Cognizant Reports Third Quarter 2026 Results
COGNIZANT TECHNOLOGY SOLUTIONS CORP (CTSH) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Cognizant Reports Third Quarter 2026 Results 12% year-over-year revenue growth in Financial Services; strong EPS growth, adjusted operating margin expansion, and free cash flow generation • Revenue of $5.7 billion increased 4.6% year-over-year or 4.8% in constant cur
How this was made
The 30-second read
Why it matters
The earnings beat and guidance update are likely to drive short‑term buying pressure, especially in AI‑related equities.
Market read
Strong earnings and upward‑revised guidance position Cognizant as a beneficiary of enterprise AI spending, potentially lifting peer stocks.
What to watch
Higher attrition rates or integration costs from recent acquisitions could pressure margins.
Revenue of $5.7 billion increased 4.6% year-over-year or 4.8% in constant currency; GAAP EPS of $1.39 increased 148% year-over-year; full-year 2026 constant currency revenue growth guidance revised to 4.0% to 4.4%.
Revenue growth, Financial Services growth, adjusted operating-margin expansion and adjusted EPS growth were positive, while GAAP operating margin declined, quarterly bookings declined and Health Sciences and Products and Resources revenue contracted.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 revenueGAAP | $5.66B | – | 4.6 % |
| Q3 2026 constant currency revenue growthnon-GAAP | 4.8 % | – | 4.8 % |
| Q3 2026 income from operationsGAAP | $872M | – | – |
| Q3 2026 GAAP operating marginGAAP | 15.4 % | – | decreased 60 basis points year-over-year |
| Q3 2026 adjusted income from operationsnon-GAAP | $923M | – | – |
| Q3 2026 adjusted operating marginnon-GAAP | 16.3 % | – | increased 30 basis points year-over-year |
| Q3 2026 net incomeGAAP | $627M | – | – |
| Q3 2026 adjusted net incomenon-GAAP | $670M | – | – |
| Q3 2026 GAAP diluted earnings per shareGAAP | $ 1.39 | – | 148% |
| Q3 2026 adjusted diluted earnings per sharenon-GAAP | $ 1.49 | – | 7.2% |
| Q3 2026 operating cash flowGAAP | $1.00B | – | – |
| Q3 2026 free cash flownon-GAAP | $925M | – | – |
| Nine months ended September 30, 2026 revenueGAAP | $16.56B | – | 5.0 % |
| Nine months ended September 30, 2026 constant currency revenue growthnon-GAAP | 4.3 % | – | 4.3 % |
| Nine months ended September 30, 2026 income from operationsGAAP | $2.59B | – | – |
| Nine months ended September 30, 2026 GAAP operating marginGAAP | 15.6 % | – | – |
| Nine months ended September 30, 2026 adjusted income from operationsnon-GAAP | $2.64B | – | – |
| Nine months ended September 30, 2026 adjusted operating marginnon-GAAP | 16.0 % | – | expanded adjusted operating margin by 30 basis points |
| Nine months ended September 30, 2026 net incomeGAAP | $1.93B | – | – |
| Nine months ended September 30, 2026 adjusted net incomenon-GAAP | $1.98B | – | – |
| Nine months ended September 30, 2026 GAAP diluted earnings per shareGAAP | $ 4.14 | – | – |
| Nine months ended September 30, 2026 adjusted diluted earnings per sharenon-GAAP | $ 4.25 | – | – |
| Nine months ended September 30, 2026 operating cash flowGAAP | $1.84B | – | – |
| Nine months ended September 30, 2026 free cash flownon-GAAP | $1.58B | – | – |
| Trailing-twelve-month bookingsother | $28.7B | – | increased 4% year-over-year |
| Trailing-twelve-month book-to-billother | approximately 1.3x | – | – |
| Third quarter bookingsother | declined 7% year-over-year | – | declined 7% year-over-year |
| Voluntary Attrition - Tech Services, trailing-twelve months ended September 30, 2026other | 12.6% | – | – |
| Total headcount as of September 30, 2026other | 359,900 | – | – |
| Project Leap charges, Q3 2026non-GAAP | $51M | – | – |
| Project Leap charges, nine months ended September 30, 2026non-GAAP | $135M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Q3 2026 Health SciencesConstant currency revenue change was (0.9) %. | $1.59B | – | (1.1) % |
| Q3 2026 Financial ServicesConstant currency revenue change was 12.3 %. The sale of third-party products contributed 400 basis points of growth. | $1.77B | – | 12.0 % |
| Q3 2026 Products and ResourcesConstant currency revenue change was (0.8) %. | $1.37B | – | (0.9) % |
| Q3 2026 Communications, Media and TechnologyConstant currency revenue change was 10.7 %. Recently completed acquisitions contributed 875 basis points and the sale of third-party products contributed 600 basis points of growth. | $939M | – | 10.5 % |
| Nine months ended September 30, 2026 Health SciencesConstant currency revenue change was (0.3) %. Lower sales of third-party products negatively impacted the segment by 100 basis points. | $4.74B | – | 0.3 % |
| Nine months ended September 30, 2026 Financial ServicesConstant currency revenue change was 11.4 %. Recently completed acquisitions contributed 125 basis points and the sale of third-party products contributed 300 basis points of growth. | $5.14B | – | 12.1 % |
| Nine months ended September 30, 2026 Products and ResourcesConstant currency revenue change was 0.3 %. | $4.01B | – | 1.2 % |
| Nine months ended September 30, 2026 Communications, Media and TechnologyConstant currency revenue change was 6.2 %. Recently completed acquisitions contributed 400 basis points and the sale of third-party products contributed 650 basis points of growth. | $2.66B | – | 6.7 % |
Amounts quoted below without a unit are in millions, as in the filing’s tables. Per-share figures are as printed.
