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Greetings, Welcome to the Cognizant Q1 2026 earnings conference call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star one on your telephone keypad. We ask you please ask one question, one follow-up. Return to the queue. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star zero. It's now my pleasure to turn the call over to Tyler Scott, Senior Vice President, Investor Relations. Tyler, please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Cognizant's first quarter 2026 earnings call. I am joined today by Ravi Kumar, Chief Executive Officer, and Jatin Dalal, Chief Financial Officer. By now, you should have received a copy of the earnings release and investor supplement. If you have not, copies are available on our website, cognizant.com. Before I begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC. Additionally, during our call today, we will reference certain non-GAAP financial measures that we believe provide useful information for our investors.

Reconciliations of non-GAAP financial measures, where appropriate to the corresponding GAAP measures, can be found in the company's earnings release and other filings with the SEC. With that, over to you, Ravi.

Thank you, Tyler. Good morning, everyone. Thank you for joining us. We delivered a solid first quarter with revenue growth in the upper half of our guidance range, expanded adjusting operating margin and strong bookings growth. I believe our work to become the world's pre-eminent AI builder is resonating, demonstrated by our first quarter performance. Looking at the quarter's highlights. Revenue grew 3.9% year-over-year in constant currency, led by strong performance in North America and driven in part by the ramp of recently won large deals. From a segment standpoint, financial services grew more than 10% year-over-year in constant currency, driven by strong demand across banking and insurance clients. Q1 bookings grew 21% year-over-year. We signed seven large deals with TCV of $100 million or greater, including one mega deal valued at more than $500 million.

We continue to drive profitable growth as adjusted operating margin expanded year-over-year for the fifth straight quarter. Adjusted EPS of about 14% year-over-year was ahead of revenue growth. We just announced a definitive agreement to acquire Astreya, a global IT managed services provider and a specialist in AI infrastructure build-out with deep expertise in managing data center infrastructure, enterprise networks, and digital workplace technology. Upon closing, we believe Astreya will add a critical layer to our AI builder technology stack. We achieved these results against a softening demand environment. Market conditions have become more complex since the start of the year, and we expect the impact from heightened macroeconomic uncertainty to persist in the near term. While clients are appropriately cautious about making large investments in this environment, they recognize AI's transformative potential and the value of strategic partners.

This transformative potential is reforging our industry's first principles, which underpin our evolving posture as an AI builder. The industry's first principles were born out of an enterprise reality. Technology was so transformational and complex that companies needed help with optimizing the use of technology to meet their business objectives. IT services companies emerged to solve these problems at scale and over time helped create many of the greatest business architectures over the last 50 years. With AI, the fundamentals are shifting. Software is penetrating deeper into enterprises, and our clients now expect more value and measurable outcomes. The old fundamentals are still relevant, but they must be reforged for a new reality. Cognizant has already embarked on this transition, which demands four significant shifts that redefine the role of IT services companies.

First, we are evolving towards owning the full stack of capabilities required to design holistic bespoke AI systems from a system integrator to an AI builder. Second, we are reimagining our talent, moving away from the traditional pyramid toward interdisciplinary teams that operate at the intersection of domain, operations, and technology. Third, we are shifting our economics from labor-based to outcome-based models that align our success directly with our clients. Our combined fixed price and transaction-based portfolio has continued to grow in proportion over the past three years, reflecting our ongoing focus on driving nonlinear revenue opportunities. Finally, we are evolving away from simply delivering projects to underwriting operational results for our clients at scale, taking full accountability for the business impact we create. Last quarter, I talked about the AI velocity gap, the gap between massive AI infrastructure spend and the business value realization.

Now Cognizant's mission is to be the AI Builder who bridges this gap. Our AI Builder stack is the connectivity tissue that translates our strategy into measurable client outcomes. It combines our proprietary methodologies and the science of context engineering with a curated ecosystem of strategic partners and our own differentiated platforms and IP. Our vision is to reimagine enterprise operations, rebuild workflows, and break functional silos to unlock AI-native ways of working. We aim to do this by bringing human effort and agentic capital together in a managed, governed, and a client contextual delivery model. Some of our pioneering clients have started to progress from AI productivity to unlocking new experiences, products, and services. Platforms are key to our AI Builder stack.

Fueling our platform strategy is our award-winning AI Lab, which was awarded three new patents, bringing its total number of patents to 65 in the U.S. and 88 globally. Our AI Lab continues to sense the future and partner closely with our clients, platforms and products group, and solutions teams to translate frontier research into industry-relevant use cases. To complement our internal investments, we launched the Cognizant Innovation Network, a new corporate investment arm that will back early-stage AI startups. We plan to initially focus on investments in AI, data, cybersecurity, and cloud technologies. Portfolio companies will gain direct access to Cognizant's deep industrial expertise and its enterprise client base, creating a powerful ecosystem for mutual growth. We are progressing towards the AI Builder vision through our three-vector strategy: AI-led productivity, industrializing AI, and agentifying the enterprise.

To date, we have well over 5,000 AI engagements across three vectors, up from approximately 4,000 exiting December. Beginning with Vector 1, we are addressing a multi-trillion-dollar opportunity of AI-led productivity across several value pools by helping clients. Building classical software in new ways accelerate software development, eliminate technical debt, and modernizing legacy systems. Our differentiated approach to autonomous software is rooted in engineering-led productivity, powered by leading strategic partnerships like Anthropic Claude, Google Gemini, Microsoft GitHub and Copilot, Devin and OpenAI Codex. This approach has enabled nearly 40% of our code to be AI assisted. Cognizant platforms play a critical role in scaling these productivity gains by accelerating software development with Flowsource, reverse engineering legacy code using agent-based capabilities through Skygrade, and automating incident management with Neuro IT Operations.

A great example of our platform strategy at work is one of is with one of the nation's largest health companies, where we now underwrite the integrity of their claims process. Our AI solution automates the validation of over 54 million provider contract updates annually, directly reducing revenue leakage and solving a problem that was previously intractable at scale. Some of the early value pools in Vector 1 where we are seeing client momentum are related to legacy debt takeout, like mainframe modernization, SAP S/4HANA migrations, autonomous software engineering, digital workplaces, and autonomous infrastructure services. For example, we are working on a highly complex, true blue field S/4HANA transformation at a global scale focused on modernizing the enterprise core for a North American global pharma leader.

What really sets this project apart is our use of a customized AI accelerator that automates both business and IT data validation, replaced using a fragmented manual process with a scalable audit ready and a robust solution, significantly cutting validation time and effort. For a leading European telecom operator, Cognizant delivered an AI-powered Oracle Cloud ERP transformation, unifying finance, procurement, and supply chain on a single cloud native platform, achieving 25% faster time to market and 40% faster deployment through agentic AI and automation. With Daimler Truck, we will use Cognizant WorkNext to transform and modernize its global workplace services. Our multi-year partnership aims to leverage artificial intelligence and automation to enhance workplace operations across their global factories and offices.

