the growth by 7.2% year on year, in constant currency terms. Volumes continued to remain soft for the quarter and end the year.

Speaker #2: On a nine-month basis, RPP increased, reflecting continued momentum of value-based selling and productivity increases that we have achieved. Adjusted operating margins increased by 20 basis points sequentially to 21.2%.

On a nine-month basis, RPP increased, reflecting continued momentum of value-based selling and productivity increases that we have achieved. Adjusted operating margins increased by 20 basis points sequentially to 21.2%. We continue our investments in sales and marketing, which has increased by double digits this year to date, and impacting margins by approximately 50 basis points. Utilization, excluding trainees, was down by 1% sequentially at 84.1%, and including trainees was down by 2.2% to 80% as we continue to create capacity for future growth opportunities. Our adjusted margins for nine months are at 21% at midpoint of guidance after absorbing accelerated investment in sales and marketing, as well as lower utilization. Onsite mix further reduced by 10 basis points Q3 and by 70 basis points in nine months, FY26. Investment in talent continues. Net headcount increased by 5,000 to 337,000 employees.

Speaker #2: We continue our investments in sales and marketing, which has increased by double digits this year to date, and is impacting margins by approximately 50 basis points.

Speaker #2: Utilization excluding trainees was down by 1% sequentially, at 84.1%, and including trainees was down by 2.2% to 80%, as we continue to create capacity for future growth opportunities.

Speaker #2: Our adjusted margins for nine months are at 21%, at the midpoint of guidance after absorbing accelerated investment in sales and marketing, as well as lower utilization.

Speaker #2: On-site mix further reduced by 10 basis points in Q3, and by 70 basis points in the nine months of FY26. Investment in talent continues. Net headcount increased by 5,000 to 337,000 employees. LTM attrition declined by 2% sequentially, and by 1.4% on a year-on-year basis.

LTM attrition declined by 2% sequentially and 1.4% on a year-on-year basis, reflecting both market conditions and our focus on employee retention and upskilling. Large deal TCV was robust at $4.8 billion in Q3 with 57% net new. Total large deal TCV for nine months stood at $11.7 billion, exceeded the total large deal TCV of full year, FY25. Net new deal TCV for nine months was up by 40% as compared to the same period last year. Large deal pipelines continue to be healthy. Our razor-sharp focus, aided by the deployment of AI agents on our order-to-receivable cycle, has resulted in a decline of five days in DSO, including net and bill, to 82 days sequentially. Driven by strong collections, free cash flow generation adjusted for labor codes remains robust at $965 million, which is 113% of adjusted net profit.

Speaker #2: Reflecting both market conditions and our focus on employee retention and upskilling. Large deal TCV was robust at $4.8 billion in Q3, with 57% net new.

Speaker #2: Total large deal TCV for nine months stood at $11.7 billion, exceeding the total large deal TCV of the full year FY25. Net new deal TCV for nine months was up by 40% as compared to the same period last year.

Speaker #2: Large deal pipelines continue to be healthy. Our razor-sharp focus, aided by the deployment of AI agents on our order-to-receivable cycle, has resulted in a decline of five days in DSO, including net and bill, to 82% sequentially.

Speaker #2: Driven by strong collections, free cash flow generation adjusted for labor codes remains robust at ?965 million, which is 113% of adjusted net profit. Adjusted free cash flow conversion for nine months stood at 118%.

Adjusted free cash flow conversion for nine months stood at 118%. Adjusted EPS in rupee terms for nine months, FY26, grew at double digits at 11.5%. During the quarter, we successfully completed our largest-ever buyback, returning 18,000 crores to our shareholders, which will help EPS accretion. We also paid our interim dividend for FY26 in line with our capital allocation policy. Adjusted operating margins for Q3 expanded by 20 basis points to 21.2% sequentially. Major components of changes are as below. Tailwinds of 40 basis points from currency movement, 40 basis points from Maximus comprising primarily of value-based selling, critical portfolios, and lean and automation, offset by 70 basis points impact from furloughs and lower working days. The impact of higher variable pay was partly offset by one-off benefits during the quarter.

