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]

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) Cognizant delivered strong Q2 2025 results with revenue exceeding guidance, organic growth, margin expansion, accelerated bookings, and increased shareholder returns [Q2 2025 Performance Overview](index=1&type=section&id=Q2%202025%20Performance%20Overview) Cognizant reported strong second-quarter 2025 results, with revenue exceeding guidance and marking the fourth consecutive quarter of organic year-over-year revenue growth. The company also achieved margin expansion and accelerated bookings, including two significant deals Q2 2025 Financial Performance | Metric | Q2 2025 | Q2 2024 | Y/Y Change | Y/Y Change CC | | :--- | :--- | :--- | :--- | :--- | | Revenue | $5,245M | $4,850M | 8.1% | 7.2% | | GAAP Operating Margin | 15.6% | 14.6% | +100 bps | - | | Adjusted Operating Margin | 15.6% | 15.2% | +40 bps | - | | GAAP Diluted EPS | $1.31 | $1.14 | +15% | - | | Adjusted Diluted EPS | $1.31 | $1.17 | +12% | - | - Acquisitions contributed approximately **400 basis points** to year-over-year revenue growth in Q2 2025[3](index=3&type=chunk) [CEO & CFO Commentary](index=1&type=section&id=CEO%20%26%20CFO%20Commentary) CEO Ravi Kumar S highlighted the effectiveness of their strategy in the AI era, driven by investments in talent, platforms, and AI infrastructure, leading to organic revenue growth and margin expansion. CFO Jatin Dalal emphasized strong execution, year-to-date momentum, and increased commitment to shareholder returns - CEO Ravi Kumar S noted that investments in talent, platforms, and AI infrastructure drove the **fourth-straight quarter of organic year-over-year revenue growth** and margin expansion[3](index=3&type=chunk) - CFO Jatin Dalal stated that the company delivered **7.7% constant currency revenue growth** and **40 basis points adjusted operating margin expansion** in H1 2025, driving **11% adjusted EPS growth**[6](index=6&type=chunk) - The company accelerated bookings, including **two deals with a Total Contract Value (TCV) of over $1 billion each**[3](index=3&type=chunk) [Key Operational Metrics](index=2&type=section&id=Key%20Operational%20Metrics) Bookings showed significant year-over-year growth in Q2, driven by large deals, and the company maintained a healthy book-to-bill ratio. Employee headcount increased, while voluntary attrition in Tech Services saw a slight decrease Bookings Performance | Metric | Q2 2025 | Y/Y Change | | :--- | :--- | :--- | | Trailing 12-month bookings | $27.8B | +6% | | Q2 bookings | - | +18% | | Book-to-bill (trailing 12-month) | ~1.4x | - | - Q2 bookings included **six large deals (TCV ≥ $100M)**, with **two exceeding $1 billion each**[7](index=7&type=chunk) Employee Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Voluntary Attrition - Tech Services | 15.2% | 15.8% | 13.6% | | Total Headcount (as of June 30, 2025) | 343,800 | +7,500 from Q1 2025 and Q2 2024 | - | [Return of Capital to Shareholders](index=2&type=section&id=Return%20of%20Capital%20to%20Shareholders) Cognizant continued its commitment to returning capital to shareholders through share repurchases and dividends, increasing its planned return for 2025 Share Repurchase Activity | Metric | Q2 2025 | YTD 2025 | | :--- | :--- | :--- | | Shares repurchased | 4.5M | 6.8M | | Value of shares repurchased | $354M | $544M | | Remaining share repurchase authorization (as of June 30, 2025) | $2.7B | - | - Declared a quarterly cash dividend of **$0.31 per share** in July 2025[9](index=9&type=chunk) - Increased planned return to shareholders for 2025 to **$2.0 billion**, up from **$1.7 billion** previously[5](index=5&type=chunk)[6](index=6&type=chunk) [Financial Guidance](index=2&type=section&id=Financial%20Guidance) Cognizant provided its financial outlook for Q3 and full-year 2025, including revenue growth, operating margin, and diluted EPS expectations [Third Quarter 2025 Guidance](index=2&type=section&id=Third%20Quarter%202025%20Guidance) Cognizant provided specific revenue growth expectations for the third quarter of 2025 Q3 2025 Financial Guidance | Metric | Q3 2025 Guidance | | :--- | :--- | | Revenue | $5.27 - $5.35 billion | | Y/Y Growth | 4.6% to 6.1% | | Y/Y Growth (Constant Currency) | 3.5% to 5.0% | [Full-Year 2025 Guidance](index=2&type=section&id=Full-Year%202025%20Guidance) The company narrowed its full-year 2025 constant currency revenue growth guidance and