Cognizant Surpasses Q1 Revenue Estimates with Large Health, Financial Services Deals

First Quarter Revenue at $5.1 Billion, Boosted by Large Deals and Acquisitions

Cognizant Technology Solutions reported a better-than-expected performance for the first quarter of 2025, fueled by large deal wins in its health sciences and financial services verticals, as well as strong inorganic contributions from recent acquisitions. Revenue for the quarter ended March 31 stood at $5.1 billion, reflecting a 7.5% year-over-year increase or 8.2% in constant currency (CC) terms, beating Wall Street estimates of $5.07 billion and exceeding the upper end of the firm’s own guidance.

The growth included a 400 basis point contribution from Belcan and Thirdera, the company’s latest acquisitions, which expanded Cognizant’s footprint in digital engineering and aerospace. These deals enhanced vertical diversification and provided access to new enterprise client segments.

Highlights:

• Q1 2025 revenue: $5.1 billion, +7.5% YoY, +8.2% in CC.

• Inorganic growth from Belcan and Thirdera contributed ~400 bps.

• Revenue beat both internal guidance and market expectations.

Net Profit Jumps 21% as Margins Improve, Productivity Measures Take Hold

Net profit for the March quarter rose 21% YoY to $663 million, reflecting operational efficiencies and improved margin management. Operating margin expanded 210 basis points to 16.7%, supported by cost optimization strategies, AI-led productivity initiatives, and reduced discretionary spending.

CEO Ravi Kumar S noted that broad-based growth, especially from recently signed large deals, helped the company offset sporadic spending softness in certain segments. The company also retained its full-year revenue growth guidance of 3.5% to 6% in CC terms, while projecting a slightly lower Q2 growth range of 5% to 6.5%.

Highlights:

• Net profit: $663 million, +21% YoY.

• Operating margin improved by 210 bps to 16.7%.

• Full-year revenue guidance maintained at 3.5%–6% (CC).

Isolated Q2 Slowdown in Health Vertical; Financial Services Shows Resilience

While Q1 remained robust, the company flagged some early signs of moderation in April, specifically in health-related segments. CFO Jatin Dalal said decision-making delays affected a few health services clients, but stressed the impact appears isolated to Q2 and is not broad-based. In contrast, financial services remained strong, showing signs of stabilization and consistent wallet share gains.

The health sciences vertical grew 11.4% YoY in CC terms to $1.57 billion, continuing to outpace financial services, which rose 6.5% YoY to $1.46 billion. This marked the sixth consecutive quarter that financial services lagged the health vertical, a significant shift from Cognizant’s historical mix.

Highlights:

• Health sciences revenue: $1.57 billion, +11.4% YoY (CC).

• Financial services revenue: $1.46 billion, +6.5% YoY.

• April slowdown observed in health, not financials.

Large Deal Pipeline Steady Despite Dip in Bookings Volume

Cognizant reported bookings of $26.7 billion, up 3% YoY, representing a book-to-bill ratio of 1.3x. However, deal signings declined by 7% YoY, with only four large deals signed in Q1 versus ten in the previous quarter. One of these was a mega-deal exceeding $500 million, which helped bolster topline growth despite overall softness in new client commitments.

CEO Kumar emphasized the role of AI-led hyper-productivity in securing large deals, with clients increasingly valuing solutions that drive efficiency and reduce technology deployment costs.

Highlights:

• Bookings: $26.7 billion, +3% YoY.

• Large deals: 4 in Q1, vs. 10 in Q4 2024.

• One $500+ million mega-deal helped maintain growth momentum.

Acquisitions of Belcan and Thirdera Fuel Diversification and Engineering Depth

The acquisition of Belcan, finalized in June 2024 for $1.3 billion, significantly enhanced Cognizant’s capabilities in aerospace, defense, and ER&D. Belcan’s blue-chip client base and digital engineering portfolio are expected to generate cross-vertical synergies, particularly through model-based systems engineering and digital twin technology.

Together with Thirdera, a cloud and ServiceNow consultancy, these acquisitions are expected to contribute ~250 basis points to FY25 revenue, reinforcing Cognizant’s push into next-generation digital transformation offerings.

Highlights:

• Belcan acquisition brings aerospace & defense clientele.

• FY25 inorganic revenue impact pegged at ~250 bps.

• Joint offerings to focus on digital twins, systems engineering.

AI and Gen AI Drive Innovation Across Verticals and Delivery Operations

Cognizant is aggressively advancing its AI and GenAI roadmap, with 1,400 early GenAI projects underway across client ecosystems, up from 1,200 last quarter. The firm has also developed 20+ agentic AI solutions, many of them in partnership with Google and NVIDIA, targeting use cases in healthcare, smart manufacturing, and enterprise LLM deployment.

A recent breakthrough in LLM uncertainty estimation has enabled Cognizant to build safer AI models with fallback mechanisms, improving decision reliability in sensitive domains. The company continues to emphasize cross-industry AI adoption, supported by its expanding AI platform and foundational infrastructure initiatives.

Highlights:

• 1,400 early GenAI projects in progress.

• 20+ agentic AI solutions developed with Google, NVIDIA.

• LLM safety milestone: weighted uncertainty estimation tech.

Mixed Employee Metrics: Attrition Up, Headcount Down, Utilization Dips

Cognizant ended Q1 2025 with a total headcount of 336,300 employees, marking a decline of 8,300 YoY and 500 sequentially. Attrition rose by 2.7 percentage points to 15.8%, while utilization dropped to 85%, a 3 percentage point decline. Despite these challenges, re-hiring trends are improving, with 13,000 ex-employees returning to the firm in 2024 and an additional 10,000 slated to rejoin.

Cognizant remains India-centric in its delivery model, with the vast majority of workforce based in India, and is investing in workforce stability and AI reskilling to manage future volatility.

Highlights:

• Headcount: 336,300, down 8,300 YoY.

• Attrition: 15.8%, up 2.7 percentage points.

• Utilization: 85%, down 3 percentage points.

Geographical Breakdown: North America Leads, Europe Shows Modest Growth

Revenue from North America rose by 9.7% YoY to $3.85 billion, while Europe posted a 3% YoY increase to $950 million, reflecting continued strength in the company’s core geographies. The company’s leadership noted that Cognizant is outperforming many Indian IT peers in organic growth, particularly in developed markets, and expects Europe to rebound further in the coming quarters.

CFO Dalal added that while market conditions remain dynamic, the company is optimistic about sustained demand in capital markets, payments, and enterprise modernization segments in both North America and Europe.

Highlights:

• North America revenue: $3.85 billion, +9.7% YoY.

• Europe revenue: $950 million, +3% YoY.

• Cognizant outperforming Indian peers in organic growth.