Cognizant Technology Solutions Corp recently released its Form 10-Q for the quarter ended March 31, 2026. Cognizant is a professional services company that provides consulting, technology and outsourcing services across North America, Europe and other international markets. It operates through four segments: Financial Services, Health Sciences, Products and Resources, and Communications, Media and Technology, and its work includes AI-related services, application development, systems integration, engineering, business process services and automation.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cognizant said first-quarter 2026 revenue rose to $5.413 billion from $5.115 billion a year earlier, an increase of $298 million, or 5.8%, and 3.9% in constant currency. The company said the increase was driven by several recently won large deals, higher demand for intuitive operations and automation services, and growth in AI and analytics services; third-party product sales tied to its integrated offerings strategy and a recently completed acquisition also contributed.
Operating income was $843 million, down from $853 million a year earlier, while operating margin narrowed to 15.6% from 16.7%. Cognizant said adjusted operating income was also $843 million, up from $791 million, and adjusted operating margin was 15.6% versus 15.5% in the prior-year quarter.
Net income was essentially flat at $662 million, compared with $663 million a year earlier. Diluted earnings per share rose to $1.39 from $1.34, while adjusted diluted EPS increased to $1.40 from $1.23.
Cost of revenues increased to $3.638 billion from $3.397 billion, and as a share of revenue it rose to 67.2% from 66.4%. Cognizant said the increase reflected third-party product sales in connection with its integrated offerings strategy and higher compensation costs, partly offset by foreign currency benefits.
Selling, general and administrative expenses were unchanged at $791 million, but fell to 14.6% of revenue from 15.5%. The company attributed the improvement to operational efficiencies, partly offset by the dilutive effect of the recently completed acquisition.
Depreciation and amortization expense increased to $141 million from $136 million, driven by amortization of intangible assets from the acquisition. Other income, net, rose to $24 million from $19 million, and the provision for income taxes declined to $208 million from $213 million.
By segment, Financial Services delivered the largest revenue increase, up $182 million, or 12.4%, with constant-currency growth of 10.2%. Communications, Media and Technology rose $65 million, or 8.1%; Products and Resources increased $43 million, or 3.4%; and Health Sciences edged up $8 million, or 0.5%.
By geography, North America revenue increased $198 million, or 5.1%, to account for most of the growth. Europe revenue rose $89 million, or 9.4%, with the United Kingdom up 11.4% and Continental Europe up 7.5%; Rest of World revenue increased $11 million, or 3.5%.
Cognizant said third-party product sales contributed about 140 basis points to overall revenue growth, including 1,000 basis points in Communications, Media and Technology and 250 basis points in Financial Services. The recently completed acquisition added about 90 basis points to overall growth, all in North America. Health Sciences revenue was held back by about 300 basis points from lower third-party product sales, partly offset by continued demand from life sciences clients.
The company said its trailing 12-month voluntary attrition rate for tech services was 12.3% at March 31, 2026, compared with 12.0% a year earlier. Headcount increased to about 357,600 from 336,300 at the end of the first quarter of 2025.
Cognizant also introduced Project Leap in the second quarter of 2026, a restructuring and investment program tied to its operating model. The company expects Project Leap costs of $230 million to $320 million, with $200 million to $270 million of that tied to employee severance and other personnel costs and $30 million to $50 million in other charges. It expects substantially all of those costs to be incurred in 2026 and said the program should generate in-year savings of about $200 million to $300 million in 2026. Following these announcements, the company's shares moved 0.02%, and are now trading at a price of $55.11. If you want to know more, read the company's complete 10-Q report here.
