Cognizant Technology Solutions Corporation, a professional services company, provides consulting and technology, and outsourcing services in North America, Europe, and internationally.
Cognizant (CTSH) closed out 2025 on a strong note, posting fourth quarter revenue of $5.3 billion, up 4.9% from a year ago and slightly ahead of Wall Street expectations. For the full year, revenue reached $21.1 billion, up 7.0% and a sharp acceleration from 2024’s 2.0% growth. However, the acquisition of Belcan, an engineering services firm, contributed roughly 2.6 percentage points of that growth, meaning organic revenue expansion was closer to 4.4%.
Profitability improved across the board. Adjusted operating margin expanded 50 basis points to 15.8% for the year, while adjusted earnings per share climbed 11% to $5.28. Free cash flow reached $2.7 billion, converting at 120% of net income, up from 82% a year earlier. On the GAAP side, earnings per share were essentially flat at $4.56 due to a one-time, non-cash tax charge of $390 million tied to U.S. tax law changes affecting research cost capitalization.
Segment performance was uneven. Financial Services was the clear standout, surging 10.5% in Q4 and beating estimates comfortably. Health Sciences grew at a steady 5.2%. However, the Communications, Media and Technology segment contracted 0.4% in Q4 and managed just 1.0% growth for the full year, signaling persistent softness with technology and media clients. Perhaps most importantly, Products and Resources posted 10.5% full year growth on paper, but Belcan contributed roughly 960 basis points of that, meaning underlying organic growth was barely above 1%.
The deal pipeline looks encouraging. Trailing twelve month bookings reached $28.4 billion with a 1.3x book-to-bill ratio, and the company signed 28 large deals in 2025, including two mega deals exceeding $500 million each. Cognizant is leaning into AI partnerships with Anthropic and Microsoft to position itself as an enterprise AI implementation partner.
Looking ahead, management guided 2026 revenue of $22.1 billion to $22.7 billion, implying 4% to 6.5% constant currency growth, a figure that exceeded consensus estimates. Adjusted operating margin should expand another 10 to 30 basis points. The company plans to return $1.6 billion to shareholders through buybacks and dividends, including a 6.5% dividend increase.
The takeaway for investors: Cognizant is executing well on its turnaround with improving margins, strong deal momentum, and above-estimate guidance. But headline growth numbers flatter the organic picture, and persistent weakness in Communications, Media and Technology remains a concern. The key question for 2026 and beyond is whether AI investments can accelerate organic growth or whether acquisitions will continue doing the heavy lifting.