As our AI productivity capabilities mature, we are increasingly applying token metering at a project or a individual level to provide early insights into usage patterns, mode-model management, and optimization of inference costs. Vector 1 continues to be a primary driver of a large deal momentum, and as a result of the cost savings and shared productivity generated in Vector 1, we're starting to see increased velocity in Vector 2 and 3 opportunities. Let me share some examples. In Vector 2, as we integrate enterprise AI into enterprise landscapes, platforms provide the foundation to move AI from proof of concept into production at enterprise scale. Managing the full Agentic AI lifecycle with Neuro AI Engineering and context engineering. This spans several areas, including data engineering, AI foundry, cybersecurity, and integrating AI into the infrastructure and cloud stacks.

As an example, with data engineering for a leading U.S. healthcare client, we deployed an AI-based data validation system to optimize the distribution of pharmaceutical shipments. The solution uses predictive models to validate data before dispatch, reducing downstream errors in the logistics chain and improving reliability across its operations. One of the value pools we see in Vector 2 and a key element of our AI Builder stack is context engineering. Cognizant's approach to context engineering is to build native work graphs by going deeper into how humans work, make decisions, and navigate exceptions in their daily business processes. We're also applying context engineering at a top wealth management firm with an advanced proof of concept where AI agents are being designed to work alongside financial advisors, handling routine interactions and back-office tasks so that financial advisors can focus on client-facing activities.

Finally, in Vector 3, we are accelerating development of our AI native products to unlock new agentic labor pools across vertical and functional domains and into core operations. The value pools in Vector 3 are significantly expansive opportunities across business operations of enterprises to embed agentic capital for productivity, experiences, and new services. In healthcare, for example, we are developing agentic solutions that accelerate and improve the accuracy of prior authorizations to support better patient outcomes. Additionally, we are building on our TriZetto product part-portfolio in a strategic partnership with Palantir to advance an outcomes-based intelligence platform that embeds AI-driven decisioning directly into healthcare operations. We're also sensing a broad structural shift as AI moves beyond digital workflows to governing physical systems, environments, and infrastructure. This is accelerating the convergence of Physical AI, Agentic AI, and governed enterprise intelligence, enabling autonomous operations across sectors.

Cognizant is investing in the architecture platforms, partner ecosystem, and industrial domain expertise for Physical AI. Business operations-led offerings are central to this evolution. We're expanding AI-enabled services across sales, finance, marketing, service operations horizontally, and healthcare financial services and banking operations on the vertical stack. Examples include the recent launch of autonomous customer engagement with Google to support outcome-based human AI workforce models across industries, and the combined value proposition of TriZetto and Palantir to agentify healthcare operations. Across all three sectors, as the importance of platforms grows, we are evolving our commercial models towards fixed and outcome-based pricing, enabling Cognizant to recognize the added value of assets, IP, and accelerators that we bring. This is an important pillar of our first principles, shifting our economics to managed services and outcome-based models.

Consistent with this shift, we delivered 2.5% and 5% increases in trailing 12-month revenue and adjusted operating margin per employee, respectively. We are beginning to see the emergence of AI-infused rate cards, where pricing reflects a blended model of human effort and digital effort. With several clients, we are exploring tokenized rate cards that prices work along a continuum from fully human-led discovery to hybrid to increasingly autonomous agentic delivery. This model is intended to turn our outcome-based economics into true partnership that aligns value creation with shared results. Execution across these sectors requires the right organizational structure and a powerful engine of innovation and talent. This brings me back to another important element of our first principles, reimagining talent away from the traditional pyramid and towards interdisciplinary AI-augmented teams. To fuel this shift, we have launched an integrated AI skilling stack for our entire organization.

It begins with our AI Builder Career Program, which maps every role at Cognizant to a future-ready AI family, job family with defined pathways and targeted learning plans aligned to how work is evolving. This is powered by Cognizant Skillspring, our new AI-native learning platform designed to redefine learning in the AI era and cultivate AI-ready talent at scale for our associates and our clients. Progress is being tracked for each associate's personal AI fluency dashboard, a real-time context-engineered view of AI readiness across various dimensions, including AI skills and proficiency, trainings and certification, AI tools and token usage, innovation, and project experience. To enable us to execute on these principles with the speed and agility the market demands, we are initiating a new program called Project Leap.

This program is designed to accelerate our transformation to the operating model of the future by funding investments in our AI capabilities and partnerships, integrated offerings and platforms, reshaping productivity, and upskilling our workforce. By fostering a workforce that is AI-enabled and equipped with future-ready skills, we aim to create a more agile, scalable, and cost-effective operating model. Even as we make these changes, we are continuing to invest in growth through acquiring new talent. We hired around 20,000 freshers in 2025 and plan to hire a greater number in 2026, providing a strong pipeline of future talent aligned to how work is evolving and shaping a broader pyramid with a shorter path to expertise. The Leap Program reinforces our commitment to be in the winner's circle of revenue growth and supports our journey of expanding margins.

To conclude, I want to leave you all with this. Our conviction in the long-term opportunity emerging with enterprise AI adoption has never been stronger. In our industry, the real work happens inside complex systems across legacy environments, regulated processes, global teams, and mission-critical operations. Large enterprises do not transform overnight. They undeniably need trusted partners who understand their systems, context, risks, and people. That is the role we intend to play as an AI Builder, bridging the gap to enterprise value. To win, we must move fast and stay agile, which is exactly why Project Leap is so critical. We are reforging our First Principles, enabling an AI-era future operating model, equipping our go-to-market teams across the three vectors, adopting new engagement models to deliver value to clients, and adopting talent through a blend of digital and human effort.

We remain confident the portfolio and capabilities we are assembling can drive sustained progress towards winner circle performance, including top-tier growth, consistent margin expansion, and EPS growth outpacing revenue growth. Before I turn the call over to Jatin, I want to thank our associates for their dedication, our clients for their continued trust, and our shareholders for your confidence as we strengthen our foundation to create for durable long-term value.

Thank you, Ravi. Thank you all for joining us. As Ravi noted, our first quarter results demonstrate that our AI Builder strategy is resonating in the market. In Q1, we delivered revenue growth in the upper half of our guidance range, 10 basis points of year-over-year adjusted margin expansion and adjusted diluted EPS growth of 14%. First quarter bookings growth of 21% was one of our strongest in recent history. This performance demonstrates our focus on execution and our ability to deliver value for the clients. As Ravi mentioned, the market remains complex. The dynamics are not universal and vary by industry. Financial services is benefiting from robust investment cycles, while policy changes are creating regulatory uncertainty in key areas of health sciences. In products and resources, trade policy uncertainty and supply chain disruptions remain realities.

