Latest quarter
Cognizant reported Q2 FY2026 revenue of $5.5 billion, compared with the consensus of $5.5 billion; revenue as the consensus counts it exceeded that benchmark by 0.03%. Adjusted EPS, as the consensus counts it, was $1.37 versus consensus adjusted EPS of $1.38, or −0.72% against the consensus. The filing reported diluted EPS of $1.36, compared with $1.31 a year earlier.
The filing said revenue rose 4.50% from Q2 FY2025, driven by recently won large deals moving into delivery, demand for operations and automation and AI and analytics services, third-party product sales, and recently completed acquisitions. Financial Services was the largest contributor to revenue growth, while Health Sciences, Products and Resources, and Communications, Media and Technology also reported revenue increases. Cognizant reported a gross margin of 33.4%, compared with 33.7%, and an operating margin of 15.9%, compared with 15.6%. Free cash flow was $459.0 million, compared with $331.0 million.
The company’s 4.50% revenue growth fell within its Q2 constant-currency revenue-growth guide of 3.20% to 4.70%.
| Q2 FY2026 | Q2 FY2025 | Change | |
|---|---|---|---|
| Revenue | $5.5 billion | $5.2 billion | 4.50% |
| Diluted EPS | $1.36 | $1.31 | 3.82% |
| Gross margin | 33.4% | 33.7% | −0.3 percentage points |
| Operating margin | 15.9% | 15.6% | 0.4 percentage points |
| Free cash flow | $459.0 million | $331.0 million | 38.7% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $1.37 | $1.38 | Missed by 0.72% |
| Revenue | $5.5 billion | $5.5 billion | In line |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
| Against its own guidance | For | Guided | Reported | Result |
|---|---|---|---|---|
| Revenue growth | Q2 FY2026 | 3.20%–4.70% | 4.50% | Within the guide |
What management said on the call
Chief Executive Officer Ravi Kumar said Cognizant delivered Q2 growth in a cautious demand environment, with large deals signed during the prior year moving into execution and Financial Services contributing to growth. Kumar said the company expects client caution to persist near term, while it sees AI changing demand for technology and business-operations services.
Chief Financial Officer Jatin Dalal said Health Sciences demand remained cautious and cost-driven, with discretionary spending subject to scrutiny, while Communications, Media and Technology demand among communications and media clients remained muted. Dalal said demand from technology customers remained supported by AI-native engineering, digital operations, data and cloud services. He also said the company was seeing growth in manufacturing, logistics, energy and utilities, while retail, consumer goods, travel and hospitality customers continued to face geopolitical and supply-chain pressures.
Kumar said Cognizant signed seven Q2 large deals, each with total contract value above $100 million, including three new-logo wins. He told analysts that Financial Services bookings had increased and that activity in $50 million to $100 million and $25 million to $50 million deals had risen. Kumar also said the company was moving from a labor-based model toward outcome-based work, with its mix of fixed-price and transaction-based work having grown for three consecutive years.
On margins, Dalal said Q2 adjusted operating margin was 16.0%, with operational efficiency and favorable currency movements offsetting higher third-party and compensation costs and the effect of acquisitions. He said Cognizant incurred approximately $84 million of Project LEAP costs in Q2. When analysts asked about headcount and gross margin, Dalal said the company remained on track to reach approximately 20,000 recent college graduates by year-end, expected headcount to remain range-bound, and planned to continue working on gross-margin improvement.
Dalal said the company deployed more than $1.1 billion on share repurchases during Q2 and $1.3 billion on acquisitions aligned with its AI-builder strategy. He said Project LEAP execution costs would be spread between Q3 and Q4.
Guidance
Cognizant revised its FY2026 constant-currency revenue-growth outlook to 4.00% to 5.50%, citing elevated macro uncertainty and pressured discretionary spending. Dalal said the company raised its FY2026 adjusted EPS guidance to $5.70 to $5.82, representing growth of 8% to 10%, from its prior growth outlook of 7% to 9%.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| EPS, non-GAAP | FY2026 | $5.70–$5.82 | — | New |
| Operating margin, non-GAAP | FY2026 | 16.0%–16.2% | — | New |
| Revenue | FY2026 | $22.0 billion–$22.4 billion | — | New |
| Revenue | Q3 FY2026 | $5.6 billion–$5.7 billion | — | New |
| Headcount, Recent College Graduates | FY2026 | 20,000 | — | — |
| EPS, Adjusted | FY2026 | $5.70–$5.82 | $5.63–$5.77 | Raised |
| Revenue growth, Recent Acquisitions | FY2026 | 1.50% | — | New |
| Tax rate | FY2026 | 25.0%–26.0% | — | New |
| Free cash flow growth, Conversion of Net Income | FY2026 | 90.0%–100.0% | — | New |
| Operating expenses, Project Leap | FY2026 | $230.0 million–$320.0 million | — | New |
| Operating margin, Adjusted | FY2026 | 16.0%–16.2% | — | New |