Cognizant grew Q2 2026 revenue 4.5% (4.1% in constant currency) to $5.48B, led by 12% growth in Financial Services. Net income slipped 1.4% on a higher tax rate, while heavy buybacks lifted diluted EPS 3.8% to $1.36. Management trimmed the top of its full-year revenue range.
Revenue
$5.5B
+4.5% YoY
Net income
$636M
-1.4% YoY
Diluted EPS
$1.36
+3.8% YoY
Operating margin
15.9%
Overview
Cognizant's revenue for the second quarter of 2026 (April–June) rose 4.5% to $5.48 billion. In constant currency, which strips out exchange-rate swings by restating this year's revenue at last year's rates, growth was 4.1%. That sits in the upper half of the 3.2%–4.7% constant-currency range management gave in April. Most of the growth came from one place: Financial Services revenue rose 12.0%. The other three segments each grew between 1.2% and 1.5%.
Operating profit rose 7.0% to $874 million, but net income fell 1.4% to $636 million. The tax rate went up, and non-operating income (interest and other items outside the core business) nearly disappeared. Diluted EPS (earnings per share) still rose 3.8% to $1.36, because heavy buybacks cut the diluted share count from 492 million to 466 million (−5.3%). Much of the per-share growth this quarter comes from having fewer shares, not from higher profit.
Management narrowed its full-year revenue range by cutting the top end. It now expects 4.0%–5.5% constant-currency growth, down from 4.0%–6.5%. It raised its adjusted EPS range to $5.70–$5.82. Quarterly bookings (the value of new contracts signed) fell 6% from a year earlier.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$5,481M
$5,245M
+4.5%
Revenue growth, constant currency
4.1%
7.2%
—
Income from operations
$874M
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Operating margin is the share of revenue left after running the business, before interest and tax. The bookings, attrition and headcount figures and the adjusted measures come from Cognizant's Q2 earnings release (Form 8-K Exhibit 99.1, July 29, 2026). The 10-Q repeats the attrition, headcount and adjusted figures.
First half (six months to June 30): revenue was $10,894M, up 5.2% (4.0% constant currency). Net income was $1,298M, down 0.8%. GAAP diluted EPS was $2.75, up 3.8% from $2.65. The GAAP operating margin was 15.8% against 16.1% a year earlier, but last year's figure included a $62M gain from selling an office complex in India. On an adjusted basis, the margin rose from 15.5% to 15.8%.
How much of the growth is organic?
The 4.1% constant-currency figure includes two tailwinds that don't come from Cognizant's own services business growing:
Acquisitions added about 1.0 percentage point. In 2026 Cognizant bought two companies. It paid $728M for 3Cloud, a Microsoft Azure services provider, which it closed on January 1. It paid $665M for Astreya, an IT managed-services firm that supports large tech companies, which it closed on June 22. Both prices include contingent consideration (payments that depend on future results). The 10-Q says the acquisition revenue came from North America and was spread across all four segments.
Resale of third-party products added about 1.7 points. Under what it calls its "integrated offerings strategy", Cognizant sells other vendors' hardware and software together with its own services. This revenue is real, but its margins are low.
Subtracting both from 4.1% leaves roughly 1.4 points of growth from Cognizant's existing services business. This is our own rough estimate: the company reports the two contributions as approximate figures and doesn't publish a combined organic number. The same point explains why cost of revenues rose from 66.3% to 66.6% of revenue. The 10-Q says this was "primarily driven by the impact of the sale of third-party products... and increased compensation costs."
Segment performance
Segment
Q2 2026 revenue
YoY
Constant currency
Segment op. margin Q2 2026
Q2 2025 (recast)
Financial Services
$1,733M
+12.0%
+11.7%
16.0%
16.2%
Health Sciences
$1,572M
+1.4%
+1.0%
19.8%
18.8%
Products & Resources
$1,322M
+1.2%
+0.7%
12.5%
12.8%
Communications, Media & Technology
$854M
+1.5%
+1.4%
14.4%
12.8%
Segment margins are segment operating profit divided by segment revenue, from the 10-Q's segment note. Starting in 2026, Cognizant charges corporate costs, including amortization of acquired intangible assets, to the segments. It has restated 2025 on the same basis.
Financial Services is now 31.6% of revenue and the growth engine. Growth came from "the ramp up of several recently won large deals and increasing demand for our intuitive operations and automation services as well as our AI and analytics services." Third-party product sales added 2.5 points of the 12.0%. Segment margin slipped 0.2 points. The 10-Q says the timing of those product sales weighed on the margin.
Health Sciences, the most profitable segment, grew only 1.0% in constant currency. Its margin rose a full point to 19.8%.
Products & Resources: the 10-Q cites "softer discretionary spend among retail, consumer goods, travel and hospitality customers," partly offset by manufacturing, logistics, energy and utilities clients. Third-party product sales added 1.25 points, so the rest of the segment's revenue was roughly flat to down in constant currency.
Communications, Media & Technology: Cognizant says it "has seen and may continue to see weakness among communications and media customers," partly offset by technology clients in North America. Third-party product sales added 3.5 points against 1.4% constant-currency growth. That means revenue from the segment's own services fell year over year. Margin improved 1.6 points because of "increased profitability of several large customers."
Geography
North America, 75.3% of revenue, grew 5.5%, and all the acquisition revenue landed there. Europe grew 2.5% as reported but only 0.8% in constant currency, so most of its growth came from currency. Continental Europe grew 2.9% as reported but just 0.1% in constant currency, and third-party product sales alone added 3.5 points there. The UK grew 1.5% in constant currency. Rest of World fell 1.5% in constant currency.