Speaker #2: Adjusted EPS in rupee terms for nine months FY26 grew at double digits, at 11.5%. During the quarter, we successfully completed our largest-ever buyback, returning ?18,000 crore to our shareholders, which will help EPS accretion.

Speaker #2: We also paid out interim dividend for FY26 in line with our capital allocation policy. Adjusted operating margins for Q3 expanded by 20 basis points to 21.2% sequentially.

Speaker #2: Major components of changes are as below. Tailwinds of 40 basis points from currency movement, 40 basis points from maximums, comprising primarily of value-based selling, critical portfolios, and lean in automation.

Speaker #2: Offset by 70 basis points impact from furloughs and lower working days. The impact of higher variable pay was partly offset by one-off benefits during the quarter.

Speaker #2: Consolidated cash and investments were at $3.9 billion at the end of the quarter after returning $3 billion to the shareholders, in the form of dividend and buyback.

Consolidated cash and investments were at $3.9 billion at the end of the quarter after returning $3 billion to the shareholders in the form of dividend and buyback. Yield on cash balance was at 6.19%, and ROE stood at 32.8%. We signed 26 large deals during the quarter, including two mega deals. This includes 10 in financial services, four in retail, three each in life sciences and manufacturing, two each in communication, EURS, and high tech. Region-wise, we signed 16 deals in America, nine in Europe, and one in rest of world. Coming to verticals, we see continued momentum in financial services with approximately 5% growth in the last nine months, led by large deal wins and uptake in discretionary spends across sub-verticals like banking, payments, mortgages, along with assets and wealth management. There is elevated interest in AI-led transformation, platform modernization, and vendor consolidation.

Speaker #2: Yield on cash balance was at 6.19%, and ROE stood at 32.8%. We signed 26 large deals during the quarter, including two mega deals. This includes 10 in financial services, 4 in retail, 3 each in life sciences and manufacturing, and 2 each in communication, EURS, and high tech.

Speaker #2: Region-wise, we signed 16 deals in America, 9 in Europe, and 1 in the rest of the world. Coming to verticals, we see continued momentum in financial services with approximately 5% growth in the last nine months, led by large deal wins and uptake in discretionary spend.

Speaker #2: Across sub-verticals like banking, payments, and mortgages, along with assets and wealth management, there is elevated interest in AI-led transformation, platform modernization, and vendor consolidation. We are seeing a shift from compliance to business growth.

We are seeing a shift from compliance to business growth. Significant core transformation across all FS sub-verticals is creating strong long-term strategic pipeline, providing good IP platform partner opportunities. We are now a preferred AI partner for top 15 out of 25 banking clients. Uptake in discretionary spend in aforementioned sub-verticals and deal wins in recent quarters positions us favorably for better growth in FY27. Manufacturing vertical is also impacted by tariff uncertainties, which is preventing clients from committing to long-term investments. Discretionary spend is under pressure, and decision-making is slow. Industrial and aero are doing well, but the auto sector remains challenged. Clients are prioritizing cost discipline, consolidation, and efficiency, and we are supporting them through digital rationalizations and AI-led productivity initiatives. Overall pipeline remains healthy and focused on cost takeouts, infra consolidation, and ERP modernization.

Speaker #2: Significant core transformation across all FS sub-verticals is creating a strong long-term strategic pipeline, providing good IP platform partner opportunities. We are now a preferred AI partner for 15 out of the top 25 banking clients.

Speaker #2: Uptake in discretionary spend in the aforementioned sub-verticals and deal wins in recent quarters position us favorably for better growth in FY27. The manufacturing vertical is also impacted by tariff uncertainties, which is preventing clients from committing to long-term investments.

Speaker #2: Discretionary spend is under pressure, and decision-making is slow. Industrial and aero are doing well, but the auto sector remains challenged. Clients are prioritizing cost discipline, consolidation, and efficiency.