Fourth quarter and full-year 2026 guidance as of October 29, 2026 outlook
- RevenueFourth quarter revenue is expected to be $5.49 to $5.57 billion, growth of 3.0% to 4.5%, or 3.2% to 4.7% in constant currency. Full-year 2026 revenue is expected to be $22.05 to $22.14 billion, growth of 4.5% to 4.9%, or 4.0% to 4.4% in constant currency.
- NoteFull-year 2026 Adjusted Operating Margin is now expected to be approximately 16.1%, or 30 basis points of expansion.
- NoteFull-year 2026 Adjusted Diluted EPS is expected to be in the range of $5.72 to $5.79, growth of 8% to 10%.
- NoteProject Leap total costs are expected to be $180 million to $250 million, with $140 million to $160 million of costs expected to be incurred in 2026 and the remainder to be incurred through the first quarter of 2027.
- NoteProject Leap is expected to generate in-year savings of approximately $200 million in 2026.
- NoteProject Leap guidance anticipates pre-tax charges of approximately $0.30 to $0.35 per diluted share and a tax benefit of approximately ($0.08) to ($0.09) per diluted share for the full year 2026.
- NoteGuidance anticipates a pre-tax benefit of approximately ($0.18) per diluted share related to the India Defined Contribution Obligation with a corresponding tax expense of approximately $0.05 per diluted share for the full year 2026.
Capital returns
- The Company repurchased 4.9 million shares for $258 million during the third quarter under its share repurchase program.
- Repurchases of common stock were $ 270 in the third quarter and $ 1,877 in the nine months ended September 30, 2026.
- Dividends paid were $ 149 in the third quarter and $ 465 in the nine months ended September 30, 2026.
- As of September 30, 2026, there was $2.1 billion remaining under the share repurchase authorization.
- In October 2026, the Company declared a quarterly cash dividend of $0.33 per share for shareholders of record on November 13, 2026, payable on November 25, 2026.
What drove it
- Financial Services revenue grew 12.0 % year-over-year and 12.3 % in constant currency in Q3 2026.
- Communications, Media and Technology revenue grew 10.5 % year-over-year, with recently completed acquisitions contributing approximately 875 basis points to segment growth.
- Recently completed acquisitions contributed approximately 210 basis points to overall Q3 2026 revenue growth.
- The sale of third-party products in connection with the integrated offerings strategy contributed approximately 190 basis points to overall Q3 2026 revenue growth.
- Adjusted operating margin expanded by 30 basis points year-over-year to 16.3 %.
- The Company reported three large deals in the third quarter, defined as deals with total contract value of $100 million or greater.
Concerns
- GAAP operating margin declined 60 basis points year-over-year to 15.4 %.
- Health Sciences revenue declined (1.1) % year-over-year and Products and Resources revenue declined (0.9) % year-over-year in Q3 2026.
- Third quarter bookings declined 7% year-over-year.
- Q3 2026 free cash flow was $ 925 compared with $ 1,160 in Q3 2025, and nine-month free cash flow was $ 1,582 compared with $ 1,884.
- Project Leap costs are now expected to total $180 million to $250 million, with the remainder beyond 2026 expected through the first quarter of 2027.
- GAAP diluted EPS in Q3 2025 included a one-time non-cash income tax charge that negatively impacted the period by $0.80.
What to watch
- Fourth quarter revenue guidance of $5.49 to $5.57 billion and constant-currency growth guidance of 3.2% to 4.7%.
- Delivery of full-year 2026 adjusted operating margin of approximately 16.1% and adjusted diluted EPS of $5.72 to $5.79.
- Whether bookings recover after the 7% year-over-year third-quarter decline.
- Execution and costs of Project Leap, including expected in-year savings of approximately $200 million in 2026.
- Growth durability in Financial Services and Communications, Media and Technology, and recovery in Health Sciences and Products and Resources.
Balance sheet and cash flow
- Cash and cash equivalents were $ 1,515 as of September 30, 2026, compared with $ 1,901 as of December 31, 2025.
- Short-term debt was — and long-term debt was $ 1,552 as of September 30, 2026.
- Total assets were $ 21,326 and total liabilities were $ 6,600 as of September 30, 2026.
