AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 3/6 · 18/10/2026
Moat31
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 1/4 · Client knowledge, critical projects and transition fees provide limited relationship friction. Inexpensive termination and concurrent use of providers weaken structural protection; no exclusive resource or comparative cost advantage is demonstrated.
durability · 1/4 · Historical technological displacement is realized adverse evidence. Current deal demand provides an offset, but does not establish protection across technology cycles.
customer dependency · 2/4 · Operationally critical work and large-deal revenue conversion support meaningful engagement indirectly. Customer dependency is mixed because clients retain exit and spending flexibility; no renewal rate or measured migration burden is supplied.
erosion resilience · 1/4 · New demand and efficiencies show adaptation, but historical service displacement and continuous provider competition leave protection fragile. Prospective AI pricing risks are not treated as realized price declines.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · — · The supplied results do not isolate realized service prices, discounts or successful cost pass-through. Competitive pressure and prospective AI pricing risk cannot establish an observed pricing outcome.
retention · 2/4 · Reported satisfaction and large-deal revenue ramp support ongoing engagement indirectly. Deal wins include new demand and do not prove renewals; inexpensive exits limit retention protection.
margin resilience · 2/4 · Adjusted operating margin improved from 15.1% in 2023 to 15.8% in 2025 and from 15.5% to 15.8% in first-half comparisons. Efficiencies and currency benefits offset compensation and acquisition pressures. This demonstrates operating resilience, with adjustment and currency limitations, rather than pricing power.
contractual freedom · 1/4 · Many clients can terminate cheaply, reduce spending and seek renegotiation, limiting Cognizant's ability to preserve favorable terms. Upfront transition fees offer partial protection.
Predictability94
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 2.80
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 1.12
Financial strength—
Missing required inputs: debtFcfGrade, netDebtEbitGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 100.00
- Interest coverage (x)
- 91.59
- Current ratio (x)
- 2.14
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -1.97
- 3-year average SBC / revenue (%)
- 0.88
- cashConversionGrade
- 97.56
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Operating cash flow of $2.883 billion in 2025 exceeded property purchases of $288 million. First-half 2026 repurchases reduced outstanding shares despite equity issuance. Substantial acquisition consideration, purchase commitments and new restructuring costs make the assessment mixed; acquisition returns and current cash-flow coverage of all spending are not established.
incentive alignment · 2/4 · Existing PSU awards use relative TSR, and the approved 2025 cash incentive was actually paid in March 2026. The committee's discretionary 200% strategic-initiative payout tempers confidence in objective alignment. Actual executive holdings and full award outcomes are missing.
execution · 3/4 · Reported 2025 growth, large-deal conversion into revenue, improved multi-year adjusted margins and cash generation demonstrate strong operating execution. This uses operating outcomes rather than CEO reputation. Acquisition contributions and currency benefits limit attribution, while Project Leap's ultimate results remain unproven.
governance · 2/4 · Annual elections, an independent chair, shareholder meeting rights and a predominantly independent board support accountability. The adverse discrimination verdict and subsequent court finding are concrete counterevidence to governance effectiveness, although the supplied record does not establish final individual liabilities.
Evidence
As an AI builder, we provide deep expertise at the intersection of industry and technology, combining our perspective with extensive knowledge of our clients' organizations to build industry-specific platforms and incorporate context into systems, AI models and custom solutions.
MD&A, Executive Summary: client knowledge and industry-specific solutions · Filed 29/07/2026
Many of our engagements involve projects that are critical to the operations of our clients’ business and provide benefits that are difficult to quantify.
Client engagement liability disclosure: operationally critical projects · Filed 12/02/2026
We do not consider set up or transition fees paid upfront by our customers to represent a financing component, as such fees are required to encourage customer commitment to the project and protect us from early termination of the contract.
Revenue recognition: upfront setup and transition fees · Filed 12/02/2025
Cognizant sustained its large deal momentum by signing 28 deals, each with a total contract value (TCV) exceeding $100 million.
Shareholder letter: 2025 large-deal signings · Filed 17/04/2026
The Company’s net promoter score—a key indicator of client satisfaction and loyalty—reached its highest level in four years.
Shareholder letter: reported net promoter score · Filed 17/04/2026
Revenue growth was positively impacted by the ramp up of several recently won large deals and increasing demand for our intuitive operations and automation services as well as our AI and analytics services.
MD&A, Executive Summary: large-deal ramp and service demand · Filed 29/04/2026
Consistent with industry practice, many of our contracts with clients are short-term or can be terminated by our clients with short notice and without significant early termination cost.
Risk Factors: contract duration and termination rights · Filed 12/02/2026
Even if not terminated, clients may be able to delay, reduce or eliminate spending on the services and solutions we provide, choose not to retain us for additional stages of a project, try to renegotiate the terms of a contract or cancel or delay additional planned work.
