Cognizant Technology Solutions Corporation

10/29/2026 | Press release | Distributed by Public on 10/29/2026 06:25

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
Executive Summary
Cognizant is one of the world's leading professional services companies, engineering modern businesses and delivering strategic outcomes for our clients. We help clients modernize technology, reimagine processes and transform experiences so they can stay ahead in today's fast-changing world, where AI is reshaping organizations in every field. As an AI builder, we provide deep expertise at the intersection of industry and technology, combining our perspective with extensive knowledge of our clients' organizations to build industry-specific platforms and incorporate context into systems, AI models and custom solutions. We tailor our services and solutions to specific industries with an integrated global delivery model that employs client service and delivery teams based at client locations and dedicated global and regional delivery centers. Our services include consulting, application development, systems integration, quality engineering and assurance, engineering research and development, application maintenance, infrastructure and security as well as business process services and automation.
In the second quarter of 2026, we initiated Project Leap, a program designed to accelerate our transformation to the operating model of the future by funding investments in our integrated offerings, AI capabilities and partnerships, reshaping productivity through competitive offerings and upskilling our workforce. By fostering a workforce that is properly sized, AI-enabled and possesses the skills required for success as well as optimizing our technology footprint, we aim to streamline operations and enhance productivity through AI-led efficiencies, creating a more agile and cost-effective operating model.
In connection with Project Leap, in the third quarter of 2026 we incurred $51 million of employee separation and other costs. Since the inception of the program, we have incurred $135 million in total costs. See Note 4 to our unaudited consolidated financial statements. During the third quarter of 2026, we revised our estimates related to Project Leap. We now expect to record total costs of $180 million to $250 million, with $140 million to $160 million of costs expected to be incurred in 2026 and the remainder to be incurred through the first quarter of 2027. Cash payments related to the costs are expected to be made primarily over the same period. This consists of $150 million to $200 million of employee severance and other personnel related costs and $30 million to $50 million of other charges. This program is expected to generate in-year savings of approximately $200 million in 2026, which are and will continue to be used primarily to fund investments as described above. The estimates of the charges and expenditures that we expect to incur in connection with Project Leap, the timing thereof, and the savings expected to be generated are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates. In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur in connection with Project Leap.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Q3 2026 Financial Results1
Revenue
Income from Operations
Operating Margin
Diluted EPS
GAAP
Adjusted1
GAAP
Adjusted1
GAAP
Adjusted1
Revenue up $249 million or 4.6% from Q3 2025; an increase of 4.8% in constant currency1
Income from Operations up $6 million or 0.7% from Q3 2025
Adjusted Income from Operations1 up $57 million or 6.6% from Q3 2025
Operating margin down 60 bps from Q3 2025
Adjusted Operating Margin1 up 30 bps from Q3 2025
Diluted EPS up $0.83 or 148.2% from Q3 2025
Adjusted Diluted EPS1 up $0.10 or 7.2% from Q3 2025
During the quarter ended September 30, 2026, revenues increased by $249 million as compared to the quarter ended September 30, 2025, representing growth of 4.6%, or 4.8% on a constant currency1 basis. Revenue growth was led by banking clients in our Financial Services segment and technology clients in our CMT segment, partially offset by weakness in communications and media clients in our CMT segment, healthcare clients in our Health Sciences segment and retail, consumer goods, travel and hospitality clients in our Products and Resources segment. Additionally, revenue growth was positively impacted by our recently completed acquisitions (210 basis points of year-over-year revenue growth) and the sale of third-party products in connection with our integrated offerings strategy (190 basis points of year-over-year revenue growth). See 'Revenues - Reportable Business Segments and Geographic Markets' within Results of Operations for further details.
Our GAAP operating margin declined to 15.4% for the quarter ended September 30, 2026 from 16.0% for the quarter ended September 30, 2025. Our Adjusted Operating Margin1 increased to 16.3% for the quarter ended September 30, 2026 from 16.0% for the quarter ended September 30, 2025. Our operating margins for the quarter ended September 30, 2026, as compared to the quarter ended September 30, 2025, were positively impacted by Project Leap savings, net of investments in our AI capabilities, and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs and the dilutive impact of our recently completed acquisitions. In addition, our GAAP operating margin for the quarter ended September 30, 2026 was negatively impacted by $51 million in costs related to Project Leap (see Note 4) which were excluded from our Adjusted Operating Margin.
In July 2025, the OBBBA was enacted in the United States, which, among other provisions, repealed the requirement to capitalize U.S. research and experimental costs. As a result, we concluded that it is not more likely than not that we will realize our deferred tax asset of $390 million related to research and experimental costs capitalized outside the United States. Therefore, in the third quarter of 2025, we recorded a one-time, non-cash income tax expense of $390 million. This impacted our Q3 2025 GAAP diluted EPS by $0.80, which is added back for the calculation of Adjusted EPS.
