Infosys reported a steady operating performance in Q3 FY26, reflecting resilient execution amid a mixed global demand environment. Strong deal wins and disciplined cost management supported medium-term visibility for the IT major.
Infosys Q3 FY26 Financial Performance
Infosys’ revenue grew 0.5% quarter-on-quarter (QoQ) and 3.2% year-on-year (YoY) on a reported basis. In constant currency terms, revenue increased 0.6% QoQ and 1.7% YoY, highlighting stable but cautious client spending patterns.
On the profitability front, the company reported an operating margin of 18.4% for the quarter. Adjusted operating margin stood higher at 21.2%, after excluding one-off labour code-related provisions. Margins were slightly softer on a reported basis due to cost pressures and exceptional adjustments, but overall execution remained controlled.
Strong Deal Wins Support Medium-Term Outlook
A key highlight of the quarter was Infosys’ robust deal momentum. The company reported large deal total contract value (TCV) of USD 4.8 billion, with 57% classified as net new deals. This strong order inflow provides improved revenue visibility over the coming quarters and underscores the company’s ability to win large, strategic transformation deals despite a cautious macro backdrop.
Segment Performance: Manufacturing and Communications Lead
Performance across verticals remained mixed in Q3 FY26:
- Manufacturing recorded strong growth of 10.8% YoY, driven by digital transformation and efficiency-led programs.
- Communication grew 11.6% YoY, benefiting from network modernization and digital services demand.
- Retail (-3.8% YoY), Hi-Tech (-2.6% YoY) and Life Sciences (-3.1% YoY) continued to face demand softness due to discretionary spending cuts and delayed decision-making by clients.
The divergence in vertical performance highlights ongoing selectivity in enterprise IT spending.
Geographic Mix: Europe Offsets North America Weakness
From a geographic perspective, Europe emerged as a strong growth driver, posting 13.3% YoY growth, supported by deal ramp-ups and stable demand.
In contrast, North America declined 1.2% YoY, reflecting cautious technology spending among large enterprises. Growth in Europe helped partially offset the softness in the company’s largest market.
Cash Flow and Balance Sheet Strength
Infosys generated free cash flow of USD 0.9 billion during the quarter, which improved to USD 1.0 billion on an adjusted basis. Strong cash generation reinforces the company’s balance sheet strength and supports shareholder returns alongside strategic investments.
Infosys Q3 FY26 Outlook
Infosys’ Q3 FY26 results indicate steady revenue growth, resilient execution, and strong deal traction amid uneven demand conditions. While near-term growth remains constrained by cautious client spending in select sectors and geographies, the healthy deal pipeline and disciplined cost control provide comfort on medium-term earnings visibility.
Going forward, the pace of demand recovery in North America and discretionary-heavy verticals will remain key monitorables. Nonetheless, Infosys appears well-positioned to navigate the current environment with its strong order book, diversified portfolio, and robust cash flows.
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