Cognizant Technology Solutions (NASDAQ:CTSH) reported second-quarter 2026 revenue growth at the high end of its expectations, supported by North American demand, large-deal execution and continued strength in financial services, while maintaining its full-year adjusted operating margin outlook.
Revenue rose 4.1% year over year in constant currency to $5.5 billion. Chief Executive Officer Ravi Kumar said nearly all of the company’s sequential growth came from its organic business. Financial services revenue increased nearly 12% in constant currency, marking the segment’s second consecutive quarter of growth above 10%.
Bookings and segment trends
Cognizant signed seven deals with total contract values above $100 million during the quarter, including three new client relationships. Trailing 12-month bookings increased 5%, producing a book-to-bill ratio of 1.3. The company said new and expansion bookings grew in the mid-teens during the first half of the year.
Kumar said financial services has been a key contributor to the company’s bookings momentum, with activity spanning banking, capital markets and insurance. He characterized the segment as a potential leading indicator for broader industry demand as organizations pursue artificial intelligence-driven productivity, modernization and growth initiatives.
Chief Financial Officer Jatin Dalal said growth was again led by North America. Cognizant’s business process outsourcing practice led service-line growth, while demand for data and cybersecurity services remained strong amid AI adoption. The company also cited growth from industry-specific AI transformations in financial services and life sciences.
Health sciences was stable, Dalal said, as clients continued to prioritize vendor consolidation, legacy modernization and compliance while closely scrutinizing discretionary spending. Products and resources was steady, with retail, consumer goods, travel and hospitality clients facing geopolitical uncertainty, supply-chain disruption and higher oil prices. Cognizant said it is seeing momentum in manufacturing, logistics, energy and utilities, particularly around physical AI and smart manufacturing.
Demand among communications and media customers remained muted, while technology clients continued to show demand for AI-native engineering, digital operations, data and cloud services, Dalal said.
Margins, capital returns and Project Leap
Second-quarter adjusted operating margin was 16%, up 40 basis points from a year earlier when excluding the impacts of Project Leap costs and a one-time benefit related to India labor regulations. The company incurred about $84 million in Project Leap costs during the quarter, while recording an $81 million one-time benefit from a partial reversal of an India defined-contribution obligation liability originally recorded in 2019.
Dalal said operational efficiency and favorable currency movements more than offset higher third-party and compensation costs, as well as the effect of recent acquisitions.
Adjusted earnings per share were $1.37, up 5% year over year, driven by revenue growth, margin expansion and a lower share count. Free cash flow totaled $459 million in the quarter and $652 million for the first half.
Cognizant spent more than $1.1 billion on share repurchases in the quarter, buying back over 22 million shares at an average price of about $51 per share. The amount included a $500 million accelerated share repurchase program announced in May. Year to date, the company returned $1.9 billion to shareholders through repurchases and dividends and said it remains on track to return about $2.6 billion for the full year.
The company also deployed $1.3 billion on acquisitions aligned with its AI strategy. Cognizant completed its acquisition of managed-services provider Astreya, which has expertise in data-center infrastructure, enterprise networks, digital workplace services and AI-first managed operations. The company ended the quarter with $1.1 billion in cash and short-term investments.
AI strategy and workforce plans
Kumar outlined Cognizant’s strategy to operate as an “AI builder,” emphasizing AI-enabled software engineering, business-process operations, platforms and outcome-based commercial arrangements. He said more than 40% of Cognizant’s software development is AI-assisted, and the company has more than 8,000 AI engagements.
The company introduced two certified roles: frontier-certified engineers, who are intended to audit workflows and build intelligent agents, and frontier business operators, who will manage blended human and digital teams. Cognizant plans to scale its workforce to 5,000 frontier-certified engineers and 10,000 frontier business operators.
Dalal said headcount was broadly flat between the first and second quarters. Cognizant continues to add recent college graduates and remains on track to hire approximately 20,000 by year-end, though Project Leap is expected to result in some headcount reductions. He said overall headcount is expected to remain range-bound for the rest of 2026.
Kumar also highlighted TriZetto, Cognizant’s healthcare platform business, which generates more than $1.1 billion in annual revenue. He said the business grew faster than the overall company in the first half and delivered substantially higher margins.
Updated outlook
For the third quarter, Cognizant forecast constant-currency revenue growth of 3.8% to 5.3% year over year, including approximately 200 basis points from recently completed acquisitions.
The company lowered its full-year constant-currency revenue growth guidance to 4% to 5.5%, saying macroeconomic uncertainty has remained elevated and discretionary spending has continued to face pressure. The revised outlook includes 150 basis points of inorganic growth, unchanged from its prior expectation.
Management maintained its forecast for adjusted operating margin of 16% to 16.2%, representing 20 to 40 basis points of year-over-year expansion. Cognizant also maintained its expectation for free cash flow conversion of 90% to 100% of net income.
The company raised its full-year adjusted EPS outlook to $5.70 to $5.82, representing growth of 8% to 10%, compared with its previous outlook for growth of 7% to 9%. Cognizant said it expects full-year diluted weighted-average shares outstanding of approximately 460 million, reflecting the pace of second-quarter repurchases.
About Cognizant Technology Solutions (NASDAQ:CTSH)
Cognizant Technology Solutions (NASDAQ: CTSH) is a global professional services company that provides information technology, consulting and business process services to large enterprises. Its core offerings include digital engineering, application development and maintenance, cloud migration and managed services, data analytics and artificial intelligence, cybersecurity, and industry-specific solutions. Cognizant works with clients to design and implement technology-enabled transformations that address customer experience, operational efficiency and new product and service delivery.
Founded in the 1990s and headquartered in Teaneck, New Jersey, Cognizant has grown into a multinational organization with delivery centers and operations across the Americas, Europe, and Asia.
