Core Insights - The individual has retired after over 43 years in investment research, now operating independently to provide actionable investment insights [1] - The focus is on rules and factor-based equity investing strategies, emphasizing the use of numbers to inspire human intelligence-driven investment stories rather than serving the numbers themselves [1] - The approach combines quantitative analysis with classic fundamental analysis to uncover the true story of a company and its stock, highlighting the importance of future potential over past data [1] Investment Experience - The individual has extensive experience covering a wide range of stocks, including large cap, small cap, micro cap, value, growth, and income [1] - Previous roles included managing a high-yield fixed-income fund and conducting research on quantitative asset allocation strategies, which are foundational to modern Robo Advising [1] - The individual has edited and written stock newsletters, notably the Forbes Low Priced Stock Report, and served as an assistant research director at Value Line [1] Educational Contributions - There is a strong passion for investor education, demonstrated through numerous seminars on stock selection and analysis [1] - The individual is the author of two books: "Screening The Market" and "The Value Connection," further contributing to investor knowledge [1] - The new role on Seeking Alpha aims to provide valuable insights while welcoming constructive feedback from the audience [1]

Core Insights - Cognizant's international revenue performance is crucial for assessing its financial resilience and growth prospects [1][2][3] Group 1: Financial Performance - Cognizant's total revenue for the quarter ending June 2025 was $5.25 billion, reflecting an 8.1% increase year-over-year [4] - The United Kingdom contributed $482 million, or 9.2% of total revenue, exceeding analyst expectations by 5.4% [5] - Continental Europe generated $520 million, accounting for 9.9% of total revenue, surpassing projections by 7.42% [6] - The Rest of World segment accounted for $331 million, or 6.3% of total revenue, falling short of expectations by 36.2% [7] Group 2: Future Projections - Analysts project total revenue for the upcoming quarter to reach $5.33 billion, a 5.6% increase from the same quarter last year [8] - Expected contributions from the United Kingdom, Continental Europe, and Rest of World are $496.46 million (9.3%), $499.55 million (9.4%), and $381.18 million (7.2%), respectively [8] - For the full year, total revenue is anticipated to be $20.9 billion, marking a 5.9% increase compared to the previous year [9] Group 3: Market Dependency - Cognizant's reliance on global markets for revenue presents both opportunities and challenges, making international revenue trends a key indicator for future performance [10][11] - The current geopolitical landscape and global interconnections are critical factors influencing earnings predictions for companies with overseas operations [11]

Core Insights - Cognizant Technology Solutions (CTSH) reported non-GAAP earnings of $1.31 per share for Q2 2025, exceeding the Zacks Consensus Estimate by 3.97% and reflecting a 12% year-over-year increase [1] - Revenues reached $5.25 billion, surpassing the consensus mark by 1.01%, with an 8.1% year-over-year growth and a 7.2% increase at constant currency [1] - The Belcan acquisition played a significant role in revenue growth, contributing approximately 400 basis points to overall results [2] Financial Performance - Bookings for the trailing 12 months increased by 6% year over year to $27.8 billion, with a book-to-bill ratio of approximately 1.4 times [2] - Financial services revenues, accounting for 29.5% of total revenues, grew by 6.9% year over year to $1.547 billion [4] - Health Sciences revenues, also 29.6% of total revenues, increased by 6.2% year over year to $1.551 billion, driven by strong demand across various sectors [4] Revenue Breakdown - Products and Resources revenues, making up 24.9% of total revenues, rose by 16% year over year to $1.306 billion [5] - Communications, Media and Technology revenues were $841 million, reflecting a 3.1% year-over-year increase [5] - North America contributed 74.6% to total revenues, with an 8.1% year-over-year growth [5][6] Regional Performance - Revenues from Europe increased by 9.6% year over year, contributing 19.1% to total revenues [6] - The U.K. saw an 8.6% year-over-year revenue increase, while Continental Europe revenues grew by 10.6% [6] - Revenues from the Rest of the World increased by 4.7% year over year, contributing 6.3% to total revenues [6] Operational Metrics - Selling, general & administrative expenses as a percentage of revenues decreased by 70 basis points year over year to 15.4% [9] - Total headcount rose to 343,800 from 336,300 in the previous quarter [9] - GAAP operating margin improved by 100 basis points year over year to 15.6% [9][10] Guidance and Future Outlook - Cognizant expects Q3 2025 revenues between $5.27 billion and $5.35 billion, indicating growth of 4.6%-6.1% [12] - For the full year 2025, revenues are projected to be in the range of $20.7-$21.1 billion, reflecting a growth of 4.7%-6.7% [12] - Adjusted earnings per share for 2025 are anticipated to be between $5.08 and $5.22 [13]

