New Delhi: Cognizant Technology Solutions reported a strong rise in quarterly revenue for the third quarter ended September 30, 2025, despite a significant fall in net income due to a one-time tax charge. The Nasdaq-listed IT services company said its performance was supported by steady client demand, AI-driven transformation projects, and sectoral expansion across key business units.
Cognizant posted total revenue of $5.42 billion, up 7.4% year-on-year and 6.5% in constant currency, surpassing the upper end of its guidance. The company credited the growth to sustained investment in digital and artificial intelligence-led solutions, which continue to strengthen its presence across global markets.
The Products and Resources segment emerged as the fastest-growing division, recording $1.38 billion in revenue, a 13% rise from the same quarter last year. The Financial Services segment contributed $1.58 billion, up 6.2%, while Healthcare Services generated $1.60 billion, reflecting 5.9% growth. Revenue from Communications, Media, and Technology reached $850 million, marking a 4.2% increase.
Cognizant also reported trailing 12-month bookings of $27.5 billion, a 5% year-over-year increase, signaling steady deal flow and business visibility. In the first nine months of 2025, the company returned $1.5 billion to shareholders through dividends and share repurchases, and aims to increase total shareholder returns to $2 billion by year-end.
Profit Declines on One-Time U.S. Tax Expense
Net income for the quarter stood at $274 million, down 53% from $582 million in the same period last year. The sharp decline was primarily due to a one-time, non-cash tax expense of $390 million linked to new U.S. tax legislation. The charge resulted from the enactment of the One Big Beautiful Bill Act, which repealed earlier requirements to capitalize U.S.-based research and experimental costs. Companies must now expense such costs immediately, accelerating tax recognition in the current period.
As a result, GAAP earnings per share (EPS) came in at $0.56, compared to $1.17 in Q3 2024. Excluding the tax expense, adjusted EPS rose 11% year-over-year to $1.39, reflecting underlying operational improvement.
The company reported an operating margin of 16.0%, a 140-basis-point increase from the previous year. On an adjusted basis, the operating margin improved 70 basis points, supported by cost-optimization measures and improved delivery efficiencies.
The $390 million non-cash tax expense aligns with U.S. GAAP and IRS requirements, and the company’s disclosures comply with SEC regulations, ensuring transparency under the Sarbanes-Oxley Act.
While the legislative change affects only the timing of tax recognition and not cash flow, it materially impacted quarterly profitability across several U.S.-based multinationals.
Guidance Raised for Full-Year 2025
Following the third-quarter results, Cognizant raised the lower end of its full-year revenue guidance. The company now expects annual revenue in the range of $21.05 billion to $21.10 billion, compared to its earlier projection of $20.7 billion to $21.1 billion. It anticipates constant-currency growth of 6.0% to 6.3% for the year.
Management said ongoing investments in artificial intelligence, automation, and cloud-migration services continue to strengthen its deal pipeline across North America, Europe, and Asia-Pacific. Cognizant reaffirmed its commitment to maintaining high standards of financial governance and statutory compliance.
The company operates on a January–December financial year and follows consolidated reporting practices in accordance with U.S. GAAP and IRS regulations. It confirmed the application of updated accounting treatments under the amended U.S. tax code.
Cognizant remains optimistic about demand across digital and AI-driven services, supported by a growing portfolio of transformation projects and strong bookings. Management expects positive business momentum to continue into Q4.
