Cognizant Q2 revenue grew 4.1% CC, beating peers, but trimmed 2026 guidance to 4-5.5% growth amid macro headwinds. CFO says discretionary spend hasn't returned as expected.
Cognizant Technology Solutions cut its full-year revenue growth forecast on Wednesday, saying the recovery in discretionary spending that it had expected in the second half of the year has not materialized.
The company now expects constant‑currency revenue growth of 4% to 5.5% for 2026, down from an earlier range of 4% to 6.5%. The guidance includes about 150 basis points of inorganic contribution.
The revision came despite a strong second quarter. Cognizant reported constant‑currency revenue growth of 4.1% in the April‑June period, outpacing larger rivals such as Tata Consultancy Services (3.2%), HCLTech (2.6%), Infosys (2.4%) and Wipro (0.9%).
CFO Jatin Dalal said the company had entered the second quarter expecting discretionary spending to return in the second half. “The reality is that the macro conditions continue to remain what they were, and there has not been an uptick or superior momentum that can be seen from the discretionary side,” he told reporters after the release.
CEO Ravi Kumar framed the lowered guidance as still above the peer average. “The average midpoint of our peer group in the tier‑1 is almost 150 to 200 basis points lower than us,” he said.
Cognizant’s revenue growth in the quarter was led by the financial services vertical, which rose 11.7% year‑on‑year – the second consecutive quarter of double‑digit growth in that segment. Deal bookings increased 5% year‑on‑year to $29.1 billion, including seven large deals worth more than $100 million each. The share of new business as a proportion of total bookings was up 10% year‑on‑year, Kumar said.
Headcount as of June 30 was 356,700, an increase of 12,900 from a year earlier. That growth rate was higher than at any of its tier‑1 peers.
The company incurred $84 million in charges in the June quarter related to Project Leap, a restructuring initiative. That included $56 million in employee separation costs and $28 million in other costs. Operating margins still improved 30 basis points year‑on‑year.
On technology trends, Kumar said enterprises will need both closed frontier models and cheaper open‑weight models. “Closed frontier models power the advances and they remain cutting edge, and they will be ahead on the curve. Open‑weight models can be industrialised in a much cheaper way,” he said.
Phil Fersht, founder and CEO of HFS Research, said Cognizant has closed much of the gap with its peers over the past two years. Sustaining above‑market growth, he said, will depend on proving that its AI investments continue to generate measurable client outcomes rather than simply strong bookings.
Cognizant carries an Alpha Score of 42 out of 100, labeled Mixed, reflecting the cautious outlook. By contrast, Infosys, which reported 2.4% revenue growth in the same quarter, has a score of 57, labeled Moderate. You can find more on both stocks at their CTSH and INFY stock pages.
The guidance revision underscores the persistent macro uncertainty that has weighed on IT services spending for more than a year. Cognizant’s next quarterly report is due in October, when investors will look for signs that the discretionary recovery management hoped for has finally arrived.
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