As a global professional services company, we compete on the basis of the knowledge, experience, insights, skills and talent of our employees and the value they can provide to our clients. We closely monitor attrition trends focusing on the metric that we believe is most relevant to our business. During the first quarter of 2026, we modified our definition of Voluntary Attrition - Tech Services to exclude certain categories of negotiated separations and have recast prior periods to conform to the new definition. For each of the trailing twelve months ended September 30, 2026 and the trailing twelve months ended September 30, 2025, our Voluntary Attrition - Tech Services was 12.6%. We finished the third quarter of 2026 with approximately 359,900 employees as compared to 349,800 employees at the end of the third quarter of 2025.
1 Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Diluted EPS and constant currency revenue growth are not measures of financial performance prepared in accordance with GAAP. See "Non-GAAP Financial Measures" for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Business Outlook
We continue to expect our clients' focus to be on their transformation into AI-ready, technology-driven, data-enabled, customer-centric and differentiated businesses. To support this transformation and drive greater business resiliency, clients have demanded and may increasingly demand services and solutions that deliver productivity and cost savings. We believe clients will continue to contend with industry-specific changes driven by evolving digital technologies, uncertainty in the regulatory environment, industry consolidation and convergence as well as international trade policies, including tariffs, and other macroeconomic and geopolitical factors. This includes the uncertainty related to the global economy, which has affected and may continue to affect their demand for our services and discretionary work.
We increasingly use AI-based technologies, including GenAI, in our client offerings and our own internal operations. AI technologies and services are part of a highly competitive and rapidly evolving market. We plan to continue to make significant investments in our AI capabilities to meet the needs of our clients and harness AI's value in a flexible, secure, scalable and responsible way. As AI-based technologies or other forms of automation evolve, demand for some services that we currently perform for our clients may be reduced, and our ability to obtain favorable pricing or other terms for some of our services may be diminished.
Potential tax law and other regulatory and administrative changes, including judicial decisions thereon, may impact our future results. The government of India implemented labor law reforms effective November 21, 2025, including the Code on Social Security, 2020, and additionally published The Social Security Rules in May 2026 and notified the Employees Provident Fund Scheme of 2026 in June 2026. The government of India continues to issue clarifications on various aspects of the Labor Code, and certain Indian states are yet to notify or operationalize their corresponding rules. The outcome of these clarifications could impact our compensation and benefit expenses in India. In addition, in March 2024, India and Mauritius signed a Protocol to amend the India-Mauritius Income Tax Treaty, which entered into force in August 2026 and was announced in October 2026 by the India Government. We continue to evaluate the potential impact of the amendment, which could increase our effective income tax rate, as CTS India is a subsidiary of our wholly-owned Mauritius entity. For additional information, see "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Results of Operations
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
The following table sets forth, for the periods indicated, certain financial data for the three months ended September 30:
% of % of Increase / Decrease
(Dollars in millions, except per share data) 2026 Revenues 2025 Revenues $ %
Revenues $ 5,664 100.0 $ 5,415 100.0 $ 249 4.6
Operating expenses:
Cost of revenues(a)
3,751 66.2 3,581 66.1 170 4.7
Selling, general and administrative expenses(a)
841 14.8 833 15.4 8 1.0
Restructuring charges 51 0.9 - - 51 N/A
Depreciation and amortization expense 149 2.6 135 2.5 14 10.4
Income from operations and operating margin
872 15.4 866 16.0 6 0.7
Other income (expense), net (9) 21 (30) (142.9)
Income before provision for income taxes 863 15.2 887 16.4 (24) (2.7)
Provision for income taxes (237) (613) 376 (61.3)
Income (loss) from equity method investments 1 - 1 N/A
Net income $ 627 11.1 $ 274 5.1 $ 353 128.8
Diluted EPS
$ 1.39 $ 0.56 $ 0.83 148.2
Other Financial Information2
Adjusted Income from Operations and Adjusted Operating Margin $ 923 16.3 $ 866 16.0 $ 57 6.6
Adjusted Diluted EPS $ 1.49 $ 1.39 $ 0.10 7.2
(a)Exclusive of depreciation and amortization expense.2
N/A Not Applicable
2 Adjusted Income from Operations, Adjusted Operating Margin and Adjusted Diluted EPS are not measures of financial performance prepared in accordance with GAAP. See "Non-GAAP Financial Measures" for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Revenues - Reportable Business Segments and Geographic Markets
Revenues of $5,664 million across our business segments and geographies were as follows for the three months ended September 30, 2026:
Q3 2026 as compared to Q3 2025
Increase/(Decrease)
(Dollars in millions) $ %
CC %3
Health Sciences (17) (1.1) (0.9)
Financial Services 189 12.0 12.3
Products and Resources (12) (0.9) (0.8)
CMT 89 10.5 10.7
Total revenues $ 249 4.6 4.8
Q3 2026 as compared to Q3 2025
Increase/(Decrease)
(Dollars in millions) $ %
CC %3
North America $ 230 5.7 5.8
United Kingdom 29 5.8 6.2
Continental Europe (14) (2.6) (1.5)
Europe - Total 15 1.4 2.2
Rest of World 4 1.2 1.4
Total revenues $ 249 4.6 4.8
Foreign currency exchange movements impacted revenue across segments and geographies as shown in the tables above. The explanations below describe constant currency changes in revenue.3
Revenue was positively impacted by the ramp up of several recently won large deals and increasing demand for our intuitive operations and automation services as well as our cloud and infrastructure services. Revenue growth was led by banking clients in our Financial Services segment, primarily in North America. Revenue was negatively impacted by weakness in healthcare customers in North America and life sciences customers in Continental Europe, as well as retail, consumer goods, travel and hospitality customers in our Products and Resources segment. Additionally, our CMT segment has seen and may continue to see weakness among communications and media customers in all geographies, while growth in technology customers, primarily in North America, was driven by our largest customer in this segment.
