Cognizant Technology Solutions Corp 10-Q for FY2026 Q1

Cognizant Technology Solutions Corp (CTSH)

10-Q 2026-04-29 For: 2026-03-31

Added on April 29, 2026

About this 10-Q

Cognizant Technology Solutions Corp filed this 10-Q on April 29, 2026, covering the quarter ended March 31, 2026 (FY2026 Q1).

Headline figures

Quarter ended March 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $5.41B; up 5.8% from $5.12B a year earlier
Net income: $662M; down 0.2% from net income of $663M a year earlier
Diluted EPS: $1.39; up 3.7% from $1.34 a year earlier

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☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended	March 31, 2026
or
☐	Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from to


Delaware									13-3728359
(State or Other Jurisdiction of Incorporation or Organization)									(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share	CTSH	The Nasdaq Stock Market LLC


Large Accelerated Filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐


Class						Number of Shares
Class A Common Stock, par value $0.01 per share						473,869,469


		Page
GLOSSARY		1

FORWARD LOOKING STATEMENTS		2

PART I.	FINANCIAL INFORMATION	4

Item 1.	Financial Statements	4

	Consolidated Statements of Financial Position (Unaudited) as of March 31, 2026 and December 31, 202 5	4

	Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31 , 202 6 and 202 5	5

	Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months Ended March 31 , 202 6 and 202 5	6

	Consolidated Statements of Stockholders' Equity (Unaudited) for the Three Months Ended March 31, 202 6 and 202 5	7

	Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31 , 202 6 and 202 5	8

	Notes to Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	35

PART II.	OTHER INFORMATION	36

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 5.	Other Information	37

Item 6.	Exhibits	38

SIGNATURES		39


Defined Term			Definition
10b5-1 Plan			Trading plan adopted pursuant to Rule 10b5-1 under the Exchange Act
Adjusted Diluted EPS			Adjusted diluted earnings per share
AI			Artificial intelligence
ASC			Accounting Standards Codification
CC			Constant Currency
CE			Continental Europe
CITA			Commissioner of Income Tax (Appeals) in India
CMT			Communications, Media and Technology
CODM			Chief Operating Decision Maker
Credit Agreement			Credit agreement with a commercial bank syndicate dated April 18, 2024, as amended
CTS India			Our principal operating subsidiary in India
DSO			Days Sales Outstanding
DTSA			Defend Trade Secrets Act
EPS			Earnings per share
EU			European Union
Exchange Act			Securities Exchange Act of 1934, as amended
FS			Financial Services
GAAP			Generally Accepted Accounting Principles in the United States of America
GenAI			Generative artificial intelligence
HS			Health Sciences
High Court			Madras, India High Court
India Defined Contribution Obligation			Certain statutory defined contribution obligations of employees and employers in India
IP			Intellectual property
ITAT			Income Tax Appellate Tribunal in India
ITD			Indian Income Tax Department
Labor Code			Labor law reforms implemented by the Government of India effective November 21, 2025, including the Code on Social Security, 2020.
NA			North America
Ninth Circuit			United States Court of Appeals for the Ninth Circuit
P&R			Products & Resources
Project Leap			Program introduced in Q2 2026 aimed at streamlining operations and enhancing productivity through AI-led efficiencies.
Recently completed acquisitions			Acquisitions that were completed in the 12 months preceding the beginning of the reporting period (in order to identify the impact of such acquisitions for the first twelve months of ownership)
RoW			Rest of World
SCI			Supreme Court of India
SEC			United States Securities and Exchange Commission
Second Circuit			United States Court of Appeals for the Second Circuit
SG&A			Selling, general and administrative
Syntel			Syntel Sterling Best Shores Mauritius Ltd.
Term Loan			Unsecured term loan under the Credit Agreement
Title VII			Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq.
TriZetto			The TriZetto Group, Inc., now known as Cognizant Technology Software Group, Inc.
UK			United Kingdom
USDC-CDCA			United States District Court for the Central District of California
USDC-NJ			United States District Court for the District of New Jersey
USDC-SDNY			United States District Court for the Southern District of New York
Voluntary Attrition - Tech Services			Includes all voluntary separations with the exception of employees in our Intuitive Operations and Automation practice and certain categories of negotiated separations


(in millions, except par values)	March 31, 2026		December 31, 2025
Assets
Current assets:
Cash and cash equivalents	$	1,504	$	1,901
Short-term investments	13		13
Trade accounts receivable, net	4,609		4,439
Other current assets	1,709		1,465
Total current assets	7,835		7,818
Property and equipment, net	955		933
Operating lease assets, net	539		573
Goodwill	7,681		7,106
Intangible assets, net	1,485		1,417
Deferred income tax assets, net	853		967
Long-term investments	113		111
Other noncurrent assets	1,039		1,767
Total assets	$	20,500	$	20,692
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	363	$	308
Deferred revenue	580		501
Short-term debt	33		33
Operating lease liabilities	140		153
Accrued expenses and other current liabilities	2,404		2,664
Total current liabilities	3,520		3,659
Deferred revenue, noncurrent	37		37
Operating lease liabilities, noncurrent	384		423
Deferred income tax liabilities, net	195		168
Long-term debt	535		543

