Cognizant post 18% YoY jump in net profit; large TCV jumps 50% in Q4

Indian IT stocks will be in focus on Thursday after US-based software services firm Cognizant reported its quarterly earnings on Wednesday. The IT stocks faced the brunt of immense selling pressure on Wednesday after new AI tools from Anthropic AI were expected to disrupt the software industry by making existing business models go obsolete.

US-based IT major Cognizant, which has a substantial number of employees in India, on Wednesday reported about an 18.7% increase in net income to $ 648 million in the December quarter.

Cognizant, which follows a January-December financial year, had posted a net income of $ 546 million in the year-ago period.

The management attributed the margin strength to AI-driven efficiencies in both delivery and support functions, and said the firm expanded its EPS (earnings per share) faster than its revenue.

The company's Q4 2025 revenue came in line with estimates at $5,333 million, increasing 4.9% year-on-year from $5,082 million in Q4 2024, fuelled by a "robust momentum" in large deals and a standout performance in the financial services sector, which grew 9% year-on-year in the fourth quarter.

The quarter was also marked by the signing of a massive $1 billion "mega deal," one of five such deals secured during the year.

For the first quarter of 2026, Cognizant expects revenues to be in the range of $5.36-5.44 billion, growth of 4.8-6.3% (2.7-4.2% in constant currency).

For the full year (2025), the Nasdaq-listed IT services firm's revenue rose 7% to $21.10 billion.

While the company signed 28 large deals -- a figure similar to the previous year -- the total contract value (TCV) of these deals surged about 50%. Growth was also supported by strategic M&A, for which the company said it has set aside close to a billion dollars that will fructify during the course of 2026.

Giving its guidance for the full-year of 2026, Cognizant said it expects revenues of $22.14-22.66 billion, a growth of 4.9-7.4% (4-6.5% in constant currency).

The company exuded confidence that the foundation built over the last three years positions it well to carry the momentum in the coming years.

"I am deeply grateful to our over 350,000 employees who helped make 2025 a defining year for Cognizant in which we put our AI builder strategy in motion and returned to the 'winner's circle' two years ahead of the target we set at our Investor Day. We have invested in our talent, strengthened our partnership ecosystem and advanced our AI platforms to help clients scale AI across the enterprise," Cognizant CEO Ravi Kumar S said.

These investments, he noted, helped Cognizant sign 28 large deals in 2025, with large deal TCV growth of nearly 50% YoY.

"We are confident that the foundation we built over the last three years positions us well to carry this momentum in the years ahead," Kumar asserted.

Fourth quarter bookings included 12 large deals, which are deals with a total contract value of USD 100 million or greater, including two mega deals (deals with a total contract value of USD 500 million or greater), according to a company statement.

Cognizant's total employee count as of December 31, 2025, was 351,600, an increase of 1,800 from September 30, 2025 and 14,800 from December 31, 2024.