Core Insights - Cognizant reported revenue of $5.25 billion for the quarter ended June 2025, reflecting an 8.1% increase year-over-year and surpassing the Zacks Consensus Estimate of $5.19 billion by 1.01% [1] - Earnings per share (EPS) for the quarter was $1.31, up from $1.17 in the same quarter last year, exceeding the consensus EPS estimate of $1.26 by 3.97% [1] Revenue Performance by Segment - Health Sciences revenue was $1.55 billion, slightly below the average estimate of $1.61 billion, representing a year-over-year increase of 6.2% [4] - Communications, Media and Technology revenue reached $841 million, exceeding the average estimate of $826.36 million, with a year-over-year growth of 3.1% [4] - Products and Resources generated $1.31 billion, surpassing the estimated $1.25 billion, marking a significant year-over-year increase of 16% [4] - Financial Services revenue was $1.55 billion, slightly above the average estimate of $1.52 billion, reflecting a year-over-year growth of 6.9% [4] Stock Performance - Cognizant's shares have declined by 6.9% over the past month, contrasting with the Zacks S&P 500 composite's increase of 3.4% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Company Performance - Cognizant reported quarterly earnings of $1.31 per share, exceeding the Zacks Consensus Estimate of $1.26 per share, and up from $1.17 per share a year ago [1] - The earnings surprise for the quarter was +3.97%, following a previous surprise of +3.36% in the last quarter [2] - The company achieved revenues of $5.25 billion for the quarter, surpassing the Zacks Consensus Estimate by 1.01%, and an increase from $4.85 billion year-over-year [3] Future Outlook - The sustainability of Cognizant's stock price movement will depend on management's commentary during the earnings call [4] - The current consensus EPS estimate for the upcoming quarter is $1.28 on revenues of $5.26 billion, and for the current fiscal year, it is $5.07 on revenues of $20.84 billion [8] - The estimate revisions trend for Cognizant was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [7] Industry Context - The Computers - IT Services industry, to which Cognizant belongs, is currently ranked in the bottom 38% of over 250 Zacks industries, suggesting potential challenges ahead [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Cognizant's performance [6]

Financial Data and Key Metrics Changes - Second quarter revenue grew 7.2% year over year in constant currency to $5.2 billion, marking the fourth consecutive quarter of year-over-year organic growth [6][26] - Adjusted operating margin improved by 40 basis points year over year to 15.6%, on track to achieve a margin expansion goal of 20 to 40 basis points for 2025 [8][34] - Bookings grew 18% year over year, with trailing twelve months growth of 6%, and the total contract value (TCV) of large deals more than doubled year over year [7][34] Business Line Data and Key Metrics Changes - Financial Services grew 6% year over year, driven by digital engineering and legacy modernization initiatives [27] - Health Sciences grew 5% year over year, supported by organic growth across payers, providers, and life sciences customers [28] - Communication, Media, and Technology returned to organic growth, led by the technology sector, with robust demand for cost reduction and capital reallocation [31] Market Data and Key Metrics Changes - North America led revenue growth with 8%, driven by financial services and health sciences [32] - Europe grew 4%, supported by life sciences and financial services clients [33] - The Rest of the World increased by about 6%, with growth driven by financial services and health sciences [33] Company Strategy and Development Direction - The company is focusing on AI-led opportunities and disciplined execution to build a resilient and durable business [4][20] - The three-vector AI strategy includes productivity, industrializing AI, and agentifying the enterprise, with a strong emphasis on innovation-led projects [5][11] - The company is expanding its talent investments in emerging technology hubs and enhancing its AI capabilities through strategic partnerships [12][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand environment, noting strong large deal momentum and a growing number of new spend cycles [24][40] - The company expects revenue growth of 4% to 6% in constant currency for 2025, reflecting improved confidence in the second half of the year [38] - Management highlighted the importance of AI in driving productivity and innovation, positioning the company for future growth [20][21] Other Important Information - The company plans to return $2 billion to shareholders in 2025, with $1.4 billion allocated for share repurchases [42] - A one-time non-cash tax expense of approximately $400 million is expected in Q3 due to changes in US tax laws [36] Q&A Session Summary Question: Clarification on bookings and pipeline outlook - Management confirmed a balanced mix of renewals and new business, with