Cognizant Q3 Results: A Mixed Bag for Indian Investors
US-based IT major Cognizant, which has a substantial number of employees in India, on Wednesday reported a 53% drop in net income for Q3 2025 to $274 million, hit by a one-time, non-cash income tax expense of $390 million.
Revenue Growth: A Silver Lining
The company’s revenues, however, rose 7.3% year-over-year to $5,415 million for the quarter ended September 2025, driven by gains coming in from its investments into AI, and it has raised the lower end of the revenue growth forecast for the full fiscal year. To learn more about Artificial Intelligence in stock market, click here.
Investing in AI: A Key Growth Driver
Cognizant had earned a revenue of $5,044 million in the year-ago period. The Nasdaq-listed IT services firm raised the lower end of its full-year revenue growth forecast, pegging it at $21.05-21.10 billion, as against $20.7-21.1 billion earlier. For more information on Nasdaq listed companies in India, visit our website.
Q4 Expectations: What to Watch Out For
For the fourth quarter, Cognizant expects revenues to be in the range of $5.27-5.33 billion. Cognizant CEO Ravi Kumar S said Q3 2025 marks the company’s fifth consecutive quarter of year-over-year organic revenue growth, and its strongest sequential organic growth since 2022. To know more about Indian IT sector trends, read our latest article.
Transitioning to an AI Builder: A Strategic Move
Kumar informed that Cognizant, over the last 2.5 years, has been investing in transitioning from a traditional system integrator to an AI builder. “AI builder is a company which is looking at enterprise journeys on AI productivity, personalising AI and actually identifying an enterprise…We invested in capability…intellectual property platforms…that is starting to come together for all the numbers,” he said, highlighting gains that accrued to the company from the strategy. Learn more about AI in stock market trading and its implications.
Revenue and Margin Growth: A Positive Trend
Revenue per person, trailing for 12 months, has gone up by 8%, while the margin per person is up by 10%. “…(this) is indicative of the fact that we are starting to see the embrace of AI in enterprise, and we are starting to win market share. With this performance, we are literally at the top of the winner’s circle amongst our peer group, and are very, very excited about sustaining that momentum for the future,” he asserted. For insights on stock market news India, follow our blog.
One-Time Hit: A Non-Cash Expense
Cognizant’s three-vector AI builder strategy is gaining ground, and early investments in AI-led platforms and IP on the edge will help power growth in the years ahead, Kumar noted. As much as 30% of the company’s code is written by machines now, translating into greater productivity. The one-time hit was due to a non-cash income tax expense of $390 million, which was a result of the One Big Beautiful Bill Act (OBBBA) enacted in the United States. To understand more about US tax laws and Indian companies, read our analysis.
Bookings and Hiring: A Mixed Picture
Cognizant’s third-quarter bookings declined 5% year-over-year, but included six large deals(those with a total contract value of $100 million or greater). The company added 6,000 employees, mostly freshers, during the July-September period, bringing its total headcount to 349,800 at the end of the quarter. Cognizant management said the firm is on track to hire 15,000-20,000 freshers this year. For information on Indian stock market trends, visit our website.
Full-Year Guidance: A Revised Outlook
Jatin Dalal, Chief Financial Officer, said the company observed broad-based growth across segments and geographies, including noteworthy performance in North America. “We have increased our full-year revenue guidance to 6.0-6.3% year-over-year constant currency growth, above our prior range and deployed $1 billion through share repurchases through Q3, underscoring our confidence in our growth strategy,” he said. To know more about stock market investing strategies, follow our blog.
Share Repurchases and Dividends: A Return to Shareholders
He added that the company has implemented hikes for 80% of its employees, effective Nov. 1. Cognizant’s top management said the company has significantly reduced its dependency on H1B and increased local hiring, alongside stepping up investments in automation, and does not see any material impact of the increased H1B fees on its finances and operations. The company repurchased 6.3 million shares for $450 million during the third quarter under its share repurchase program. As of Sept. 30, 2025, there was $2.2 billion remaining under the share repurchase authorisation. In October 2025, the company declared a quarterly cash dividend of $0.31 per share for shareholders of record on Nov. 18, 2025. This dividend will be payable on Nov. 26, 2025. For latest updates on Sensex and Nifty trends, visit our website.