Cognizant Reports 7.5% Revenue Growth to $5.115 Billion in Q1 2025

Cognizant Technology Solutions Corporation reported a revenue increase of 7.5% for the first quarter of 2025, reaching $5.115 billion compared to $4.760 billion in the same period last year. The growth was attributed to a strong performance in the Health Sciences and Financial Services segments, as well as contributions from recent acquisitions, which accounted for approximately 400 basis points of the revenue increase. The company's net income also rose by 21.4% to $663 million, up from $546 million in the prior year, with diluted earnings per share increasing to $1.34 from $1.10.

The company's operating margin improved to 16.7%, up from 14.6% in Q1 2024, driven by operational efficiencies and net savings from the NextGen program. Adjusted operating margin also saw an increase, reaching 15.5% compared to 15.1% in the previous year. A notable factor in the financial results was a $62 million gain from the sale of an office complex in India, which positively impacted the GAAP operating margin. The absence of restructuring charges, which were $23 million in the prior year, further contributed to the improved profitability.

Cognizant's workforce decreased to approximately 336,300 employees as of March 31, 2025, down from 344,400 a year earlier, reflecting a voluntary attrition rate of 15.8% in its tech services division. The company continues to focus on enhancing its AI capabilities, which are integral to its service offerings, as it navigates a competitive landscape increasingly driven by digital transformation and automation.

In terms of operational metrics, the company reported a Days Sales Outstanding (DSO) of 81 days, an increase from 78 days at the end of 2024. Cognizant's cash and cash equivalents stood at $1.980 billion, down from $2.231 billion at the end of the previous year. The company also repaid $300 million of its revolving credit facility during the quarter, leaving no outstanding balance as of March 31, 2025.

Looking ahead, Cognizant anticipates continued demand for its services as clients focus on transforming into AI-ready and technology-driven businesses. The company plans to invest significantly in its AI capabilities to meet evolving client needs. However, it acknowledges potential challenges from macroeconomic factors and industry-specific changes that may impact demand for its services. The integration of the recently acquired Belcan is expected to have a modest near-term dilutive effect on operating margins due to associated expenses.