Speaker #2: And we are supporting them through digital industrialization and AI-led productivity initiatives. Overall, the pipeline remains healthy, with a focus on cost takeouts, infrastructure consolidation, and ERP modernization.

Speaker #2: EURS companies are increasingly allocating budgets towards AI infrastructure, data readiness, cloud, and software platforms. There is demand for setting up GCCs across sectors, with most clients looking at SIs to complement the GCC strategy.

European companies are increasingly allocating budgets towards AI infrastructure, data readiness, cloud, and software platforms. There is demand for setting up GCCs across sectors, with most clients looking at SI to complement the GCC strategy. We are a preferred AI partner for top 15 out of top 25 clients. We are seeing an increase in discretionary demand in utilities and energies, which should lead to growth accelerations in FY27. Utility sector is witnessing increasing demand driven by massive investments in infra and AI data centers. While discretionary demand in the energy sector is focused on decarbonization and low-carbon solutions, there is also focus on cost optimization and consolidation due to enterprise AI adoption. Retail and CPG clients continue to experience uncertainty due to the ongoing tariff negotiations and evolving geopolitical equations.

Speaker #2: We are a preferred AI partner for 15 out of the top 25 clients. We are seeing an increase in discretionary demand in utilities and energy, which should lead to growth acceleration in FY27.

Speaker #2: The utilities sector is witnessing increasing demand driven by massive investments in infrastructure and AI data centers. While discretionary demand in the energy sector is focused on decarbonization and low-carbon solutions, there is also focus on cost optimization and consolidation due to enterprise AI adoption.

Speaker #2: Retail and CPG clients continue to experience uncertainty due to the ongoing tariff negotiations and evolving geopolitical equations. Clients are prioritizing cost takeouts and AI-led productivity deals, while discretionary spend remains soft apart from SAP, DNA testing, and AI-augmented services.

Sandeep Mahindroo: Clients are prioritizing cost takeouts and AI-led productivity deals while discretionary spend remains soft apart from SAP DNA testing and AI augmented services. We continue to leverage Topaz and our AI Next platform to deliver measurable business value with robust guardrails around privacy, governance, and augmenting customer and employee experiences. Communication sector continues to be impacted by geopolitical uncertainty. However, our deal wins in prior quarters are helping us drive growth acceleration year-on-year over the last few quarters. Telcos are prioritizing AI automation and transformation productivity increases, while traditionally IT remains under pressure. Clients are increasingly seeking partnerships with SIs for scaling and innovation within complex ecosystems. Focus is on outcome-based engagement models rather than traditional effort-based pricing models. Our stellar execution in a seasonally weak quarter is a clear reflection of our ability to navigate the uncertain environment effectively.

Clients are prioritizing cost takeouts and AI-led productivity deals while discretionary spend remains soft apart from SAP DNA testing and AI augmented services. We continue to leverage Topaz and our AI Next platform to deliver measurable business value with robust guardrails around privacy, governance, and augmenting customer and employee experiences. Communication sector continues to be impacted by geopolitical uncertainty. However, our deal wins in prior quarters are helping us drive growth acceleration year-on-year over the last few quarters. Telcos are prioritizing AI automation and transformation productivity increases, while traditionally IT remains under pressure. Clients are increasingly seeking partnerships with SIs for scaling and innovation within complex ecosystems. Focus is on outcome-based engagement models rather than traditional effort-based pricing models. Our stellar execution in a seasonally weak quarter is a clear reflection of our ability to navigate the uncertain environment effectively.

Speaker #2: We continue to leverage Topaz and our AI Next platform to deliver measurable business value, with robust guardrails around price, privacy, governance, and augmenting customer and employee experiences.

Speaker #2: The communication sector continues to be impacted by geopolitical uncertainty. However, our deal wins in prior quarters are helping us drive growth acceleration year-on-year over the last few quarters.

