Cognizant, one of the largest IT services providers has reiterated revenue growth guidance for the fiscal year at 3.5% to 6% in constant currency. This is underpinned by a pickup in discretionary expenditure in the banking, financial services, and insurance (BFSI) segment, AI-powered transformations across its client base and expansion through acquisition.

For calendar year 2025, Q1, the company earned a net income of $663 million, or a 21.4% rise from $546 million of the same quarter of the prior year. Its Q1 CY25 revenue rose 8.2% on a constant currency basis to $5.1 billion, as per its expectations. Belcan's acquisition accounted for about 400 basis points of the revenue growth year-on-year for 2025.

While Indian IT companies have an April-March financial year, Cognizant runs on a January-December calendar year. CEO Ravi Kumar S. said, "We began the year on a strong note, posting revenue and adjusted operating margins above our expectations, reflecting our dedication to implementing our strategy over the last few years." He underscored the need for productivity, cost savings, and resilience and added that Cognizant's differentiated AI and platform capabilities are helping customers navigate today's uncertainties while embarking on long-term AI-driven transformations.

The Q1 total contract value (TCV) was down 7% year-on-year, but the trailing 12-month TCV was $26.7 billion. Expansion was broad-based across sectors and geographies. Vertically, health sciences. Cognizant's largest vertical expanded by 11.4% year-on-year, financial services by 6.5%, and products and resources by 13.6%, all in constant currency. Geographically, revenue from the US grew by 9.7%, Europe saw a 3% increase, and the rest of the world rose by 7.1%, all in constant currency.

CFO Jatin Dalal said, "Our first-quarter performance demonstrates strong operational discipline in the face of increased uncertainty. We delivered revenue at the higher end of our guidance and grew our adjusted operating margin 40 basis points year-over-year, leading to a 10% year-over-year increase in adjusted EPS, which outgrew revenue growth." He further added that Cognizant intends to return around $1.7 billion to shareholders in the form of buybacks and dividends during 2025 with the ability to invest in growth in reserve.

The firm plans to recruit 20,000 new graduates in calendar year 2025, while its overall employee base fell by 500 in Q1 to reach 336,300. For the second quarter, Cognizant has estimated revenue growth of 5% to 6.5% in constant currency, reflecting a sequential growth range of -1% to 5%.

Discussing issues of uncertainties due to tariff wars, Kumar said that the company has not seen any effects or project ramp-downs. "Up to now, we have not heard anything from our clients. Our exposure to federal contracts is minimal. While Belcan has some work in this area, it is quite small," he said.

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