Our recently completed acquisitions contributed approximately 210 basis points to overall revenue growth, primarily in our CMT segment and our North America region, where the contribution was 875 basis points and 250 basis points, respectively. Additionally, the sale of third-party products in connection with our integrated offerings strategy contributed 190 basis points to overall revenue growth. These sales contributed 200 basis points of growth to our North America region and 425 basis points of growth to our United Kingdom region. These sales contributed 600 basis points of growth to our CMT segment and 400 basis points of growth to our Financial Services segment.
3 Constant currency revenue growth is not a measure of financial performance prepared in accordance with GAAP. See "Non-GAAP Financial Measures" for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Cost of Revenues (Exclusive of Depreciation and Amortization Expense)
é
$170M
é
0.1% as a % of revenues
¡ % of Revenues
Our cost of revenues consists primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, project-related immigration and travel for technical personnel, subcontracting and costs of third-party products and services relating to revenues. The increase, as a percentage of revenues, was primarily driven by the impact of the sale of third-party products in connection with our integrated offerings strategy and increased compensation costs, partially offset by the beneficial impact of foreign currency exchange rate movements.
SG&A Expenses (Exclusive of Depreciation and Amortization Expense)
SG&A expenses consist primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, immigration, travel, marketing, communications, management, finance, administrative and occupancy costs. The decrease, as a percentage of revenues, was primarily driven by Project Leap savings, net of investments in our AI capabilities, partially offset by the dilutive impact of our recently completed acquisitions.
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8M
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0.6% as a % of revenues
¡ % of Revenues
Restructuring Charges
Restructuring charges consist of costs related to Project Leap. Restructuring charges were $51 million, or 0.9% as a percentage of revenue, for the three months ended September 30, 2026. For further detail on our restructuring charges see Note 4 to our unaudited consolidated financial statements.
Depreciation and Amortization Expense
Depreciation and amortization expense increased by 10.4% during the third quarter of 2026 as compared to the third quarter of 2025. The increase was driven by amortization expense from intangible assets related to our recently completed acquisitions.
Operating Margin and Adjusted Operating Margin4 - Overall
The increase in our Adjusted Operating Margin4 for the quarter ended September 30, 2026, as compared to the quarter ended September 30, 2025, was primarily driven by Project Leap savings, net of investments in our AI capabilities, and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs and the dilutive impact of our recently completed acquisitions. In addition, our GAAP operating margin for the quarter ended September 30, 2026 was negatively impacted by $51 million in costs related to Project Leap which was excluded from our Adjusted Operating Margin.
A predominant portion of our costs in India are denominated in the Indian rupee, representing approximately 22% of our global operating costs during the three months ended September 30, 2026. These costs are subject to foreign currency exchange rate fluctuations, which have an impact on our results of operations. We enter into foreign exchange derivative contracts to hedge certain Indian rupee denominated payments in India. These hedges are intended to mitigate the volatility of the changes in the exchange rate between the U.S. dollar and the Indian rupee. Net of the impact of the hedges, the depreciation of the Indian rupee positively impacted our operating margin for the three months ended September 30, 2026 by approximately 120 basis points as compared to the three months ended September 30, 2025.
Excluding the impact of applicable designated cash flow hedges, the depreciation of the Indian rupee against the U.S. dollar positively impacted our operating margin by approximately 160 basis points during the three months ended September 30, 2026. Each additional 1.0% change in exchange rate between the Indian rupee and the U.S. dollar will have the
4 Adjusted Income from Operations and Adjusted Operating Margin are not measures of financial performance prepared in accordance with GAAP. See "Non-GAAP Financial Measures" for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
effect of moving our operating margin by 17 basis points (excluding the impact of the hedges). The settlement of our cash flow hedges had a negative impact of approximately 65 basis points on our operating margin during the three months ended September 30, 2026, compared to a negative impact of approximately 20 basis points during the three months ended September 30, 2025.
Segment Operating Profit
In the first quarter of 2026, we made certain changes to the internal measurement of segment operating profit for the purpose of evaluating segment performance and resource allocation. The primary reason for the change was to reflect a more complete cost of delivery. Specifically, segment operating profit now includes the allocation of corporate costs, which were previously included in "unallocated costs", including amortization expense related to acquired intangible assets. Beginning in 2026, segment operating profits have been reported using the new allocation methodology and we have recast the 2025 results to conform to the new methodology.