Speaker #2: Telcos are prioritizing AI automation and transformation productivity increases, while traditionally IT remains under pressure. Clients are increasingly seeking partnerships with SIs for scaling and innovation within complex ecosystems.

Speaker #2: Focus is on outcome-based engagement models rather than traditional effort-based pricing models. Our stellar execution in a seasonally weak quarter is a clear reflection of our ability to navigate the uncertain environment effectively.

Speaker #2: Strong year-to-date performance and robust deal wins have enabled us to revise our revenue guidance for FY26 upward to 3.0 to 3.5%. This does not include any revenues from the joint venture with Telstra, as we still await the regulatory approvals.

Sandeep Mahindroo: Strong year-to-date performance and robust deal wins have enabled us to revise our revenue guidance for FY26 upward to 3% to 3.5%. This does not include any revenues from the joint venture with Telstra, as we still await the regulatory approvals. Our operating margin guidance remains at 20% to 22%. With that, we can open up for the questions.

Strong year-to-date performance and robust deal wins have enabled us to revise our revenue guidance for FY26 upward to 3% to 3.5%. This does not include any revenues from the joint venture with Telstra, as we still await the regulatory approvals. Our operating margin guidance remains at 20% to 22%. With that, we can open up for the questions.

Speaker #2: Our operating margin guidance remains at 20 to 22%. With that, we can open up for questions. Thank you very much. We'll now begin the question and answer session.

Operator: Thank you very much. We'll now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants, while asking a question, are requested to use handsets and not on speakerphone or any other mode to avoid any inconvenience. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Ankur Rudra from J.P. Morgan. Please go ahead.

Speaker #2: Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two.

Speaker #2: Participants, while asking a question, are requested to use handsets and not speakerphone or any other mode to avoid any inconvenience. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Speaker #2: Participants, you may press star and one to ask a question. The first question is from the line of Ankur Rudra from JP Morgan. Please go ahead.

Speaker #2: Ahead. Hi, thank you, and happy New Year.

Ankur Rudra: Hi, thank you, and happy New Year to you too. Good to see a nice print here. Just first couple of questions on the revenue and the demand side. The signings have been quite strong for the last couple of quarters, and momentum has been quite strong as well. I'm just curious why the implied outlook for the fourth quarter can't be stronger than it is. And secondly, I just want to confirm that your comment is for a growth acceleration in F27 for the overall business and not for a segment alone. And are you seeing any signs of short-cycle projects or discretionary spending expanding beyond financial services and energy also, especially when you think about F27? Thank you.

Speaker #3: To you too. Good to see a nice print here. Just a couple of questions on the revenue and the demand side. The signings have been quite strong for the last couple of quarters.

Speaker #3: Momentum has been quite strong as well. I'm just curious why the outlook—the implied outlook—for the fourth quarter can't be stronger than it is.

Speaker #3: And secondly, I just want to confirm that your comment is for a growth acceleration in FY27 for the overall business and not for a segment alone.

Speaker #3: And are you seeing any signs of short-cycle projects or discretionary spending expanding beyond financial services and energy also, especially when you think about FY27?

Speaker #3: Thank you.

Speaker #4: Hi, Ankur. This is Salil. So first, on what we are seeing in terms of the momentum and the deals, all of that has led to the increase in the guidance, keeping in mind the overall picture.

Salil Parekh: Hi, Ankur. This is Salil. So first, on what we are seeing in terms of the momentum and the deals, all of that has led to the increase in the guidance, keeping in mind the overall picture. So Jayesh mentioned a little bit about financial services, about energy utilities, the overall deal. And then if you look at some of our other sectors, we are still seeing those sectors starting to come up, but not at that level. So keeping all of that in mind, we've increased the guidance for what we see in Q4. On the numbers for next year, so what we have shared today is in the two verticals, energy, utilities, resources, and services, and in financial services, we see that the growth on financial year '27 to '26 will be good.

Speaker #4: So, we mentioned Jayesh mentioned a little bit about financial services, about energy utilities, the overall deal. And then, if you look at some of our other sectors, we are still seeing those sectors starting to come up but not at that level.

