Cognizant — Third Quarter 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenue was $5.664 billion, a 4.6% year-over-year increase (4.8% in constant currency), compared to $5.415 billion in Q3 2025.
• GAAP operating margin was 15.4%, a decrease of 60 basis points year-over-year; Adjusted Operating Margin was 16.3%, an increase of 30 basis points year-over-year.
• GAAP diluted EPS was $1.39, a 148% increase year-over-year; Adjusted diluted EPS was $1.49, a 7.2% increase year-over-year.
• Trailing 12-month bookings were $28.7 billion, a 4% year-over-year increase, with a book-to-bill ratio of approximately 1.3x.
• Q3 2026 bookings declined 7% year-over-year and included three large deals (total contract value of $100 million or greater).
• Year-to-date 2026 operating cash flow was $1.836 billion; free cash flow was $1.582 billion.
• GAAP net income for Q3 2026 was $627 million; Adjusted Net Income was $670 million.
• Total headcount was 359,900 as of September 30, 2026, an increase of 10,100 from September 30, 2025.
• Voluntary attrition in Tech Services was 12.6% for the trailing twelve months ended September 30, 2026.
• Long-term debt was $1.552 billion as of September 30, 2026, compared to $543 million as of December 31, 2025.
• Deferred revenue was $415 million (current) and $29 million (noncurrent) as of September 30, 2026.

Guidance and Future Outlook:

• Full-year 2026 constant currency revenue growth guidance revised to 4.0% to 4.4% year-over-year.
• Full-year 2026 Adjusted Operating Margin guidance is now approximately 16.1%, representing a 30 basis point year-over-year expansion.
• Full-year 2026 Adjusted Diluted EPS guidance revised to $5.72 to $5.79, representing 8% to 10% year-over-year growth.
• Q4 2026 revenue is expected to be $5.49 to $5.57 billion, with growth of 3.0% to 4.5% (3.2% to 4.7% in constant currency).
• Full-year 2026 revenue is expected to be $22.05 to $22.14 billion.
• Project Leap total costs are expected to be $180 million to $250 million, with $140 million to $160 million incurred in 2026 and the remainder through Q1 2027.
• Project Leap is expected to generate in-year savings of approximately $200 million in 2026.

Business Segments and Product Lines:

• Financial Services revenue grew 12.0% year-over-year to $1.767 billion, representing 31.2% of total revenue.
• Communications, Media and Technology revenue grew 10.5% year-over-year to $939 million.
• Health Sciences revenue decreased 1.1% year-over-year to $1.587 billion.
• Products and Resources revenue decreased 0.9% year-over-year to $1.371 billion.
• North America revenue grew 5.7% year-over-year to $4.258 billion.
• Europe (Total) revenue grew 1.4% year-over-year to $1.057 billion.
• Launched Cognizant AI Nexus, a modular, multi-model operating layer for AI investment value realization.
• Launched Cognizant Activate, a new business unit for emerging enterprises to harness AI.
• Announced general availability of Workflow Agentic Processing and Enterprise Model Context Protocol (MCP) Servers for TriZetto Facets® and QNXT™ platforms.
• Expanded partnership with Google Cloud to establish a new Gemini Frontier Capability Group backed by 18,000 associates.
• Expanded collaboration with CrowdStrike to introduce Cognizant Cybersecurity for Operational Technology.

Market and Competitive Landscape:

• Recognized as a Leader by Everest Group in 16 PEAK Matrix® Assessments across BFS Agentic Business Operations, Life and Annuity Insurance IT Services, and Cybersecurity Services.
• Recognized as a Leader in IDC MarketScape for Worldwide AI-Enabled Adobe Professional Services and Worldwide Cloud Professional Services in the AI Era.
• Recognized as a Leader in ISG Provider Lens for Telecom, Media and Entertainment AI-Native Transformation Services and Future of Work Services.
• Recognized as a Leader in Avasant's RadarView for Application Management Services and Capital Markets Business Process Transformation.
• The AI market is moving from capability to value realization, with over 50% of Cognizant's code now AI-assisted.
• Associates have earned over 95,000 frontier AI badges and certifications.

Risks and Challenges:

• Forward-looking statements are subject to risks including general economic conditions, competitive marketplace for talent, and labor market trends.
• Risks include the ability to successfully use AI-based technologies and their impact on demand and terms for services.
• Risks include the ability to successfully implement Project Leap, including costs, timing, and benefits.
• Legal, reputational, and financial risks resulting from cyberattacks.
• Changes in the regulatory environment, including immigration, trade, and taxes.
• One-time non-cash income tax expense of $390 million impacted Q3 2025 GAAP EPS due to the enactment of the OBBBA.
• Non-operating foreign currency exchange gains and losses are subject to high variability and cannot be provided on a forward-looking basis without unreasonable efforts.

Management Commentary and Tone:

• CEO Ravi Kumar S stated the company delivered third-quarter revenue above the midpoint of guidance and achieved the seventh consecutive quarter of year-over-year adjusted operating margin expansion.
• CFO Jatin Dalal noted that adjusted EPS grew 7%, exceeding revenue growth, and highlighted a balanced approach to capital allocation, investing in strategic partnerships and AI skilling while integrating acquisitions.
• Management emphasized the transition of the AI market from capability to value realization and the goal of making AI a new production function for clients.

Analyst Questions and Answers:

• No specific analyst questions and answers content is included in the provided press release text.

Other Key Points:

• Entered into a definitive agreement to acquire DyFlex Solutions, a leading SAP transformation firm in Australia and New Zealand.
• Repurchased 4.9 million shares for $258 million during Q3 2026; $2.1 billion remained under the share repurchase authorization as of September 30, 2026.
• Declared a quarterly cash dividend of $0.33 per share in October 2026, payable on November 25, 2026.
• Deployed $2.3 billion on share repurchases and dividends through the first nine months of 2026.
• Completed Americas Codex hackathon with OpenAI, where over 2,600 associates built solutions using OpenAI Codex.
• Plans to hire 1,500 U.S. college graduates and scale a Frontier Certified Engineer and Frontier Business Operator workforce to 15,000 people.
• Recent client agreements include extensions and new work with Gilead Sciences, European Bank for Reconstruction and Development (EBRD), Travelport, SITA, Odyssey Logistics, Axis Bank, Benchling/Kyowa Kirin, and Ingenico.
• Project Leap charges for Q3 2026 were $51 million, consisting of $46 million in employee separation costs and $5 million in other costs.