Cognizant Q2 Earnings Miss Estimates, Revenues Beat, Rise Y/Y

Cognizant signed seven deals with total contract values exceeding $100 million, including three new-logo contracts. Management noted stronger activity in the $25-million-to-$100-million deal range and said new and expansion bookings grew in the mid-teens during the first half.

CTSH’s Financial Services Momentum Continues

Financial Services revenues hit $1.73 billion, which reflected 11.7% growth at cc. Growth remained broad-based across banking, capital markets and insurance clients as large contracts moved into execution.

North American Financial Services revenues climbed 15.2% year over year to $1.26 billion. Europe and Rest of World revenues rose 4.1% and 4.5%, respectively. Management also highlighted demand for legacy modernization, data services and AI-led transformation.

Health Sciences revenues totaled $1.57 billion, up 1.4% year over year and 1% in cc. Demand remained cautious and cost-focused as clients prioritized vendor consolidation, compliance and modernization projects with measurable returns.

Products and Resources revenues rose 1.2% year over year to $1.32 billion, while growth at cc was 0.7%. Communications, Media and Technology revenues increased 1.5% year over year to $854 million, reflecting strength in technology customers despite muted demand across communications and media.

CTSH’s North American Business Leads Growth

North America revenues advanced 5.5% year over year to $4.13 billion, with the same growth rate at cc. Large-deal ramps, third-party product sales and demand for AI infrastructure supported performance in the region.

Europe revenues increased 2.5% year over year to $1.03 billion but rose only 0.8% in cc. Rest of World revenues declined 1.2% year over year to $327 million and fell 1.5% in cc. Third-party product sales contributed about 170 basis points (bps) to overall revenue growth.

CTSH’s Q2 Operating Details

Selling, general & administrative expenses, as a percentage of revenues, contracted 220 bps year over year to 13.3%.

Total headcount at the end of the second quarter was 356,700, a decrease of 900 from March 31, 2026 and an increase of 12,900 from June 30, 2025. 

Voluntary attrition - Tech Services on a trailing 12-month basis was 13% in the second quarter of 2026 compared with 12.3% and 12.6% for the periods ended March 31, 2026, and June 30, 2025, respectively.

Adjusted operating margin expanded 40 bps year over year to 16%. Operational efficiencies and favorable currency movements more than offset higher compensation, third-party costs and the impact of recent acquisitions.

CTSH’s Balance Sheet Details

CTSH had cash and short-term investments of $1.05 billion as of June 30, 2026, compared with $1.51 billion as of March 31, 2026. As of June 30, 2026, the company had a total debt of $1.56 billion, down from $568 billion reported as of March 31, 2026.

Operating cash flow increased to $558 million from $398 million a year earlier. Free cash flow rose to $459 million from $331 million, bringing the first-half total to $652 million.

Cognizant repurchased 22.5 million shares for $1.15 billion during the reported quarter and completed the $634-million Astreya acquisition. The company had $2.338 billion remaining under its repurchase authorization at the end of the reported quarter.

Cognizant Raises Earnings View, Trims Revenue Outlook

For the third quarter of 2026, Cognizant expects revenues between $5.60 billion and $5.68 billion. This implies reported growth of 3.4-4.9% and growth between 3.8% and 5.3% at cc, including an inorganic contribution of roughly 200 bps.

For 2026, the company now expects revenues of $22.04-$22.35 billion, representing growth between 4%-5.5% at cc. The revised range reflects continued pressure on discretionary spending. Adjusted operating margin guidance remains in the 16%-16.2% range, which reflects expansion between 20 bps and 40 bps.

Adjusted earnings guidance was raised to $5.70-$5.82 per share from $5.63-$5.77, implying growth of 8-10%. The increase reflects a lower expected share count following aggressive repurchases, partly offset by higher interest expense.

Zacks Rank & Stocks to Consider

Cognizant currently carries a Zacks Rank #3 (Hold).

Shopify SHOP, Sandisk SNDK and HubSpot HUBS are some better-ranked stocks in the broader Zacks Computer and Technology sector. Each of the three stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shopify, Sandisk and HubSpot are expected to report their quarterly results on Aug. 5. Shares of Sandisk have jumped 327.9%, while Shopify and HubSpot have dropped 19.8% and 37.5%, year to date, respectively.

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