Speaker #4: So, keeping all of that in mind, we've increased the guidance for what we see in Q4. On the numbers for next year—so, what we have shared today is, in the two verticals, Energy, Utilities, Resources, and Services, and in Financial Services, we see that the growth from financial year '26 to '27 will be good, and that is because of the deals we have won—large and other deals.

That is because of the deals we have won, large and other deals, and the AI, where we are partners with 15 of our large 25 clients. So those two things especially are giving us that view. We are not making a comment on the overall. We are not saying anything on the overall at this stage. Ankur, if I can just add to what Salil was saying.

Speaker #4: And the AI, where we are partners with 15 of our large 25 clients. So those two things, especially, are giving us that view. We are not making a comment on the overall.

Speaker #4: We are not saying anything on the overall at this stage.

Jayesh Sanghrajka: Ankur, if I can just add to what Salil was saying.

Speaker #3: And Ankur, if I can just add to what Salil was

Operator: Appreciate your comment.

Ankur Rudra: Appreciate your comment.

Speaker #2: Sure.

Speaker #3: Yeah, Ankur, if I can just add to what Salil was saying on guidance, and your question on why Q4 guidance cannot be elevated more.

Sandeep Mahindroo: Yeah. Ankur, if I can just add to what Salil was saying on guidance and your question on why Q4 guidance cannot be elevated more. You should also remember that there is a lower working day calendar day impact in this quarter, which is usually seasonally there. So that is also a headwind from the guidance perspective.

Jayesh Sanghrajka: Yeah. Ankur, if I can just add to what Salil was saying on guidance and your question on why Q4 guidance cannot be elevated more. You should also remember that there is a lower working day calendar day impact in this quarter, which is usually seasonally there. So that is also a headwind from the guidance perspective.

Speaker #3: We should also remember that there is a lower working day capital calendar day impact in this quarter, which is usually seasonally there. So that is also a headwind from the guidance.

Speaker #3: perspective. Appreciate it.

Appreciate it. Just a question for you, Jayesh, as well on the margin side. Margins appear to be down 20 basis points if I adjust the gains from the property sale this time. Could you highlight if you're seeing any kind of pricing pressure, and also how do you see the percentage going forward? Also, given a lot more disclosure on the AI side, which is appreciated, I'm curious if AI is a headwind or a tailwind on your margins when you do these 4,600 AI projects.

Ankur Rudra: Appreciate it. Just a question for you, Jayesh, as well on the margin side. Margins appear to be down 20 basis points if I adjust the gains from the property sale this time. Could you highlight if you're seeing any kind of pricing pressure, and also how do you see the percentage going forward? Also, given a lot more disclosure on the AI side, which is appreciated, I'm curious if AI is a headwind or a tailwind on your margins when you do these 4,600 AI projects.

Speaker #5: Just a question for you, Jayesh, as well. On the margin side, margins appear to be down 20 basis points if I adjust for the gains from the sale.

Speaker #5: Property sale this time, could you highlight if you're seeing any kind of pricing pressure, and also how do you see the percentage going forward?

Speaker #5: Also, given a lot more disclosure on the AI side—which is appreciated—I'm curious if AI is a headwind or a tailwind on your margins when you do these 4,600 AI projects.

Speaker #5: Also, given a lot more disclosure on the AI side, which is appreciated, I'm curious if AI is a headwind or a tailwind on your margins when you do these 4,600 AI.

Speaker #3: Yeah. So you're right. There was a benefit that we got this quarter, and I did call that out—that benefit was largely offset by the higher variable pay that we also provided in the financial statements this quarter.

Salil Parekh: Yeah, so you're right. There was a benefit that we got this quarter, and I did call that out that the benefit was largely offset by the higher variable pay that we also provided in the financial statements this quarter. So that's the put and take of the margin. On the pricing, if you look at our consistent pricing commentary, it has been that our pricing is accretive. We have seen consistently our pricing going up on back of various factors, including AI, including Project Maximus. New Gen pricing is part of the Project Maximus, which includes how do you price these new AI projects, etc., the agents, etc. So we don't really see an impact or a headwind coming because of the AI projects on pricing, especially.

