COGNIZANT TECHNOLOGY SOLUTIONS CORP
For the period ended Sep 30, 2026. Filed Oct 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.
Sep 30, 2026 · Filed Oct 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 2026-06-30; filed 2026-07-29.
0001058290-26-000031
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-10-29.
0001058290-26-000041
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 20 previous paragraphs and 19 current paragraphs.
13 unchanged; 5 reworded; 1 added; 2 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 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In July 2025, the OBBBA was enacted in the United States, which, among other provisions, repealed the requirement to capitalize U.S. research and experimental costs.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.
Removed paragraphs (2)
Previous report
As disclosed in Note 11 to our unaudited consolidated financial statements, 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. Thus, in the second quarter of 2026, we recorded a benefit of $81 million in "Selling, general and administrative expenses" in our unaudited consolidated statement of operations.
Previous report
During the second quarter of 2026, we repurchased $1,153 million of our Class A common stock under our stock repurchase program: $653 million through open market purchases and $500 million through ASR agreements. Additionally, we completed our acquisition of Astreya for a purchase price of $634 million, including contingent consideration of $25 million, net of cash acquired, while borrowing$1,000 million under our revolving credit facility. We remain focused on our long-term capital allocation framework, including the flexibility to pursue strategic acquisitions.
Reworded paragraphs (5)
Previous wording
In connection with Project Leap, in the second quarter of 2026 we incurred $84 million of employee separation and other costs. See Note 4 to our unaudited consolidated financial statements. We expect to record total 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.
Current wording
In connection with Project Leap, in the third quarter of 2026 weincurred $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.
Previous wording
During the quarter ended June 30, 2026, revenues increased by $236 million as compared to the quarter ended June 30, 2025, representing growth of 4.5%, or 4.1% 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 acquisitions. See 'Revenues - Reportable Business Segments and Geographic Markets' within Results of Operations for further details.
Current wording
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 currency 1 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.
Previous wording
Our GAAP operating margin increased to 15.9% for the quarter ended June 30, 2026 from 15.6% for the quarter ended June 30, 2025. Our Adjusted Operating Margin 1 increased to 16.0% for the quarter ended June 30, 2026 from 15.6% for the quarter ended June 30, 2025. Our operating margins for the quarter ended June 30, 2026, as compared to the quarter ended June 30, 2025, were positively impacted by operational efficiencies and the beneficial impact of 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 quarter ended June 30, 2026 was negatively impacted by $84 million in costs related to Project Leap (see Note 4) and positively impacted by the $81 million partial reversal of the 2019 India Defined Contribution Obligation liability (see Note 11), both of which were excluded from our Adjusted Operating Margin.
Current wording
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 Margin 1 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.
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. 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 June 30, 2026, our Voluntary Attrition - Tech Services was 13.0% as compared to 12.6% for the trailing twelve months ended June 30, 2025. We finished the second quarter of 2026 with approximately 356,700 employees as compared to 343,800 employees at the end of the second quarter of 2025.
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 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.
Previous wording
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. 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.
Current wording
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.