Broadly speaking, we believe the shifts we are seeing in client demand play to our strengths, and we remain confident in our position as a strategic partner to our clients as they navigate a complex macro environment and the rapid pace of AI innovation. Moving on to the details of the quarter. In Q1, revenues of $5.4 billion grew 3.9% year-over-year in constant currency, driven by a ramp of large deals across our North America region and financial services segment, along with a strong performance in the U.K. We have seen increasing demand for our IOA and AI and analytics services, driven by AI readiness and innovation budgets. Growth also benefited from revenue from third-party products associated with our integrated offering strategy and inorganic contribution from our 3Cloud acquisitions.

By segment, financial services led with over 10% year-over-year growth in constant currency balanced across banking, financial services, and insurance customers. We saw both healthy discretionary spending and sustained large deal momentum driven by North America. Health Sciences performance remained resilient. Growth was negatively impacted by approximately 300 basis points year-over-year due to a lower revenue from third-party products associated with our integrated offering strategy. Excluding this impact, services in Health Sciences grew at a similar level to the company. Products and resources was stable despite headwinds from macro, geopolitical, and trade policy uncertainty. We continue to see emerging client demand in areas such as predictive supply chains, agentic commerce, and hyper-personalization. Use cases where AI has the opportunity to create real differentiation. Physical AI is an early stage but fast-moving category, and we are positioning ourselves to capture this opportunity as client adoption accelerates.

Within communications, media, and technology, our revenue with technology customers continues to grow. AI adoption is driving demand for engineering, modernization, and platform services. In the comms and media sector, the environment has been more measured with added pressure from client-specific dynamics tied to strategic shifts at a large customer. In Q1, segment growth was driven by revenue from third-party products associated with our integrated offering strategy, which contributed approximately 10 percentage points of growth. Turning to bookings. We delivered another strong quarter of large deal bookings. We signed 7 large deals, each with TCV of more than $100 million in Q1, including one mega deal with TCV in excess of $500 million. On a trailing 12-month basis, bookings grew 11% and represented a book-to-bill of one point four.

Annual contract value was flat as deal duration increased in the quarter, reflecting large deal mix and continued softness in smaller discretionary projects. Our pipeline remains healthy and broad-based. We continue to see strong demand for cost takeout, vendor consolidation, and AI-led services. Moving on to margins. Q1 gross margin decreased by 80 basis points year-over-year, reflecting impact of our integrated offering strategy and increased compensation cost. We remain very focused on driving gross margin improvements over time. This is an important objective of the Project Leap program. First quarter adjusted operating margin of 15.6% increased by 10 basis points year-over-year. Our ongoing focus on operational efficiency and benefits from the Indian rupee depreciation helped to more than offset the impact of our integrated offering strategy, M&A investments, and increased compensation costs. Now to additional details on EPS, cash flow, and capital allocation.

First quarter adjusted EPS was $1.40, up 14% year-over-year. DSO of 84 days increased three days sequentially and year-over-year. First quarter free cash flow was approximately $200 million, impacted by a larger bonus payout this year and in line with our expectations and typical Q1 seasonality. During the quarter, we returned about $600 million of capital to shareholders through share repurchases and dividends. We ended the quarter with cash and short-term investments of $1.5 billion or net cash of $949 million. Now turning to guidance. For the second quarter, we expect revenue to grow 3.2%-4.7% year-over-year in constant currency. This includes approximately 150 basis points from our recently completed acquisitions, including a partial quarter contribution from Astreya that we just announced.

Our second quarter guidance includes a more cautious near-term view of discretionary spending based on recent global events and trends. Our full year revenue guidance is unchanged at 4%-6.5% in constant currency. The macroeconomic environment remains dynamic and our guidance reflects a range of outcomes. We expect large deal ramps and two full quarters of Astreya contribution to be meaningful second half drivers. At the midpoint, we assume some improvement in discretionary spending in the second half of the year compared to our Q2 assumptions. Our strong bookings momentum, along with one point four book-to-bill ratio, give us confidence that we are winning in the market. Our full year guidance assumes recently completed acquisitions will contribute approximately 150 basis points to revenue growth, reflecting contribution from both 3Cloud and Astreya.

Beyond this, our M&A pipeline remains healthy and active, and we see a number of interesting opportunities that are consistent with our AI Builder strategy. As always, we'll be disciplined and deliberate but remain well-positioned to act if the right opportunities emerge. Now a few more details on Project Leap. This is an important initiative to accelerate our path to a more agile and AI-enabled operating model of the future and improving our cost of delivery. The program is expected to deliver savings in 2026 of approximately $200 million-$300 million with a full year benefit in 2027. We anticipate approximately two-thirds of the savings generated by Project Leap will be directly reinvested to support future growth across integrated offerings, AI capabilities and partnerships, and roughly one-third toward upskilling our workforce, all while maintaining an active and strategic M&A posture.

The expected savings generated from the program net of investments are enabling us to raise our 2026 adjusted operating margin guidance range to 16%-16.2%, which represents 20 to 40 basis points of year-over-year expansion. This is on the top of 50 basis points of margin expansion we delivered in 2025 and in line with our long-term aspiration to expand margins. As part of this program, we expect to record costs of $230 million-$320 million, with substantially all incurred in 2026. This consists of $200 million-$270 million of employee severance and other personnel related costs and $30 million-$50 million of other charges. This cost will be adjusted in our non-GAAP financial measures. As Ravi noted, we will hire more recent college graduates this year than last year.

Our free cash flow conversion guidance for the full year remains 90%-100% of net income. Tax rate guidance is unchanged at 25%-26%. Our expected weighted average dilutive share count is approximately $473 million, down slightly from our prior estimate due to the pace of repurchases in Q1. This leads to EPS guidance of $5.63-$5.77, representing 7%-9% growth. For 2026, we still expect to return approximately $1.6 billion of capital to shareholders, including $1 billion towards share repurchases and the remainder towards our regular dividend. Finally, we continue to make progress and advance on our evaluation of a potential primary offering and secondary listing in India. We remain committed to acting in the best interest of our shareholders and will provide updates as appropriate.

To close, we are delivering on our commitment to stay in the winner's circle. In Q1, we grew revenue at the top of our large cap peer set, posted our strongest booking growth in recent history, expanded adjusted operating margins, and delivered double-digit earnings per share growth. While the macro environment remains uncertain, our momentum is clear, and we believe we are winning in the marketplace. With that, we'll open the call for your questions.