Segment operating profit and operating margin percentage were as follows:
Segment operating profit % Segment operating margin
In the third quarter of 2026, segment operating margins across all our segments were positively impacted by Project Leap savings, net of investments in our AI capabilities, and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs. Segment operating margin in CMT was positively impacted by increased profitability of several large customers, which was partially offset by the dilutive impact of our recently completed acquisitions. Additionally, on a year-over-year basis, the timing of sales of third-party products negatively impacted segment operating margin in Financial Services.
Total segment operating profit and operating margin were as follows for the three months ended September 30:
(Dollars in millions) 2026 % of Revenues 2025 % of Revenues Increase/(Decrease)
Total segment operating profit $ 923 16.3 $ 866 16.0 $ 57
Unallocated (costs) (51) (0.9) - - (51)
Income from operations $ 872 15.4 $ 866 16.0 $ 6
Unallocated costs for the three months ended September 30, 2026 represents Project Leap costs. See Note 4 to our unaudited consolidated financial statements for additional information.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Other Income (Expense), Net
The following table sets forth total other income (expense), net for the three months ended September 30:
(in millions) 2026 2025 Increase/
Decrease
Foreign currency exchange gains (losses) $ 4 $ (1) $ 5
(Losses) gains on foreign exchange forward contracts not designated as hedging instruments (2) 5 (7)
Foreign currency exchange gains (losses), net 2 4 (2)
Interest income 16 25 (9)
Interest expense (19) (8) (11)
Other, net (8) - (8)
Total other income (expense), net $ (9) $ 21 $ (30)
The foreign currency exchange gains were attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries. The gains and losses on foreign exchange forward contracts not designated as hedging instruments related to the realized and unrealized gains and losses on contracts entered into to offset our foreign currency exposures. As of September 30, 2026, the notional value of our undesignated hedges was $653 million. Interest income declined for the three months ended September 30, 2026, driven by the combination of lower invested balances and lower yields as compared to the three months ended September 30, 2025. Higher interest expense during the three months ended September 30, 2026 was driven by the outstanding balance under our revolving credit facility during the period. The increase in expenses in Other, net was related to our India defined benefit plans as a result of the enactment of the Labor Code reforms in 2025.
Provision for Income Taxes
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$376M
¡ Effective Income Tax Rate ê 41.6%
The effective income tax rate decrease as compared to Q3 2025 was driven by the one-time, non-cash income tax expense of $390 million related to the enactment of the OBBBA during Q3 2025. See Note 7 to our unaudited consolidated financial statements for additional information.
Net Income
The increase in net income as compared to Q3 2025 was primarily driven by the one-time, non-cash income tax expense of $390 million related to the enactment of the OBBBA during Q3 2025.
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$353M
¡ é 6.0% of Revenues
Non-GAAP Financial Measures
Portions of our disclosure include non-GAAP financial measures. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures should be read in conjunction with our financial statements prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures to the corresponding GAAP measures set forth below should be carefully evaluated.
Our non-GAAP financial measures Adjusted Operating Margin and Adjusted Income from Operations exclude unusual items, such as Project Leap charges and the partial reversal of the India Defined Contribution Obligation liability in the second quarter of 2026 and the gain on sale of property and equipment in the first quarter of 2025. Our non-GAAP financial measure Adjusted Diluted EPS excludes unusual items, such as Project Leap charges, the partial reversal of the India Defined Contribution Obligation liability, the gain on sale of property and equipment and the one-time income tax expense related to the enactment of the OBBBA in the third quarter of 2025, and net non-operating foreign currency exchange gains or losses and the tax impact of all the applicable adjustments. The income tax impact of each item excluded from Adjusted Diluted EPS is calculated by applying the statutory rate and local tax regulations in the jurisdiction in which the item was incurred. Constant currency revenue growth is defined as revenues for a given period restated at the comparative period's foreign currency exchange rates measured against the comparative period's reported revenues.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
We believe providing investors with an operating view consistent with how we manage the Company provides enhanced transparency into our operating results. For internal management reporting and budgeting purposes, we use various GAAP and non-GAAP financial measures for financial and operational decision-making, to evaluate period-to-period comparisons, to determine portions of the compensation for executive officers and for making comparisons of our operating results to those of our competitors. We believe that the presentation of these non-GAAP financial measures, which exclude certain costs, read in conjunction with our reported GAAP results and reconciliations to the most comparable GAAP measure, as applicable, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations.
A limitation of using non-GAAP financial measures versus financial measures calculated in accordance with GAAP is that non-GAAP financial measures may exclude costs that are recurring such as net non-operating foreign currency exchange gains or losses. In addition, other companies may calculate non-GAAP financial measures differently than us, thereby limiting the usefulness of these non-GAAP financial measures as a comparative tool. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP financial measures to allow investors to evaluate such non-GAAP financial measures.
The following table presents a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure for the three months ended September 30:
2026 % of
Revenues 		2025 % of
Revenues
GAAP income from operations and operating margin $ 872 15.4 $ 866 16.0
Project Leap(1)
51 0.9 - -
Adjusted Income from Operations and Adjusted Operating Margin $ 923 16.3 $ 866 16.0
GAAP diluted EPS $ 1.39 $ 0.56
Effect of above adjustments, pre-tax
0.11 -
Non-operating foreign currency exchange (gains) losses, pre-tax(2)
- (0.01)
Tax effect of above adjustments(3)
(0.01) 0.04
One-time income tax expense related to the enactment of the OBBBA (4)
- 0.80
Adjusted Diluted EPS $ 1.49 $ 1.39
(1)Consists of employee separation, facility exit and other costs incurred in connection with Project Leap. See Note 4 to our unaudited consolidated financial statements for additional information.
