Cognizant 2025-26: $20B Revenue, AI 30%+ Code, FY26 EPS $5.56-$5.70
FY25 revenue $21.11B (+7% / 6.4% cc); op income $3.53B (+22%); NI $2.23B; EPS $4.55 (+1%). Q4 +3.8% cc / 12 large deals (>$100M, one >$1B). Adj op margin 16% (+30bp Q4). Financial Services led (+9% Q4 / +7% FY cc). 4,000+ AI engagements; 30%+ developer effort AI-assisted. FY26 guide: revenue +4-6.5% cc; adj EBIT 15.9-16.1%; adj EPS $5.56-$5.70 (+5-8%).
Key takeaways
- Q4 record bookings — 12 large deals >$100M, one >$1B. TCV growth +9% Q4 YoY. The big-deal pipeline + financial services momentum + AI-led modernization combo is structural.
- AI is real — 30%+ of developer effort AI-assisted. Internal code generation; 1,500+ agents in production; 340K+ associates AI-skilled. Industrializing AI builder stack via 3 dedicated units. The transformation from cost-center to AI-powered development hub.
- Financial Services led FY +7% / Q4 +9% cc. North America financial services + insurance driving. Discretionary spending steadily improved through year. Consistent large deal signings.
- Three Cloud acquisition adds ~100bp Q1. Total inorganic contribution +150bp FY26 (one-third from M&A). India primary offering + secondary listing being evaluated.
- FY26 guide: revenue +4-6.5% cc, adj EPS $5.56-$5.70 (+5-8%), $1.6B shareholder return. Margin expansion 15.9-16.1% (+30bp YoY). FCF/NI ~90-100%. The compounding algorithm continues.
Business
Cognizant Technology Solutions is a US IT services + consulting + outsourcing firm with four operating segments + AI-led transformation:
- Financial Services (~30% of revenue, fastest growing). Banking + insurance + capital markets. FY +7% cc / Q4 +9% cc. North America banking + financial services + insurance leading. Steady discretionary spending improvement.
- Health Sciences (~25%). Payer + provider + life sciences. TriZetto core differentiator. GenAI in claims efficiency + clinical documentation + customer experience.
- Products & Resources (~22%). Manufacturing + retail + transportation. Tariff uncertainty suppressed discretionary spending FY25; large deal traction expected 2026.
- Communications, Media & Technology (~22%). Tech + comms + media. Q4 tech customer growth offset comms/media weakness. Tech adopting GenAI rapidly.
Strategic moves FY25:
- 12 large deals >$100M Q4 (one >$1B incremental partnership)
- Cisco partnership (customer interactions transformation)
- Three Cloud acquisition announced (closes 2026)
- Cognizant Agent Foundry + Autonomous Customer Engagement launched
- Belcan integration (~$1B revenue, 350bp inorganic FY25 contribution)
- 1,500+ AI agents in production
- BPO revenue +10% last 2 quarters; on track for $3B annualized
- AI partnership ecosystem: NVIDIA, Anthropic, others
- Google Gemini Enterprise — early launch partner
- $2B FY25 buyback / $1.6B FY26 plan
FY25 financial performance
| Metric (FY) | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue ($B) | 19.43 | 19.35 | 19.74 | 21.11 |
| Revenue YoY | n/a | -0.4% | +2% | +7% |
| Op income ($B) | 2.97 | 2.69 | 2.89 | 3.53 |
| Op margin | 15.3% | 13.9% | 14.7% | 16.7% |
| Net income ($B) | 2.29 | 2.13 | 2.24 | 2.23 |
| Diluted EPS ($) | 4.41 | 4.21 | 4.51 | 4.55 |
| Adj EPS ($) | n/a | n/a | ~4.85 | ~5.30 |
| FCF ($B) | 2.24 | 2.01 | 1.83 | 2.60 |
| Capex ($M) | -332 | -317 | -297 | -288 |
| Total debt ($B) | 1.53 | 1.32 | 1.50 | 1.58 |
| Dividends ($M) | -564 | -591 | -600 | -610 |
| Buyback ($M) | -1,422 | -1,064 | -605 | -1,378 |
The earnings progression: revenue +7% FY25 (vs 2% FY24, -0.4% FY23) — clear acceleration. Op margin 14.7% → 16.7% (+200bp). FCF $2.6B (+42% YoY).
