Cognizant(US:CTSH)2026-02-04 11:32Financial Performance - Fourth quarter revenue reached $5.33 billion, a 4.9% increase year-over-year, while full-year revenue was $21.11 billion, up 7.0% year-over-year[4] - Full-year GAAP operating margin improved to 16.1%, a 140 basis point increase year-over-year, while adjusted operating margin was 15.8%, up 50 basis points year-over-year[4] - Adjusted diluted EPS for 2025 was $5.28, reflecting an 11% increase year-over-year, while GAAP diluted EPS was $4.56, a 1% increase year-over-year[4] - Revenues for Q4 2025 reached $5,333 million, a 4.9% increase from $5,082 million in Q4 2024[28] - Full year 2025 revenues totaled $21,108 million, up 6.9% from $19,736 million in 2024[28] - Operating income for Q4 2025 was $853 million, compared to $751 million in Q4 2024, reflecting a 13.6% increase[28] - Net income for Q4 2025 was $648 million, an increase from $546 million in Q4 2024, representing an 18.6% growth[28] - Adjusted diluted EPS for Q4 2025 was $1.34, up from $1.10 in Q4 2024, marking a 22% increase[28] - Adjusted net income for the year ended December 31, 2025, was $2,582 million, an increase from $2,363 million in 2024, representing a growth of 9.3%[32] Shareholder Returns - The company plans to return $1.6 billion to shareholders in 2026 through share repurchases and dividends, including $1 billion in share repurchases[4] - The company repurchased 4.3 million shares in Q4 2025, compared to 1.8 million shares in Q4 2024, indicating a significant increase in share repurchase activity[45] - Dividends paid in Q4 2025 were $151 million, slightly up from $150 million in Q4 2024, indicating stable dividend policy[43] - The remaining authorized balance for stock repurchases as of December 31, 2025, was $1,918 million, indicating strong capacity for future buybacks[45] Growth and Acquisitions - The company signed 28 large deals in 2025, with total contract value (TCV) growth of nearly 50% year-over-year, contributing to trailing 12-month bookings of $28.4 billion, which increased 5% year-over-year[2][6] - Cognizant's acquisition of Belcan contributed approximately 260 basis points to revenue growth for the full year ended December 31, 2025[2] - The company completed the acquisition of 3Cloud, enhancing its expertise in Azure and AI enablement[16] - The acquisition of Belcan contributed approximately 260 basis points to overall revenue growth for the year ended December 31, 2025[41] Operational Efficiency - Voluntary attrition in tech services decreased to 13.9% for the period ended December 31, 2025, down from 15.9% a year earlier[7] - Cost of revenues for Q4 2025 was $3,534 million, an increase from $3,297 million in Q4 2024[28] - The company recognized a gain of $62 million from the sale of property and equipment in 2025[28] - The company reported adjustments for non-cash income and expenses of $94 million in Q4 2025, compared to $40 million in Q4 2024, indicating a rise of 135%[43] Cash Flow and Assets - The company reported a free cash flow of $2,230 million for the full year 2025, compared to $2,240 million in 2024[28] - Net cash provided by operating activities for the twelve months ended December 31, 2025, was $2,883 million, up from $2,124 million in 2024, reflecting a growth of 36%[43] - Free cash flow for Q4 2025 was $781 million, slightly down from $837 million in Q4 2024, while for the twelve months, it increased to $2,665 million from $1,827 million, a growth of 46%[45] - Cash and cash equivalents decreased to $1,901 million in 2025 from $2,231 million in 2024, a decline of 14.8%[36] - Total assets increased to $20,692 million in 2025, up from $19,966 million in 2024, representing a growth of 3.6%[30] - Total liabilities increased to $5,677 million in 2025, compared to $5,558 million in 2024, reflecting a growth of 2.1%[30] - The net cash used in investing activities for the twelve months ended December 31, 2025, was $(230) million, a decrease from $(1,646) million in 2024, reflecting improved cash management[43] Market Position and Strategy - The company launched Cognizant® Resilient IT Operations and expanded partnerships with Microsoft and Adobe to enhance AI capabilities and digital transformation services[13][11] - The company is focused on enhancing its capabilities in AI and digital transformation services, positioning itself as a leader in the market[20] - Cognizant's book-to-bill ratio indicates strong future revenue potential, with significant contracts contributing to bookings[25]