(2)Non-operating foreign currency exchange gains and losses, inclusive of gains and losses on related foreign exchange forward contracts not designated as hedging instruments for accounting purposes, are reported in "Foreign currency exchange gains (losses), net" in our unaudited consolidated statements of operations.
(3)Presented below are the tax impacts of our non-GAAP adjustments to pre-tax income:
Three Months Ended
September 30,
(in millions) 2026 2025
Non-GAAP income tax benefit (expense) related to:
Project Leap charges $ 14 $ -
Foreign currency exchange gains and losses (8) (15)
The effective tax rate related to non-operating foreign currency exchange gains and losses varies depending on the jurisdictions in which such income and expenses are generated and the statutory rates applicable in those jurisdictions. As such, the income tax effect of non-operating foreign currency exchange gains and losses shown in the above table may not appear proportionate to the net pre-tax foreign currency exchange gains and losses reported in our unaudited consolidated statements of operations.
(4)In the third quarter of 2025, we recorded a one-time, non-cash income tax expense of $390 million related to the enactment of the OBBBA. See Note 7 to our unaudited consolidated financial statements for additional information.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
The following table sets forth, for the periods indicated, certain financial data for the nine months ended September 30:
% of % of Increase / Decrease
(Dollars in millions, except per share data) 2026 Revenues 2025 Revenues $ %
Revenues $ 16,558 100.0 $ 15,775 100.0 $ 783 5.0
Cost of revenues(a)
11,041 66.7 10,457 66.3 584 5.6
Selling, general and administrative expenses(a)
2,360 14.3 2,434 15.4 (74) (3.0)
Restructuring charges 135 0.8 - - 135 N/A
Depreciation and amortization expense 433 2.6 410 2.6 23 5.6
(Gain) on sale of property and equipment
- - (62) (0.4) 62 (100.0)
Income from operations and operating margin
2,589 15.6 2,536 16.1 53 2.1
Other income (expense), net 16 65 (49) (75.4)
Income before provision for income taxes 2,605 15.7 2,601 16.5 4 0.2
Provision for income taxes (676) (1,023) 347 (33.9)
Income (loss) from equity method investments (4) 4 (8) (200.0)
Net income $ 1,925 11.6 $ 1,582 10.0 $ 343 21.7
Diluted EPS $ 4.14 $ 3.22 $ 0.92 28.6
Other Financial Information5
Adjusted Income From Operations and Adjusted Operating Margin
$ 2,643 16.0 $ 2,474 15.7 $ 169 6.8
Adjusted Diluted EPS $ 4.25 $ 3.93 $ 0.32 8.1
(a)Exclusive of depreciation and amortization expense.
N/A Not Applicable
Revenues
During the nine months ended September 30, 2026, revenues increased by $783 million as compared to the nine months ended September 30, 2025, representing growth of 5.0%, or 4.3% on a constant currency basis5.
5 Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Diluted EPS and constant currency revenue growth are not measures of financial performance prepared in accordance with GAAP. See "Non-GAAP Financial Measures" for more information and reconciliations to the most directly comparable GAAP financial measures.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Revenues - Reportable Business Segments and Geographic Markets
Revenues of $16,558 million across our business segments and geographies were as follows for the nine months ended September 30, 2026:
YTD 2026 as compared to YTD 2025
Increase/(Decrease)
(Dollars in millions) $ %
CC %6
Health Sciences 12 0.3 (0.3)
Financial Services 557 12.1 11.4
Products and Resources 47 1.2 0.3
CMT 167 6.7 6.2
Total revenues $ 783 5.0 4.3
YTD 2026 as compared to YTD 2025
Increase/(Decrease)
(Dollars in millions) $ %
CC %6
North America $ 643 5.5 5.4
United Kingdom 91 6.3 4.1
Continental Europe 38 2.4 (1.5)
Europe - Total 129 4.3 1.2
Rest of World 11 1.1 0.4
Total revenues $ 783 5.0 4.3
Foreign currency exchange movements impacted revenue across segments and geographies as shown in the tables above. The explanations below describe constant currency changes in revenue.6
Revenue across all geographies was positively impacted by the ramp up of several recently won large deals and increasing demand for our intuitive operations and automation services. Revenue growth was driven by banking and insurance clients in our Financial Services segment, life sciences customers in our Health Sciences segment as well as growth in technology customers in our CMT segment, which was attributable to our largest customer in this segment. Revenue was negatively impacted by weakness in healthcare customers in our Health Sciences segment and retail, consumer goods, travel and hospitality customers in our Products and Resources segment. Additionally, our CMT segment has seen and may continue to see weakness among communications and media customers.
