tapebrief
CTSH · Q3 2025
Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

CTSH · Q1 2026 Earnings

Cognizant

Reported February 4, 2026

30-second summary

Cognizant closed FY2025 above the high end of its prior guidance ranges: full-year revenue of $21.1B grew 7.0% YoY (6.4% cc), adjusted operating margin expanded 50bps to 15.8%, and adjusted EPS grew 11% to $5.28. Q4 revenue was $5,333M (+4.9% YoY, +3.8% cc), adjusted operating margin was 16.0% (+30bps YoY), and adjusted EPS was $1.35 (+12% YoY). Bookings were a standout for the year: 28 large deals signed in 2025 with large-deal TCV up ~50% YoY; TTM bookings of $28.4B grew 5% with a book-to-bill of ~1.3x, and Q4 bookings grew 9% YoY including 12 large deals (2 mega ≥$500M). Initial FY2026 guidance frames a measured setup: Q1 FY26 cc revenue growth of 2.7–4.2%, full-year FY26 cc growth of 4.0–6.5%, adjusted operating margin of ~15.9–16.1% (10–30bps expansion), and adjusted EPS of $5.56–$5.70 (5–8% growth). Capital return planned at $1.6B in 2026 including $1B of buybacks; quarterly dividend raised 6.5% to $0.33.

Headline numbers

EPS

Q1 FY2026

$1.35

Revenue

Q1 FY2026

$5.33B

+4.9% YoY

Gross margin

Q1 FY2026

33.8%

Free cash flow

Q1 FY2026

$0.78B

Operating margin

Q1 FY2026

16.0%

Key financials

Q1 FY2026
MetricQ1 FY2026YoYQ3 FY2025QoQ
Revenue$5.33B+4.9%$5.42B-1.5%
EPS$1.35—$1.39-2.9%
Gross margin33.8%—33.9%-10bps
Operating margin16.0%—16.0%+0bps
Free cash flow$0.78B—$1.16B-32.7%

Guidance

FY2026 guidance established with 4.0–6.5% constant-currency revenue growth and 16.0–16.2% adjusted operating margin; Q2 guidance issued at $5.36–$5.44B revenue with 2.7–4.2% constant-currency growth.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ1 FY2026$5.27–$5.33B$5.333B+$0.003B above guide (at high end)Beat
Revenue YoY growth (constant currency)Q1 FY20262.5% to 3.5%—Unable to determine; actual YoY constant-currency growth for Q1 FY2026 not disclosedBeat

New guidance

MetricPeriodGuideYoY
RevenueFY2026$22.14–$22.66B—
Revenue YoY growth (constant currency)FY20264.0% to 6.5%—
Adjusted Diluted EPSFY2026$5.56–$5.70 (growth 5% to 8%)—
Adjusted Operating MarginFY202616.0% to 16.2%—
RevenueQ2 FY2026$5.36–$5.44B+2.1% to +3.6% YoY
Revenue YoY growth (constant currency)Q2 FY20262.7% to 4.2%—

Segment performance

Q1 FY2026
SegmentQ1 FY2026YoY
Health Sciences$1.621B+5.2%
Financial Services$1.586B+10.5%
Products and Resources$1.318B+1.8%
Communications, Media and Technology$0.808B-0.4%

Platform metrics

Q1 FY2026
SegmentQ1 FY2026
Trailing Twelve-Month Bookings$28.4 billion
Book-to-Bill Ratio1.3x
Q4 Bookings Growth YoY9%
Large Deals (>$100M TCV) in Q412
Mega Deals (>$500M TCV) in Q42
Full-Year Large Deals Count28
Voluntary Attrition - Tech Services (TTM)13.9%
Total Headcount351,600

Other KPIs

Q1 FY2026
SegmentQ1 FY2026YoY
North America$3.986B+4.3%
Europe$1.018B+8.4%
Rest of World$0.329B+2.5%

Management tone

The "AI builder" identity is now front and center. CEO Ravi Kumar framed 2025 as a "defining year" in which Cognizant "returned to the winner's circle two years ahead of the target we set at our Investor Day." The narrative pairs strategic conviction with operational proof points: 28 large deals signed in 2025 with large-deal TCV up ~50% YoY, and a TTM book-to-bill of ~1.3x.

CFO Jatin Dalal emphasized that 2025 delivered "top-tier revenue growth with 50 basis points of expanded adjusted operating margin and 11% adjusted EPS growth," and characterized initial 2026 guidance as reflecting "sustained momentum, backed by our commitment to advancing our strategic investments aimed at accelerating our AI-led growth strategy."

The capital return story is reinforced: $2B returned to shareholders in 2025 (including $1.3B of buybacks), with $1.6B planned for 2026 (including $1B of buybacks) and the quarterly dividend raised 6.5% to $0.33. $1.9B remained under the share repurchase authorization at year-end.

The partnership and platform build-out accelerated in Q4: expanded Microsoft partnership for co-built AI solutions, adoption of Anthropic's Claude across enterprise workloads, partnership with Cognition (Devin AI) for autonomous software engineering, expanded Adobe partnership, and the closed 3Cloud acquisition adding Microsoft Azure / Data & AI capabilities.

Recurring themes management leaned on this quarter:

AI builder positioning and bridging AI infrastructure spend to business value realizationThree-vector strategy: AI-led productivity, industrializing AI, identifying the enterpriseShift from labor-based to outcome-based and fixed-price engagement modelsPlatform-centric strategy (NeuroAI, FlowSource, SkyGrade, TriZetto partnership with Palantir)Project LEAP: organizational restructuring, pyramid broadening, and margin expansionPhysical AI emergence and convergence with agentic systems across regulated, mission-critical operations

Risks management surfaced:

Softening demand environment and heightened macroeconomic uncertainty persisting in near termPolicy changes creating regulatory uncertainty in health sciencesTrade policy uncertainty and supply chain disruptions in products and resourcesMargin pressure from integrated offering strategy investments and increased compensation costsDiscretionary spending softness in certain verticals, requiring cautious near-term view

What to watch into next quarter

Q1 FY26 cc growth landing inside the 2.7–4.2% range — The starting cadence for the FY26 4.0–6.5% range. A landing in the upper half would suggest H2 acceleration is plausible; a low-end print would imply the FY26 range skews to the lower half.

Whether FY26 cc range is tightened or raised mid-year — Range issued at 4.0–6.5%. Watch Q1/Q2 prints for any narrowing or lift.

Belcan organic trajectory post-anniversary — Belcan contributed ~260bps to FY25 revenue growth (~960bps to P&R). With the anniversary effect rolling off in 2026, P&R underlying organic trend becomes visible.

CMT stabilization — Q4 CMT printed -1.2% cc with FY25 only +0.7% cc; watch whether technology customer strength offsets comms/media pressure.

Adjusted operating margin progression vs the 15.9–16.1% FY26 guide — Q4 FY25 already printed at 16.0%; sustaining margin while funding AI investments and integrating 3Cloud is the key operational test.

Bookings momentum sustaining — 28 large deals in 2025, large-deal TCV +~50% YoY, TTM book-to-bill ~1.3x. Watch whether large-deal cadence continues into early 2026 as a leading indicator for H2 ramp.

3Cloud integration and M&A cadence — 3Cloud closed in Q4 with $733M of restricted cash tied to the deal at year-end. Watch for early revenue contribution and additional tuck-in activity consistent with the AI builder strategy.

Sources

  1. Cognizant Q4 and Full-Year 2025 press release (Exhibit 99.1, Form 8-K filed 2026-02-04) — https://www.sec.gov/Archives/edgar/data/1058290/000105829026000003/exhibit99112312025.htm

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