Why Is Cognizant (CTSH) Down 0.1% Since Last Earnings Report?

Core Viewpoint - Cognizant Technology Solutions reported strong Q2 2025 earnings, beating estimates and showing year-over-year revenue growth, driven by acquisitions and organic growth in key sectors [3][4][12]. Financial Performance - Non-GAAP earnings per share for Q2 2025 were $1.31, exceeding the Zacks Consensus Estimate by 3.97% and reflecting a 12% increase year-over-year [3]. - Revenues reached $5.25 billion, surpassing the consensus mark by 1.01%, with an 8.1% year-over-year increase and a 7.2% increase at constant currency [3]. - The Belcan acquisition contributed approximately 400 basis points to revenue growth [4]. - 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 [4]. Segment Performance - Financial Services revenues, accounting for 29.5% of total revenues, grew by 6.9% year-over-year to $1.547 billion [6]. - Health Sciences revenues, also 29.6% of total revenues, increased by 6.2% year-over-year to $1.551 billion [6]. - Products and Resources revenues rose by 16% year-over-year to $1.306 billion, while Communications, Media and Technology revenues increased by 3.1% to $841 million [7]. Geographic Performance - North America revenues grew by 8.1% year-over-year, contributing 74.6% to total revenues [7]. - Europe revenues increased by 9.6% year-over-year, contributing 19.1% to total revenues, with the U.K. and Continental Europe showing respective increases of 8.6% and 10.6% [8]. Operational Metrics - Selling, general & administrative expenses as a percentage of revenues decreased by 70 basis points year-over-year to 15.4% [9]. - The company reported a GAAP operating margin of 15.6%, expanding by 100 basis points year-over-year [10]. - Total headcount increased to 343,800 from 336,300 in the previous quarter [9]. Balance Sheet - Cash and short-term investments totaled $1.80 billion as of June 30, 2025, down from $1.99 billion as of March 31, 2025 [11]. - Total debt decreased to $592 million from $600 million in the previous quarter [11]. - Free cash flow was reported at $331 million, compared to $393 million in the prior quarter [11]. Guidance - For Q3 2025, Cognizant expects 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 between $20.7 billion and $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]. Market Position - Estimates for Cognizant have trended upward over the past month, indicating positive market sentiment [14][16]. - The company holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the near term [16].