The sale of third-party products, primarily in North America and Europe, in connection with our integrated offerings strategy, contributed approximately 170 basis points to overall revenue growth. These sales contributed 650 basis points of growth to our CMT segment and 300 basis points growth to our Financial Services segment, while negatively impacting our Health Sciences segment by 100 basis points due to lower sales of third-party products in 2026 as compared to 2025. Our recently completed acquisitions contributed approximately 140 basis points to overall revenue growth, primarily in North America, including 400 basis points to our CMT segment and 125 basis points to our Financial Services segment.
6 Constant currency revenue growth is not a measure of financial performance prepared in accordance with GAAP. See "Non-GAAP Financial Measures" for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Cost of Revenues (Exclusive of Depreciation and Amortization Expense)
é
$584M
é
0.4% as a % of revenues
¡ % of Revenues
Our cost of revenues consists primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, project-related immigration and travel for technical personnel, subcontracting and costs of third-party products and services relating to revenues. The increase, as a percentage of revenues, was primarily driven by the impact of the sale of third-party products in connection with our integrated offerings strategy and increased compensation costs, partially offset by the beneficial impact of foreign currency exchange rate movements.
SG&A Expenses (Exclusive of Depreciation and Amortization Expense)
SG&A expenses consist primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, immigration, travel, marketing, communications, management, finance, administrative and occupancy costs. The decrease, as a percentage of revenues, was primarily driven by the $81 million partial reversal of the 2019 India Defined Contribution Obligation liability and Project Leap savings, net of investments in our AI capabilities, partially offset by the dilutive impact of our recently completed acquisitions.
ê
$74M
ê
1.1% as a % of revenues
¡ % of Revenues
Restructuring Charges
Restructuring charges consist of costs related to Project Leap. Restructuring charges were $135 million, or 0.8% as a percentage of revenue, for the nine months ended September 30, 2026. For further detail on our restructuring charges see Note 4 to our unaudited consolidated financial statements.
Depreciation and Amortization Expense
Depreciation and amortization expense increased by 5.6% during the nine months ended September 30, 2026 as compared to the 2025 period. The increase was driven by amortization expense from intangible assets related to our recently completed acquisitions.
Gain on Sale of Property and Equipment
During the nine months ended September 30, 2025, we realized a gain of $62 million on the sale of an office complex in India. For further detail see Note 1 to our unaudited consolidated financial statements.
Operating Margin and Adjusted Operating Margin7- Overall
Our 2026 GAAP and Adjusted Operating Margins7 were positively impacted by Project Leap savings, net of investments in our AI capabilities, and foreign currency exchange rate movements, partially offset by increased compensation costs, the dilutive impact of our recently completed acquisitions and the impact of the sale of third-party products in connection with our integrated offerings strategy. In addition, our GAAP operating margin for the nine months ended September 30, 2026 was negatively impacted by $135 million in costs related to Project Leap and positively impacted by the $81 million partial reversal of the 2019 India Defined Contribution Obligation liability, both of which were excluded from our Adjusted Operating Margin. Our GAAP operating margin for 2025 was positively impacted by $62 million from the gain on sale of property and equipment, which was excluded from our Adjusted Operating Margin.
7 Adjusted Income from Operations and Adjusted Operating Margin are not measures of financial performance prepared in accordance with GAAP. See "Non-GAAP Financial Measures" for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Net of the impact of applicable designated cash flow hedges, the depreciation of the Indian rupee positively impacted our operating margin for the nine months ended September 30, 2026 by approximately 90 basis points as compared to the nine months ended September 30, 2025. Excluding the impact of such hedges, the depreciation of the Indian rupee against the U.S. dollar positively impacted our operating margin by approximately 150 basis points for the nine months ended September 30, 2026. The settlement of our cash flow hedges had a negative impact of approximately 70 basis points on our operating margin during the nine months ended September 30, 2026, compared to a negative impact of approximately 10 basis points during the 2025 period.
Segment Operating Profit
In the first quarter of 2026, we made certain changes to the internal measurement of segment operating profit for the purpose of evaluating segment performance and resource allocation. The primary reason for the change was to reflect a more complete cost of delivery. Specifically, segment operating profit now includes the allocation of corporate costs, which were previously included in "unallocated costs", including amortization expense related to acquired intangible assets. Beginning in 2026, segment operating profits have been reported using the new allocation methodology and we have recast the 2025 results to conform to the new methodology.
Segment operating profit and operating margin percentage were as follows:
Segment operating profit % Segment operating margin
In 2026, segment operating margins across all our segments were positively impacted by Project Leap savings, net of investments in our AI capabilities, and foreign currency exchange rate movements, partially offset by increased compensation costs. Segment operating margin in CMT was positively impacted by increased profitability of several large customers, which was partially offset by the dilutive impact of our recently completed acquisitions. Additionally, on a year-over-year basis, the timing of sales of third-party products positively impacted Health Sciences segment operating margin, while negatively impacting Financial Services segment operating margin.
