Cognizant Posts $5.664 Billion in Revenue, Cuts 2026 Growth Ceiling to 4.4%
Key Facts
Cognizant posted revenue of $5.664 billion in the third quarter ended September 30, up 4.6% year over year and 4.8% in constant currency, while adjusted diluted earnings per share rose to $1.49 from $1.39 a year earlier, according to results announced by the company on October 29. But the company lowered the upper end of its 2026 annual constant-currency revenue growth forecast to 4.4% from 5.5% in its July guidance, while keeping the lower end at 4.0%. It forecast annual revenue of $22.05 billion to $22.14 billion. Fourth-quarter revenue guidance of $5.49 billion to $5.57 billion also came in below the analysts’ average estimate of $5.65 billion. The stock fell about 10% in premarket trading on October 29, according to Investing.com.
Fourth-quarter guidance implies expected year-over-year growth of 3.0% to 4.5%, or 3.2% to 4.7% in constant currency, a slower pace than the third quarter’s constant-currency growth. Cognizant reported second-quarter revenue of $5.481 billion, with reported growth of 4.5% and constant-currency growth of 4.1%. In July, its 2026 annual constant-currency revenue growth forecast ranged from 4.0% to 5.5%, before the upper end was lowered in the latest update. The company expects an adjusted operating margin of about 16.1% and adjusted diluted earnings per share of $5.72 to $5.79 for the year. Its adjusted earnings-per-share forecast had been raised in July to a range of $5.70–$5.82.
On demand, bookings fell 7% year over year in the third quarter, despite rising 4% to $28.7 billion on a trailing 12-month basis through September. Third-quarter bookings included 3 large deals; the company defines a large deal as one with a total contract value of at least $100 million. According to Investing.com, bookings fell 6% in the second quarter, and the number of large deals declined from 7 to 3 between the two quarters. In its second-quarter results, the company said organic revenue growth momentum was at the upper end of its expectations and that financial services had posted two consecutive quarters of double-digit year-over-year growth. The quarterly bookings decline contrasts with growth on a trailing 12-month basis, while revenue guidance for the coming quarter came in below the market’s average estimate.
Performance varied across Cognizant’s four segments: financial services revenue grew 12.0% year over year, while communications, media and technology revenue rose 10.5%. By contrast, health sciences revenue fell 1.1%, and products and resources revenue declined 0.9%. Recently completed acquisitions contributed about 210 basis points to overall revenue growth in the quarter, while sales of third-party products tied to integrated offerings added about 190 basis points. Chief Executive Ravi Kumar said that "the AI market is moving from capabilities to value realization," adding that more than 50% of the company’s code is now AI-assisted. Kumar said macroeconomic uncertainty affected discretionary spending in the fourth quarter, particularly in healthcare and consumer-facing sectors.
Free cash flow was $925 million in the third quarter, compared with $1.160 billion in the same period a year earlier. In the first nine months of 2026, free cash flow was $1.582 billion, versus $1.884 billion in the same period of 2025. The company expects Project Leap costs to range from $180 million to $250 million, including $140 million to $160 million during 2026, with the remainder to be incurred through the end of the first quarter of 2027. The total includes $150 million to $200 million in severance and other employee-related costs, and $30 million to $50 million in other charges. Cognizant estimates in-year savings of about $200 million in 2026.
Cognizant had about 359,900 employees on September 30, an increase of 3,200 from June and 10,100 from September 2025. The company also declared a quarterly cash dividend of $0.33 per share for shareholders of record on November 13, payable on November 25, 2026. In customer announcements, Cognizant said on October 6 that it had extended its collaboration with Gilead Sciences for five years to support the development of DevOps capabilities and the responsible application of agentic AI tools in selected technology programs. The next financial update will focus on fourth-quarter performance, with the company’s revenue forecast set at $5.49 billion to $5.57 billion. The timeline for remaining Project Leap costs also extends through the first quarter of 2027.