US-based IT major Cognizant, which has a substantial number of employees in India, on Wednesday reported about 18.7 per cent increase in net income to $648 million in the December quarter.
Illustration: Dado Ruvic/Reuters
Key Points
- Cognizant’s Q4 net income increased by 18.7% year-over-year, reaching $648 million, driven by AI-driven efficiencies and strong performance in financial services.
- The company secured a $1 billion mega deal in Q4 2025, contributing to a 4.9% increase in revenue compared to the previous year.
- Cognizant expects revenue growth of 4.9-7.4% for the full year 2026, with plans to hire 24,000-25,000 freshers to expand its workforce.
- Cognizant is focusing on leveraging AI to shift high-value tech expertise to entry-level employees, decoupling revenue growth from headcount growth.
- Cognizant plans to return $1.6 billion to shareholders in 2026 through share repurchases and dividends, demonstrating financial strength.
Cognizant, which follows a January-December financial year, had posted a net income of $546 million in the year-ago period.
The management attributed the margin strength to AI-driven efficiencies in both delivery and support functions, and said the firm expanded its EPS (earnings per share) faster than its revenue.
The company’s Q4 2025 revenue came in line with estimates at $5,333 million, increasing 4.9 per cent year-on-year from $5,082 million in Q4 2024, fuelled by a “robust momentum” in large deals and a standout performance in the financial services sector, which grew 9 per cent year-on-year in the fourth quarter.
The quarter was also marked by the signing of a massive $1 billion “mega deal,” one of five such deals secured during the year.
For the first quarter of 2026, Cognizant expects revenues to be in the range of $5.36-5.44 billion, growth of 4.8-6.3 per cent (2.7-4.2 per cent in constant currency).
For the full year (2025), the Nasdaq-listed IT services firm’s revenue rose 7 per cent to $21.10 billion.
While the company signed 28 large deals — a figure similar to the previous year — the total contract value (TCV) of these deals surged about 50 per cent. Growth was also supported by strategic M&A, for which the company said it has set aside close to a billion dollars that will fructify during the course of 2026.
Giving its guidance for the full-year of 2026, Cognizant said it expects revenues of $22.14-22.66 billion, a growth of 4.9-7.4 per cent (4-6.5 per cent in constant currency).
The company exuded confidence that the foundation built over the last three years positions it well to carry the momentum in the coming years.
“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. We have invested in our talent, strengthened our partnership ecosystem and advanced our AI platforms to help clients scale AI across the enterprise,” Cognizant CEO Ravi Kumar S said.
These investments, he noted, helped Cognizant sign 28 large deals in 2025, with large deal TCV growth of nearly 50 per cent year-on-year.
“We are confident that the foundation we built over the last three years positions us well to carry this momentum in the years ahead,” Kumar asserted.
Fourth quarter bookings included 12 large deals, which are deals with a total contract value of $100 million or greater, including two mega deals (deals with a total contract value of $500 million or greater), according to a company statement.
Cognizant’s workforce and hiring plans
Cognizant’s total employee count as of December 31, 2025, was 351,600, an increase of 1,800 from September 30, 2025 and 14,800 from December 31, 2024.
Of the 20,000 graduates hired in 2025, the company said 16,000 are already “in production” working on client projects, while the remaining 4,000 are undergoing training.
In 2026, Cognizant aims to hire about 24,000-25,000 freshers in 2026 as part of its strategy to expand its “bottom of the pyramid” workforce.
Kumar said the company is focused on a “broader pyramid” strategy, shifting high-value tech expertise to entry-level employees through the use of artificial intelligence (AI).
He noted the non-linearity of revenue and margins, and said the company is decoupling revenue growth from headcount growth. For 2025, revenues grew 6.4 per cent (in constant currency) while the workforce only increased 4 per cent, resulting in a 5 per cent increase in revenue per person.
“This year we plan to increase this by an order of magnitude, about 20 per cent, so we would be very happy to land around 24,000-25,000 for 2026,” company CFO Jatin Dalal said.
Tax benefits and future outlook
Furthermore, he said the long-term tax holiday announced in the Union Budget for global cloud firms using Indian data centres has the opportunity to make India a global hub for AI and services in the next few years.
The Budget proposals will have “far-reaching consequences” for the tech landscape, and measures such as clubbing various IT service segments under a unified tax framework with an expanded safe harbour limit, all of which point towards a big vision, Dalal said.
On the tax holiday till 2047 for data centres, he said it provides an “opportunity to make India a home for AI and services, a combined hub for the world in the next few years.
Share repurchase program
The company repurchased 4.3 million shares for $325 million during the fourth quarter under its share repurchase program.
For the full year, the company repurchased 17.4 million shares for $1.3 billion under the program. As of December 31, 2025, there was $1.9 billion remaining under the share repurchase authorisation.
“In 2026, (the company) expect to return $1.6 billion to shareholders through share repurchases and dividends, including $1 billion of share repurchases,” Cognizant said.
