Key Highlights

  • CTSH shares fell about 10% pre-market to $59.70, from $66.36 prior close.
  • Q3 adjusted EPS of $1.49 beat the $1.46 consensus.
  • Q4 revenue guidance of $5.49 billion to $5.57 billion trails the $5.65 billion expected.
  • Q3 bookings fell 7% year on year.
  • Financial Services revenue grew 12% in the quarter.

Beat on Earnings, Miss on Outlook

Cognizant Technology Solutions Corporation (NASDAQ:CTSH) shares fell in pre-market trading after third-quarter results that beat estimates but came with a soft outlook. Revenue of $5.66 billion rose 4.6%, or 4.8% in constant currency. Adjusted earnings per share of $1.49 rose 7.2% and topped the $1.46 consensus, while adjusted operating margin of 16.3% widened 30 basis points.

Investors focused on bookings and guidance. Third-quarter bookings fell 7% from a year earlier, though trailing 12-month bookings of $28.7 billion rose 4%. Fourth-quarter revenue is guided to $5.49 billion to $5.57 billion, below the roughly $5.65 billion expected, and the full-year constant currency growth range was narrowed to 4.0% to 4.4%.

Cognizant is a global IT services and consulting firm headquartered in Teaneck, New Jersey, with roughly 360,000 employees. It operates through Financial Services, Health Sciences, Products and Resources, and Communications, Media and Technology segments.

Segments and Restructuring

Financial Services revenue of $1.77 billion grew 12.0% and Communications, Media and Technology grew 10.5%, helped by recent acquisitions that added about 210 basis points to overall growth. Health Sciences fell 1.1% and Products and Resources fell 0.9%. Reported earnings per share of $1.39 compared with $0.56 a year earlier, which included a one-time tax charge of $0.80.

Costs from Project Leap, a restructuring programme, were raised to a range of $180 million to $250 million, with $140 million to $160 million falling in 2026. The company expects about $200 million of in-year savings. Full-year 2026 adjusted EPS guidance is $5.72 to $5.79, up 8% to 10%, with adjusted operating margin near 16.1%.

Cash Returns and Valuation

Nine-month free cash flow was $1.58 billion, down from $1.88 billion a year earlier. In the quarter, the company repurchased 4.9 million shares for $258 million, with $2.1 billion remaining, and declared a quarterly dividend of $0.33 per share payable on November 25.

Before the move, Cognizant had a market capitalisation of about $29.9 billion, a trailing price-to-earnings ratio of 12.1, a forward ratio of 10.6 and a dividend yield of about 2%. Its 52-week range is $37.08 to $87.03, and the shares had rallied about 30% since July. The sector fund was down about 1.4% pre-market after Alphabet's results.

What Investors Will Weigh Next

The quarter shows margin gains and strength in financial services, but weaker bookings and a soft fourth-quarter guide leave questions over demand in health sciences and manufacturing clients. Large-deal conversion and the pace of Project Leap savings are the next markers.