Risk Factors: client spending discretion and renegotiation · Filed 12/02/2026
In addition, concurrent use by many clients of multiple professional service providers means that we are required to be continually competitive on the quality, scope and pricing of our offerings or face a reduction or elimination of our business.
Risk Factors, competition: concurrent use of multiple providers · Filed 14/02/2024
Some of these technological changes have reduced or replaced the demand for some of our historical services and solutions and will continue to do so in the future.
Risk Factors: realized technological displacement of historical services · Filed 12/02/2026
As AI-based technologies or other forms of automation evolve, demand for some services that we currently perform for our clients may be reduced, and our ability to obtain favorable pricing or other terms for some of our services may be diminished.
MD&A, Business Outlook: potential automation effects on demand and pricing · Filed 29/07/2026
The following table presents a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure for the six months ended June 30: (Dollars in millions, except per share amounts) 2026 % of Revenues 2025 % of Revenues GAAP income from operations and operating margin $ 1,717 15.8 $ 1,670 16.1 Project Leap(1) 84 0.8 — — India Defined Contribution Obligation(2) (81) (0.8) — — (Gain) on sale of property and equipment(3) — — (62) (0.6) Adjusted Income from Operations and Adjusted Operating Margin $ 1,720 15.8 $ 1,608 15.5 GAAP diluted EPS $ 2.75 $ 2.65 Effect of above adjustments, pre-tax 0.01 (0.13) Non-operating foreign currency exchange (gains) losses, pre-tax (4) (0.05) (0.02) Tax effect of above adjustments (5) 0.05 0.05 Adjusted Diluted EPS $ 2.76 $ 2.55 (1)Consists of employee separation, facility exit and other costs incurred in connection with Project Leap.
Non-GAAP reconciliation: first-half 2026 operating margins and adjustments · Filed 29/07/2026
In the second quarter of 2026, segment operating margins across all our segments were positively impacted by operational efficiencies and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs and the dilutive impact of our recently completed acquisitions.
Segment results: efficiencies, currency benefits and cost pressures · Filed 29/07/2026
(Dollars in millions, except per share data) 2023 % of Revenues 2024 % of Revenues 2025 % of Revenues GAAP income from operations and operating margin $ 2,689 13.9% $ 2,892 14.7% $ 3,389 16.1% (Gain) on sale of property and equipment(1) — — — — (62) (0.3) NextGen charges(2) 229 1.2 134 0.6 — — Adjusted income from operations and adjusted operating margin $ 2,918 15.1% $ 3,026 15.3% $ 3,327 15.8% GAAP diluted EPS $ 4.21 $ 4.51 $ 4.56 Effect of the above adjustments, pre-tax 0.45 0.27 (0.13) Effect of non-operating foreign currency exchange losses (gains), pre-tax(3) — 0.04 (0.04) Tax effect of above adjustments(4) (0.11) (0.07) 0.09 One-time income tax expense related to the enactment of the OBBBA(5) — — 0.80 Adjusted diluted EPS $ 4.55 $ 4.75 $ 5.28 Net cash provided by operating activities $ 2,330 $ 2,124 $ 2,883 Purchases of property and equipment (317) (297) (288) Proceeds from sale of property and equipment — — 70 Free cash flow $ 2,013 $ 1,827 $ 2,665 (1) During 2025, we realized a gain of $62 million on the sale of an office complex in India.
GAAP reconciliation: 2023–2025 operating results, operating cash flow and capital spending · Filed 17/04/2026
Cognizant Technology Solutions 6 June 30, 2026 Form 10-Q Table of Contents COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (in millions, except per share data) Class A Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity Shares Amount Balance, December 31, 2025 479 $ 5 $ 12 $ 15,158 $ (160) $ 15,015 Net income — — — 662 — 662 Other comprehensive income (loss) — — — — (66) (66) Common stock issued, stock-based compensation plans 1 — 17 — — 17 Stock-based compensation expense — — 46 — — 46 Repurchases of common stock (6) — (58) (390) — (448) Dividends declared, $0.33 per share — — — (158) — (158) Balance, March 31, 2026 474 5 17 15,272 (226) 15,068 Net income — — — 636 — 636 Other comprehensive income (loss) — — — — 25 25 Common stock issued, stock-based compensation plans 1 — 12 — — 12 Stock-based compensation expense — — 53 — — 53 Repurchases of common stock (23) — (71) (1,103) — (1,174) Dividends declared, $0.33 per share — — — (158) — (158) Balance, June 30, 2026 452 $ 5 $ 11 $ 14,647 $ (201) $ 14,462 (in millions, except per share data) Class A Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity Shares Amount Balance, December 31, 2024 495 $ 5 $ 13 $ 14,686 $ (296) $ 14,408 Net income — — — 663 — 663 Other comprehensive income (loss) — — — — 131 131 Common stock issued, stock-based compensation plans 1 — 19 — — 19 Stock-based compensation expense — — 42 — — 42 Repurchases of common stock (3) — (55) (155) — (210) Dividends declared, $0.31 per share — — — (154) — (154) Balance, March 31, 2025 493 5 19 15,040 (165) 14,899 Net income — — — 645 — 645 Other comprehensive income (loss) — — — — 208 208 Common stock issued, stock-based compensation plans — — 14 — — 14 Stock-based compensation expense — — 48 — — 48 Repurchases of common stock (4) — (67) (305) — (372) Dividends declared, $0.31 per share — — — (154) — (154) Balance, June 30, 2025 489 $ 5 $ 14 $ 15,226 $ 43 $ 15,288 The accompanying notes are an integral part of the unaudited consolidated financial statements.
