Mphasis revenue rises as AI-led wins top USD $461m

Mphasis reported higher first-quarter revenue and contract wins. Revenue rose 3.3% quarter on quarter and 17.5% year on year on a reported basis.

The IT services group posted new total contract value wins of USD $461 million for the quarter.

Earnings per share rose 10.4% from a year earlier to ₹25.6, although profitability weakened from both the previous quarter and the same period last year. Gross margin fell to 26.9%, operating margin declined to 14.8%, and net margin slipped to 11.2%.

In US dollar terms, revenue increased 1.8% from the previous quarter and 7.7% from a year earlier. In constant currency, revenue rose 2.1% quarter on quarter and 8.3% year on year.

Direct revenue, which excludes pass-through elements, grew 1.9% quarter on quarter and 9.2% year on year in US dollar terms. On a constant-currency basis, direct revenue increased 2.2% from the prior quarter and 9.9% from a year earlier.

A large share of the company's new business was tied to artificial intelligence work, with 63% of the quarter's USD $461 million in new contract value described as AI-led.

Management pointed to demand across technology, telecoms, and financial services. The quarter included an agreement with a Tier 1 global technology company covering online store, retail, commerce, data platforms, enterprise technology platforms, engineering, and quality engineering work.

Mphasis also secured work with a Tier 1 US telecoms group focused on enterprise business operations, with the programme centred on cost reduction and process automation using AI-driven tools.

In banking, the company won a mandate from an investment bank for programmes covering crypto, tokenisation, and multicurrency systems. It also signed a separate deal with a US bank to modernise fraud and claims operations, banking operations, and retail core functions.

Management view

The results come as technology services companies look for new spending linked to AI while many clients remain cautious on broader discretionary technology budgets.

"We are pleased with the momentum as we enter the financial year, and the early market acceptance of Mphasis Tria, which has elevated us to a platform-led AI partner for enterprise clients. Q1 FY27 was a strong start, with revenue growth of 2.1% sequentially in constant currency, with strong pipeline and TCV wins. We expect further acceleration in sequential growth in Q2 FY27, as we continue to gain wallet share, as well as capture additional AI led market share," said Nitin Rakesh, Chief Executive Officer & Managing Director, Mphasis.

Rakesh's comments suggest the company is leaning on AI-related programmes to support growth even as margin pressure remains visible.

Margin pressure

The margin trend was weaker than the revenue picture. Gross margin declined by 140 basis points from the prior quarter and by 200 basis points from a year earlier. Operating margin fell by 60 basis points quarter on quarter and by 50 basis points year on year, while net margin was down by 80 basis points sequentially and 60 basis points from the same period last year.

As a result, profit growth lagged top-line momentum on a sequential basis, with earnings per share down 4% from the previous quarter despite the year-on-year increase.

The contrast between rising sales and softer margins reflects a pattern seen across parts of the IT services sector, where companies are winning work in newer areas but still facing pricing pressure, changes in service mix, and investment needs.

Sector backdrop

Mphasis operates in a market where clients are testing AI projects while also seeking savings in core operations. Its latest deal list reflects that mix, with contracts spanning customer-facing digital work, operational efficiency programmes, and modernisation projects in regulated industries.

Financial services remained prominent in the quarter's wins, with banking clients awarding programmes linked to fraud operations, tokenisation, and multicurrency systems. Telecoms and large technology customers also featured in new bookings.

Outside the quarterly numbers, Mphasis listed several recent recognitions from research and advisory groups, including mentions by Gartner, Forrester, Everest Group, and HFS, as well as an award for its People Manager Certificate programme.

The company said 63% of new total contract value in the quarter was AI-led, underlining how central that category has become to its sales pipeline.