Other noncurrent liabilities	761		847
Total liabilities	5,432		5,677
Commitments and contingencies (See Note 10)
Stockholders’ equity:
Preferred stock, $0.10 par value, 15 shares authorized, none issued	—		—
Class A common stock, $0.01 par value, 1,000 shares authorized, 474 and 479 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively	5		5
Additional paid-in capital	17		12
Retained earnings	15,272		15,158
Accumulated other comprehensive income (loss)	(226)		(160)
Total stockholders’ equity	15,068		15,015
Total liabilities and stockholders’ equity	$	20,500	$	20,692


(in millions, except per share data)	Three Months Ended March 31,
	2026		2025
Revenues	$	5,413	$	5,115
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization expense shown separately below)	3,638		3,397
Selling, general and administrative expenses	791		791

Depreciation and amortization expense	141		136
(Gain) on sale of property and equipment	—		(62)
Income from operations	843		853
Other income (expense), net:
Interest income	22		30
Interest expense	(7)		(12)
Foreign currency exchange gains (losses), net	18		2
Other, net	(9)		(1)
Total other income (expense), net	24		19
Income before provision for income taxes	867		872
Provision for income taxes	(208)		(213)
Income (loss) from equity method investments	3		4
Net income	$	662	$	663
Basic earnings per share	$	1.39	$	1.34
Diluted earnings per share	$	1.39	$	1.34
Weighted average number of common shares outstanding - Basic	477		494
Dilutive effect of shares issuable under stock-based compensation plans	—		1
Weighted average number of common shares outstanding - Diluted	477		495


(in millions)	Three Months Ended March 31,
	2026		2025
Net income	$	662	$	663
Change in Accumulated other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(39)		103
Unrealized gains and losses on cash flow hedges	(65)		28
Changes in net defined benefit obligations	38		—

Other comprehensive income (loss)	(66)		131
Comprehensive income	$	596	$	794


(in millions, except per share data)	Class A Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity
	Shares	Amount
Balance, December 31, 2025	479	$	5	$	12	$	15,158	$	(160)	$	15,015
Net income	—	—		—		662		—		662
Other comprehensive income (loss)	—	—		—		—		(66)		(66)
Common stock issued, stock-based compensation plans	1	—		17		—		—		17
Stock-based compensation expense	—	—		46		—		—		46
Repurchases of common stock	(6)	—		(58)		(390)		—		(448)
Dividends declared, $0.33 per share	—	—		—		(158)		—		(158)
Balance, March 31, 2026	474	$	5	$	17	$	15,272	$	(226)	$	15,068


(in millions)	For the Three Months Ended March 31,
	2026		2025
Cash flows from operating activities:
Net income	$	662	$	663
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	141		136

Deferred income taxes	111		54
Stock-based compensation expense	46		42

Gain on sale of property and equipment	—		(62)
Other, net	(6)		(6)
Changes in operating assets and liabilities, net of effects of businesses acquired:
Trade accounts receivable, current	(143)		(177)
Other current and noncurrent assets	(206)		(42)
Accounts payable	25		9
Deferred revenues, current and noncurrent	76		70
Other current and noncurrent liabilities	(432)		(287)
Net cash provided by operating activities	274		400
Cash flows from investing activities:
Purchases of property and equipment	(76)		(77)
Proceeds from sale of property and equipment	—		70






Payments for business combinations, net of cash acquired	(730)		—
Net cash (used in) investing activities	(806)		(7)
Cash flows from financing activities:
Issuance of common stock under stock-based compensation plans	17		19


Repurchases of common stock	(444)		(209)
Repayment of Term Loan borrowings and finance lease obligations	(11)		(12)

Repayment of notes outstanding under the revolving credit facility	—		(300)
Dividends paid	(159)		(155)
Net cash (used in) financing activities	(597)		(657)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1)		13
(Decrease) in cash, cash equivalents and restricted cash	(1,130)		(251)
Cash, cash equivalents and restricted cash beginning of year	2,634		2,231
Cash and cash equivalents, end of period	$	1,504	$	1,980


Date Issued and Topic	Date Adopted and Method	Description	Impact
July 2025 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets	Adopted effective January 1, 2026 Prospective basis	The standard is intended to simplify the measurement of credit losses for accounts receivable and contract assets by providing a practical expedient that allows an entity to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset.	Adoption did not have a significant impact on our consolidated financial statements.
September 2025 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software	Early adopted effective January 1, 2026 Prospective basis	The standard is intended to modernize the internal-use software guidance, making it easier to apply to various software development methods.	Adoption did not have a significant impact on our consolidated financial statements.
December 2025 Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities	Early adopted effective January 1, 2026 Prospective basis	The standard provides authoritative guidance for business entities receiving government grants, establishing rules for their recognition, measurement, presentation, and disclosure.	Adoption did not have a significant impact on our consolidated financial statements.


