US-based IT services Cognizant on Wednesday missed revenue guidance for the April–June quarter, set at $5.45–$5.52 billion, below analyst estimates of $5.55 billion due to a volatile macroeconomic environment. The company follows a calendar financial year ending December 31. The revision comes even as the firm reported a steady performance for the January–March quarter.
Cognizant posted first-quarter revenue of $5.4 billion, up 5.8% year-on-year, or 3.9% in constant currency terms, at the upper end of its guidance and broadly in line with estimates. For the full year, the company guided revenue in the range of $22.11–$22.64 billion, with the upper end marginally above Bloomberg estimates of $22.36 billion, though narrower than its earlier forecast of $22.14–$22.66 billion.
Operating margin for the quarter fell 110 basis points year-on-year to 15.6%, while adjusted operating margin rose 10 basis points. Adjusted earnings per share increased 13.8% to $1.40. The company expects FY26 adjusted EPS in the range of $5.63–$5.77 and adjusted operating margin of 16–16.2%.
Navigating the Macro Haze
“In a complex macroeconomic environment, we delivered first quarter revenue growth in the upper half of our guidance range, with sustained bookings momentum and financial services again leading performance. We signed seven large deals in the quarter and delivered over 70% large deal total contract value growth year-over-year,” CEO, Ravi Kumar S, said.
Bookings rose 21% year-on-year in the quarter, while trailing 12-month bookings increased 11% to $29.6 billion, implying a book-to-bill ratio of about 1.4. The company signed seven large deals during the quarter, including one mega deal with a total contract value of $500 million or more, compared with 12 deals in the preceding quarter.
Project Leap
Cognizant also announced Project Leap, a restructuring programme aimed at creating a more cost-efficient operating model through AI-led productivity gains. The initiative is expected to generate savings of $200–$300 million in 2026. Of this, $200–$270 million has been earmarked for employee severance and related costs, with $30–$50 million for other charges. The net impact has been factored into margin guidance, with an expected expansion of 20–40 basis points.
“The Project Leap programme is a key step toward accelerating our vision of the operating model of the future and funding continued investments in AI, competitive offerings and the re-skilling of our workforce,” CFO Jatin Dalal said.
The company did not disclose the number of employees likely to be affected. Headcount stood at 357,600 at the end of the quarter, up by 6,000 sequentially and 21,300 year-on-year. Voluntary attrition remained stable at 12.3%.
Cognizant said it had over 5,000 AI engagements during the quarter, with nearly 40% of its code being AI-assisted. Addressing concerns around AI-led pricing pressure, Kumar said strong deal wins reflected client confidence despite slower conversion cycles.