Thank you. We will now be conducting a question-and-answer session. If you would like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. As a reminder, we ask you please ask one question, one follow-up, then return to the queue. Our first question today is coming from Jason Kupferberg from Wells Fargo. Your line is now live.

Good morning, guys. Thank you. Bookings, clear highlight this quarter. Wanted to see if you had any color on how much of the bookings were new versus renewal. Anything on ACV growth, how that looked in the quarter. Just given the fact that there has been a little bit of softening on the discretionary side, it sounds like in certain verticals. I wanted to confirm, Jatin, if I heard you correctly, that the midpoint of the 2026 guide now assumes a little bit of improvement in discretionary spending in the second half. Maybe you could just elaborate on that a little bit. I have a follow-up. Thanks.

Jason, we don't exactly break out new versus renewal, but this year, i mean for the quarter, it's been very healthy and I would say the growth, especially of the large deals, is driven by the newer opportunity in either existing customers or the new customers.

In fact, just to add to Jatin, this is the second quarter in a row we've had robust bookings. The new proportion is as healthy as it was in the past. In fact, the top seven deals, which are more than $100 million, one mega deal more than $500 million, 70% increase in TCV on the large deals. I think it's been a good quarter for bookings, two quarters in a row. This is probably the highest bookings growth we have seen since I have been on board, three years ago, since three years.

Okay. Okay, thank you. You know, there was some commentary from one of your large competitors last week talking about AI resulting in increased competition, more pass-through of productivity gains to clients. I mean, you guys have been talking about that pass-through and the AI-assisted coding for a long time. Are you seeing competitors broadly engage in any additional level of contract pricing that you might characterize as irrational?

Yeah, yeah. Jason, you know, the way I see it is unlike in the past where pricing was determined by the unit price, which is billing rate equivalent. The race now is about the number of units and how well we could deliver with lower number of units for the same output, for the same outcome. That is based on how much productivity you can derive out of AI usage in your software development cycle. We feel very confident because 40% of our software development cycle is assisted by AI. We have infused AI into our rate cards now. When we are up for a consolidation, you know, opportunity, we seem to be in the winner spot because we are able to share the productivity and also keep it for ourselves.

Our bid to date is actually very healthy over the last three years, the deals we have been working on. We seem to have got this work rhythm of autonomous software engineering, as we call it, and we seem to be doing well. I, you know, I wouldn't. I mean, there is productivity sharing with clients, you have to see that as an opportunity to win more, you have to see that as an opportunity to create more momentum for ourselves. That's how we are seeing it. That's on the old stuff. On the new stuff, there is, you know, in Vector 2 and Vector 3, as I call it is new work. We're also seeing unlock of legacy modernization, which is not consolidation.

It is actually net new business which kind of got locked because customers were not willing to pay that much to modernize the legacy. Now they're actually throwing that on the, in the mix, and that is actually a business case of how much they spend to how much they could potentially spend using AI to modernize it. While there is price pressure on it, I would say it's an opportunity not to look at labor costs. It's an opportunity to look at how much of the number of units you could optimize using AI.

Yeah. Jason, to your earlier question on the visibility of second half and how do we see our guidance range, let me break it down. Definitely the environment around us, the macro has is significantly more uncertain than what it was in the beginning of February. Therefore, I mentioned in my opening remarks that there are a range of outcomes which are possible across the across the guidance range for the full year. What gives us confidence for the second half are essentially two things. The large deal wins that we have had in quarter four and in quarter one, which continue to ramp up and will reach their full potential starting June, July. Therefore, that's one lever.

The second is acquisition like Astreya will come full on steam from Q3 standpoint, it would be a partial revenue in Q2. These are two additional sort of drivers for a stronger second half than assumption than what it is. As I mentioned, the midpoint does assume a little better discretionary environment than what we assume for Q2, which is sort of impacted by the current environment, but we remain confident as we walk through the rest of the year. Finally, you know, we have had very strong bookings for Q1, which means we are winning in the marketplace. Even as in the uncertain environment, customers are choosing Cognizant as a partner of 1st preference.

That is what helping us continue to lead in this environment with a sense of velocity and confidence.

You know, a lot of large deal transitions which are happening now between Q4 and Q1 will start to unlock in Q2 and Q3. This is, you know, literally production capacity already in there. We are not making the money; we are incurring the cost. Now, as the transitions get over, we start to accrue the dollars. That's actually another tailwind to our journey in the second half.

Thank you. Our next question today is coming from James Schneider from Goldman Sachs. Your line is now live.

Good morning. Thanks for taking my question. I was wondering if you could maybe kind of unpack the comments you made earlier, Ravi, around, you know, the token usage that you're seeing in terms of token metering and also some of the productivity, your benefits you're starting to deliver. Just wanted to clarify two things. One is, are you seeing, you know, with the increased sort of productivity on units delivered to your customers, I would have thought that you would be seeing, you know, if you're keeping some of that benefit for yourself, a little bit better margin leverage as a result of that, as you're getting some revenue growth, or is that being masked by the startup cost on longer dated outsourcing deals you just kind of talked about in response to your last question?

You know, separately, I was wondering if you could maybe address, you know, how you expect sort of the token usage to sort of play out in terms of how you build customers. You talked about AI type rate cards, but are token costs being directly billed through to clients today in terms of time and materials contracts? Thank you.

Great, great question, great question, both of them. Let me first get to the second one. Token metering is a reality, both at a project level and at a individual level. We have token metering for fixed price programs as well as for time and material. For fixed price programs, we have the opportunity to reduce the cost and keep the margin with us. For new deals we do, this kind of links back to the first question, we actually have the opportunity to outpace the productivity we give to our clients and therefore keep it with us. Our bid to date, over the last three years is very healthy. I'm very excited about the fact that that has leverage for margin accrual in the future.

Of course, it has startup set up costs, which we have to establish at the start. There is an upfront cost attached to it, but there is downstream savings. On time and material tokenized rate cards, we are starting to see a pattern. I'll give you one example. One of the rate cards I am establishing, which is a template, we're taking it to the street, is A-0 is completely human effort. A-1 is effort which is done by humans, verified by AI. A-2 is effort delivered by AI, verified by humans. A-3 is autonomous digital labor.

When clients do this, you could meter the capacity they have bought from a frontier model company like Anthropic or OpenAI directly, in which case we are responsible for the human effort, and the clients are responsible for the digital effort. Clients have started to see that they are not able to optimize the digital effort. Some clients are coming back and saying, "You know what?Why don't you take care of the human and the digital effort? You open the tap and compute, you open the tap on LLMs, and you deliver the service, and we don't want to manage the economics." You know, already we're talking about AIOps, AI FinOps. You manage the economics and digital labor or human labor, it doesn't matter.