Belcan integration adds ~350bp inorganic to FY25; FY26 inorganic +150bp (one-third from M&A).
Capital allocation
- Capex: $-288M FY25 (-3% YoY).
- Dividends: $-610M FY25 (+2%); ~$1.20/share annual.
- Buybacks: $-1.38B FY25 (vs $-605M FY24, +128%).
- M&A: Belcan integrated; Three Cloud announced (closes 2026).
- Debt: $1.58B (+5% YoY).
- Shareholder return: $2B FY25 / $1.6B FY26 plan.
- FCF: $2.60B (+42%).
FY26 outlook (per Q4 2025 call, 2026-02-04)
| FY26 framework | Detail |
|---|---|
| Q1 FY26 revenue growth | +2.7% to +4.2% cc |
| Three Cloud Q1 contribution | ~+100bp |
| FY26 revenue growth | +4% to +6.5% cc |
| Inorganic contribution | ~+150bp (one-third M&A) |
| Adjusted op margin | 15.9% to 16.1% (+30bp) |
| FCF / NI conversion | 90-100% |
| Adjusted diluted EPS | $5.56 to $5.70 (+5-8%) |
| Shareholder return | ~$1.6B |
| India listing | Evaluating primary + secondary |
The +5-8% EPS growth on +4-6.5% revenue + ~30bp margin expansion + buyback contribution is the steady-state compounding pattern. Below the FY25 acceleration but durable.
Key risks
- Macro economic / discretionary spending. Products & Resources affected by tariff uncertainty. Q4 large deal traction expected to flip 2026.
- Tech change rate. AI adoption + regulatory pressure in health sciences segment.
- Labor law changes in India. Could impact costs.
- Large deal dependence. Timely ramp-up of $100M+ deals matter for revenue velocity.
- Fixed price / success-based contracts. Cost curve risk on contract execution.
- AI commoditization. AI-led productivity could compress pricing if competitors match capabilities.
- Belcan integration tail. ~$1B revenue contribution; integration synergies depend on engineering services demand.
Bottom line
CTSH FY25 is the AI-led acceleration year: revenue +7% (vs 2% FY24), Q4 12 large deals incl one >$1B, op margin +200bp to 16.7%, FCF +42% to $2.6B. AI-assisted code generation 30%+ of developer effort = structural cost + revenue lever. FY26 +4-6.5% cc revenue / $5.56-$5.70 adj EPS / 30bp margin expansion / $1.6B return. Risks are macro / large deal timing / commoditization. Quality global IT services compounder mid-AI-transformation cycle.
Citations
- Cognizant Technology Solutions Corp. FY25 Form 10-K (filed February 2026, SEC EDGAR).
- CTSH Q4 2025 earnings call, 2026-02-04 — Q4 +3.8% cc; 12 large deals >$100M (one >$1B); 4,000+ AI engagements; 30%+ developer AI-assisted; FY26 guide ($5.56-$5.70 EPS, +4-6.5% cc revenue, 15.9-16.1% margin, ~$1.6B return); Three Cloud acquisition.
- CTSH Q3 2025 earnings call, 2025-10-29 — Q3 +6.5% cc / $5.4B; 6 large deals; AI agents 1,500+; BPO $3B annualized run rate; FY guide raised $5.22-$5.26.
- CTSH Q2 2025 earnings call, 2025-07-30 — Q2 +7.2% cc / $5.2B; FS +6% / HS +5% organic; Cognizant Agent Foundry launched; FY guide $5.08-$5.22.
- CTSH Q1 2025 earnings call, 2025-04-30 — Q1 +8.2% cc / $5.1B; HS +11% organic; 1,400 GenAI engagements; FY guide $4.98-$5.14.
- Internal financial_statements view (consolidated annual + cash flow + capital structure).