reaffirmed its adjusted operating margin and adjusted diluted EPS outlook Full-Year 2025 Financial Guidance | Metric | Full-Year 2025 Guidance | | :--- | :--- | | Revenue | $20.7 - $21.1 billion | | Y/Y Growth | 4.7% to 6.7% | | Y/Y Growth (Constant Currency) | 4.0% to 6.0% (narrowed) | | Adjusted Operating Margin | 15.5% to 15.7% (unchanged, 20-40 bps expansion) | | Adjusted Diluted EPS | $5.08 to $5.22 | [Strategic Initiatives & Company Recognition](index=3&type=section&id=Strategic%20Initiatives%20%26%20Company%20Recognition) Cognizant announced new client engagements, expanded its AI-driven platform offerings and strategic partnerships, and received various industry recognitions [Client Announcements](index=3&type=section&id=Client%20Announcements) Cognizant secured several new and renewed client agreements, focusing on digital transformation, AI solutions, and IT modernization across various industries - Contract with Lineage, Inc. to advance customer service transformation using **Agentic AI solutions**[14](index=14&type=chunk) - Renewed multi-year agreement with Aker Solutions, including use of **Cognizant Neuro® platform** for IT operations modernization[14](index=14&type=chunk) - Agreement with Ipswich City Council and Workday, Inc. to implement **Workday HCM** for a five-year technology transformation[14](index=14&type=chunk) - Agreement with SmartestEnergy to transform employee support services and enable **scalable growth**[14](index=14&type=chunk) - Contract with Kramp to transform its IT platform and implement a **new ERP solution**[14](index=14&type=chunk) [Platform Enhancements and Partnerships](index=3&type=section&id=Platform%20Enhancements%20and%20Partnerships) Cognizant launched new AI-driven offerings and expanded strategic collaborations to enhance its platform capabilities and deliver advanced solutions to clients - Launched **Cognizant Agent Foundry**, an offering to help enterprises design, deploy, and orchestrate autonomous AI agents at scale, integrating with existing enterprise systems and leading AI platforms[14](index=14&type=chunk) - Open-sourced its **Neuro® AI Multi-Agent Accelerator** for research and academic use to promote collaboration in building multi-agent systems[14](index=14&type=chunk) - Partnered with Google Cloud to launch **Cognizant® Autonomous Customer Engagement**, an AI-led contact center solution for hyper-personalized customer experiences[16](index=16&type=chunk) - Expanded strategic collaboration with Pegasystems Inc. to augment agentic AI services with **Pega Blueprint™** for cloud transformations[16](index=16&type=chunk) - Expanded partnership with Salesforce, introducing new customer and operations transformation services for **Salesforce's Agentforce** to accelerate AI-augmented workforce shifts[16](index=16&type=chunk) [Company Recognition, Announcements, and Analyst Ratings](index=4&type=section&id=Company%20Recognition,%20Announcements,%20and%20Analyst%20Ratings) Cognizant received multiple industry recognitions, expanded its global footprint, and continued its focus on responsible AI and sustainability - Cognizant's AI Lab was granted **two new U.S. patents** in H1 2025, bringing its total to **59**[16](index=16&type=chunk) - Recognized as one of the first organizations to sign the White House's **Pledge to America's Youth: Investing in Artificial Intelligence (AI) Education**[16](index=16&type=chunk) - Named one of **America's Greatest Workplaces 2025** and **America's Greatest Workplaces in Tech 2025** by Newsweek for the third consecutive year[16](index=16&type=chunk) - Announced a major expansion of its India operations with plans for a state-of-the-art campus in Visakhapatnam, creating over **8,000 employment opportunities**[16](index=16&type=chunk) - Published 2024 Sustainability and Corporate Citizenship Report, highlighting focus on skilling through **Synapse initiative (1M people by 2026)** and advancing responsible AI frameworks[16](index=16&type=chunk) - Recognized as a Leader by Everest Group® in multiple PEAK Matrix® Assessments, including **Talent Readiness for Next-generation Application Services, Intelligent Process Automation, and Healthcare Data, Analytics, and AI Services**[17](index=17&type=chunk) - Named **Global Data Cloud Services Implementation Partner of the Year by Snowflake** and **Partner of the Year by Pegasystems**[16](index=16&type=chunk) [Financial Statements](index=10&type=section&id=Financial%20Statements) The