Date Issued and Topic	Effective Date	Description	Impact
November 2024 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)	Annual period starting in 2027 and interim periods starting in 2028 Prospective basis	The standard is intended to improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods.	We are currently evaluating the impact on our disclosures.
December 2025 Interim Reporting (Topic 270): Narrow-Scope Improvements	Interim reporting periods within annual reporting periods starting in 2028 Prospective basis	The standard clarifies the applicability of Topic 270, provides a comprehensive list of interim disclosures, and includes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.	We are currently evaluating the impact on our interim disclosures.


	Three Months Ended March 31, 2026

(in millions)	Health Sciences		Financial Services		Products and Resources		Communications, Media and Technology		Total
Revenues
Geography:
North America	$	1,311	$	1,176	$	916	$	649	$	4,052
United Kingdom	57		171		164		117		509
Continental Europe	168		166		161		35		530
Europe - Total	225		337		325		152		1,039
Rest of World	43		131		80		68		322
Total	$	1,579	$	1,644	$	1,321	$	869	$	5,413

Service line:
Consulting and technology services	$	913	$	1,185	$	901	$	492	$	3,491
Outsourcing services	666		459		420		377		1,922
Total	$	1,579	$	1,644	$	1,321	$	869	$	5,413

Type of contract:
Time and materials	$	474	$	780	$	523	$	434	$	2,211
Fixed-price	806		808		713		397		2,724
Transaction or volume-based	299		56		85		38		478
Total	$	1,579	$	1,644	$	1,321	$	869	$	5,413


	Three Months Ended March 31, 2025

(in millions)	Health Sciences		Financial Services		Products and Resources		Communications, Media and Technology		Total
Revenues
Geography:
North America	$	1,330	$	1,043	$	911	$	570	$	3,854
United Kingdom	49		153		137		118		457
Continental Europe	160		147		153		33		493
Europe - Total	209		300		290		151		950
Rest of World	32		119		77		83		311
Total	$	1,571	$	1,462	$	1,278	$	804	$	5,115

Service line:
Consulting and technology services	$	870	$	1,020	$	887	$	449	$	3,226
Outsourcing services	701		442		391		355		1,889
Total	$	1,571	$	1,462	$	1,278	$	804	$	5,115

Type of contract:
Time and materials	$	481	$	764	$	556	$	434	$	2,235
Fixed-price	791		651		634		334		2,410
Transaction or volume-based	299		47		88		36		470
Total	$	1,571	$	1,462	$	1,278	$	804	$	5,115


(in millions)	3Cloud		Weighted Average Useful Life
Cash	$	3
Trade accounts receivable	26
Other current assets	2
Property and equipment and other noncurrent assets	2

Non-deductible goodwill	118
Tax-deductible goodwill	473
Customer relationship assets	130		6.0 years
Other definite-lived intangible assets	2		1.0 year


Other current liabilities	(25)
Deferred income tax liabilities, net	(3)

Purchase price	$	728


	Location of Net Gains (Losses) on Derivative Instruments	Amount of Net Gains (Losses) on Derivative Instruments

(in millions)		2026		2025
Foreign exchange forward contracts – Not designated as hedging instruments	Foreign currency exchange gains (losses), net	$	2	$	(1)


(in millions)	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	15	$	—	$	—	$	15
Time deposits	—		380		—		380

Short-term investments:
Time deposits	—		1		—		1
Equity investment security	12		—		—		12


Other current assets:
Foreign exchange forward contracts	—		5		—		5




Accrued expenses and other current liabilities:
Foreign exchange forward contracts	—		(133)		—		(133)

Other noncurrent liabilities:
Foreign exchange forward contracts	—		(46)		—		(46)



