01—Abstract
Summary
Summary of the 10-Q filed July 31, 2025. Cited figures are marked; the original filing is the authoritative source.
Cognizant Technology Solutions Corporation (CTSH) reported solid financial performance for the second quarter and first half of 2025.
Revenue showed a healthy increase of 8.1% year-over-year for the quarter, reaching $5.245 billiona, bolstered by the recent acquisition of Belcan which contributed significantly to growth, particularly in the Products and Resources segment. Net income for the quarter rose by 14.0% to $645 million, with diluted EPS increasing to $1.31. The company maintained a strong operating margin of 15.6% for the quarter, reflecting benefits from operational efficiencies and cost-saving programs like NextGen, partially offset by increased compensation costs and integration expenses from acquisitions.
Looking ahead, Cognizant expects continued client focus on AI-driven transformations, while also navigating macroeconomic uncertainties and evolving digital technologies. A notable development is the anticipated one-time, non-cash tax expense of approximately $400 millionb in Q3 2025 due to the repeal of U.S. R&E cost capitalization under the OBBBA.
Despite this, the company projects the OBBBA will reduce its cash taxes by $200 millionc in 2025. The company also continues its capital allocation strategy, repurchasing $354 million of its stock in Q2 2025 and returning value to shareholders through dividends.
02—Key points
Key Highlights
- Revenue increased by 8.1% to $5.245 billion in Q2 2025 compared to Q2 2024, with a constant currency growth of 7.2%.
- Net income for Q2 2025 grew by 14.0% to $645 million, resulting in diluted EPS of $1.31, up from $1.14 in the prior year.
- The acquisition of Belcan contributed approximately 400 basis points to overall revenue growth in Q2 2025.
- Operating margin remained strong at 15.6% for Q2 2025, an improvement from 14.6% in Q2 2024, driven by operational efficiencies and cost savings.
- Voluntary Attrition - Tech Services increased to 15.2% for the trailing twelve months ended June 30, 2025, compared to 13.6% in the prior year.
- The company anticipates a significant one-time, non-cash tax expense of approximately $400 million in Q3 2025 due to the OBBBA, but expects it to reduce cash taxes by $200 million in 2025.
- Cognizant repurchased $354 million of its Class A common stock in Q2 2025 under its authorized stock repurchase program.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed July 31, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $5.25B$4.85B | +8.1% |
| SG&A Expenses | $810.00M$781.00M | +3.7% |
| Operating Income | $817.00M$708.00M | +15.4% |
| Net Income | $645.00M$566.00M | +14.0% |
| EPS (Basic) | $1.31$1.14 | +14.9% |
| EPS (Diluted) | $1.31$1.14 | +14.9% |
| Shares Outstanding (Basic) | 492.00M497.00M | −1.0% |
| Shares Outstanding (Diluted) | 492.00M498.00M | −1.2% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in Q2 2025?
Revenue growth in Q2 2025 was primarily driven by the recent acquisition of Belcan, which contributed approximately 400 basis points to overall revenue growth. Growth was also supported by strong performance in the Financial Services and Health Sciences segments.
What is the expected impact of the OBBBA on Cognizant's financials?
The OBBBA, enacted in July 2025, is expected to result in a one-time, non-cash tax expense of approximately $400 million in Q3 2025 due to the repeal of the requirement to capitalize U.S. R&E costs. However, it is projected to reduce Cognizant's cash taxes by $200 million in 2025.
How did the company's operating margin perform in Q2 2025?
Cognizant achieved a GAAP operating margin of 15.6% in Q2 2025, an improvement from 15.2% in Q2 2024 (adjusted basis). This improvement was attributed to net savings from the NextGen program, operational efficiencies, and favorable foreign currency movements, partly offset by higher compensation costs and acquisition-related impacts.
What is the current status of Cognizant's stock repurchase program?
Cognizant repurchased approximately $354 million of its Class A common stock in Q2 2025. The stock repurchase program, authorized up to $13.5 billion, had a remaining balance of $2,693 million as of June 30, 2025. The company continues to return value to shareholders through share repurchases and dividends.
06—Continue