Margins: better underneath, but helped by the rupee
The adjusted operating margin rose 0.4 points to 16.0%. The GAAP margin (15.9%) includes two one-off items of almost the same size, which nearly cancel out:
−$84M: Project Leap restructuring charges. Project Leap is a new cost program. This quarter's charge was $56M of severance and $28M of other costs. Cognizant expects total charges of $230M–$320M, nearly all in 2026. It expects $200M–$300M of in-year savings, which it says will "primarily" fund investment in AI capabilities, partnerships and integrated offerings.
+$81M: a partial reversal of a 2019 accrual for Indian provident-fund (retirement contribution) obligations. After India issued new social-security rules in May and June 2026, management concluded that the part of the liability covering periods with no government proceedings was no longer needed. The release was booked as a reduction of SG&A (selling, general and administrative) expenses.
Currency helped a lot. About 22% of Cognizant's operating costs are in Indian rupees, and the rupee weakened. Before hedging, that added about 1.8 points to the operating margin. Hedge settlements took back about 0.8 points, leaving a net benefit of about 1.0 point. Without it, the adjusted margin would have been lower than a year ago rather than 0.4 points higher. Management credits the margin gain to "operational efficiencies and the beneficial impact of foreign currency exchange rate movements." It says higher compensation costs, dilution from the acquisitions and the low-margin product resales worked against it.
Why net income fell while operating profit rose
Tax rate: 26.4% vs 23.4% a year earlier, which the 10-Q attributes to "multi-year tax planning strategies."
Non-operating income: it dropped from $25M to $1M. Interest income fell from $23M to $18M as the cash balance shrank. Interest expense rose from $9M to $13M after the company borrowed $1.0 billion on its revolving credit line. "Other, net" swung to −$11M. There was also an $8M loss from equity-method investments (minority stakes accounted for as a share of their profit or loss).
People and AI
Headcount was 356,700, down 900 from March but up 12,900 from a year ago. The quarter-on-quarter decline coincides with Project Leap's severance spending. Voluntary attrition in tech services (the share of staff choosing to leave over the past 12 months) rose to 13.0% from 12.3% at March 31 and 12.6% a year earlier. Cognizant changed its attrition definition in Q1 2026 and restated prior periods on the new basis.
On AI, the 10-Q points both ways. AI and analytics services are among the reasons Financial Services grew. But in the Business Outlook section, Cognizant warns that "demand for some services that we currently perform for our clients may be reduced, and our ability to obtain favorable pricing or other terms for some of our services may be diminished." The filing gives no figure for AI-related revenue.
Bookings
According to the earnings release, trailing-12-month bookings rose 5% to $29.1B. That is a book-to-bill of about 1.3x, meaning roughly $1.30 of new contracts for every $1 of revenue. Bookings in the quarter itself fell 6% year over year, although Cognizant signed seven large deals ($100M+ each). In Q1, the trailing-12-month figure was $29.6B, up 11%, with 1.4x book-to-bill. The trailing total is still well above revenue, but it has now shrunk from one quarter to the next.
Capital returns and balance sheet
Cognizant spent $1,153M on buybacks in the quarter, buying 22.5 million shares. That was $500M through an accelerated share repurchase (ASR: a lump-sum purchase through a bank) at an average price of $51.54, plus $653M on the open market. In the same quarter of 2025, it bought back 4.5 million shares. H1 buybacks totalled $1.6B (cash-flow statement: $1,607M), and acquisitions another $1.3B ($1,334M). Together they exceeded operating cash flow of $832M. Cash fell from $1,901M at year-end to $1,038M, and long-term debt rose from $543M to $1,527M. The company still has $2.34B left under its buyback authorization. Free cash flow (operating cash flow minus capital spending) was $459M in Q2, up from $331M, but $657M for the half, down from $724M. The quarterly dividend is $0.33.
Takeaway: The headline numbers look better than the business underneath. Once acquisitions (about 1 point) and third-party product resale (about 1.7 points) are removed, constant-currency growth from existing services was only about 1.4%. It was concentrated in Financial Services, while CMT's own services revenue fell. A net 1-point rupee benefit supported the margin, and buybacks drove EPS: net income was down 1.4%.
Guidance and outlook
Guidance given July 29, 2026 (earnings release):
Latest (Jul 29)
Previous (Apr 29)
Q3 2026 revenue
$5.60–$5.68B (+3.4% to +4.9%; 3.8%–5.3% cc)
—
FY2026 revenue growth, constant currency
4.0%–5.5%
4.0%–6.5%
FY2026 revenue
$22.04–$22.35B
$22.11–$22.64B
FY2026 adjusted operating margin
16.0%–16.2%
16.0%–16.2%
FY2026 adjusted diluted EPS
$5.70–$5.82 (+8% to +10%)
$5.63–$5.77
The EPS range went up while the revenue range came down. That pattern fits a lower share count and the Project Leap savings, not stronger demand. The adjusted EPS guidance excludes Project Leap charges, which management expects to cost roughly $0.50–$0.70 per share pre-tax this year. Q3 guidance implies constant-currency growth close to Q2's pace, which includes the added Astreya revenue. What to watch in Q3: whether bookings grow again after this quarter's 6% decline, whether growth outside Financial Services picks up, and how much of the margin depends on the rupee.