Total segment operating profit and margin were as follows for the nine months ended September 30:
(Dollars in millions) 2026 % of Revenues 2025 % of Revenues Increase/(Decrease)
Total segment operating profit $ 2,643 16.0 $ 2,474 15.7 $ 169
Unallocated (costs)/benefits (54) (0.4) 62 0.4 (116)
Income from operations $ 2,589 15.6 $ 2,536 16.1 $ 53
Unallocated costs for 2026 represents Project Leap costs, partially offset by the partial reversal of the 2019 India Defined Contribution Obligation liability. See Note 4 and Note 11 to our unaudited consolidated financial statements for additional information. Unallocated benefits for 2025 represents the 2025 gain on sale of property and equipment. See Note 1 to our unaudited consolidated financial statements for additional information.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Other Income (Expense), Net
The following table sets forth total other income (expense), net for the nine months ended September 30:
(in millions) 2026 2025 Increase/
Decrease
Foreign currency exchange gains $ 29 $ 16 $ 13
(Losses) on foreign exchange forward contracts not designated as hedging instruments (2) (3) 1
Foreign currency exchange gains (losses), net 27 13 14
Interest income 56 78 (22)
Interest expense (39) (29) (10)
Other, net (28) 3 (31)
Total other income (expense), net $ 16 $ 65 $ (49)
The foreign currency exchange gains were attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries. The gains and losses on foreign exchange forward contracts not designated as hedging instruments related to the realized and unrealized gains and losses on contracts entered into to offset our foreign currency exposures. Interest income declined in 2026 as compared to 2025, driven by the combination of lower invested balances and lower yields. The increase in expenses in Other, net was related to our India defined benefit plans as a result of the enactment of the Labor Code reforms in 2025.
Provision for Income Taxes
ê
$347M
¡ Effective Income Tax Rate ê 13.3%
The effective income tax rate decrease compared to 2025 was driven by the negative impact of the one-time, non-cash income tax expense of $390 million related to the enactment of the OBBBA during Q3 2025, partially offset by multi-year tax planning strategies.
Net Income
The increase in net income as compared to 2025 was driven by the one-time, non-cash income tax expense of $390 million related to the enactment of the OBBBA during Q3 2025 as well as increased income from operations in 2026, partially offset by decreased other income in 2026.
é
$343M
¡ é 1.6% of Revenues
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Non-GAAP Financial Measures
See "Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025 - Non-GAAP Financial Measures" above for additional information about our use of non-GAAP financial measures.
The following table presents a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure for the nine months ended September 30:
(Dollars in millions, except per share amounts) 2026 % of
Revenues 		2025 % of
Revenues
GAAP income from operations and operating margin $ 2,589 15.6 $ 2,536 16.1
Project Leap(1)
135 0.8 - -
India Defined Contribution Obligation(2)
(81) (0.4) - -
(Gain) on sale of property and equipment(3)
- - (62) (0.4)
Adjusted Income from Operations and Adjusted Operating Margin $ 2,643 16.0 $ 2,474 15.7
GAAP diluted EPS $ 4.14 $ 3.22
Effect of above adjustments, pre-tax
0.12 (0.13)
Non-operating foreign currency exchange (gains) losses, pre-tax (4)
(0.06) (0.03)
Tax effect of above adjustments (5)
0.05 0.08
One-time income tax expense related to the enactment of the OBBBA (6)
- 0.79
Adjusted Diluted EPS $ 4.25 $ 3.93
(1)Consists of employee separation, facility exit and other costs incurred in connection with Project Leap. See Note 4 to our unaudited consolidated financial statements for additional information.
(2)In the second quarter of 2026, management concluded that the portion of the India Defined Contribution Obligation liability recorded in 2019 that relates to periods where no proceedings had been initiated by the government is no longer required. See Note 11 to our unaudited consolidated financial statements for additional information.
(3)During the three months ended March 31, 2025, we realized a gain of $62 million on the sale of an office complex in India. See Note 1 to our unaudited consolidated financial statements for additional information.
(4)Non-operating foreign currency exchange gains and losses, inclusive of gains and losses on related foreign exchange forward contracts not designated as hedging instruments for accounting purposes, are reported in "Foreign currency exchange gains (losses), net" in our unaudited consolidated statements of operations.
(5)Presented below are the tax impacts of each of our non-GAAP adjustments to pre-tax income:
(in millions) Nine Months Ended
September 30,
2026 2025
Non-GAAP income tax benefit (expense) related to:
Gain on sale of property and equipment
$ - $ (9)
Project Leap charges 36 -
India Defined Contribution Obligation (21) -
Foreign currency exchange gains and losses (38) (25)
The effective tax rate related to non-operating foreign currency exchange gains and losses varies depending on the jurisdictions in which such income and expenses are generated and the statutory rates applicable in those jurisdictions. As such, the income tax effect of non-operating foreign currency exchange gains and losses shown in the above table may not appear proportionate to the net pre-tax foreign currency exchange gains and losses reported in our unaudited consolidated statements of operations.
(6)In the third quarter of 2025, we recorded a one-time, non-cash income tax expense of $390 million related to the enactment of the OBBBA. See Note 7 to our unaudited consolidated financial statements for additional information.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Liquidity and Capital Resources
Cash generated from operations has historically been the primary source of liquidity to fund operations and investments to grow our business. As of September 30, 2026, we had cash, cash equivalents and short-term investments of $1,552 million. As of September 30, 2026, we had $1,000 million outstanding under the revolving credit facility, bringing the available capacity under our credit facility to $850 million.
