Key Highlights

  • Adjusted EPS of USD 1.49 rose 7% year over year and topped the consensus estimate of USD 1.46.
  • Revenue of USD 5.66 billion grew 4.6%, slightly above the consensus estimate of USD 5.64 billion, led by banking clients.
  • Adjusted Operating Margin reached 16.3%, up 30 basis points, and USD 51 million of Project Leap costs sat outside it.
  • Full year EPS guidance narrowed to USD 5.72 to 5.79, while Revenue growth guidance was lowered to 4% to 4.4%.

Cognizant Technology Solutions Corporation (NASDAQ:CTSH) reported third quarter 2026 adjusted diluted EPS of USD 1.49, above a consensus estimate of USD 1.46 and up 7% from USD 1.39 a year earlier. GAAP diluted EPS was USD 1.39, compared with USD 0.56 in the prior year quarter. Revenue was USD 5.66 billion, slightly above a consensus estimate of USD 5.64 billion, and rose 4.6% as reported or 4.8% in constant currency.

Growth was led by banking clients in Financial Services and technology clients in Communications, Media and Technology, partly offset by weakness among healthcare, communications and media, and consumer-facing accounts. Recently completed acquisitions added 210 basis points to growth. Chief Executive Officer Ravi Kumar S said Financial Services grew 12% in constant currency, its third straight quarter of double-digit growth.

Margin, Bookings and Cash Returns

GAAP operating margin slipped to 15.4% from 16.0%, with USD 51 million of Project Leap costs excluded from the adjusted figure of 16.3%.

Trailing 12 month bookings rose 4% with a book-to-bill of 1.3x, and three deals above USD 100 million in total contract value were signed in the quarter. Management said fixed price and transaction-based work reached nearly 58% of revenue and that more than 50% of software development was AI-assisted. Free Cash Flow was USD 925 million, and the company repurchased 4.9 million shares for over USD 250 million at an average price near USD 53. Cash and short-term investments stood at USD 1.6 billion, and a Dividend of USD 0.33 per share is payable on November 25, 2026.

Revised Guidance and Cost Estimates

Management said macro uncertainty is weighing more on discretionary spending in healthcare and consumer-facing sectors during the fourth quarter. Fourth quarter revenue growth is guided to 3.2% to 4.7% in constant currency, including about 200 basis points from acquisitions. Full year revenue growth in constant currency was lowered to 4% to 4.4% from 4% to 5.5%, with about 150 basis points of inorganic contribution unchanged.

Adjusted operating margin guidance was narrowed to about 16.1%, and EPS guidance to USD 5.72 to 5.79, representing 8% to 10% growth. The company projects a tax rate near 25%, a diluted share count near 460 million and free cash flow of 90% to 100% of net income. Total Project Leap cost was trimmed to USD 180 million to USD 250 million from USD 230 million to USD 320 million, with in-year savings of around USD 200 million in 2026 and the program running through the first quarter of 2027.

Signposts for the Fourth Quarter

Fourth quarter revenue growth is guided to 3.2% to 4.7%, and the fixed price and transaction mix near 58% is a measure the company itself highlighted. Days Sales Outstanding stood at 89 days, up 5 days from a year earlier on a change in Business mix. The announced DyFlex Solutions Acquisition is scheduled to close in the first quarter of 2027. The full year adjusted margin near 16.1% is the other benchmark.