In fact, one of our, one of our, one of our research papers talks about a Cognizant, a Cognizant unit of measure, which we call it as, it's equivalent to the function point measure, which is equivalent to what we do in digital labor. Effectively, this is evolving. We are ahead on the curve, both to take the accountability of digital and human labor for ourselves or if clients want to take the accountability for themselves. Time and material comes in two forms. I could take care of digital labor and human labor, and I could take the sizing and the economics of digital labor and, you know, create throughput for our clients. This is something evolving, and some clients are already proposing this.

On fixed price deals, of course, we wanna share that productivity with our with our clients. That's how we are seeing this. It's not far off when we're gonna see a rate card for this, a rate card which is digital and human labor put together more mainstream as we go forward. That gives us a opportunity to actually deliver both human and digital labor through the books of Cognizant. We already have arrangements with the frontier model companies to do that. One is to take care of our developer community which uses it, but also for client work which we can deliver.

Yeah. Thank you.

James, I'll quickly cover the question on gross margin. Essentially, we in Q1 was an investment more little bit on gross margin across three different dimensions. The first was surely the investment in the bench. If you see, we have grown sequentially in headcount, and we have grown year-over-year in headcount. As we have continued to hire the fresh college graduates into the mix, you know, we have invested little bit of utilization. That's one reason why gross margin is lower. The second, Ravi spoke about this integrated offering. You know, we as every time when the industry sees a new element of service delivery coming to customers, they expect a service provider like Cognizant to act as a system integrator.

To that extent, you see that you have a higher element cost as part of this integrated service offering that you have. That has been slightly higher in Q1. That's an investment because you almost always see a significant follow-through revenue coming through services when you anchor yourself through that early offering. Third is the salary increase that we gave on 1st of November, so there is a one-month impact sitting there. Combination of these three factors have led to a slightly lower gross margin in Q1. In our earnings call as well as through the quarter, we spoke about the volatility that you would probably see as a result of this investment in Q1.

We are confident that the number will continue to improve through the course of the rest of the year. The Project Leap ambition is to really drive significant cost savings through cost of delivery model, and that should also help the gross margin as we execute for the rest of the year.

That's very helpful. Thank you.

Thank you. Next question today is coming from James Faucette from Morgan Stanley. Your line is now live.

Thank you very much. Appreciate all the color and detail today on current conditions, et cetera. I'm wondering if you can talk a little bit about what you're seeing in terms of valuation and how you're thinking about the price of acquisitions that you're looking at, particularly as you seem to be looking to add incremental tech capabilities to the Cognizant base. I'm just thinking about how we should think about your commitment to spend what portion of free cash flow and the impact on the inorganic contribution on a go-forward basis.

I mean, you know, I'm gonna ask Jatin to add. This is a phenomenal time to create value from, you know, M&A in line with our Reforged First principles, which is about having a platform play, managing business on outcomes versus effort and AI enabling our offerings. If you put all of that together, we have some exceptional opportunities in the market. We also have the ability to anchor this on new pillars in the mix, which will give us expansive opportunities. We are not we are not doing this in a tactical way. We are doing this in a very strategic way of filling the boxes for being an AI Builder. That's what our thesis is.

Just to give you a sense, today, the one we announced does data builder, data center build-out services, workplace services, AI infrastructure build-out services, and network services. It's a Astreya is a phenomenal opportunity to anchor a complementary piece of work which is, yeah, which is attached to the infrastructure services where Cognizant is delivering very well. Where will we anchor this? We'll anchor this on platforms, on outcome-based models. In fact, Astreya delivers work on per user basis, not on effort. I mean, they do workplace services. They also do data center buildouts in a outcome-based model. We think that's a unique opportunity.

If there are platforms in the market, we're gonna evaluate and look for it because platform play will allow us to go to the outcome model, transaction-based pricing and outcome-based pricing. In and around TriZetto. In and around TriZetto, we see a ton of opportunity. I mean, our TriZetto business now is growing much, much faster than what I saw in 2023 when I came on board. It is highly profitable, and healthcare has a strong moat, a defensible moat, so we are actually looking for layering it around.

In fact, one of the reasons why we partnered with Palantir is to create the opportunity to drive, you know, the healthcare payer control points for medical loss ratio performance and payment integrity and real-time cost intelligence and network performance and all of that. We have specific areas where we think we wanna do M&A, which will substantiate our endeavor to be a platforms company and a outcomes-based company in the AI era. We also believe it will uniquely give us an opportunity to create durability of our earnings. That's how we are seeing it, and this is a good time for a value play. We are continuing to. We have a very healthy pipeline. We'll continue to evaluate value assets which are available in each of these pillars I just spoke about.

Just from a capital allocation standpoint, you know we generate $2.5 billion of free cash flow. Last year, we returned close to $2 billion to shareholders, and roughly $700 million was invested into 3Cloud, which technically closed beginning of this year but was announced in 2025. This year again, $2.5 billion. We have committed $1.6 billion to be returned to the shareholder. $1 billion by share buyback and $600 million odd in dividends. Of which we have now used about $600 million from the remaining $1 billion for Astreya. We have therefore sort of fuel in the tank, and we have a very healthy balance sheet to leverage if a very attractive opportunity came our way.

That's great. I just wanna say, you guys have been really front-footed, both in terms of, like, your own development, prioritizations, and how you're trying to implement AI. I think your commentary just now on how you're looking at acquisitions and some of the benefits that they provide, further bolsters that view. What types of customers are you seeing, either generally or what kind of characteristics do they have that are willing to engage with you and kinda match your march forward right now? Where are you seeing the best traction, and where should we look for examples of success patterns? Thanks.

I would say, you know, I'll just highlight quick themes. Financial services is a double-digit growth. Very, very excited about it. Not only are they doing Vector 1, they're innovating new products, new services. Vector 1 is more productivity-led, and they're willing to experiment with us. In fact, one of the things I mentioned in my earnings script is about opportunity with management company to apply Agentic AI on their advisors, wealth advisors, so that they could deliver more innovative products. Financial services is right up there. The second I would say is consolidation opportunities. Consolidation opportunities, I mean, every customer, every Forbes Global 2000 company has a huge set of providers.

I mean, they've accumulated, you know, they've created a big network of providers over the last 25, 30 years. This is their opportunity to consolidate and get some productivity benefits. We are on the front of it, and we are winning a lot on it. That is the second. The third, I would say, is unlock of the third value pool, I would say, is unlock of technology debt. You know, I have great momentum on mainframe modernization. Just to give you a sense, 1 line of mainframe code used to cost $10 to refactor to new age, say, new age software. It now costs $1.50. We have a unique opportunity to unlock. This opportunity didn't exist before because tribal knowledge was missing.