(in millions)	Before Tax Amount		Tax Effect		Net of Tax Amount
Foreign currency translation adjustments:
Beginning balance	$	11	$	1	$	12
Change in foreign currency translation adjustments	(32)		(7)		(39)
Ending balance	$	(21)	$	(6)	$	(27)
Unrealized gains (losses) on cash flow hedges:
Beginning balance	$	(84)	$	21	$	(63)
Unrealized (losses) arising during the period	(121)		30		(91)
Reclassifications of net losses to:
Cost of revenues	30		(7)		23
SG&A expenses	4		(1)		3
Net change	(87)		22		(65)
Ending balance	$	(171)	$	43	$	(128)
Changes in net defined benefit obligations:
Beginning balance	$	(149)	$	40	$	(109)
Prior service costs and gains and losses, net of amortization	57		(19)		38
Ending balance	$	(92)	$	21	$	(71)
Accumulated other comprehensive income (loss):
Beginning balance	$	(222)	$	62	$	(160)
Other comprehensive income (loss)	(62)		(4)		(66)
Ending balance	$	(284)	$	58	$	(226)


	Three Months Ended March 31, 2026
(in millions)	HS		FS		P&R		CMT		Total
Revenues	$	1,579	$	1,644	$	1,321	$	869	$	5,413
Less: Other segment items	1,264		1,392		1,143		771		4,570
Segment operating profit	$	315	$	252	$	178	$	98	$	843
Unallocated benefits/(costs)									—
Income from operations									$	843


	Three Months Ended March 31, 2025
(in millions)	HS		FS		P&R		CMT		Total
Revenues	$	1,571	$	1,462	$	1,278	$	804	$	5,115
Less: Other segment items	1,283		1,219		1,099		723		4,324
Segment operating profit	$	288	$	243	$	179	$	81	$	791
Unallocated benefits/(costs)									62
Income from operations									$	853


	As of
(in millions)	March 31, 2026		December 31, 2025
Long-lived Assets: (1)
North America (2)	$	307	$	300
Europe	67		67
Rest of World (3)	581		566
Total	$	955	$	933


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.


			% of			% of	Increase / Decrease
(Dollars in millions, except per share data)	2026		Revenues	2025		Revenues	$		%
Revenues	$	5,413	100.0	$	5,115	100.0	$	298	5.8
Operating expenses:
Cost of revenues(a)	3,638		67.2	3,397		66.4	241		7.1
Selling, general and administrative expenses(a)	791		14.6	791		15.5	—		—

Depreciation and amortization expense	141		2.6	136		2.7	5		3.7
(Gain) on sale of property and equipment	—		—	(62)		(1.2)	62		(100.0)
Income from operations and operating margin	843		15.6	853		16.7	(10)		(1.2)
Other income (expense), net	24			19			5		26.3
Income before provision for income taxes	867		16.0	872		17.0	(5)		(0.6)
Provision for income taxes	(208)			(213)			5		(2.3)
Income (loss) from equity method investments	3			4			(1)		(25.0)
Net income	$	662	12.2	$	663	13.0	$	(1)	(0.2)
Diluted EPS	$	1.39		$	1.34		$	0.05	3.7

Other Financial Information2
Adjusted Income from Operations and Adjusted Operating Margin	$	843	15.6	$	791	15.5	$	52	6.6
Adjusted Diluted EPS	$	1.40		$	1.23		$	0.17	13.8


Revenues - Reportable Business Segments and Geographic Markets


Q1 2026 as compared to Q1 2025			Increase/(Decrease)
(Dollars in millions)	$	%			CC %3
Health Sciences			8			0.5	(0.9)
Financial Services			182			12.4	10.2
Products and Resources			43			3.4	1.1
CMT			65			8.1	6.5
Total revenues			$	298		5.8	3.9


SG&A Expenses (Exclusive of Depreciation and Amortization Expense)


(Dollars in millions)	2026		% of Revenues	2025		% of Revenues	Increase/(Decrease)
Total segment operating profit	$	843	15.6	$	791	15.5	$	52
Unallocated benefits/(costs)	—		—	62		1.2	(62)
Income from operations	$	843	15.6	$	853	16.7	$	(10)


	2026		% of Revenues	2025		% of Revenues
GAAP income from operations and operating margin	$	843	15.6	$	853	16.7
(Gain) on sale of property and equipment(1)	—		—	(62)		(1.2)

Adjusted Income from Operations and Adjusted Operating Margin	$	843	15.6	$	791	15.5

GAAP diluted EPS	$	1.39		$	1.34
Effect of above adjustments, pre-tax	—			(0.13)
Non-operating foreign currency exchange (gains) losses, pre-tax(2)	(0.04)			—
Tax effect of above adjustments(3)	0.05			0.02

Adjusted Diluted EPS	$	1.40		$	1.23


Item 3. Quantitative and Qualitative Disclosures about Market Risk.


Month	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (in millions)
January 1, 2026 - January 31, 2026	1,188,829	$	84.12	1,188,829	$	1,818
February 1, 2026 - February 28, 2026	3,019,057	65.32		3,019,057	1,621
March 1, 2026 - March 31, 2026	2,057,471	63.33		2,057,471	1,491
Total	6,265,357	$	68.23	6,265,357