AI Takeaway
Cognizant Technology Solutions delivered 5.8% revenue growth to $5.41B in Q1 2026, but operating margin contracted 110 bps to 15.6% and operating cash flow fell 31.5% YoY, reflecting rising cost pressures even as EPS edged up 3.7% to $1.39.
Revenue
$5.41B
++5.83% YoY
EPS (Basic)
$1.39
++3.73% YoY
Operating Income
$843M
-1.17% YoY
Filed · Source: SEC EDGAR 10-Q filing
Revenue grew 5.8% YoY to $5.41B in Q1 2026 from $5.12B in Q1 2025, marking a meaningful acceleration that suggests improving demand for IT services and digital transformation engagements across Cognizant's client base.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
Operating income declined 1.2% YoY to $843M despite higher revenues, causing operating margin to contract approximately 110 basis points to 15.6% from 16.7%, indicating that revenue growth is being outpaced by cost increases, potentially from wage inflation or investment in talent and capabilities.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
SG&A expenses were unchanged at $791M YoY (0.0% change), suggesting management exercised discipline on selling and administrative costs; however, this was insufficient to offset margin pressure from other cost lines such as cost of revenues.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
2 more insights available
Upgrade to unlockOperating cash flow dropped sharply by 31.5% YoY to $274M, which could signal working capital headwinds such as slower collections or higher upfront project costs. Sustained deterioration in cash conversion could limit Cognizant's financial flexibility for investments and buybacks.
Source: Source: 10-Q Cash Flow Statement (XBRL Financial Data)
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $1.40 versus the $1.36 analyst consensus — a +3.0% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $5.41B | $5.12B | +5.83% |
Operating Income | $843M | $853M | -1.17% |
Net Income | $662M | $663M | -0.15% |
EPS (Basic) | $1.39 | $1.34 | +3.73% |
EPS (Diluted) | $1.39 | $1.34 | +3.73% |
SG&A Expense | $791M | $791M | 0.00% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $20.5B | $19.97B | +2.67% |
Current Assets | $7.83B | $7.54B | +3.84% |
Total Liabilities | $5.43B | $5.07B | +7.18% |
Current Liabilities | $3.52B | $3.41B | +3.35% |
Stockholders' Equity | $15.07B | $14.9B | +1.13% |
Cash & Equivalents | $1.5B | $1.98B | -24.04% |
Long-Term Debt | $535M | $567M | -5.64% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $274M | $400M | -31.50% |
Investing Cash Flow | $-806M | $-7M | -11414.29% |
Financing Cash Flow | $-597M | $-657M | +9.13% |
Share Buybacks | $444M | $209M | +112.44% |
D&A | $141M | $136M | +3.68% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 15.6% | 16.7% | -1.10% |
Net Margin | 12.2% | — | — |
ROE | 4.4% | — | — |
ROA | 3.2% | — | — |
Current Ratio | $2.226 | — | — |
Debt to Equity | $0.36 | — | — |
Other companies in IT Consulting & Other Services
Cognizant reported Q1 2026 revenue of $5.41B, up 5.8% YoY, and EPS of $1.39, up 3.7% YoY. However, operating income declined 1.2% to $843M and operating cash flow fell sharply by 31.5% to $274M, reflecting margin pressure and elevated cash outflows.
The key takeaways are that revenue growth accelerated to 5.8% but operating margin contracted 110 bps to 15.6%, suggesting rising costs are outpacing revenue gains. Additionally, a massive jump in investing outflows to -$806M (from -$7M) and a 24% drop in cash balances point to a significant capital deployment event, likely an acquisition.
Cognizant's operating cash flow fell 31.5% YoY to $274M in Q1 2026, likely due to working capital headwinds or higher upfront project costs. Simultaneously, investing cash outflows surged to -$806M from just -$7M in Q1 2025, suggesting a major acquisition or investment that significantly reduced the company's cash balance by 24% to $1.50B.
Yes, Cognizant more than doubled its share repurchases in Q1 2026, spending $444M compared to $209M in Q1 2025, a 112.4% increase. This aggressive buyback activity helped boost EPS by 3.7% to $1.39 even though net income was essentially flat at $662M.
Cognizant's balance sheet remains solid with a current ratio of 2.23, a conservative debt-to-equity ratio of 0.36, and total stockholders' equity of $15.07B. However, cash declined 24% to $1.50B and total liabilities rose 7.2% YoY, so investors should watch whether the elevated investing and buyback spending is sustainable given the weaker operating cash flow.