There was cost, financial cost to modernize, and there were legacy skills missing. Now, all of that is out of the window. If you unlock that is trillions of dollars. We're seeing that as a good team. There is operations-led AI. I mean, that's why my BPO business is close to double-digit growth because operations of enterprises are gonna be embedded with this new software which, you know, operations didn't have a chance. If I have to pick specific areas, customer service is the top area where we are seeing this. Employee services is the second area we are seeing. Traditional areas like, you know, financial systems and legal systems.

These are places where we historically didn't see a lot of classical software embedded, so we're starting to see that. One of the things I highlighted in my earnings script is physical AI. I mean, it's a leapfrog for traditional industries with physical manifestation to actually invest into digital enhancement of physical objects. We're seeing quite a bit of that. I think we are at that inflection point now to take productivity and create elasticity of consumption of software, classical software, and use new software, which is, you know, written around the neural networks, to an expansive opportunity in enterprises and integrate the two and reinvent and reimagine businesses.

I mean, this is, this is a fabulous opportunity for system integrators to be those builders and I'm actually more optimistic than I was before on the opportunity in front of us.

Thank you. Next question is coming from Tien-tsin Huang from J.P. Morgan. Your line is now live.

Great. Thanks. Hope you can hear me. Just wanted to ask on Project Leap, if that's okay. Just the offensive or defensive nature of it, what prompted it, the scope of it, and what outcomes we can expect in the short and midterm from Project Leap.

I'll kick off, and I'll get Jatin Dalal to add. I mean, we have a mental frame of what our future operating model looks like, and I'm pretty confident that that operating model is, we are on the journey to get to that operating model. Leap is to make sure that we get there fast. It's our opportunity to resize our pyramid with a broader pyramid. That's why we're hiring more school graduates, more early careers, and shorten the height of the pyramid so that you get to expertise much faster. That's our model. It is margin accretive because the more you broaden the pyramid, the more you could deliver the services in a more AI native way, if I may.

The second important thing is, this allows us to invest into the platforms, AI enabling the enterprise and tokenizing the enterprise, as I call it. It allows us to do that. We have measured the savings. It is in the range of $200 million-$300 million this year, and this is partial because we are already in the middle of the year, and we have two months to complete this process and, you know, three to four months of impact. It has a much higher impact next year in 2027. Not only are we rightsizing the pyramid, and remember, we are also saying our future offerings are not effort-based, they're outcome-based, more and more. I mean, we'll see a mix of it in the transition.

When we get to that new operating model quicker, we are gonna seize these opportunities faster, and we'll be having a more optimized, you know, operating model, and we will have a kitty for investing into our future so that we can seize the opportunities ahead of others. We also said in our investor day that we will have an expansive margin trajectory, which is what we intend to. I mean, last year, 2025, we did 50 basis points in spite of the M&A and the investments. This year, we have upped our margin guidance to 20-40 basis points, increased from 10-30.

We are constantly on that trajectory to keep increasing our margins, keep delivering productivity to our clients, and be in the winner's circle of growth. This allows us to do all of this in a quicker, faster way, we get to that future operating model, which we have envisaged.

Thank you. Our final question today is coming from Surinder Thind from Jefferies. Your line is now live.

Thank you. Ravi, can you expand upon the last point of what is the benefit of showing margin improvement in the current environment relative to your ability to invest? Why not just maximize every dollar of spend, maybe broaden the spend across what I would call more of a VC type strategy where you take more bets? The pace of change is accelerating, as you try to build and adjust the model.

I think you're spot on. If you look at it, we're gonna save $200 million-$300 million this year, which is just a few months. You know, in 2027 we have a much bigger opportunity. We're investing back the rest of the money to generate growth opportunities and be agile enough in the market to generate more growth opportunities. You're exactly right. We're investing more into growth, and we are contributing some into our expansive margins. The idea of doing this is growth and be in the winner's circle.

Thank you. We've reached the end of our question-and answer session. I'd like to turn the floor back over to management for any further closing comments.

Thank you so much for listening to us. I mean, we're very excited about our quarter one performance, very excited about the bookings momentum we've had and the tailwind we have for the rest of the year and of course, our anchor to the AI opportunity and getting there fast with the Project Leap, and keeping our thesis of being in the winner's circle of growth, expansive margins and EPS growth being higher than revenue growth. That's our endeavor, this will allow us to create sustainable, durable earnings for the future.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time. Have a wonderful day. We thank you for your participation today.

Ladies and gentlemen, welcome to the Cognizant Technology Solutions year-end Fourth Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question at that time, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before Thank you. I would now like to turn the conference over to Mr. Tyler Scott, Senior Vice President, Investor Relations. Thank you. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Welcome to Cognizant's fourth quarter and full year 2025 earnings call. I am joined today by Ravi Kumar, our CEO, and Jatin Dalal, our CFO. Now, you should have received a copy of the earnings release and the investor supplement. If you have not, copies are available on our website, cognizant.com. Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC. Additionally, during our call today, we will reference certain non-GAAP financial measures that we believe provide useful information for our investors. Reconciliations of non-GAAP financial measures where appropriate to corresponding GAAP measures can be found in the company's earnings release and other filings with the SEC. With that, over to you, Ravi.