a healthy outlook for bookings in the second half of the year [46][50] Question: Gross margin outlook - Management indicated that gross margin will be shaped by resource utilization and investments in large deals, with stable margins expected [51][53] Question: Pricing and incorporation of AI agents into deals - Management discussed the potential for outcome-based pricing and the differentiation created by their AI capabilities [58][60] Question: Healthcare segment headwinds and offsets - Management noted that while there are headwinds in healthcare, there are also opportunities for productivity-led growth [90][91] Question: Convergence of IT services and BPM - Management highlighted the unique opportunity presented by the convergence of operations and technology, emphasizing the role of AI in transforming client operations [92][93]

Financial Data and Key Metrics Changes - Second quarter revenue grew 7.2% year over year in constant currency to $5.2 billion, marking the fourth consecutive quarter of year-over-year organic growth [6][26] - Adjusted operating margin improved by 40 basis points year over year to 15.6%, on track to achieve a margin expansion goal of 20 to 40 basis points for 2025 [7][35] - Bookings grew 18% year over year, translating to trailing twelve months growth of 6% [6][34] - Free cash flow for the second quarter was $331 million, compared to $183 million a year ago [36] Business Line Data and Key Metrics Changes - Financial Services grew 6% year over year, driven by digital engineering and legacy modernization [27] - Health Sciences grew 5% year over year, supported by organic growth across payers, providers, and life sciences customers [28] - Communication, Media, and Technology returned to organic growth, led by the technology sector [31] Market Data and Key Metrics Changes - North America led revenue growth with 8%, driven by financial services and health sciences [32] - Europe grew 4%, supported by life sciences and financial services clients [33] - The Rest of the World increased by about 6%, driven by financial services and health sciences [33] Company Strategy and Development Direction - The company is focusing on AI-led opportunities and disciplined execution to build a resilient and durable business [4] - The strategy includes a three-vector approach: enabling hyper productivity, industrializing AI, and identifying the enterprise [81] - The company is expanding its talent investments in emerging technology hubs and enhancing its AI capabilities [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ability to drive large deal momentum and win new spend cycles in AI opportunities [23] - The demand environment remains dynamic, but the company is encouraged by its performance and pipeline [23][40] - The company expects revenue growth of 4% to 6% in constant currency for the full year 2025 [39] Other Important Information - The company plans to return $2 billion to shareholders in 2025, an increase from previous guidance [42] - A one-time non-cash tax expense of approximately $400 million is expected in Q3 due to changes in US tax laws [37] Q&A Session Summary Question: Clarification on bookings and pipeline outlook - Management confirmed a balanced mix of renewals and new business, with a healthy pipeline for the second half of the year [49][53] Question: Gross margin outlook - Management indicated that gross margin will be shaped by resource utilization and investments in large deals [54][57] Question: Pricing and business opportunities related to AI agents - Management discussed the potential for outcome-based pricing and the differentiation created by their AI capabilities [62][66] Question: Capital allocation and M&A pipeline - Management provided an update on capital allocation plans, indicating a decent pipeline for M&A in the second half of the year [69] Question: Healthcare segment headwinds and offsets - Management noted that their exposure to Medicaid and Medicare is limited, with a focus on productivity-led opportunities in healthcare [95] Question: Convergence of IT services and BPM - Management highlighted the unique opportunity presented by the convergence of operations, data, and AI [96] Question: Headcount increase and outlook for the second half - Management acknowledged the increase in headcount and its implications for resource management moving forward [101]

[PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) [Financial Statements](index=7&type=section&id=Item%201%2E%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the three and six months ended June 30, 2025, including statements of financial position, operations, comprehensive income, stockholders' equity, and cash flows, with detailed notes on accounting policies and financial data breakdowns [Consolidated Statements of Financial Position](index=7&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) Total assets increased to **$20.16 billion** by June 30, 2025, while total liabilities decreased to **$4.88 billion**, leading to a rise in total stockholders' equity to **$15.29 billion** Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$20,164** | **$19,966** | | Cash