Cognizant Raises Earnings Outlook as Financial Services Extends Gains
Second-quarter revenue rose 4.5% to $5.481 billion as operating margins widened.
Cognizant Technology Solutions (CTSH), an information-technology services company, raised its full-year earnings outlook after its largest segment delivered a second consecutive quarter of double-digit growth.
Financial Services revenue grew 12% from a year earlier, extending the segment's momentum as companywide growth remained in the mid-single digits.
Second-quarter revenue rose 4.5% from a year earlier, or 4.1% in constant currency. GAAP diluted earnings increased 3.8% to $1.36 a share, while adjusted earnings rose 4.6% to $1.37 a share. Net income declined to $636 million from $645 million.
Profitability improved despite restructuring costs. GAAP operating margin expanded 30 basis points to 15.9%, and adjusted operating margin widened 40 basis points to 16.0%. Cognizant recorded $84 million of Project Leap charges, largely offset by an $81 million benefit tied to a reversal of part of its India defined-contribution liability following regulatory changes.
Demand indicators were mixed. Trailing-12-month bookings increased 5% to $29.1 billion, representing about 1.3 times revenue, while second-quarter bookings declined 6%. Technology-services voluntary attrition rose sequentially to 13.0%, and headcount fell by 900 during the quarter to 356,700, remaining 12,900 above the year-earlier level.
Cognizant now expects full-year adjusted diluted earnings of $5.70 to $5.82 a share, up 8% to 10%, and constant-currency revenue growth of 4.0% to 5.5%. Reported revenue is projected at $22.04 billion to $22.35 billion, while adjusted operating margin guidance remains 16.0% to 16.2%. For the third quarter, the company expects revenue of $5.60 billion to $5.68 billion, representing reported growth of 3.4% to 4.9%.
The company completed its $634 million acquisition of Astreya and borrowed $1.0 billion under its revolving credit facility. It also repurchased 22.5 million shares for $1.153 billion during the quarter, bringing first-half buybacks to $1.6 billion, with $2.3 billion remaining under its authorization.
Project Leap is expected to produce total charges of $230 million to $320 million, substantially all during 2026, leaving the restructuring program as a continuing cost alongside Cognizant's improved earnings outlook.