Cognizant Technology Solutions Corporation

What they do

Cognizant delivers consulting, application development, systems integration, quality engineering, engineering R&D, application maintenance, infrastructure and security, and business process services and automation. It goes to market through four industry-based segments: Health Sciences, Financial Services, Products and Resources, and Communications, Media and Technology. Work is delivered through an integrated global model using teams at client locations plus global and regional delivery centers, with a significant majority of operations and technical personnel located in India.

Revenue drivers

• Financial Services (FS) — Serves banking, capital markets, payments and insurance clients; described as the largest and most mature segment, and the only segment called out for double-digit year-over-year growth in Q2 2026 (12%). Demand is driven by legacy modernization, operational resilience, and cloud, data and AI adoption.
• Health Sciences (HS) — Serves healthcare providers and payers and life sciences companies including pharmaceutical, biotech and medical device firms. Demand areas include clinical development, pharmacovigilance, manufacturing, claims processing, enrollment, membership and revenue cycle management.
• Products and Resources (P&R) — One of the four reportable segments named in the 2025 10-K; the excerpts provided do not describe its client base or demand drivers in detail.
• Communications, Media and Technology (CMT) — One of the four reportable segments named in the 2025 10-K; the excerpts provided do not describe its client base or demand drivers in detail.

Recent performance

Second quarter 2026 revenue was $5,481 million, up 4.5% year-over-year and 4.1% in constant currency, versus 8.1% growth in Q2 2025. GAAP operating margin was 15.9% (up 30 basis points), adjusted operating margin was 16.0% (up 40 basis points), GAAP diluted EPS was $1.36 and adjusted diluted EPS was $1.37. Trailing-twelve-month bookings rose 5% to $29.1 billion (about 1.3x book-to-bill), but second quarter bookings declined 6% year-over-year and included seven deals of $100 million or more. Headcount was 356,700 at June 30, 2026, down 900 sequentially and up 12,900 year-over-year, with voluntary tech services attrition of 13.0%. The company repurchased 22.5 million shares for $1,153 million in the quarter, leaving $2.3 billion authorized.

Strategy

Cognizant is positioning itself as an 'AI builder,' combining industry expertise with engineering, infrastructure and data modernization to help clients move from AI experimentation to enterprise-scale execution. Stated priorities are accelerating growth, becoming an employer of choice, and simplifying operations through modernization and an AI-enabled IT roadmap, including large-scale reskilling of technical teams and expanded local workforces in the United States and other markets. It pursues select acquisitions to add talent and capabilities, and it is expanding a partner ecosystem of hyperscalers, cloud providers, enterprise software companies and start-ups. In the first half of 2026 the company deployed $1.6 billion on share repurchases and $1.3 billion on acquisitions aligned with the AI builder strategy.

Risks

• Client discretionary spending — Volatile or uncertain economic and geopolitical conditions have caused and could again cause clients to reduce, postpone or cancel projects, which the 10-K cites as having negatively impacted revenue in the recent past.
• Geographic and industry concentration — Revenue is highly dependent on clients in the United States and Europe, and many clients are in financial services and healthcare, so weakness, consolidation or restrictive regulation in those industries or regions can reduce demand.
• India delivery concentration — A significant majority of operations and technical personnel are in India, exposing costs to high inflation, wage growth, currency volatility and adverse changes in government policy or tax incentives.
• Competition and technology change — The company operates in intensely competitive markets where service offerings must keep pace with rapid technological advances, and clients face disruption from AI-native competitors.

Outlook

Management revised 2026 constant currency revenue growth guidance to 4.0% to 5.5% year-over-year. Adjusted operating margin guidance is unchanged at 16.0% to 16.2%, representing 20 to 40 basis points of year-over-year expansion. Adjusted diluted EPS guidance was raised to $5.70 to $5.82, or 8% to 10% growth. The CEO said the market opportunity is larger than ever as organizations shift from AI experimentation to enterprise-scale execution.