financial statements detail the company's Q2 2025 operational performance, financial position, cash flow activities, revenue segmentation, and non-GAAP measure reconciliations [Consolidated Statements of Operations](index=10&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show an increase in revenue and net income for both the three and six months ended June 30, 2025, compared to the prior year periods Consolidated Statements of Operations | (in millions, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 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 earnings per share | $1.31 | $1.14 | $2.65 | $2.23 | [Consolidated Statements of Financial Position](index=11&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) The balance sheet indicates an increase in total assets and stockholders' equity as of June 30, 2025, compared to December 31, 2024, while total liabilities decreased Consolidated Statements of Financial Position | (in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $20,164 | $19,966 | | Total liabilities | $4,876 | $5,558 | | Total stockholders' equity | $15,288 | $14,408 | | Cash and cash equivalents | $1,796 | $2,231 | | Trade accounts receivable, net | $4,402 | $4,059 | | Goodwill | $7,120 | $6,953 | [Consolidated Statements of Cash Flows](index=15&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flows from operating activities significantly increased for both the three and six months ended June 30, 2025, compared to the prior year periods. The company also provided details on share repurchases and free cash flow Consolidated Statements of Cash Flows | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $398 | $262 | $798 | $357 | | Net cash (used in) investing activities | $(82) | $(79) | $(317) | $(89) | | Net cash (used in) financing activities | $(516) | $(221) | $(1,173) | $(525) | | Cash, cash equivalents and restricted cash and cash equivalents, end of period | $1,796 | $2,193 | $1,796 | $2,193 | Free Cash Flow | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Free cash flow | $331 | $183 | $724 | $199 | - Repurchased **4.5 million shares** for **$354 million** in Q2 2025, with **$2.693 billion** remaining under authorization as of June 30, 2025[46](index=46&type=chunk) [Revenue by Business Segment and Geography](index=14&type=section&id=Revenue%20by%20Business%20Segment%20and%20Geography) Revenue growth was observed across all business segments and geographies in Q2 2025, with Products and Resources showing the highest growth, significantly boosted by the Belcan acquisition Revenues by Segment (Q2 2025) | Revenues by Segment (Q2 2025) | $ (millions) | % of total | Y/Y % Change | Constant Currency % Change | | :--- | :--- | :--- | :--- | :--- | | Health Sciences | $1,551 | 29.6% | 6.2% | 5.3% | | Financial Services | $1,547 | 29.5% | 6.9% | 6.0% | | Products and Resources | $1,306 | 24.9% | 16.0% | 14.7% | | Communications, Media and Technology | $841 | 16.0% | 3.1% | 2.2% | | Total Revenues | $5,245 | - | 8.1% | 7.2% | Revenues by Geography (Q2 2025) | Revenues by Geography (Q2 2025) | $ (millions) | % of total | Y/Y % Change | Constant Currency % Change | | :--- | :--- | :--- | :--- | :--- | | North America | $3,912 | 74.6% | 8.1% | 8.1% | | United Kingdom | $482 | 9.2% | 8.6% | 3.2% | | Continental Europe | $520 | 9.9% | 10.6% | 4.7% | | Europe - Total | $1,002 | 19.1% | 9.6% | 4.0% | | Rest of World | $331 | 6.3% | 4.7% | 6.0% | | Total Revenues | $5,245 | - | 8.1% | 7.2% | - The acquisition of Belcan contributed approximately **400 basis points** to overall revenue growth in Q2 2025, primarily in North America and the United Kingdom, and significantly boosted the Products and Resources segment (**1,600 bps**)[42](index=42&type=chunk) [Reconciliations of Non-GAAP Financial Measures](index=12&type=section&id=Reconciliations%20of%20Non-GAAP%20Financial%20Measures) The company provided reconciliations for Adjusted Income From Operations, Adjusted Operating Margin, and Adjusted Diluted EPS, detailing adjustments for items like gain on sale of property and equipment, NextGen charges, and non-operating foreign currency exchange gains/losses Non-GAAP Reconciliations (Q2 2025 & YTD Q2 2025) | (dollars in millions, except per share amounts) | Q2 2025 GAAP | Q2 2025 Adjusted | YTD Q2 2025 GAAP | YTD Q2 2025 Adjusted | | :--- | :--- | :--- | :--- | :--- | | Income from operations | $817 | $817 | $1,670 | $1,608 | | Operating