CTSH Earning Date, Transcript Summary & Report

Q1 Revenue Growth Analysis: First quarter revenue grew by 8.2% year over year in constant currency to $5.1 billion, driven by the Belcan acquisition and organic growth in Health Sciences and Financial Services.

Health Sciences Growth Surge: Health Sciences segment grew over 11% year over year in constant currency, with broad-based growth across payer, provider, and life sciences.

Financial Services Growth: Financial Services segment grew 6.5% year over year in constant currency, with healthy discretionary spending as clients invest in cloud and data modernization.

Operating Margin Improvement: Adjusted Operating Margin improved by 40 basis points year over year to 15.5%, on track to achieve full year guidance of 20 to 40 basis points of expansion.

Consistent EPS Growth: Adjusted EPS grew 10% year over year, marking the sixth consecutive quarter of year over year growth.

Bookings Growth Outlook: Bookings grew 3% year over year on a trailing twelve month basis, providing a healthy backlog to support the outlook for the year.

AI Engagement Growth: Cognizant has approximately 1,400 early Gen AI engagements, up from 1,200 at the end of the fourth quarter, indicating strong momentum in AI initiatives.

AI Software Investment Strategy: The company is investing heavily in AI-powered software-led engineering, integrating expertise in embedded software and IoT with capabilities from recent acquisitions.

AI Training Center Initiative: Cognizant announced plans to establish a 14-acre immersive learning center in Chennai, aiming to train 100,000 individuals annually in advanced AI technologies.

Award Recognition at Google Cloud: The company received several awards at Google Cloud Next 2025, including Data Analytics Global Partner of the Year and Retail Industry Solutions Partner of the Year.

Global Capability Centre Expansion: Cognizant's Global Capability Centre strategy is expanding, with new centers being established to support clients' operational strength and innovation.

Aerospace Hub Launch: Belcan opened an aerospace and defense hub in Toulouse and was named GE Aerospace Supplier of the Year, highlighting its strong market position.

Client Decision-Making Slowdown: April saw a slowdown in client decision-making and discretionary spending, particularly in health sciences and products and resources, indicating potential challenges ahead.

Bookings Decline Analysis: Bookings declined 7% year over year, driven by a decrease in the Rest of the World region, suggesting a weakening demand in certain markets.

Revenue Growth Deceleration: The company anticipates a deceleration in revenue growth for the second quarter, projecting a range of 5% to 6.5% year over year, reflecting the impact of the current macroeconomic environment.

Revenue Guidance Uncertainty: Despite a healthy backlog, the company acknowledges that the low end of their revenue guidance assumes further deterioration in demand, indicating uncertainty in future performance.

Intense Pricing Environment: The pricing environment for large deals is intense, with a focus on reducing total cost of ownership rather than outright rate card negotiations, which may pressure margins.

Revenue vs. Headcount Growth: The company has seen a widening gap between organic revenue growth and headcount growth, raising concerns about sustainability and operational efficiency moving forward.