Thank you, Tyler. Good morning, everyone. Thank you for joining us today. I'm pleased to report our momentum continued in the fourth quarter. Revenue growth and adjusted operating margin again outpaced our expectations. Looking at the quarter's highlights, revenue grew 3.8% year over year in constant currency, all organic, driven by North America. By segment, financial services led growth with constant currency revenue increasing 9% year over year during the quarter and 7% for the year, the highest annual level since 2016. Q4 bookings grew 9% year on year, driving a record quarterly total contract value. We signed 12 large deals with TCV of $100 million or greater, including one deal valued at more than $1 billion. The value of these large deal wins is 60% greater than a year ago. Adjusted operating margin of 16% improved by 30 basis points year over year. We now have over 4,000 AI engagements across all three vectors, and over 30% of our developer effort in software development cycles is AI-assisted and agent tech. Our productivity improved as fixed bid and transaction-based work now represent more than 50% of our revenue. We also saw a 5% and an 8% increase in trailing twelve-month revenues and adjusted operating income per employee, respectively. These results drove 2025 revenues up 6.4% in constant currency, surpassing the $20 billion mark and the high end of our guidance range. Importantly, we delivered profitable growth. Our 15.8% adjusted operating margin exceeded guidance, rising 50 basis points over last year. We achieved this result while investing in our people, including through a merit cycle for most associates and our highest discretionary annual bonus funding level since 2018. January marked my third anniversary as Cognizant's CEO. When we began this journey in early 2023, we set out to reclaim our winning heritage. In 2024, we successfully pivoted from stabilization to growth, industrialized a large deal engine, and expanded our platform strategy with AI-led investments to broaden our capabilities. In early 2025, we laid out our strategic objectives to amplify talent, scale innovation, and accelerate growth. We also set a goal to reach our industry's winner's circle by 2027. I'm extremely proud that we arrived two years early with top-tier revenue growth. Throughout 2025, we executed with speed and discipline, consistently meeting or beating the high end of our expectations each quarter as our investments began shaping Cognizant into an AI builder capable of scaling agentic AI across our clients' landscapes. Looking at additional milestones that demonstrate successful execution on our three strategic priorities, in 2025, we promoted more than 35,000 associates. We signed 28 deals, each with TCV above $100 million, with a combined TCV up nearly 50% versus last year. This includes five mega deals with TCV of $500 million or greater. Our net promoter scores reached a record high in 2025, from when I started three years ago. We expanded the breadth and depth of our partnerships across the hyperscaler and AI-native landscapes. We signed and have since closed our acquisition of Three Cloud, adding more than 1,200 Azure specialists and engineers to industrialize our deep expertise in Azure data and AI and application innovation. We returned $2 billion to shareholders through dividends and share repurchases. Our progress is reflected in our total shareholder return, which was top two within our peer group in 2025, both 2025 and the three-year period beginning 2023 through. Finally, with Belcan, we completed key integration milestones and continue to build a healthy synergy pipeline in the aerospace and defense industries. Last week, we announced Belcan secured a position on the missile defense agency's shield program. The indefinite delivery, indefinite quantity contract with a ceiling value of $150 billion positions us to compete for a broad range of task orders supporting innovative defense capabilities. As we enter 2026, our strategy is focused on solving the AI velocity gap. The gap between massive AI infrastructure spending in the past few years and business value realization for our clients. While AI technology is now mature enough to offer transformative value, the methodologies and tools to harness it are only just emerging, and the value to enterprises hasn't drifted yet. In fact, our latest new work new world research released last month reveals that AI is capable of unlocking $4.5 trillion in US labor value in the future. Cognizant's mission is to be the AI builder bridging the gap to enterprise value by converting the technology to measurable returns on investments for our clients. We are approaching this opportunity through our three-vector strategy. To capture vector one demand, as we call it, we're applying AI-led productivity to augment and accelerate traditional software cycles. As we shared at our Investor Day, we see a massive multi-trillion dollar opportunity to help clients accelerate the elimination of technology debt, build classical software in newer ways with AI platforms, and repurpose savings towards innovation. To capture what we call vector two and three, we are building entirely new cycles of agentic capital and digital labor that go beyond the reach of legacy software, creating a much larger total addressable spend. Closing this velocity gap, the AI velocity gap requires new methodologies and evolving beyond the traditional IT services role of the last two decades. In the nineties, we were bespoke systems builders. We wrote custom software code, and we owned the outcomes. In the two decades that followed, our role evolved into orchestrating classical software owned by various software providers. But classical software was written around the microprocessor, was deterministic, and built on rigid logic and fixed rules. Today's AI-led software, which is written around the frontier models, is probabilistic and contextual. This shift allows us to own the stack again and deliver outcomes. We believe the invention and reimagination of businesses will be driven by value at the intersection of AI-led agentic capital and classical software. To capture this demand, our AI builder stack acts as the connective tissue that addresses four layers of the ecosystem: AI compute, cloud, model access, and human capital services. Let me share some key elements. First is our trademark basis framework, our proprietary blueprint that guides clients in architecting new business processes, specifically for deploying and orchestrating autonomous agents. This is a fundamental shift from writing rigid logic to designing behavior, persona, intent, and outcomes. Second is our pioneering science of context engineering, a methodology for mapping a client's unique work graph, giving AI the situational awareness it needs to produce reliable business outcomes. Context engineering bundles an organization's operating principles, tribal knowledge, work patterns, friction sources, and historical and cultural imperatives so that AI intelligently binds to the enterprise's heterogeneous context, creating highly productive agentic capital. Third is our AI partnership ecosystem, which we continue to strengthen. On NVIDIA stack, we are offering solutions across the full life cycle, from building and fine-tuning models to standing up agentic applications and deploying them as microservices. With Anthropic, Google Cloud, Microsoft Azure, and OpenAI, we're using their frontier models and agentic tooling to build layers of application value to accelerate AI adoption for our clients. With Adobe and Typeface, we are modernizing the enterprise marketing function and enabling cutting-edge customer experiences and content by moving manual workflows to agentic orchestration. With Claude's code, cognition, GitHub, and WinSurf, we are industrializing software creation through advanced code generation. With WorkFabric, we are scaling the emerging discipline of context engineering. With Ryder and Uniphore, we are partnering to deploy specialized domain-specific AI platforms. With Palantir, we will integrate its foundry and artificial intelligence platform to support the integration of AI with our TriZero business. Finally, with Salesforce and ServiceNow, we are embedding our agentic networks directly into our client's primary enterprise workflows. The fourth layer of our AI builder stack is our own proprietary IP across platform services and research. For example, Source elevates our engineering velocity while neuro IT ops harnesses AI to proactively manage and self-heal hybrid environments. Our AI data services have helped curate billions of high-precision data points for global clients. With Sizeto, we are accelerating and improving health care management. Our recently launched CareAdvanced AI offerings help streamline clinical workflows, reduce administrative burden, and empower care teams with faster and more accurate insights. Our award-winning AI labs, which was awarded its sixty-first patent, continues to feed our continued investments in AI platforms and products. To industrialize our AI builder stack, we have formed three units to sharpen our go-to-market muscle. First, our market-facing AI units are the hunters of value seekers working to capture the $4.5 trillion in labor value our research identified. Second, our integrated AI solution unit acts as an architectural core bringing various components of the AI stack together with strategic partnerships, cognizant methodologies, and AI platforms to address specific reinvention needs of businesses. Finally, our centralized AI platforms and products unit is a factory packaging custom IP into repeatable solutions. Underpinning our AI builder stack is our talent strategy. Over the last two and a half years, over 340,000 of our associates have completed AI skilling. We are shifting from a traditional linear staffing model to an asynchronous autonomous software engineering model. In this framework, our associates are trained to delegate complex high-value macro tasks to agentic networks while the micro steer to outcomes using platforms like Cognition, Gemini, Cloud, Hub, and others, orchestrating through Cognizant FlowSource. We are in the process of developing a hyperproductive high-velocity delivery model for agents to asynchronously assist human software developers and agent managers. In addition, we are broadening our talent base with non-STEM talent and early career programs. This includes aggressively recruiting interdisciplinary skills at the intersection of industry domain and technology. We added over 16,000 associates in India in 2025. In 2026, we are targeting 2,000 campus hires in the US and approximately 20,000 in India. We are seeing this AI builder strategy translate into demand across our core practices. For example, our proprietary platforms like Flowsource and neuroengineering are helping clients unlock technology debt, helping to fuel 8% year over year in both the fourth quarter and year in our digital engineering practices. Similarly, as our clients rethink their operations through an agentic lens, demand for our BPO business powered by deep immersion of digital labor grew 9% year over year in the quarter and the year. Our AI data training services launched early last year is gaining traction with our clients to build fine-tune AI models at speed and scale. Demand for data and cloud modernization remains healthy with revenue across both practice areas growing mid-single digits organically, outpacing total company growth. Let me share a few client examples of our strategy in action. First, with the financial services client, we signed an incremental billion-dollar partnership where we are leveraging our AI platforms, including our NeuroSuite and FlowSource, to help accelerate speed to market, drive product innovation, and deliver enhanced productivity. Next, with Cisco, the global leader in food distribution, we're transforming their complex customer interaction ecosystem into agentic capital. Previously, customer requests from product credits to auto substitutions could have prolonged resolution windows. Now, by deploying orchestrated agents, we have collapsed that cycle to ninety seconds. Cisco is harvesting this AI-generated savings to fund its next phase of identification. In the health care sector, we moved from pilots to production-grade automation. For a major US regional player, our AI intake platform reduced enrollment cycle times from as many as seven days to minutes. On their claim side, our clinical engine now adjudicates 96% of nurse note reviews autonomously, cutting human review times from eight hours to twenty minutes. We are scaling this expertise globally through a new strategic collaboration with Bupa Hong Kong, where our GenAI-led business process as a service solution modernizes claim and fraud, waste, and abuse detection, marking our largest BPO win in the region. We announced a multiyear expansion with Kolar, a leader in kitchen and bath products, building on our successful five-year partnership. We are bringing our cloud management capabilities and AI solutions like neuro idea ops to advance Kolar's digital ecosystem and drive AI-driven innovation. As we look towards 2026, we are well-positioned to continue our momentum. Our ambition is to lead as an AI builder and maintain a position in our industry's winner's circle. In closing, I'm proud of all that we have accomplished over the last three years. It has helped us reach our industry's winner circle two years ahead of plan. As the next decade of contextual computing unlocks new waves of nonlinear enterprise productivity and agentic software cycles, I believe there is a significant opportunity to create shared value for our clients, our associates, and our shareholders. The foundation is set. I believe the boldest chapters of our story are still ahead. Thank you again for joining us. I'll now turn the call over to Jatin.

