Cognizant Q3 2026 Revenue Rises 4.6% as Financial Services Grows

Cognizant (CTSH) reported higher third-quarter revenue and adjusted earnings, supported by double-digit growth in Financial Services and Communications, Media & Technology. Acquisitions and third-party product sales contributed materially to the increase, while GAAP operating margin contracted as the company recorded costs related to Project Leap.

Revenue for the quarter ended September 30, 2026, rose 4.6% year over year to $5.66 billion and increased 4.8% in constant currency. Recently completed acquisitions accounted for about 210 basis points of the reported growth, while third-party product sales associated with integrated offerings contributed approximately 190 basis points.

GAAP operating income was $872 million, with operating margin falling 60 basis points to 15.4%. The quarter included $51 million of Project Leap charges, comprising $46 million of employee separation costs and $5 million of other expenses. Excluding specified items, adjusted operating income reached $923 million and adjusted operating margin expanded 30 basis points to 16.3%.

GAAP diluted earnings per share increased to $1.39 from $0.56 a year earlier. The prior-year figure included a $0.80-per-share impact from a one-time, non-cash income tax expense. Adjusted diluted EPS rose to $1.49 from $1.39.

Financial Services Leads Segment Growth

Financial Services revenue increased 12.0% to $1.77 billion, or 12.3% in constant currency, marking Cognizant’s third consecutive quarter of double-digit growth in the segment. Revenue grew across all three geographic groupings, including increases of 11.3% in North America, 14.7% in Europe and 3.0% in the rest of the world. Third-party product sales contributed about 400 basis points to the segment’s growth.

Communications, Media & Technology revenue climbed 10.5% to $939 million and rose 10.7% in constant currency. Recently completed acquisitions contributed nine percentage points to its year-over-year growth, while third-party product sales added about 600 basis points. North American revenue in the segment rose 15.7%, offset in part by a 16.1% decline in Europe.

The other two business segments contracted. Health Sciences revenue declined 1.1% to $1.59 billion, or 0.9% in constant currency, as a 7.0% decrease in North America outweighed growth in Europe. Products & Resources revenue slipped 0.9% to $1.37 billion and decreased 0.8% in constant currency.

By geography, total North American revenue increased 1.4% to $4.26 billion, Europe rose 1.2% to $1.06 billion, and the rest of the world grew 5.7% to $349 million. Third-party product sales contributed 200 basis points to North American growth and 425 basis points to growth in the United Kingdom.

Bookings Rise on a Trailing Basis as Quarterly Volume Falls

Trailing-12-month bookings increased 4% to $28.7 billion, representing a book-to-bill ratio of 1.3 times. Large-deal bookings, defined as contracts with total value of at least $100 million, grew 9% over the trailing 12 months. New and expansion bookings accounted for more than 60% of the trailing-12-month mix, up more than 10 percentage points from a year earlier.

Quarterly bookings, however, declined 7% year over year. Cognizant cautioned that bookings can vary significantly between quarters based partly on the timing of a small number of large contracts. Conversion into revenue can also be affected by contract duration, client spending, service volumes and contract modifications or terminations.

Cognizant ended the quarter with approximately 359,900 employees, up from 356,700 at the end of the second quarter. Trailing-12-month voluntary attrition in technology services was 12.6%, while blended utilization excluding trainees increased to 86%. The company also reported more than 95,000 frontier AI badges and certifications.

Cash Flow Declines; 2026 Outlook Targets Continued Growth

Operating cash flow fell to $1.00 billion from $1.23 billion a year earlier, while free cash flow decreased to $925 million from $1.16 billion. Cash and short-term investments totaled $1.55 billion at quarter-end, broadly matching total debt of $1.55 billion. Cognizant said it had deployed more than $2.3 billion through share repurchases and dividends during the first nine months of 2026.

For the fourth quarter, management expects revenue of approximately $5.49 billion to $5.57 billion, representing reported growth of 3.0% to 4.5% and constant-currency growth of 3.2% to 4.7%. The forecast includes about 200 basis points of inorganic contribution.

For full-year 2026, Cognizant expects revenue of approximately $22.05 billion to $22.14 billion, equivalent to reported growth of 4.5% to 4.9% and constant-currency growth of 4.0% to 4.4%. Acquisitions are expected to contribute about 150 basis points. The company projects an adjusted operating margin of approximately 16.1%, a 30-basis-point year-over-year expansion, and adjusted diluted EPS of $5.72 to $5.79, representing growth of 8% to 10%.

Cognizant revised its estimated Project Leap costs to between $180 million and $250 million. It expects to incur $140 million to $160 million in 2026, with the remainder through the first quarter of 2027.

The company identified uncertainty around economic conditions, competition, AI-related changes in client demand and service terms, talent recruitment and retention, Project Leap execution, cyberattacks, and changes to immigration, trade and tax rules. Its guidance also depends on acquisition contributions and other assumptions that may differ from actual results.