and cash equivalents | $1,796 | $2,231 | | Goodwill | $7,120 | $6,953 | | **Total Liabilities** | **$4,876** | **$5,558** | | Long-term debt | $559 | $875 | | Accrued expenses and other current liabilities | $2,249 | $2,610 | | **Total Stockholders' Equity** | **$15,288** | **$14,408** | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 revenues grew **8.1%** to **$5.25 billion** with net income of **$645 million**, while six-month revenues reached **$10.36 billion** and net income **$1.31 billion**, with diluted EPS of **$1.31** and **$2.65** respectively Q2 and Six Months Ended June 30 - Financial Performance (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $5,245 | $4,850 | $10,360 | $9,610 | | Income from operations | $817 | $708 | $1,670 | $1,403 | | Net income | $645 | $566 | $1,308 | $1,112 | | Diluted EPS | $1.31 | $1.14 | $2.65 | $2.23 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased to **$798 million** for the six months ended June 30, 2025, while financing activities used **$1.17 billion**, resulting in cash and cash equivalents decreasing to **$1.80 billion** Six Months Ended June 30 - Cash Flow Summary (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $798 | $357 | | Net cash used in investing activities | $(89) | $(317) | | Net cash used in financing activities | $(1,173) | $(525) | | **(Decrease) in cash and cash equivalents** | **$(435)** | **$(524)** | | Cash and cash equivalents, end of period | $1,796 | $2,193 | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes support the financial statements, covering revenue disaggregation, NextGen restructuring, debt, Indian tax disputes, OBBBA impact, derivatives, legal proceedings, and segment reporting changes - In Q1 2025, the company sold an office complex in India for **$70 million**, recording a gain of **$62 million**[34](index=34&type=chunk) - The NextGen restructuring program was completed at the end of 2024, incurring no related costs in the first six months of 2025, compared to **$52 million** in the same period of 2024[44](index=44&type=chunk) - The company is involved in ongoing disputes with the Indian Income Tax Department (ITD) over share repurchase transactions from 2013 and 2016, maintaining it has paid all applicable taxes and has not recorded any reserves[55](index=55&type=chunk)[59](index=59&type=chunk) - In Q1 2025, the company changed its internal measurement of segment operating profit to include an allocation of certain corporate costs for better reflection of full delivery costs, with prior period results recast for comparability[98](index=98&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 2025 financial performance, highlighting **8.1%** Q2 revenue growth, improved operating margin, AI investment plans, and the OBBBA tax law's impact on tax expense and cash taxes, alongside liquidity and capital allocation [Executive Summary & Business Outlook](index=27&type=section&id=Executive%20Summary%20%26%20Business%20Outlook) Q2 2025 revenue grew **8.1%** to **$5.2 billion**, with GAAP operating margin increasing by **100 bps** to **15.6%**, while the company plans significant AI investments and anticipates a **$400 million** one-time non-cash tax expense from OBBBA Q2 2025 Financial Highlights vs. Q2 2024 | Metric | Change | Constant Currency Change | | :--- | :--- | :--- | | Revenue | +8.1% | +7.2% | | Income from Operations | +15.4% | N/A | | Operating Margin | +100 bps | N/A | | Diluted EPS | +14.9% | N/A | - The company plans to continue significant investments in AI capabilities to meet client needs and harness its value in a flexible, secure, and responsible way[110](index=110&type=chunk) - The enactment of the OBBBA in July 2025 is anticipated to cause a one-time, non-cash tax expense of approximately **$400 million** in Q3 2025 but reduce cash taxes by **$200 million** in 2025[111](index=111&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Q2 2025 revenues increased **8.1%** to **$5.2 billion**, driven by broad segment growth and the Belcan acquisition, while GAAP operating margin improved to **15.6%** due to NextGen savings and efficiencies, with six-month revenues reaching **$10.4 billion** Q2 2025 vs Q2 2024 Revenue Growth by Segment | Segment | Revenue Growth ($M) | Growth % | Constant Currency % | | :--- | :--- | :--- | :--- | | Health Sciences | $90 | 6.2% | 5.3% | | Financial Services | $100 | 6.9% | 6.0% | | Products and Resources | $180 | 16.0% | 14.7% | | CMT | $25 | 3.1% | 2.2% | | **Total** | **$395** | **8.1%** | **7.2%** | - The acquisition of Belcan contributed **400 basis points** to overall revenue growth and approximately **1,600 basis points** to the Products and Resources segment in Q2 2025[116](index=116&type=chunk) - For the six months ended June 30, 2025, the company realized a gain of **$62 million** on the sale of an office complex in India, which positively impacted GAAP operating margin by **60 basis points**[159](index=159&type=chunk)[162](index=162&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company held **$1.81 billion** in cash and equivalents, with operating cash flow increasing to **$798 million**, primarily using cash