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Introduction & Market Context
Cognizant Technology Solutions (NASDAQ:CTSH) released its second quarter 2025 financial results on July 30, showing continued momentum with 8.1% year-over-year revenue growth and improved profitability. The company’s shares closed at $74.91, down 1.84% in regular trading before the results were announced.
The IT services provider demonstrated broad-based growth across all business segments and geographies, with the recently acquired Belcan contributing significantly to overall performance. Following strong Q1 results, Cognizant has maintained its growth trajectory and raised its full-year guidance, signaling confidence in its business outlook despite ongoing macroeconomic uncertainties.
Quarterly Performance Highlights
Cognizant reported Q2 2025 revenue of $5.25 billion, representing an 8.1% increase year-over-year on a reported basis and 7.2% in constant currency. The Belcan acquisition contributed approximately 400 basis points to this growth.
Profitability metrics showed notable improvement, with GAAP operating margin expanding to 15.6% from 14.6% in Q2 2024. Adjusted operating margin also reached 15.6%, up from 15.2% in the same period last year. Diluted earnings per share grew to $1.31 on both a GAAP and adjusted basis, compared to $1.14 (GAAP) and $1.17 (adjusted) in Q2 2024.
As shown in the following summary of Q2 2025 results:
Cash flow generation remained strong with operating cash flow of $398 million, up from $262 million in Q2 2024. Free cash flow increased to $331 million from $183 million in the prior-year period, reflecting improved operational efficiency.
Segment Analysis
All four of Cognizant’s business segments delivered year-over-year growth in Q2 2025, with Products & Resources showing the strongest performance, largely due to the Belcan acquisition.
The revenue breakdown by segment and geography reveals balanced growth across the company’s portfolio:
Health Sciences generated $1.55 billion in revenue, up 6.2% year-over-year (5.3% in constant currency). The segment has shown consistent growth over the past several quarters, with North America accounting for the majority of its revenue.
Financial Services, Cognizant’s largest segment alongside Health Sciences, posted revenue of $1.55 billion, representing a 6.9% increase year-over-year (6.0% in constant currency). This segment has shown steady improvement after experiencing negative growth in early 2024.
Products & Resources delivered the strongest growth among all segments, with revenue of $1.31 billion, up 16.0% year-over-year (14.7% in constant currency). However, it’s important to note that the Belcan acquisition contributed approximately 16 percentage points to this growth, indicating that the segment’s organic performance was relatively flat.
Communications, Media & Technology, the smallest segment, generated $841 million in revenue, up 3.1% year-over-year (2.2% in constant currency). This represents a recovery from the 2.7% decline reported in Q1 2025.
From a geographic perspective, North America remained Cognizant’s largest market with $3.91 billion in revenue (74.6% of total), growing 8.1% year-over-year. Europe contributed $1.0 billion (19.1% of total), increasing 9.6% year-over-year (4.0% in constant currency). The Rest of World accounted for $331 million (6.3% of total), growing 4.7% year-over-year (6.0% in constant currency).
Strategic Initiatives & Operational Metrics
Cognizant’s bookings momentum remained strong, with trailing twelve-month bookings reaching $27.8 billion, up 6% year-over-year, representing a book-to-bill ratio of 1.4x. Q2 2025 bookings increased 18% compared to the same period last year, indicating robust demand for the company’s services.
The following chart illustrates the consistent growth in trailing twelve-month bookings:
Total (EPA:TTEF) headcount increased to 343,800 at the end of Q2 2025, up from 336,300 a year ago. This growth includes employees added through the Belcan acquisition. Trailing 12-month voluntary attrition for technical services decreased slightly to 15.2% from 15.8% in the previous quarter but remains higher than the 13.6% reported in Q2 2024.
The company maintained strong utilization rates, with blended utilization excluding trainees at 85%, unchanged from Q1 2025 and up from 83% in Q2 2024.
Cognizant continued to return value to shareholders through share repurchases and dividends. For the trailing 12 months, the company repurchased $1.19 billion worth of shares and paid $607 million in dividends. Cash and short-term investments stood at $1.81 billion at the end of Q2 2025, down from $2.24 billion a year ago, partly due to capital allocation activities.
Forward Guidance
Based on its strong performance in the first half of 2025, Cognizant raised its full-year guidance. The company now expects 2025 revenue to be between $20.7 billion and $21.1 billion, representing growth of 4.7% to 6.7% year-over-year (4.0% to 6.0% in constant currency).
Adjusted operating margin is projected to be between 15.5% and 15.7%, while adjusted diluted EPS is expected to range from $5.08 to $5.22. For Q3 2025, Cognizant anticipates revenue of $5.27 billion to $5.35 billion, representing growth of 4.6% to 6.1% year-over-year (3.5% to 5.0% in constant currency).
The detailed guidance is presented in the following slide:
This updated outlook builds on the momentum seen in Q1 2025, when the company reported an EPS of $1.23 against a forecast of $1.20 and revenue of $5.1 billion. The continued strong performance in Q2 and raised guidance suggest that Cognizant is successfully executing its strategy despite macroeconomic uncertainties that have affected client decision-making in certain sectors.
The company’s focus on AI-driven productivity and cost optimization measures, highlighted in previous earnings calls, appears to be yielding positive results as reflected in the improved operating margins and strong bookings growth.
Full presentation:
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