margin | 15.6% | 15.6% | 16.1% | 15.5% | | Diluted earnings per share | $1.31 | $1.31 | $2.65 | $2.55 | - Adjustments for Q2 2024 included **NextGen charges of $29 million ($0.06 per diluted share)**[32](index=32&type=chunk)[35](index=35&type=chunk) - Anticipates a one-time, non-cash tax expense of approximately **$400 million** in Q3 2025 (approx. **$0.82 per diluted share**) due to the enactment of the **One Big Beautiful Bill Act (OBBBA)** repealing R&E cost capitalization[36](index=36&type=chunk) Net Cash Reconciliation | (in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net cash | $1,216 | $1,335 | | Cash and unrestricted cash equivalents | $1,796 | $2,231 | | Short-term debt | $33 | $33 | | Long-term debt | $559 | $875 | [Supplemental Information](index=6&type=section&id=Supplemental%20Information) This section provides details on the Q2 2025 conference call, an overview of Cognizant, important forward-looking statement disclaimers, and definitions of non-GAAP financial measures [Conference Call Details](index=6&type=section&id=Conference%20Call%20Details) Details for accessing the conference call and replay discussing the second quarter 2025 results were provided - Conference call held on **July 30, 2025, at 5:00 p.m. (Eastern)** with dial-in and webcast options[18](index=18&type=chunk) - Replay available until **August 13, 2025**, via dial-in and for **60 days** on Cognizant's website[18](index=18&type=chunk) [About Cognizant](index=6&type=section&id=About%20Cognizant) Cognizant is a leading professional services company focused on modernizing businesses through technology, process reimagination, and experience transformation - Cognizant (Nasdaq: CTSH) engineers modern businesses, helping clients modernize technology, reimagine processes, and transform experiences[19](index=19&type=chunk) [Forward-Looking Statements](index=7&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements subject to risks and uncertainties, and investors are cautioned not to place undue reliance on them - Statements regarding strategy, partnerships, competitive position, AI impact, talent efforts, capital returns, and anticipated financial performance are **forward-looking**[20](index=20&type=chunk) - Risks include general economic conditions, competitive markets, ability to use AI, talent competition, regulatory changes, and cybersecurity[20](index=20&type=chunk) [About Non-GAAP Financial Measures and Performance Metrics](index=8&type=section&id=About%20Non-GAAP%20Financial%20Measures%20and%20Performance%20Metrics) This section defines non-GAAP financial measures and performance metrics used in the report, explains their purpose, and outlines their limitations - Non-GAAP measures include **Adjusted Operating Margin, Adjusted Diluted EPS, free cash flow, net cash, and constant currency revenue growth**[21](index=21&type=chunk) - Adjusted Operating Margin and Adjusted Diluted EPS exclude unusual items like **gain on sale of property and equipment** and **NextGen charges**[22](index=22&type=chunk) - Bookings are defined as **total contract value (TCV)** of new contracts, renewals, and expansions, serving as a key indicator of potential future revenues[25](index=25&type=chunk) - Management uses non-GAAP measures for internal reporting, budgeting, evaluating performance, and compensation, believing they provide **enhanced transparency**[23](index=23&type=chunk)

Core Insights - Cognizant reported strong second quarter 2025 financial results, with revenue exceeding guidance and demonstrating effective strategy execution in the AI era [2][9] - The company achieved organic year-over-year revenue growth for the fourth consecutive quarter, alongside margin expansion and significant bookings, including two deals worth over $1 billion each [2][5] Financial Performance - Q2 2025 revenue reached $5,245 million, an increase of 8.1% year-over-year, with constant currency growth of 7.2% [3][9] - GAAP operating margin improved to 15.6%, up 100 basis points from the previous year, while adjusted operating margin also increased to 15.6% [3][9] - GAAP diluted EPS was $1.31, reflecting a 15% increase year-over-year, and adjusted diluted EPS was also $1.31, up 12% [3][9] Growth Drivers - Recent acquisitions contributed approximately 400 basis points to year-over-year revenue growth in both Q2 2025 and year-to-date [3][40] - Bookings for the trailing twelve months rose 6% year-over-year to $27.8 billion, with