Cognizant lifts margin outlook after bookings jump
Thu, 30th Apr 2026 (Today)
Cognizant reported first-quarter revenue of USD $5.4 billion and raised its full-year adjusted operating margin guidance.
Revenue rose 5.8% from a year earlier, or 3.9% in constant currency. Adjusted diluted earnings per share increased 13.8% to USD $1.40, while GAAP diluted earnings per share rose 3.7% to USD $1.39. Operating margin fell to 15.6% from 16.7%.
Bookings strengthened during the quarter, rising 21% year on year in the first quarter. On a trailing 12-month basis, bookings reached USD $29.6 billion, up 11%, for a book-to-bill ratio of about 1.4 times.
Cognizant signed seven large deals in the quarter, defined as contracts with a total contract value of USD $100 million or more. One was a mega deal worth at least USD $500 million.
Performance was led by financial services, where revenue rose 12.4%, or 10.2% in constant currency, to USD $1.64 billion. Health sciences revenue was broadly flat at USD $1.58 billion, while products and resources rose 3.4% and communications, media and technology increased 8.1%.
North America remained the largest market, with revenue of USD $4.05 billion, up 5.1%. Revenue from the United Kingdom rose 11.4% to USD $509 million, while continental Europe increased 7.5% to USD $530 million, though it fell 3.1% in constant currency.
Cognizant left its full-year 2026 constant-currency revenue growth forecast unchanged at 4.0% to 6.5%. It now expects adjusted operating margin of 16.0% to 16.2%, up from previous guidance that implied expansion of 10 to 30 basis points.
For the second quarter, the company forecast revenue of USD $5.45 billion to USD $5.52 billion, representing growth of 3.8% to 5.3%, or 3.2% to 4.7% in constant currency. Full-year revenue is expected to be USD $22.11 billion to USD $22.64 billion, while adjusted diluted earnings per share are projected at USD $5.63 to USD $5.77.
Restructuring Plan
The higher margin outlook is tied to Project Leap, a programme introduced in the second quarter to reshape the operating model and reduce costs. The initiative is expected to generate in-year savings of about USD $200 million to USD $300 million in 2026.
Those savings come with charges of USD $230 million to USD $320 million, with most of the costs expected this year. The charges include USD $200 million to USD $270 million of employee severance and other personnel-related costs, plus USD $30 million to USD $50 million of other charges.
Headcount stood at 357,600 at the end of the quarter, up 6,000 from the previous quarter and 21,300 from a year earlier. Voluntary attrition in tech services was 12.3%, unchanged from the previous quarter and slightly above the 12.0% reported a year earlier on a recast basis.
Cash And Capital
Net income was USD $662 million, little changed from USD $663 million a year earlier. Net cash fell to USD $949 million from USD $1.34 billion at the end of the previous year, while cash and cash equivalents declined to USD $1.5 billion from USD $1.9 billion.
Operating cash flow was USD $274 million, down from USD $400 million a year earlier. Free cash flow fell to USD $198 million from USD $393 million, while investing cash outflow included USD $730 million of payments for business combinations.
Cognizant repurchased 6.3 million shares for USD $427 million during the quarter. It had USD $1.5 billion remaining under its buyback authorisation at quarter-end and also declared a quarterly cash dividend of USD $0.33 per share.
The quarter also included a contribution from a recently completed acquisition, which added about 90 basis points to overall revenue growth. Sales of third-party products contributed about 140 basis points.
Chief Executive Officer Ravi Kumar S said financial services again led the group's performance. "In a complex macroeconomic environment, we delivered first quarter revenue growth in the upper half of our guidance range, with sustained bookings momentum and Financial Services again leading performance. We signed seven large deals in the quarter and delivered over 70% large deal total contract value growth year-over-year," he said.
He added: "We believe our AI builder strategy, deep industry expertise and scaled partnership ecosystem uniquely position us to bridge the 'AI Velocity Gap' by helping clients convert their significant AI investments into tangible business outcomes."