Cognizant posts strongest sequential growth since 2022, raises full-year guidance to 6-6.3%

Chief Financial Officer Jatin Dalal said the upward revision in guidance was driven entirely by operational execution, not acquisitions.

Nasdaq-listed information technology (IT) company Cognizant reported one of its strongest quarterly performances in recent years, posting 6.5 percent year-on-year revenue growth in constant currency terms in the third quarter, and raising its full-year growth guidance.

Revenue for the quarter came in at $5.42 billion, beating Street estimates of $5.32 billion. Sequential revenue growth stood at 2.8 percent, which the company said was its best sequential performance since 2022. This also marked the fifth consecutive quarter of year-on-year revenue growth.

Adjusted operating margin for the quarter stood at 16 percent.

The robust performance sent the shares soaring by over 6 percent on the tech-heavy Nasdaq.

Cognizant raised its 2025 constant currency revenue growth guidance between 6 percent and 6.3 percent, up from the earlier band of 4 percent to 6 percent.

Chief Executive Officer Ravi Kumar S said the quarter’s performance reflected the company’s ongoing shift from a traditional systems integrator to what he called an AI builder.

“This has been the best quarter on sequential growth since 2022. Over the last two and a half years we have invested in transitioning ourselves from a system integrator to an AI builder. That is starting to resonate and that is starting to come together for the numbers we are reporting,” he said while addressing a press conference.

He added that over 30 percent of the company’s code is now being generated by AI, improving developer productivity and enabling larger fixed-price deals.

“We are excited about the fact that 30 percent of our code is written by machines and that number will keep going up. If you create more throughput at lower cost and higher velocity, customers spend more. It is a reinforcing flywheel,” he added.

Guidance, Business Outlook

Chief Financial Officer Jatin Dalal said the upward revision in guidance was driven entirely by operational execution, not acquisitions.

“We delivered 6.5 percent year-on-year growth and our sequential 2.8 percent growth is all organic. On the back of this strong performance, we have raised our full-year guidance to 6 to 6.3 percent,” he further said.

He added that margins have expanded every quarter this year, and the company expects to maintain the 15.7 percent margin level in Q4 despite furloughs and wage hikes beginning in November.

Cognizant signed six large deals in Q3, taking the year-to-date large deal count to 16, with total contract value up 40 percent year-on-year. Trailing twelve-month bookings grew 5 percent.

Employee Metrics

Cognizant ended Q3 with 349,800 employees, adding 6,000 employees sequentially and 9,700 year-on-year. The firm continues to focus heavily on fresher hiring, with 20,000 campus hires planned this year.

“We are increasing our headcount but reducing our cost of human capital by hiring at the bottom of the pyramid. You can create more throughput even with freshers because of AI-assisted engineering,” Kumar said.

Voluntary tech-services attrition stood at 14.5 percent on a trailing twelve-month basis.

AI Adoption, Enterprise Spending

Kumar said enterprises are now moving beyond AI experimentation into production-scale agentic automation.

“We are starting to see agentic journeys go from experimentation to full-blown production. This is an expansive opportunity and we believe we are leading the way as an AI-built company,” he said.

Cognizant continued to scale its Gen AI delivery through the quarter, reporting about 3,500 projects in Q3 from 2,500 in the previous quarter, marking a 40 percent increase.

“We are starting to see agentic journeys go from experimentation to full-blown production. This is pervasive,” Kumar said.