Cognizant Q2 Earnings Beat Estimates: Will Raised View Aid Shares?

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]