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Cognizant: Cognizant's Strong Q4 and Full-Year 2025 Earnings

Cognizant Technology Solutions reported a robust fourth-quarter and full-year 2025 earnings, with revenue growing 3.8% year-over-year in constant currency in Q4, driven by North America, and 6.4% for the full year, surpassing the $20 billion mark. The company achieved an adjusted operating margin of 16% in Q4, a 30-basis-point improvement year-over-year, and 15.8% for the full year, exceeding guidance. Adjusted diluted EPS was $1.35, up 12% year over year, beating analyst estimates of $1.32.

CTSH

USD 70.91

-4.91%

A-Score: 5.7/10

Publication date: February 4, 2026

Full Report

Author: Analystock.ai

📋 Highlights
  • Revenue & Margin Growth: Full-year 2025 revenue surpassed $20 billion (+6.4% YoY), with Q4 adjusted operating margin at 16% (+30 bps YoY).
  • Large Deal Momentum: Signed 28 TCV $100M+ deals in 2025 (total TCV up 50% YoY), including a $1B+ Q4 deal.
  • Shareholder Returns: Returned $2 billion to shareholders via dividends and buybacks in 2025, with $500 million returned in Q4 alone.
  • AI Integration: Over 4,000 AI engagements active, with 32% of code development AI-assisted, driving productivity and differentiation.
  • 2026 Guidance: Projects 4-6.5% constant currency revenue growth, 15.9-16.1% adjusted operating margin, and 5-8% EPS growth.

Financial Performance Highlights

The company's financial performance was strong, with revenue growth and adjusted operating margin outpacing expectations. The financial services segment led growth, with a 7% constant currency revenue increase for the full year. Cognizant's guidance implies stronger sequential growth in the second and third quarters compared to 2025, driven by the ramp-up of deals and seasonality.

Valuation Metrics

With a P/E Ratio of 16.55, P/B Ratio of 2.46, and ROE of 14.84%, the market has already priced in Cognizant's strong growth prospects. The company's EV/EBITDA ratio of 8.8 suggests a reasonable valuation. The Dividend Yield of 1.62% and Free Cash Flow Yield of 6.93% indicate a decent return for shareholders.

AI-Driven Growth Strategy

Cognizant's CEO, Ravi Kumar, highlighted the company's successful execution on its strategic priorities, including scaling AI-led investments and expanding its platform strategy. The company has over 4,000 AI engagements, and over 30% of its developer effort in software development cycles is AI-assisted. Cognizant's AI Builder strategy is driving demand, and it sees AI as a tailwind, not a headwind, with a significant opportunity to apply AI to traditional software and capture new surface area in enterprises.

Bookings Growth and Deal Activity

The company signed 12 large deals with a total contract value (TCV) of $100 million or greater in Q4, including one deal valued at over $1 billion. For the full year, Cognizant signed 28 deals with a TCV above $100 million, with a combined TCV up nearly 50% versus the previous year. Bookings growth was driven by large deals, with a 9% year-over-year growth in Q4.

Outlook and Guidance

Cognizant expects revenue growth of 4-6.5% in constant currency in 2026, with an inorganic contribution of approximately 150 basis points. The company expects adjusted operating margin of 15.9-16.1% and EPS growth of 5-8%. Analysts estimate next year's revenue growth at 5.7%, indicating a steady trajectory for the company.

Cognizant's A-Score