Cognizant Q4 Earnings Beat Estimates: Will Raised View Aid Shares?

Cognizant Technology Solutions CTSH reported non-GAAP earnings of $1.35 per share in the fourth quarter of 2025, which beat the Zacks Consensus Estimate by 1.96% and increased 11.6% year over year. Revenues of $5.33 billion beat the consensus mark by 0.50%. The top line increased 4.9% year over year and 3.8% at constant currency (cc). This growth was driven by strong performance in North America and organic growth across all segments. Acquisitions also contributed approximately 260 basis points to year-over-year revenue growth.On a trailing 12-month basis, bookings increased 5% year over year to $28.4 billion, which represented a book-to-bill of approximately 1.3 times. Bookings in the fourth quarter increased 9% year over year. Fourth-quarter bookings included 12 large deals, with a total contract value of more than $100 million, of which two were mega deals, or deals with a total contract value of more than $500 million.Cognizant had over 4,000 early Generative AI client engagements in the fourth quarter of 2025.Cognizant Technology Solutions Corporation Price, Consensus and EPS Surprise Cognizant Technology Solutions Corporation price-consensus-eps-surprise-chart | Cognizant Technology Solutions Corporation QuoteCTSH’s shares have underperformed the Zacks Computer & Technology sector in the trailing 12-month period. The stock has gained 8.3%, underperforming the broader sector’s increase of 12.9%. We believe the raised guidance will help CTSH stock recover.CTSH’s Top-Line DetailsFinancial services revenues (29.7% of revenues) increased 10.5% year over year (up 9.3% at cc) to $1.586 billion. Growth is primarily driven by improved discretionary spending and investments in cloud, data modernization and AI.Health Sciences revenues (30.4% of revenues) increased 5.2% year over year (up 4.2% at cc) to $1.621 billion. Growth is driven by strong demand across payer, provider and life sciences, which offsets some discretionary spending pressures.Products and Resources revenues (24.7% of revenues) increased 1.8% year over year (up 0.3% at cc) to $1.318 billion.Communications, Media and Technology revenues (15.2% of revenues) were $808 million, which declined 0.4% from the year-ago quarter (down 1.2% at cc). Region-wise, revenues from North America increased 4.3% year over year and 4.2% at cc and contributed 74.7% of total revenues.Revenues from Europe increased 8.4% year over year (up 2% at cc) and contributed 19.1% to total revenues. Revenues from the U.K. increased 7.9% year over year (up 3.8% at cc). Continental Europe revenues increased 8.9% year over year (up 0.3% at cc).The Rest of the World revenues increased 2.5% year over year (up 3.6% at cc) and contributed 6.2% to total revenues.CTSH’s Operating DetailsSelling, general & administrative expenses, as a percentage of revenues, contracted 150 bps year over year to 15.1%.Total headcount at the end of the fourth quarter was 351,600 compared with 349,800 in the prior quarter. Voluntary attrition - Tech Services on a trailing 12-month basis was 13.9% in the fourth quarter of 2025 compared with 14.5% and 15.9% for the periods ended Sept. 30, 2025, and Dec. 31, 2024, respectively.Cognizant reported a GAAP operating margin of 16%, expanding 120 bps on a year-over-year basis.Non-GAAP operating margin (adjusted for NextGen charges) of 16% expanded 30 bps year over year.CTSH’s Balance SheetCTSH had cash and short-term investments of $1.91 billion as of Dec. 31, 2025, compared with $2.35 billion as of Sept. 30, 2025. As of Dec. 31, 2025, the company had a total debt of $576 million, down from $584 billion reported as of Sept. 30, 2025.The company generated $858 billion in cash from operations compared with $1.227 million in the previous quarter.Free cash flow was $781 million compared with $1.16 million reported in the prior quarter.CTSH Initiates Strong Q1 & 2026 GuidanceCognizant expects first-quarter 2026 revenues between $5.36 billion and $5.44 billion, indicating growth of 4.8%-6.3% and an increase of 2.7%-4.2% on a cc basis. For 2026, revenues are expected to be in the range of $22.14-$22.66 billion, an increase of 4.9-7.4% on a reported basis and growth of 4%-6.5% on a cc basis. Adjusted operating margin for 2026 is expected to be approximately 15.9% to 16.1% (an increase of 10 to 30 basis points).Adjusted earnings per share for 2026 are expected to be between $5.56 and $5.70.CTSH’s Zacks Rank & Stocks to ConsiderCTSH currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the broader Zacks Computer and Technology sector include Arista Networks ANET, Advanced Energy AEIS, and Amkor Technology AMKR. While Amkor Technology sports a Zacks Rank #1 (Strong Buy), Arista Networks and Advanced Energy carry a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Shares of Arista Networks have gained 6.1% in the trailing six-month period. Arista Networks is set to report fourth-quarter 2025 results on Feb. 12Shares of Advanced Energy have surged 82.1% in the trailing six-month period. Advanced Energy is slated to report fourth-quarter 2025 results on Feb. 10.Amkor Technology shares have surged 97.6% in the trailing six-month period. Amkor Technology is set to report fourth-quarter 2025 results on Feb. 9.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cognizant Technology Solutions Corporation (CTSH): Free Stock Analysis Report Amkor Technology, Inc. (AMKR): Free Stock Analysis Report Advanced Energy Industries, Inc. (AEIS): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks