COGNIZANT TECHNOLOGY SOLUTIONS CORP
For the period ended Mar 31, 2026. Filed Apr 29, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed Apr 29, 2026
CTSH$64.72-2.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-10-29.
0001058290-25-000341
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-04-29.
0001058290-26-000016
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 139 previous paragraphs and 18 current paragraphs.
11 unchanged; 6 reworded; 1 added; 118 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 44 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (1)
Current report
In the second quarter of 2026, we introduced 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.
Removed paragraphs (118)
Previous report
During the quarter ended September 30, 2025, revenues increased by $371 million as compared to the quarter ended September 30, 2024, representing growth of 7.4%, or 6.5% on a constant currency 1 basis. Revenue growth was broad-based, led by North America. Additionally, our recently completed acquisition of Belcan contributed approximately 250 basis points to revenue growth.
Previous report
In July 2025, the OBBBA was enacted in the United States, which, among other provisions, repealed the requirement to capitalize U.S. R&E costs. As a result, we do not believe it is more likely than not that we will realize our deferred tax asset of $390 million related to R&E costs capitalized outside the United States. These amounts would have otherwise been available to offset certain future U.S. taxes on our non-U.S. earnings, which, as a result of this repeal, we no longer project to be applicable to us. Therefore, in the third quarter of 2025, we recorded a one-time, non-cash income tax expense of $390 million. This impacted our GAAP diluted EPS by $0.80, which is added back for the calculation of Adjusted EPS. Other than this impact, we do not expect the OBBBA to significantly impact our effective income tax rate. Additionally, as a result of this repeal, our cash taxes during the third quarter of 2025 were reduced by approximately $150 million as compared to our initial cash tax projections prior to the repeal. An additional reduction of $50 million in cash taxes as compared to our initial cash tax projections prior to the repeal is expected during the fourth quarter of 2025. These assessments are based upon our current interpretation of the OBBBA, which may change as a result of future clarifications or guidance.
Previous report
Results of Operations
Previous report
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
Previous report
The following table sets forth, for the periods indicated, certain financial data for the three months ended September 30:
Previous report
(a)Exclusive of depreciation and amortization expense.2
Previous report
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.
Previous report
Revenues of $5,415 million across our business segments and geographies were as follows for the three months ended September 30, 2025:
Previous report
Revenue growth was driven by the following factors:3
Previous report
• Revenue growth across all geographies was driven by our Financial Services and Health Sciences segments, which were positively impacted by the ramp up of several recently won large deals. Revenue growth within our Communications, Media and Technology segment was driven by clients in the North America region;
Previous report
• Our acquisition of Belcan contributed approximately 250 basis points of growth to overall revenue growth, including approximately 900 basis points of growth to our Products and Resources segment, primarily in North America and to a lesser extent in the United Kingdom. The remaining growth in our Products and Resources segment was driven by the resale of third-party products, primarily in North America, in connection with our integrated offerings strategy.
Previous report
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.
Previous report
Cost of Revenues (Exclusive of Depreciation and Amortization Expense)
Previous report
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 resale of third-party products in connection with our integrated offerings strategy and the dilutive impact of the recently completed acquisition of Belcan, partially offset by operational efficiencies and the beneficial impact of foreign currency exchange rate movements.
Previous report
SG&A Expenses (Exclusive of Depreciation and Amortization Expense)
Previous report
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 net savings generated from our NextGen program.
Previous report
Depreciation and Amortization Expense
Previous report
Depreciation and amortization expense increased by 4.7% and decreased 0.1% as a percentage of revenues during the third quarter of 2025 as compared to the third quarter of 2024. The increase was driven by amortization expense from intangible assets related to our recently completed acquisition of Belcan.
Previous report
Operating Margin and Adjusted Operating Margin4 - Overall
Previous report
Our GAAP and Adjusted Operating Margins 4 for the quarter ended September 30, 2025, as compared to the quarter ended September 30, 2024, were positively impacted by net savings generated from our NextGen program, operational efficiencies and the beneficial impact of foreign currency exchange rate movements, partially offset by the dilutive impact of the recently completed acquisition of Belcan. In addition, our GAAP operating margin for the quarter ended September 30, 2024 was negatively impacted by NextGen charges, which were excluded from our Adjusted Operating Margin.
