Cognizant posts fastest growth in four years, signals steady growth ahead

Bengaluru: Bolstered by large deal wins, improving execution and margin expansion, Cognizant Technology Solutions Corp. ended 2025 with its fastest revenue growth in four years, beating analyst estimates and projecting steady growth for the ongoing year despite being cautious on demand.

Outpacing its Indian rivals, the Teaneck, New Jersey-headquartered firm reported a 6.95% year-on-year increase in dollar revenue to $21.12 billion for financial year 2025 (January-December), exceeding the $21.09 billion consensus estimate from a Bloomberg poll of 26 analysts, as well as its own 6.6–6.9% growth guidance issued last October.

A little over a third of its growth in 2025 came from the sale of products and resources, which account for about a quarter of its total revenue. However, even as operating margin expanded 140 basis points to 16.1%, net profit slipped 0.45% on-year to $2.23 billion.

While Indian companies follow an April-March fiscal year, Mint’s calculations show that for the comparable period of calendar year 2025, the fastest growth was recorded by HCL Technologies Ltd at 5.1%, while Infosys Ltd grew 3.85% year-on-year.

On the other hand, Tata Consultancy Services Ltd (TCS) and Wipro Ltd posted revenue declines of 0.72% and 1.41% over the same period.

Cognizant’s growth can also be attributed to three billion-dollar mega deals it signed in 2025, the latest reportedly a $1-billion IT modernization contract with Swiss pharma giant Novartis AG.

Shareholders cheered the results and pulled out of the bloodbath in IT stocks as Cognizant’s shares rose 2.71% to $76.52 on the Nasdaq during pre-market trading hours. The results were announced before market hours in the US.

Experts gave the company’s results a thumbs-up. “Cognizant’s growth this year is less about a sudden demand rebound and more about execution catching up with opportunity,” said Phil Fersht, chief executive of Massachusetts-based IT research firm HFS Research.

“This is the fastest growth in four years because Cognizant has been sharper on deal conversion, more focused on large client mining, and more disciplined on costs,” Fersht added.

Note of caution

Management believes productivity-led savings for clients, rising adoption of artificial intelligence (AI), and sharper deal conversion will support discretionary spending over time. Still, it struck a cautious note on the demand environment.

During a post-earnings analyst call on 4 February, company CFO Jatin Dalal said the environment remains complex, with traditional discretionary spending cycles continuing to evolve as clients re-baseline expectations for productivity gains.

“However, we view this as an opportunity to capture wallet share in large deals and help clients reinvest savings into innovation,” Dalal said.

This is in line with larger peer Accenture Plc, which stated that macroeconomic demand remains unchanged.

“The pace of overall spending and discretionary spending in our market is at the same level we have seen over the last year,” Julie Sweet, Accenture's chief executive, said during a post-earnings analyst call on 18 December. “We are delivering strong results and taking market share in this environment, because reinvention is critical for our clients.”

For now, Cognizant is confident of faster growth, expecting to end 2026 with revenue of $22.14-22.66 billion, implying annual growth of 4.9-7.4%.

The company expects 150 basis points, or 1.5%, of this growth to come from acquisitions, with a third of this coming from future acquisitions. A basis point is a hundredth of a percentage point.

It also refrained from spelling out revenue from Gen AI, but said the new technology would continue to drive non-essential spending.

S. Ravi Kumar, chief executive of Cognizant, said during the analyst call that if AI advances trickle down to businesses, it would support the return of discretionary spending. “It’s going to be a catalyst. It's going to trigger a capex cycle on enterprises to (realise) that value, and it will flow through to us,” he said.

India listing plans

Meanwhile, the management said it is progressing on its India listing plans, but did not divulge details.

“At this juncture, we are still thinking through the decision, the regulatory framework and, therefore, the decision on the primary offering and secondary listing. And at some point, we should be able to come back and tell you more about this. But at this juncture, I think it's a continued progress that would be what I would suggest, as an update from the previous quarter to this quarter,” said Dalal.

Mint had reported on 30 October 2025 about the possibility of the company listing its shares on Indian stock exchanges, which experts attributed to a drive for better valuations.

The Indian-heritage company—which has more than two-thirds of its employees based in India—ended the December quarter with 351,600 employees, 14,800 more than the year ago and 1,800 more than the preceding three months. The increase in headcount comes even as peer TCS cut its headcount by almost 20,000.