Cognizant Technology Solutions (CTSH) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue reached $5.413 billion, up 5.8% year-over-year (3.9% in constant currency), driven by large deal ramp-ups, AI, automation, and analytics services.

• Adjusted EPS grew 13.8% year-over-year to $1.40, outpacing revenue growth; GAAP EPS was $1.39, up 3.7% year-over-year.

• Bookings surged 21% year-over-year, with seven large deals over $100 million TCV, including one mega deal above $500 million.

• Project Leap launched to accelerate transformation, targeting $200–$300 million in savings for 2026 and supporting increased margin guidance.

• Recent acquisitions, including 3Cloud and Astreya, are strengthening AI infrastructure and managed services capabilities.

Financial highlights

• Operating margin was 15.6%, down 110 basis points year-over-year; adjusted operating margin rose 10 basis points to 15.6%.

• Adjusted EPS: $1.40, up 13.8% year-over-year; GAAP EPS: $1.39.

• Free cash flow for Q1 2026 was $198 million, impacted by higher bonus payouts.

• Cash and short-term investments at quarter-end were $1.5 billion; net cash position at $949 million.

• Book-to-bill ratio: 1.4x on a trailing 12-month basis; trailing 12-month bookings totaled $29.6 billion.

Outlook and guidance

• Full-year 2026 revenue guidance: $22.11–$22.64 billion, 4.8%–7.3% growth (4.0%–6.5% in constant currency).

• Adjusted operating margin guidance raised to 16.0%–16.2%, reflecting 20–40 basis points expansion.

• Adjusted diluted EPS expected at $5.63–$5.77, representing 7%–9% growth.

• Q2 2026 revenue expected at $5.45–$5.52 billion, 3.8%–5.3% growth.

• Project Leap expected to incur $230–$320 million in costs in 2026, with anticipated in-year savings of $200–$300 million, primarily reinvested in AI and integrated offerings.