Previous report
A predominant portion of our costs in India are denominated in the Indian rupee, representing approximately 23% of our global operating costs during the three months ended September 30, 2025. 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, 2025 by 40 basis points as compared to the three months ended September 30, 2024.
Previous report
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 70 basis points during the three months ended September 30, 2025. Each additional 1.0% change in exchange rate between the Indian rupee and the U.S. dollar will have the effect of moving our operating margin by 18 basis points (excluding the impact of the hedges). The settlement of our cash flow hedges had a negative impact of 20 basis points on our operating margin during the three months ended September 30, 2025, compared to a positive impact of 10 basis points during the three months ended September 30, 2024.
Previous report
Segment Operating Profit
Previous report
In the first quarter of 2025, 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 an allocation of corporate costs, which were previously included in "unallocated costs." We have reported 2025 segment operating profits using the new allocation methodology and have recast the 2024 results to conform to the new methodology.
Previous report
Segment operating profit and operating margin percentage were as follows:
Previous report
In the third quarter of 2025, segment operating margins across all our segments were positively impacted by net savings generated from our NextGen program, operational efficiencies and the beneficial impact of foreign currency exchange rate movements. Health Sciences segment operating profit in the third quarter of 2025 was positively impacted by reduced resales of third-party products in connection with our integrated offerings strategy. Financial Services segment operating profit in the third quarter of 2025 was negatively impacted by higher costs typical to the initial phases of several recently won large deals. Products and Resources segment operating profit in the third quarter of 2025 was negatively impacted by the dilutive impact of the Belcan acquisition and by resales of third-party products in connection with our integrated offerings strategy.
Previous report
Total segment operating profit and operating margin were as follows for the three months ended September 30:
Previous report
The decrease in unallocated costs for three months ended September 30, 2025 as compared to September 30, 2024 was primarily driven by the absence of NextGen charges in 2025.
Previous report
Other Income (Expense), Net
Previous report
The following table sets forth total other income (expense), net for the three months ended September 30:
Previous report
The foreign currency exchange losses were attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries. The gains 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, 2025, the notional value of our undesignated hedges was $770 million. Interest income declined for the three months ended September 30, 2025, primarily driven by lower yields as compared
Previous report
to the three months ended September 30, 2024. Higher interest expense during the three months ended September 30, 2024 was driven by the borrowing of $600 million under our revolving credit facility to partially fund the acquisition of Belcan in that period. The borrowing was subsequently repaid in the fourth quarter of 2024 and first quarter of 2025.
Previous report
Provision for Income Taxes
Previous report
The effective income tax rate for Q3 2025 was negatively impacted by the one-time, non-cash income tax expense of $390 million related to the enactment of the OBBBA. The effective income tax rate for Q3 2024 reflects the benefit of the recognition of a $40 million deferred tax asset related to foreign tax credits.
Previous report
Net Income
Previous report
The decrease in net income was primarily driven by the one-time, non-cash income tax expense of $390 million related to the enactment of the OBBBA, partially offset by an increase in income from operations.
Previous report
Non-GAAP Financial Measures
Previous report
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.
Previous report
Our non-GAAP financial measures Adjusted Operating Margin and Adjusted Income from Operations exclude unusual items, such as the gain on sale of property and equipment in the first quarter of 2025 and NextGen charges in 2024. Our non-GAAP financial measure Adjusted Diluted EPS excludes unusual items, such as the one-time income tax expense related to the enactment of the OBBBA, the gain on sale of property and equipment and NextGen charges, and net non-operating foreign currency exchange gains or losses and the tax impact of all the applicable adjustments. For further detail on the one-time income tax expense related to the enactment of the OBBBA, the gain on sale of property and equipment and NextGen charges, see Note 6, Note 1 and Note 3, respectively, to our unaudited consolidated financial statements. 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.
Previous report
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 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.
Showing the first 40 of 118 passages. Open the source sections for the rest.
