Cognizant Technology Solutions (CTSH.O) on Wednesday reported fourth quarter revenue that exceeded its own guidance, driven by a surge in large deals and a strategic push into generative artificial intelligence. The IT services provider also issued a positive forecast for 2026, suggesting it has regained its competitive footing in the professional services market two years ahead of its internal schedule.
Fourth Quarter Highlights
For the quarter ended Dec. 31, revenue rose 4.9% to $5.33 billion, surpassing the company’s previous expectations. On a constant currency basis, revenue grew 3.8%. Adjusted diluted earnings per share (EPS) for the quarter came in at $1.35, up from $1.21 a year earlier.
For the full year 2025, revenue reached $21.1 billion, a 7.0% increase over 2024. The company’s adjusted operating margin expanded by 50 basis points to 15.8%, while full-year adjusted EPS grew 11% to $5.28. However, full-year GAAP results were weighed down by a one-time, non-cash income tax charge of $390 million or $0.80 per share, related to the enactment of the One Big Beautiful Bill Act (OBBBA) in the United States. This resulted in a full-year GAAP EPS of $4.56, representing only a 1% increase year-over-year.
AI Strategy and Bookings
AI builder strategy brought back the company’s return to the “winner’s circle” ahead of the 2027 target set during its 2023 Investor Day. Cognizant signed 28 large deals (valued at over $100 million) throughout 2025, with 12 of those signed in the fourth quarter alone.Total trailing12-month bookings reached $28.4 billion, representing a book-to-bill ratio of approximately 1.3x.
The company highlighted that over 260,000 employees have now been skilled in generative AI. Significant partnerships were expanded or launched with Microsoft, Adobe, and Anthropic to scale AI solutions for enterprise clients.
Segment and Geographic Performance
- Financial Services: Revenue grew 10.5% in Q4 (9.3% in constant currency), marking its fastest annual growth since 2016.
- Health Sciences: Reported a 5.2% increase in Q4 revenue to $1.62 billion.
- Products and Resources: Increased 1.8% in Q4; however, the segment was a major driver for the full year, growing 10.5%, aided by the Belcan acquisition, which contributed roughly 960 basis points to the segment’s annual growth.
- Geographies: North America revenue rose 7.4% for the full year, while Europe saw a 6.7% increase.
2026 Outlook and Capital Allocation
Cognizant expects to return $1.6 billion to shareholders in 2026 through $1 billion in share repurchases and $600 million in dividends. The company also increased its quarterly cash dividend by 6.5% to $0.33 per share.
For the full year 2026, Cognizant provided the following guidance:
- Revenue: $22.14 billion to $22.66 billion, representing 4.0% to 6.5% growth in constant currency.
- Adjusted Operating Margin: 15.9% to 16.1%, an expansion of 10 to 30 basis points.
- Adjusted Diluted EPS: $5.56 to $5.70.
The 2026 revenue guidance includes approximately 150 basis points of inorganic contribution, of which roughly 50 basis points is earmarked for future acquisitions.