for **$577 million** in stock repurchases and debt repayment, while DSO rose to **83 days** Six Months Ended June 30 - Cash Flow Summary (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Operating activities | $798 | $357 | | Investing activities | $(89) | $(317) | | Financing activities | $(1,173) | $(525) | - Days Sales Outstanding (DSO) was **83 days** as of June 30, 2025, an increase of **5 days** from year-end 2024[181](index=181&type=chunk) - Key capital allocation activities in the first half of 2025 included increased share repurchases and repayment of the outstanding balance under the revolving credit facility[183](index=183&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes have occurred in the company's quantitative and qualitative disclosures about market risk since the Annual Report on Form 10-K for fiscal year 2024 - There have been no material changes in market risk disclosures since the last annual report[195](index=195&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204%2E%20Controls%20and%20Procedures) As of June 30, 2025, the CEO and CFO concluded the company's disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[196](index=196&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[197](index=197&type=chunk) [PART II. OTHER INFORMATION](index=43&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) [Legal Proceedings](index=43&type=section&id=Item%201%2E%20Legal%20Proceedings) This section refers to Note 10 of the financial statements for details on legal proceedings, including claims related to Syntel, India Defined Contribution Obligation, and shareholder derivative lawsuits - For details on legal proceedings, the report refers to Note 10 of the financial statements[200](index=200&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A%2E%20Risk%20Factors) No material changes have occurred in the company's risk factors since those disclosed in its Annual Report on Form 10-K for fiscal year 2024 - There have been no material changes in risk factors since the last annual report filed on February 12, 2025[201](index=201&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2025, the company repurchased approximately **4.5 million** shares for **$354 million**, with **$2.69 billion** remaining available under its authorized stock repurchase program as of June 30, 2025 Q2 2025 Share Repurchases | Month (2025) | Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April | — | N/A | | May | 1,800,845 | $79.96 | | June | 2,654,094 | $79.11 | | **Total** | **4,454,939** | **$79.45** | - As of June 30, 2025, the remaining authorized amount for share repurchases was **$2,693 million**[202](index=202&type=chunk) [Other Information](index=43&type=section&id=Item%205%2E%20Other%20Information) During Q2 2025, no directors or Section 16 officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or Section 16 officers adopted or terminated Rule 10b5-1 trading plans during Q2 2025[205](index=205&type=chunk)

Financial Performance - Revenue for Q2 2025 was $5245 million, an increase of 81% year-over-year as reported, or 72% in constant currency[4, 5] - GAAP diluted EPS for Q2 2025 was $131, compared to $114 in Q2 2024[7] - Adjusted diluted EPS for Q2 2025 was $131, compared to $117 in Q2 2024[7] - GAAP operating margin for Q2 2025 was 156%, compared to 146% in Q2 2024[9] - Adjusted operating margin for Q2 2025 was 156%, compared to 152% in Q2 2024[9] - Operating cash flow for Q2 2025 was $398 million, compared to $262 million in Q2 2024[11] - Free cash flow for Q2 2025 was $331 million, compared to $183 million in Q2 2024[11] Segment and Geographic Performance - Products & Resources segment revenue increased by 160% year-over-year, or 147% in constant currency[17] - Health Sciences segment revenue increased by 62% year-over-year, or 53% in constant currency[17] - Financial Services segment revenue increased by 69% year-over-year, or 60% in constant currency[17] - Communications, Media & Technology segment revenue increased by 31% year-over-year, or 22% in constant currency[17] - North America revenue increased by 96% year-over-year, Europe revenue increased by 47% year-over-year, and Rest of World revenue increased by 81% year-over-year[17] Acquisitions and Bookings - Revenue from the Belcan acquisition contributed approximately 400 basis points to year-over-year growth in Q2 2025[12, 14] - Trailing twelve-month bookings increased 6% year-over-year to $278 billion, representing a book-to-bill ratio of 14x[44] Guidance - Full-year 2025 revenue is projected to be between $207 billion and $211 billion, representing a 40% to 60% increase in constant currency[49]

Exhibit 99.1 Our recently completed acquisitions contributed approximately 400 basis points to year-over-year revenue growth in each of the Q2 2025 and YTD Q2 2025 periods. Constant currency ("CC") revenue growth, Adjusted Operating Margin, and Adjusted Diluted Earnings Per Share ("Adjusted Diluted EPS" or "Adjusted EPS") are not measures of financial performance prepared in accordance with GAAP. A full reconciliation of Adjusted Operating Margin guidance to the corresponding GAAP measure on a forward-looki ...