Jayesh Sanghrajka: Yeah, so you're right. There was a benefit that we got this quarter, and I did call that out that the benefit was largely offset by the higher variable pay that we also provided in the financial statements this quarter. So that's the put and take of the margin. On the pricing, if you look at our consistent pricing commentary, it has been that our pricing is accretive. We have seen consistently our pricing going up on back of various factors, including AI, including Project Maximus. New Gen pricing is part of the Project Maximus, which includes how do you price these new AI projects, etc., the agents, etc. So we don't really see an impact or a headwind coming because of the AI projects on pricing, especially.

Speaker #3: So that's the put and take of the margin. On the pricing, if you look at our consistent pricing commentary, it has been that our pricing is accretive.

Speaker #3: We have seen consistently our pricing going up on the back of various factors, including AI, including project Maximas. New-gen pricing is part of the project Maximas, which includes how do you price these new AI projects, etc., or the agents, etc.

Speaker #3: So, we don't really see an impact or a headwind coming because of the AI projects. On pricing, especially.

Speaker #5: Understood. Thank you, and best of luck.

Ankur Rudra: Understand. Thank you. Best of luck.

Speaker #2: Thank you. Next question is from the line of Brian from TD Coven. Please go ahead.

Operator: Thank you. Next question is from Bryan Bergin from TD Cowen. Please go ahead.

Speaker #6: Hi, good evening. Thank you. I wanted to ask on North America. So, just your comment on your view going forward here—at least in the coming quarters—you see it just tipped down to contraction of minus 1% on a year-on-year basis.

Bryan Bergin: Hi, good evening. Thank you. I wanted to ask on North America. So just your comment on your view going forward here, at least in the coming quarters. You see it just tip down to a contraction of -1% on a year-on-year basis. Was that due to any particular industries? And just how do you see that progressing here as you go through March and beyond?

Speaker #6: Was that due to any particular industries? And just how do you see that progressing here as you go through March and—

Speaker #6: beyond? Yeah.

Speaker #3: So Kevin, this is what we had called out at the beginning of the year when we provided our original guidance: that looking at the deals in the pipeline, looking at the projects that we have, and the projects or large deals that were under execution, we expected this year the third-party cost, and therefore the third-party revenue, to be lower than last year.

Salil Parekh: That's okay. This is what we had called out at the beginning of the year when we provided our original guidance, that looking at the deals in the pipeline, looking at the projects that we have, and the projects or large deals that were under execution, we expected this year the third-party cost and therefore the third-party revenue to be lower than the last year. It's across segments. Of course, the impact of it by segment could vary, but the impact is across segments.

Speaker #3: It's across segments. Of course, the impact of it by segment could vary, but the impact is across segments.

Speaker #6: Okay, understood. And then, just as it relates to the commentary on budgets going forward, can you comment on the conversations you're having with enterprises now as it relates to their calendar '26 budgets?

Bryan Bergin: Okay. Understood. And then just as it relates to the commentary on budgets going forward, can you just comment on the conversations you're having with enterprises now as it relates to their calendar '26 budgets? As you think about this right now versus this time last year, any key changes worth noting?

Speaker #6: As you think about this right now versus this time last year, are there any key changes worth noting?

Speaker #3: So, hi, this is Salil. I think what we see now is, first, the comment that we made earlier on energy, utilities vertical, and financial services.

Salil Parekh: So, hi, this is Salil. I think what we see now is, first, the comment that we made earlier on energy, utilities vertical, and financial services. In financial services, we also see discretionary work that is more prevalent. And then we see much more activity on AI. And in the AI area, what we are starting to identify as the six Value Pools areas where we can drive faster growth, we are seeing traction on that. And with some of the partnerships we've announced and some others that we're already working with companies on, we see good momentum. So those are the two things that we are seeing. Some of the discretionary in FS, good momentum in those two energy utilities and financial services. And then in AI, more activity, which is different from this time of last year.