Reworded paragraphs (6)
Previous wording
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 beginning to reshape organizations in every field. We provide industry expertise and close client collaboration, combining critical perspective with a flexible engagement style. 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 collaborative services include digital services and solutions, 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. Digital, AI-enhanced services continue to be an important part of our portfolio, aligning with our clients' focus on becoming data-enabled, customer-centric and differentiated businesses.
Current wording
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.
Previous wording
Revenues - Reportable Business Segments and Geographic Markets
Current wording
During the quarter ended March 31, 2026, revenues increased by $298 million as compared to the quarter ended March 31, 2025, representing growth of 5.8%, or 3.9% on a constant currency 1 basis. Revenue growth 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 AI and analytics services. Additionally, revenue growth was positively impacted by the sale of third-party products in connection with our integrated offerings strategy and our recently completed acquisition. See 'Revenues - Reportable Business Segments and Geographic Markets' within Results of Operations for further details.
Previous wording
Our GAAP operating margin and Adjusted Operating Margin 1 were both 16.0% for the quarter ended September 30, 2025, as there were no adjustments for unusual items to report in our calculation of Adjusted Operating Margin for that period. Our GAAP operating margin and Adjusted Operating Margin were 14.6% and 15.3%, respectively, for the quarter ended September 30, 2024. Our operating margin for the quarter ended September 30, 2025, as compared to the quarter ended September 30, 2024, was positively impacted by net savings generated from our NextGen program, operational efficiencies and the beneficial impact of foreign currency exchange rate movements, partially offset by the dilutive impact of the recently completed acquisition of Belcan. In addition, our GAAP operating margin for the quarter ended September 30, 2024 was negatively impacted by NextGen charges, which were excluded from our Adjusted Operating Margin.
Current wording
Our GAAP operating margin and Adjusted Operating Margin 1 were both 15.6% for the quarter ended March 31, 2026, as there were no adjustments for unusual items to report in our calculation of Adjusted Operating Margin for that period. Our GAAP operating margin and Adjusted Operating Margin were 16.7% and 15.5%, respectively, for the quarter ended March 31, 2025. Our operating margin for the quarter ended March 31, 2026, as compared to the quarter ended March 31, 2025, was positively impacted by operational efficiencies and the beneficial impact of foreign currency exchange rate movements, partially offset by the impact of the sale of third-party products in connection with our integrated offerings strategy, the dilutive impact of our recently completed acquisition and increased compensation costs. In addition, our GAAP operating margin for the quarter ended March 31, 2025 was positively impacted by 120 basis points, or $62 million, from the gain on sale of property and equipment, which was excluded from our Adjusted Operating Margin.
Previous wording
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. For the trailing twelve months ended September 30, 2025, our Voluntary Attrition - Tech Services was 14.5% as compared to 14.6% for the trailing twelve months ended September 30, 2024. We finished the third quarter of 2025 with approximately 349,800 employees as compared to 340,100 employees at the end of the third quarter of 2024.
Current wording
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 the trailing twelve months ended March 31, 2026, our Voluntary Attrition - Tech Services was 12.3% as compared to 12.0% for the trailing twelve months ended March 31, 2025. We finished the first quarter of 2026 with approximately 357,600 employees as compared to 336,300 employees at the end of the first quarter of 2025.
Previous wording
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.
Current wording
In connection with Project Leap, we expect to record costs of$230 million to $320 million, with substantially all of the costs expected to be incurred in 2026. Cash payments related to the costs are expected to be made primarily over the same period. This consists of $200 million to $270 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 to $300 million in 2026, which will 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. Costs related to Project Leap will beremoved from our calculation of Adjusted Operating Margin, Adjusted Income from Operations and Adjusted Diluted EPS.
Previous wording
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, 2024.
Current wording
In addition to Project Leap, 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. Certain aspects of the Labor Code rely on the issuance of rules and regulations. Additionally, the Government of India is in the process of clarifying certain aspects of the Labor Code. The issuance of rules and regulations as well as 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. We continue to evaluate the potential impact of the amendment, which, depending on its final terms when entered into force, 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.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
Revenues - Reportable Business Segments and Geographic Markets
Previous report — wording carried elsewhere
Gain on Sale of Property and Equipment
Previous report — wording carried elsewhere
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.