Cognizant Q1 net income rises 21.4%; maintains full year revenue guidance

IT services major Cognizant has kept its revenue growth guidance for the full year unchanged at 3.5–6 per cent in constant currency. This outlook is supported by a revival in discretionary spending in the banking, financial services and insurance (BFSI) segment, AI-led transformation across the client ecosystem, and inorganic growth.

The company reported net income of $663 million for the first quarter of calendar year 2025 (Q1 CY25), a 21.4 per cent increase over $546 million in the same quarter of CY2024.

Revenue for Q1 CY25 grew 8.2 per cent in constant currency to $5.1 billion, in line with its guidance. The acquisition of Belcan contributed around 400 basis points to the year-on-year revenue growth for 2025.

Unlike Indian IT services firms that follow an April–March financial year, Cognizant follows a January–December calendar year.

“We started the year on a strong note, delivering revenue and adjusted operating margin ahead of our expectations, reflecting our steadfast focus on the execution of our strategy over the last several years,” said Chief Executive Officer Ravi Kumar S.

Kumar added: “Today, productivity, cost reduction and resiliency are especially important, and we believe our differentiated AI and platform capabilities are helping clients navigate the near-term uncertainty while embarking on longer-term AI-led transformation.”

The company’s total contract value (TCV) for Q1 was down 7 per cent year-on-year. However, the trailing 12-month TCV stood at $26.7 billion.

Growth during the quarter was broad-based across verticals and geographies. Among verticals, health sciences—Cognizant’s largest segment—grew 11.4 per cent year-on-year, financial services rose 6.5 per cent, and products and resources was up 13.6 per cent, all in constant currency.

Among geographies, revenue from the US grew 9.7 per cent, Europe was up 3 per cent, and the rest of the world rose 7.1 per cent, all in constant currency.

“Our first-quarter performance reflects strong operational rigour in a period of elevated uncertainty. We delivered revenue above the high end of our guidance and expanded adjusted operating margin by 40 basis points year-on-year. This drove adjusted EPS growth of 10 per cent year-on-year, which was ahead of revenue growth,” said Chief Financial Officer Jatin Dalal.

Dalal added that in 2025, Cognizant expects to return about $1.7 billion to shareholders through buybacks and dividends, while maintaining flexibility to invest in growth.

The company plans to hire 20,000 freshers during calendar year 2025. However, its total headcount declined by 500 in Q1, bringing the workforce to 336,300.

For the second quarter, Cognizant has guided for revenue growth of 5–6.5 per cent in constant currency, representing sequential growth of minus 1 per cent to 5 per cent.

Addressing concerns about uncertainty due to tariff wars, Kumar said the company had not seen any impact or project ramp-downs. “So far we have not heard anything from our clients. We do not have much exposure to federal contracts. Belcan does have some work but it is very small,” he said.