Speaker #3: In financial services, we also see discretionary work that is more prevalent. And then we see much more activity on AI. And in the AI area, what we are starting to identify as the six value pools—areas where we can drive faster growth—we are seeing traction on that.

Speaker #3: And with some of the partnerships we've announced, and some others that we're already working with companies on, we see good momentum. So those are the two things that we are seeing.

Speaker #3: Some of the discretionary in FS—good momentum in those two, energy, utilities, and financial services. And then in AI, more activity, which is different from this time last year.

Speaker #3: year. Great.

Bryan Bergin: Okay. Thank you.

Speaker #6: Thank you.

Speaker #2: Thank you. Next question is from the line of Ashwin Mehta from Ambit Capital. Please go ahead.

Operator: Thank you. Next question is from Ashwin Mehta from Ambit Capital. Please go ahead.

Speaker #2: ahead. Yeah.

Ashwin Mehta: Yeah, hi. So just one question in terms of healthcare. It seems to have done pretty well this quarter, almost $44 million of incremental revenues, which is nearly double of our overall incremental revenue. So what is the driver of the healthcare growth? And secondly, was there any contribution from the NHS deal in this quarter?

Speaker #5: Hi. So just one question in terms of healthcare. It seems to have done pretty well this quarter, almost $44 million of incremental revenues, which is nearly double our overall incremental revenues.

Speaker #5: So, what is the driver of the healthcare growth? And secondly, was there any contribution from the NHS deal in this quarter?

Speaker #3: Yeah, Ashwin, so healthcare did benefit from the contribution from the NHS deal that we—

Salil Parekh: Yeah, Ashwin, so healthcare did benefit from the contribution from the NHS deal that we signed.

Speaker #3: signed. And we expect the

Ashwin Mehta: We expect residual contribution as you get into the next quarter, or this is kind of scaled up?

Speaker #5: Residual contribution, as you get into the next quarter, or this is kind of scaled.

Speaker #3: So Ashwin, we don't provide deal-by-deal revenue estimates per se, right? But yeah, healthcare did benefit from the

Salil Parekh: So Ashwin, we don't provide deal-by-deal the revenue estimates per se, right? But yeah, healthcare did benefit from the NHS.

Speaker #3: NHS. So fair.

Ashwin Mehta: Fair. And the second question is in terms of wage hikes. I missed the initial comments, but any decision in terms of the wage hikes, and are they expected in fourth year?

Speaker #5: And the second question is in terms of wage hikes. I missed the initial comments, but any decision in terms of the wage hikes? And are they expected in

Speaker #5: 4Q? Yeah.

Speaker #3: So, on the wage hike, whenever we decide that, we've always considered multiple factors: when was the last wage hike done, what are the market scenarios, the inflation, etc., etc.

Salil Parekh: Yeah, so on the wage hike, whenever we decided, we've always considered multiple factors. When was the last wage hike done? What are the market scenarios, the inflation, etc., etc.? If you look at this calendar, we've already done rolled out wage hikes in two stages. One part was effective January. The other one was effective April, like we always do. So we haven't decided the next cycle yet.

Speaker #3: If you look at this calendar, we've already done rolled-out wage hikes in two stages—one part was effective January; the other one was effective April.

Speaker #3: Like we always do. So, we haven't decided the next cycle yet.

Speaker #5: Oh, okay. Okay. Fair enough. Thanks a lot and all the—

Ashwin Mehta: Okay. Fair enough. Thanks a lot and all the best.

Speaker #5: best. Thank

Speaker #2: You. Next question is from the line of Abhishek Patak from Motilal Oswal. Please go ahead.

Operator: Thank you. Next question is from Abhishek Bhandari from Motilal Oswal. Please go ahead.

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