Cognizant Technology Solutions (CTSH) Q3 2025 earnings summary

Executive summary

• Q3 2025 revenue reached $5.415B, up 7.4% year-over-year (6.5% in constant currency), exceeding guidance, with broad-based growth across all segments and geographies, especially North America, and a significant contribution from the Belcan acquisition.

• Adjusted diluted EPS rose 11% year-over-year to $1.39, while GAAP EPS declined to $0.56 due to a one-time, non-cash income tax expense of $390M ($0.80/share).

• Operating margin improved to 16.0%, up 140 basis points year-over-year; adjusted operating margin also at 16.0%.

• Trailing 12-month bookings totaled $27.5B, up 5% year-over-year, with six large deals signed in Q3 and 16 year-to-date, driving a 40% increase in large deal TCV.

• Year-to-date, $1.5B was returned to shareholders via share repurchases and dividends, with $2.0B targeted for the full year.

Financial highlights

• Q3 2025 revenue: $5,415M (7.4% YoY growth, 6.5% in constant currency); YTD revenue up 7.3% in constant currency.

• Q3 2025 GAAP and adjusted operating margin: 16.0%, up 140 bps YoY; adjusted EPS: $1.39 (up 11% YoY).

• Free cash flow for Q3: $1,160M; YTD free cash flow: $1,884M (100% of adjusted net income).

• Cash and short-term investments at quarter-end: $2,354M; net cash: $1,770M.

• Book-to-bill ratio for trailing 12 months: ~1.3x.

Outlook and guidance

• Full-year 2025 constant currency revenue growth guidance raised to 6.0%–6.3%; full-year revenue expected at $21.05–$21.10B (6.6%–6.9% YoY growth).

• Q4 2025 revenue expected at $5.27–$5.33B (3.8%–4.8% YoY growth).

• Full-year 2025 adjusted operating margin expected at ~15.7%; adjusted diluted EPS guidance is $5.22–$5.26 (10%–11% YoY growth).

• Free cash flow conversion expected at ~100% of adjusted net income; adjusted tax rate expected at 24%–25%.

• No significant impact from the OBBBA tax law change is expected on future effective tax rates, aside from the Q3 2025 one-time effect.