Cognizant Technology Solutions Corp (CTSH) turned in a solid fourth quarter on Wednesday, beating Wall Street's expectations while announcing guidance that suggests the IT consulting giant's momentum is accelerating into 2026.

The company posted quarterly revenue of $5.33 billion, marking 4.9% year-over-year growth and edging past the analyst consensus of $5.31 billion. Adjusted earnings per share came in at $1.35, clearing the $1.32 estimate with room to spare.

Margin Expansion And Deal Flow

Beyond the headline numbers, Cognizant demonstrated improving operational efficiency. The adjusted operating margin expanded 30 basis points to 16.0%, while the GAAP operating margin jumped 120 basis points to match that figure.

The real story, though, is in the bookings. Quarterly bookings climbed 9% year-over-year, and on a trailing-twelve-month basis, bookings reached $28.4 billion, representing a book-to-bill ratio of approximately 1.3x. That means for every dollar of revenue recognized, the company is booking $1.30 in new business.

The quarter included twelve large deals with total contract values exceeding $100 million each. Two of those qualified as mega-deals, carrying contract values of $500 million or more. These massive engagements signal that enterprises are making long-term commitments to Cognizant's services, particularly as companies scramble to integrate AI into their operations.

Workforce And Cash Management

Cognizant's total headcount reached 351,600 as of December 31, 2025, up 14,800 employees from the prior year. Voluntary attrition among tech services employees dropped to 13.9% from 15.9% a year earlier, suggesting improved retention and possibly a more stable labor market.

The company generated $858 million in operating cash flow during the quarter, down slightly from $920 million in the year-ago period. Still, CFO Jatin Dalal highlighted that operational discipline helped maintain free cash flow conversion above 100% of net income for the full year, enabling the company to return $2 billion to shareholders.

Speaking of shareholder returns, Cognizant repurchased 4.3 million shares for $325 million during the quarter. In February 2026, the company declared a quarterly dividend of $0.33 per share, payable February 26 to shareholders of record as of February 18.

Looking Ahead

The guidance tells an optimistic story. For the first quarter, Cognizant expects revenue between $5.360 billion and $5.440 billion, implying growth of 4.8% to 6.3% and comfortably ahead of the $5.348 billion analyst consensus.

For the full year 2026, the company projects revenue of $22.140 billion to $22.660 billion, representing growth of 4.9% to 7.4%. That range surpasses the Street's estimate of $22.063 billion. Adjusted EPS for 2026 is expected to land between $5.56 and $5.70, bracketing the analyst consensus of $5.62.

Dalal noted that in 2025, the company exceeded the upper end of its guidance ranges, achieving strong revenue growth, a 50 basis point increase in adjusted operating margin, and 11% growth in adjusted EPS.

Despite the upbeat results and guidance, CTSH shares declined 2.68% to $72.50 in premarket trading Wednesday. Sometimes even good news gets a lukewarm reception from the market.