The following table provides a summary of cash flows for the nine months ended September 30:
(in millions) 2026 2025 Increase / Decrease
Net cash provided by (used in):
Operating activities $ 1,836 $ 2,025 $ (189)
Investing activities (1,617) (155) (1,462)
Financing activities (1,335) (1,785) 450
Operating activities
The decrease in cash provided by operating activities for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, was primarily driven by higher incentive based compensation payments in 2026, partially offset by lower cash tax payments in 2026.
We monitor turnover, aging and the collection of accounts receivable by client. Our DSO calculation includes receivables, net of allowance for doubtful accounts, and contract assets, reduced by the uncollected portion of deferred revenue. Our DSO was 89 days as of September 30, 2026, an increase of 8 days from 81 days as of December 31, 2025. Our DSO was 82 days as of September 30, 2025, an increase of 4 days from 78 days as of December 31, 2024.
Investing activities
The increase in cash used in investing activities for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, was driven by the payments for our recently completed acquisitions in 2026 and the gain on sale of property and equipment in 2025.
Financing activities
The decrease in cash used in financing activities for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, was primarily driven by the draw down on our revolving credit facility in 2026 and the repayment of the outstanding balance under the revolving credit facility in 2025, partially offset by increased repurchases of common stock during 2026.
During 2026, we repurchased $1,838 million of our Class A common stock under our stock repurchase program: $1,338 million through open market purchases and $500 million through ASR agreements.
In 2022, we entered into the Credit Agreement providing for the $650 million Term Loan and a $1,850 million unsecured revolving credit facility, which were each due to mature in October 2027. During the second quarter of 2026, we borrowed $1,000 million under our revolving credit facility. On October 5, 2026, we entered into the New Credit Agreement providing for a $550 million unsecured New Term Loan and a $1,850 million unsecured revolving credit facility, which are each due to mature in October 2031. The Credit Agreement was terminated upon the closing of the New Credit Agreement and the proceeds from the New Term Loan were used primarily to repay our outstanding Term Loan balance. Additionally, in October 2026, we borrowed $1,000 million under the new revolving credit facility and used the proceeds to repay the outstanding balances under the previous revolving credit facility.
We are required under the New Credit Agreement to make scheduled quarterly principal payments under the New Term Loan beginning in December 2027. The New Credit Agreement contains customary affirmative and negative covenants as well as a financial covenant. The financial covenant is tested at the end of each fiscal quarter and requires us to maintain a Leverage Ratio not in excess of 3.50:1.00, or at our election for a period of up to four quarters following certain material acquisitions, 4.00:1.00.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
Capital Allocation
Acquisitions
Share repurchases
Dividend payments
We review our capital allocation on an ongoing basis, considering our financial performance and liquidity position, investments required to execute our strategic plans and initiatives, acquisition opportunities, the economic outlook, regulatory changes and other relevant factors. As these factors may change over time, the actual amounts expended on stock repurchase activity, dividends, and acquisitions, if any, during any particular period cannot be predicted and may fluctuate from time to time.
Other Liquidity and Capital Resources Information
We seek to ensure that our cash is available to us in the locations in which it is needed. As part of our ongoing liquidity assessments, we regularly monitor the mix of our domestic and international cash flows and cash balances. We evaluate on an ongoing basis what portion of the non-U.S. cash, cash equivalents and short-term investments is needed locally to execute our strategic plans and what amount is available for repatriation back to the United States.
We expect operating cash flows, cash and short-term investment balances, together with the available capacity under our revolving credit facilities, to be sufficient to meet our operating requirements, including purchase commitments, tax payments, payments related to Project Leap and servicing our debt for the next twelve months. The ability to expand and grow our business in accordance with current plans, make acquisitions, meet long-term capital requirements beyond a twelve-month period and execute our capital return plan will depend on many factors, including the rate, if any, at which cash flow increases, our ability and willingness to pay for acquisitions with capital stock and the availability of public and private debt, including the ability to extend the maturity of or refinance our existing debt, and equity financing. We cannot be certain that additional financing, if required, will be available on terms and conditions acceptable to us, if at all.
Commitments and Contingencies
See Note 11 to our unaudited consolidated financial statements.
Critical Accounting Estimates
Management's discussion and analysis of our financial condition and results of operations is based on our unaudited consolidated financial statements that have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities, including the recoverability of tangible and intangible assets, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. On an ongoing basis, we evaluate our estimates. The most significant estimates relate to the recognition of revenue, including the application of the cost-to-cost method of measuring progress to completion for certain fixed-price contracts, income taxes, business combinations and valuation of goodwill and other long-lived assets. We base our estimates on historical experience, current trends and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The actual amounts may differ from the estimates used in the preparation of the accompanying unaudited consolidated financial statements. For a discussion of our critical accounting estimates, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2025. Our significant accounting policies are described in Note 1 to the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Recently Adopted and New Accounting Pronouncements
See Note 1 to our unaudited consolidated financial statements.
Cognizant Technology Solutions
September 30, 2026 Form 10-Q
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