a book-to-bill ratio of approximately 1.4x [5][9] Shareholder Returns - The company repurchased 4.5 million shares for $354 million in Q2 2025, with a total of 6.8 million shares repurchased year-to-date for $544 million [7][9] - Cognizant plans to return approximately $2.0 billion to shareholders in 2025, an increase from the previous estimate of $1.7 billion [4][9] Future Guidance - For Q3 2025, revenue is expected to be between $5.27 billion and $5.35 billion, representing growth of 4.6% to 6.1% [8][9] - Full-year 2025 revenue guidance is narrowed to $20.7 billion to $21.1 billion, with expected growth of 4.7% to 6.7% [13][9] Operational Metrics - Voluntary attrition in tech services was 15.2% in Q2 2025, a slight decrease from 15.8% in Q1 2025 [6] - Total headcount as of June 30, 2025, was 343,800, an increase of 7,500 from both Q1 2025 and Q2 2024 [6] Strategic Initiatives - Cognizant is focusing on building a portfolio of capabilities to advance an AI-led future through client agreements and platform enhancements [11][12] - The company launched Cognizant Agent Foundry, designed to help enterprises deploy autonomous AI agents at scale [14][15]

Core Insights - Cognizant is attempting to set a GUINNESS WORLD RECORDS title for the most participants in an online generative AI hackathon, with over 250,000 employees registered to participate [1][2] - The event, known as Vibe Coding Week, aims to enhance AI fluency across various talent ranks and capitalize on the increasing integration of AI in coding [3][4] Company Initiatives - In 2023, Cognizant committed to investing $1 billion in AI over three years, focusing on productivity gains and high-value engagement from its talent [3] - The company has partnered with platforms like Lovable, Windsurf, Cursor, Gemini Code Assist, and GitHub Copilot to support employees of varying technical skills during the Vibe Coding event [4][5] Employee Engagement - The Vibe Coding event includes hands-on workshops, a prompt engineering toolkit, best-practice sessions, and an innovation competition, aiming to engage thousands of employees [5] - Cognizant's grassroots innovation initiative, Bluebolt, has led to over 528,505 ideas shared by employees, with more than 80,000 already implemented with clients [6][7] Training and Development - Cognizant has launched a global training initiative called Synapse, aiming to upskill one million people by 2026 to harness the innovation potential of AI [7]

Core Insights - Cognizant has formed a strategic partnership with WRITER to implement secure, domain-specific AI agents for enterprises, particularly in regulated industries like financial services and life sciences [1][2][4] - The collaboration aims to transition organizations from AI pilot projects to enterprise-scale adoption, focusing on security and compliance [2][4] - WRITER's platform utilizes proprietary Palmyra models and an enterprise-grade knowledge retrieval system to ensure accurate information from enterprise data [2][4] Group 1 - The partnership combines Cognizant's industry expertise with WRITER's end-to-end platform to enhance operational efficiency and competitive advantage for organizations [1][3] - Cognizant will leverage WRITER's pre-built industry agents and custom-created agents to explore high-impact workflows for clients [3][4] - The collaboration supports Cognizant's broader agentic AI strategy, including the Cognizant Agent Foundry framework, to design and manage AI agents across business functions [4][5] Group 2 - The partnership reflects Cognizant's commitment to engineering AI for impactful outcomes, focusing on productivity improvements and risk mitigation for clients [5] - WRITER's platform is designed for complex environments, ensuring that AI systems are accurate, secure, and compliant [4] - The collaboration aims to accelerate AI adoption for customers who require rapid implementation without compromising governance [4]

Cognizant is a data and AI model training partner, long trusted by large digital native pioneers to help train some of the most advanced AI /ML models in the world "At Cognizant, we're committed to helping our clients accelerate their AI innovation at scale. By launching AI Training Data Services, we're advancing this commitment and providing enterprises with the high-quality, multi-modal data they need to build sophisticated AI solutions," said Ravi Kumar S., CEO of Cognizant. "In leveraging this specializ ...