- Net cash provided by operating activities was $ 1,004 in Q3 2026 and $ 1,836 in the nine months ended September 30, 2026.
- Purchases of property and equipment were $ 79 in Q3 2026 and $ 254 in the nine months ended September 30, 2026.
- Payments for business combinations, net of cash acquired, were $ 1,313 in the nine months ended September 30, 2026.
- Proceeds from borrowing under the revolving credit facility were $ 1,000 in the nine months ended September 30, 2026.
Analysis
Cognizant reported Q3 2026 revenue of $ 5,664, up 4.6 % year-over-year, or 4.8 % in constant currency. Financial Services was the largest growth contributor, with revenue of $ 1,767, up 12.0 %, while Communications, Media and Technology rose 10.5 % to $ 939. Health Sciences declined (1.1) % to $ 1,587 and Products and Resources declined (0.9) % to $ 1,371. Recently completed acquisitions contributed approximately 210 basis points to overall growth, while sales of third-party products contributed approximately 190 basis points.
Profitability showed a divergence between GAAP and adjusted measures. GAAP operating margin was 15.4 %, down from 16.0 %, while adjusted operating margin was 16.3 %, up from 16.0 %. Q3 GAAP income from operations was $ 872 and adjusted income from operations was $ 923, including $51 million of Project Leap charges. GAAP diluted earnings per share was $ 1.39 compared with $ 0.56, while adjusted diluted earnings per share increased to $ 1.49 from $ 1.39. The prior-year GAAP EPS included a one-time non-cash income tax charge that negatively impacted Q3 2025 by $0.80.
Cash generation remained substantial but was lower than the prior-year period. Operating cash flow was $ 1,004 in Q3 2026 and free cash flow was $ 925, compared with $ 1,227 and $ 1,160, respectively, in Q3 2025. For the first nine months, operating cash flow was $ 1,836 and free cash flow was $ 1,582. The company repurchased 4.9 million shares for $258 million during the quarter, had $2.1 billion remaining under its authorization as of September 30, 2026, and declared a quarterly cash dividend of $0.33 per share in October 2026.
Demand indicators were mixed. Trailing-twelve-month bookings increased 4% year-over-year to $28.7 billion and represented a book-to-bill of approximately 1.3x, but third-quarter bookings declined 7% year-over-year. The company reported three large deals in the quarter. Headcount was 359,900 as of September 30, 2026, and trailing-twelve-month Voluntary Attrition - Tech Services was 12.6%.
The company guided fourth-quarter revenue to $5.49 to $5.57 billion, representing growth of 3.0% to 4.5%, or 3.2% to 4.7% in constant currency. Full-year 2026 revenue is expected to be $22.05 to $22.14 billion, or 4.0% to 4.4% constant-currency growth. Full-year adjusted operating margin is expected to be approximately 16.1%, and adjusted diluted EPS is expected to be $5.72 to $5.79. Project Leap is expected to incur total costs of $180 million to $250 million and generate in-year savings of approximately $200 million in 2026.
Management, verbatim
We delivered third-quarter revenue above the midpoint of our guidance range, including another quarter of double-digit growth in Financial Services and our seventh consecutive quarter of year-over-year adjusted operating margin expansion.
Ravi Kumar S, Chief Executive Officer
Adjusted EPS grew 7%, exceeding revenue growth both in the quarter and year-to-date.
Jatin Dalal, Chief Financial Officer
Through the first nine months of 2026, we have expanded adjusted operating margin by 30 basis points, generated $1.6 billion of free cash flow and deployed $2.3 billion on share repurchases and dividends.
Jatin Dalal, Chief Financial Officer
Not in the filing
stated, not guessed- Prior outlook was not provided, so no comparison of actual results with prior guidance is available.
- Gross profit and gross margin were not reported.
- Q3 2026 tax rate was not reported.
- Quarterly or full-year GAAP operating-margin, GAAP EPS, operating-expense and tax-rate guidance was not provided.
- Prior-quarter revenue, operating income, operating margin, net income, EPS, operating cash flow and free cash flow were not reported for the Q3 2026 metric rows.
- Segment operating income or segment margin was not reported.
- A complete debt total was not separately reported as a single line item.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Cognizant filed a Form 8‑K reporting its Q3 2026 earnings, highlighting AI‑driven growth and revising FY guidance.
Ticker impact
Cognizant disclosed Q3 2026 results with 4.6% revenue growth, 148% GAAP EPS increase and revised FY guidance.
likely upward pressure as investors price in higher EPS and updated revenue guidance
The 148% EPS jump and upward‑revised FY revenue guidance signal better profitability, prompting buying interest.
Market effects
May boost sentiment for the broader IT services and AI consulting sector.
Positive for U.S. technology stocks and AI‑focused funds.
Reinforces global AI adoption narrative, supporting related multinational tech firms.
Counterpoint
If the AI spending slowdown materializes, the guidance could be overly optimistic.
Key entities
- companyCognizant Technology Solutions Corp
US‑listed IT services and AI consulting firm.