Statements of stockholders' equity: first-half 2026 repurchases, issuance and dividends · Filed 29/07/2026
The allocations of preliminary purchase price to the fair value of the aggregate assets acquired and liabilities assumed were as follows: (in millions) 3Cloud Astreya Total Weighted Average Useful Life Cash $ 3 $ 31 $ 34 Trade accounts receivable 26 45 71 Other current assets 2 24 26 Property and equipment and other noncurrent assets 2 18 20 Operating lease assets — 2 2 Non-deductible goodwill 119 407 526 Tax-deductible goodwill 477 — 477 Customer relationship assets 130 250 380 9.2 years Other definite-lived intangible assets 2 1 3 1.0 year Other current liabilities (30) (32) (62) Deferred income tax liabilities, net (3) (68) (71) Other noncurrent liabilities — (13) $ (13) Purchase price, inclusive of contingent consideration1 $ 728 $ 665 $ 1,393 (1)The purchase price for Astreya includes a contingent consideration component with a maximum payout of $25 million, valued at $25 million at the date of acquisition, which is contingent upon achievement of certain business outcomes.
Note 3, Business Combinations: acquisition consideration and preliminary asset allocations · Filed 29/07/2026
See Note 12. Project Leap charges for each of the three and six months ended June 30, 2026 were $84 million and included $56 million of employee separation costs and $28 million of other costs.
Note 4, Restructuring Charges: incurred Project Leap costs · Filed 29/07/2026
Relative total shareholder return (TSR) To incentivize shareholder return, relative TSR is utilized as a performance metric for our PSU awards.
Compensation discussion: relative TSR metric for PSU awards · Filed 17/04/2026
2025 Annual cash incentive (ACI) The 2025 ACI award design, as well as the target award amounts for applicable senior executives, including our NEOs, were approved by the Compensation Committee on March 3, 2025, cover a performance period of January 1 through December 31, 2025 and were paid on March 13, 2026.
Compensation discussion: approved 2025 annual cash incentive and actual payment date · Filed 17/04/2026
the Committee determined that a payout of 200% of target was appropriate for the portion of the ACI tied to strategic initiatives.
Compensation discussion: discretionary strategic-initiative payout determination · Filed 17/04/2026
Key governance practices Shareholder rights and engagement Board of Directors Annual director elections / no classified Board Each share of Company common stock is entitled to one vote on matters put to a shareholder vote Shareholder right to call a special meeting (10% threshold) Annual vote to ratify executive compensation Annual vote to ratify selection of independent registered public accounting firm No poison pill Proxy access Majority of independent directors (12 of 13 director nominees) Separate independent Chair of the Board and CEO positions Annual Board and committee self-evaluations Majority voting in uncontested director elections A director who experiences a material change in job responsibilities (other than retirement) is required to offer to resign Regular executive sessions of independent directors Directors limited to service on no more than three other public company boards (or one other board if the director is a public company NEO) Board member independence Other than Mr.
Corporate governance: board structure and shareholder rights · Filed 17/04/2026
The case proceeded to a retrial on September 24, 2024, and on October 4, 2024, the jury returned a verdict in favor of plaintiffs.
Litigation disclosure: October 2024 jury verdict · Filed 29/07/2026
On December 5, 2025, the USDC-CDCA awarded plaintiffs $16 million in interim attorneys’ fees and costs; and separately found in plaintiffs’ favor on their claim that Cognizant policies had a disparate impact on non-South Asian and non-Indian employees in view of the same evidence presented at the retrial.
Litigation disclosure: December 2025 court finding and interim fee award · Filed 29/07/2026
Additionally, we have purchase commitments of approximately $2.3 billion that will be paid over the next five years, of which approximately $800 million will be paid during the next twelve months.
Liquidity discussion: purchase commitments · Filed 12/02/2026
The Company delivered full year revenue of $21.1 billion, or year-over-year growth of 7.0% (6.4% in constant currency(2)) and expanded GAAP and adjusted operating margin by 140 and 50 basis points year-over-year,(2)respectively, while advancing our talent strategy, partnership ecosystem and AI platforms.
Shareholder letter: reported 2025 revenue growth and operating performance · Filed 17/04/2026
