A global IT and professional services company, Cognizant helps organizations modernize their technology and adopt artificial intelligence, offering consulting, software development, and business process services across industries like health, finance, and retail. It began in 1994 in Chennai, India, as an in-house tech unit of Dun & Bradstreet before spinning off in 1996 and taking a name drawn from the Latin "cognoscere," meaning "to get to know." One of the world's largest IT services firms, it keeps a workforce of roughly three hundred fifty thousand people, most based in India, under its global delivery model.
Q2 2026 revenue rose 5.8% to $5,413M while gross margin fell 0.8pt to 32.8% year over year
fell to 32.8%, its lowest in the reported quarterly series. rose 5.8% to $5,413M and rose 3.7% to $1.39, with growth led by Financial Services and a $1,000M funding $1,153M of buybacks. The company is growing but compressing on delivery cost and cash generation.
Key takeaways
rose 5.8% to $5,413M and 1.5% from Q1, with Financial Services up 12.4% in Q1 carrying into the first half and third-party product sales adding about 140 in Q1 and 170 bps in Q2 per the MD&A.
declined 0.8pt to 32.8% and 0.9pt from Q1, as cost of revenues rose from third-party product sales and higher compensation while fell on efficiencies.
fell 1.2% to $843M and was 15.6%, down 1.1pt ; the Q1 comparison included a $62M property sale gain, while Q2 MD&A shows operating margin at 15.9% on rupee and an $81M liability reversal.
Section summaries
Management's Discussion and Analysis
Q2 2026 revenue grew 4.5% to $5,481M, driven by large deal ramp-ups and AI demand; GAAP operating margin rose to 15.9%.
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increased 4.5% (4.1% ) to $5,481M, led by (+12.0%) and aided by large deal ramp-ups, AI/analytics demand, and third-party product sales contributing 170 to growth.
Project Leap incurred $84M in separation costs in Q2 against a $230M–$320M 2026 guide, with $200M–$300M in-year savings earmarked for AI and upskilling.
fell 31.5% to $274M and fell 38.7% to $198M, driven by higher incentive compensation payments and a $1,000M alongside $1,153M of share repurchases.
was $662M, down 0.2% , and rose 3.7% to $1.39, aided by a $34M in Q1 from an advance pricing agreement.
What changed
Days sales outstanding rose to 84 days in Q1 from 81 at year-end 2025 and was flagged to be watched; the Q2 MD&A does not state a new figure, leaving the collection-period rise unaddressed this quarter.
Financial Services constant-currency growth was flagged after Q1's 12.4% rise; the Q2 MD&A cites Financial Services up 12.0% in its 4.5% Q2 growth view, confirming the strength held.
Project Leap was flagged in Q1 as a new $230M–$320M program; Q2 reports $84M incurred, tracking within guide with savings still expected in-year.
and 3Cloud acquisition was flagged to watch against margin; Q2 MD&A notes acquisition dilution partly offset the 100 rupee to , consistent with prior quarters.
The non-cash tax charge of $390M hit Q3 2025 and was flagged for further items; Q1 2026 shows a $34M favorable discrete item instead, and no new OBBBA charge appears in Q2.
What to watch
Days sales outstanding next quarter after the Q1 rise to 84 days to see if collections keep pace with .
Project Leap cumulative costs and realized savings against the $230M–$320M and $200M–$300M guides and their effect on and adjusted .
trajectory after the fall to 32.8%, to see if third-party product mix and compensation keep pressing it down.
Financial Services growth in Q3 2026 to confirm the 12.0%–12.4% run rate holds.
improved 30 to 15.9%, benefiting from operational efficiencies and a 100 bps from Indian rupee , partially offset by higher compensation costs and from acquisitions.
Project Leap restructuring incurred $84M in employee separation costs; total expected costs of $230M–$320M in 2026, with in-year savings of $200M–$300M to fund AI and workforce investments.
SG&A expenses declined 2.1% as a percentage of , primarily due to an $81M partial reversal of a 2019 India Defined Contribution Obligation liability.
Liquidity was supported by $1,051M in cash and short-term investments and a $1,000M draw on the ; $1,153M was used for share repurchases in Q2.
Outlook notes continued client focus on AI transformation, potential impacts from India labor law reforms and tax treaty changes, and ongoing investments in AI capabilities.
Quantitative and Qualitative Disclosures About Market Risk
During the three months ended June 30, 2026, we borrowed $1,000 million under our revolving credit facility. The borrowing did not have a material impact on our exposure to market risk from changes in interest rates. Aside from the borrowing, there have been no material changes…
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During the three months ended June 30, 2026, we borrowed $1,000 million under our revolving credit facility. The borrowing did not have a material impact on our exposure to market risk from changes in interest rates. Aside from the borrowing, there have been no material changes in our quantitative and qualitative disclosures about market risk from those
Cognizant Technology Solutions 42 June 30, 2026 Form 10-Q
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disclosed in "Part II, Item 7A, Quantitative and Qualitative Disclosures about Market Risk" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Except as disclosed in “Part II, Item 1A, Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, there have been no material changes in our risk factors from those disclosed in "Part I, Item 1A, Risk Factors" in our Annual Report on For…
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Except as disclosed in “Part II, Item 1A, Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, there have been no material changes in our risk factors from those disclosed in "Part I, Item 1A, Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.