Cognizant Technology Solutions Corp (NASDAQ: CTSH), a key player in the information technology consulting and outsourcing sector, announced its financial results and business outlook in its latest quarterly report. The company posted revenue of $5.33 billion for the fourth quarter, reflecting a 4.9% increase compared to the same period last year and surpassing the analyst consensus estimate of $5.31 billion.
Adjusted earnings per share (EPS) for the quarter were reported at $1.35, exceeding the consensus estimate of $1.32, demonstrating the company's ability to generate profits above market expectations. Alongside revenue growth, profitability also improved with the adjusted operating margin expanding by 30 basis points to reach 16.0% for the quarter. The generally accepted accounting principles (GAAP) operating margin showed an even more notable improvement, broadening by 120 basis points to also hit 16.0%.
Over the trailing twelve months, Cognizant's bookings — the total value of contracts signed — grew by 5% year-over-year to $28.4 billion. This robust intake corresponds to a book-to-bill ratio of approximately 1.3x, highlighting a healthy pipeline of future work. The quarterly bookings displayed an even stronger year-over-year uplift of 9% and included twelve large-scale contracts valued at $100 million or above. Among these were two substantial "mega-deals" each exceeding $500 million in contract value, emphasizing Cognizant’s traction in securing large, long-term engagements, particularly those related to artificial intelligence (AI) growth initiatives.
Employee dynamics showed a favorable trend, with voluntary attrition in the technology services division improving from 15.9% at the end of 2024 to 13.9% as of December 31, 2025. The firm’s total headcount rose by 14,800 over the same period, culminating in 351,600 employees by year-end, signaling ongoing investments in staff to support active projects and growth efforts.
Operating cash flow for the recent quarter totaled $858 million, slightly down from $920 million recorded a year earlier, yet reflecting strong cash generation capabilities. This operational cash was partly channeled into share repurchases, with the company buying back 4.3 million shares for approximately $325 million during the quarter. In addition, Cognizant declared a quarterly cash dividend of $0.33 per share payable in late February 2026 to shareholders of record as of February 18, 2026.
From a management perspective, CFO Jatin Dalal noted that Cognizant not only exceeded the upper ranges of its guidance in 2025 but also achieved a commendable 50 basis point increase in adjusted operating margin alongside an 11% growth in adjusted EPS. Operational discipline was credited for maintaining exceptional free cash flow conversion above 100% of net income, which supported the company in returning $2 billion to shareholders over the year.
Looking ahead, Cognizant projects revenue for the first quarter of 2026 to fall between $5.36 billion and $5.44 billion, suggesting growth in the range of 4.8% to 6.3% compared to prior-year results and slightly above analyst expectations set at around $5.348 billion. For the full year 2026, the company anticipates total revenue reaching between $22.14 billion and $22.66 billion, translating to an estimated growth rate of 4.9% to 7.4%, again modestly exceeding consensus estimates near $22.06 billion. Adjusted EPS guidance for 2026 is positioned between $5.56 and $5.70, pacing slightly variably against analysts’ consensus forecast of $5.62 per share.
Following the earnings release, Cognizant’s stock price experienced a decline of 2.68%, trading at $72.50 in premarket activity, reflecting market reactions to the detailed guidance and underlying financials.
In summary, Cognizant has delivered a solid financial performance highlighted by consistent revenue growth, margin enhancements, and a strong influx of large-scale contracts, including significant contributions from AI-related initiatives. The company’s operational efficiency and strong cash flows underpin a shareholder-friendly approach through dividends and share repurchases. Its outlook for 2026 indicates ongoing momentum, with expectations of sustained top-line growth and profitability.
While the fiscal results and large contract wins underscore resilience and strategic success, market participants will monitor how Cognizant manages potential risks such as volatility in cash flow generation, competitive pressures impacting large deal acquisitions, and workforce dynamics amid evolving technological demands.