Cognizant Technology Solutions (NASDAQ:CTSH) shares climbed about 2% in premarket trading on Wednesday, recouping some of the more than 10% drop seen a day earlier, after the IT services group delivered better-than-expected fourth-quarter results and outlined a constructive outlook for 2026 supported by strong bookings and continued investment in artificial intelligence.
The sharp sell-off on Tuesday followed the launch of new plug-ins by Anthropic, which weighed broadly on IT services and BPO stocks. Sentiment improved after Cognizant’s earnings update.
For the fourth quarter, the company reported adjusted earnings per share of $1.35, ahead of analysts’ expectations of $1.32. Revenue reached $5.3 billion, slightly below the $5.31 billion consensus but up 4.9% year on year, or 3.8% on a constant-currency basis. Bookings in the quarter rose 9% year on year and included twelve large deals, two of which were mega-deals valued at more than $500 million each.
“I am deeply grateful to our over 350,000 employees who helped make 2025 a defining year for Cognizant in which we put our AI builder strategy in motion and returned to the ‘winner’s circle’ two years ahead of the target we set at our Investor Day,” said CEO Ravi Kumar.
For full-year 2025, Cognizant posted revenue of $21.1 billion, representing 7% growth from the prior year. Adjusted operating margin improved by 50 basis points to 15.8%, while adjusted earnings per share increased 11% to $5.28.
Looking ahead, Cognizant expects first-quarter 2026 revenue to range between $5.36 billion and $5.44 billion, implying growth of 4.8% to 6.3%. For the full year, the company forecasts revenue of $22.14 billion to $22.66 billion, corresponding to growth of 4.9% to 7.4% and topping the analyst consensus of $22.13 billion. Adjusted operating margin for 2026 is projected at 15.9% to 16.1%, an expansion of 10 to 30 basis points.
“In 2025, we outperformed the high end of our guidance ranges, combining top-tier revenue growth with 50 basis points of expanded adjusted operating margin and 11% adjusted EPS growth,” said CFO Jatin Dalal. “Our operational rigor allowed us to maintain a robust free cash flow conversion of more than 100% of net income.”
The company also announced a 6.5% increase in its quarterly dividend to $0.33 per share and said it plans to return $1.6 billion to shareholders in 2026 through a combination of dividends and share repurchases.