Thank you, Ravi, and thank you all for joining us. Our fourth quarter and full-year results were a significant milestone in a multiyear journey marked by disciplined execution, strategic clarity, and operational excellence. We delivered fourth-quarter revenue growth above the high end of our guidance range and exceeded the initial full-year guidance we provided in February across all revenue, adjusted operating income, EPS, and free cash flow. We expect that our calendar year 2025 constant currency revenue growth will be in the top tier among the 10 peers against which we benchmarked performance, placing us definitively in the winner's circle. Beyond revenue growth, we achieved each of the broader objectives we provided at our Investor Day. This includes sustaining large deal momentum, skilling for the future through AI training, approximately 260,000 employees, adjusted operating margin expansion of 50 basis points, and 2025 adjusted EPS growth of 11%, well above revenue growth. We delivered these results during a period of significant macroeconomic complexity and technological change, further bolstering our conviction in the strategic actions we have taken to become an AI builder company. We are well-positioned to sustain this growth in 2026 and confident that we can build on this momentum in the years ahead. Now moving to the details. In Q4, revenue of $5.3 billion grew 3.8% year over year in constant currency and was all organic. For the full year, the revenue of $21.1 billion grew 6.4% in constant currency, including 260 basis points of growth from Belcan. With respect to demand, the environment remains complex. Traditional discretionary spending cycles continue to evolve as clients rebaseline expectations for productivity gains. However, we view this as an opportunity to capture wallet share in large deals and help clients reinvest savings into innovation. Moreover, it opens new pools of addressable spend for us to advance our AI Builder strategy. Now, turning to segment results. Financial Services once again led with full-year constant currency revenue growth of approximately 7%. This was driven by strong performance in North America across banking, financial services, and insurance clients. We have seen a steady improvement in discretionary spending in the last several quarters and consistent large deal signings, including a new mega deal in the fourth quarter. Our pipeline is strong, and we feel well-positioned to carry this momentum into 2026. Health sciences performance was resilient despite ongoing industry cost pressures and policy changes. In this period of heightened uncertainty, we are helping customers reduce costs while improving patient experiences and accelerating productivity. These cost savings are funding clients' future-focused investments across core platforms, cloud modernization, and regulatory readiness. We are seeing GenAI projects grow in areas like claims efficiency, clinical documentation, and customer experience. TriZetto remains a core differentiator, driving growth in implementation and managed services as clients modernize their administrative cores. Products and resources performance has been stable. While tariff uncertainty continues to suppress discretionary spending, we expect large deal traction during 2025 to drive better performance in 2026. AI adoption is growing across consumer and retail sectors, leading to demand for data services and agentic-led experience transformation. In communications, media, and technology, fourth-quarter year-over-year growth among our technology customers was more than offset by weakness in comms and media. Within comms and media, we have seen some impact from broader end-market softness, particularly in North America. On the technology side, clients continue to rapidly innovate and adopt GenAI, which is driving demand for our services. Geographically, North America was again our standout region in the fourth quarter, with growth of more than 4% year over year in constant currency, driven by financial services and healthcare. Europe grew 2% in constant currency, with healthy growth in financial services and among life sciences customers. Rest of the world grew in line with the total company, driven by the Middle East. Turning to bookings, bookings growth in the fourth quarter was driven by robust large deal performance. We signed 12 deals, each with TCV of more than $100 million. This includes two mega deals in the quarter, one in financial services and one in healthcare. On a trailing twelve-month basis, bookings grew 5% and represented a book-to-bill of 1.3. Annual contract value declined modestly year over year due to the mix of longer-duration deals and softness in small deal banks. That said, our backlog visibility at year-end is similar to where it stood this time last year and underpins our confidence in our full-year guidance. Now moving on to margins. Fourth-quarter adjusted operating margin of 16% increased by 30 basis points year over year, benefiting from NextGen program savings, increased utilization, and the Indian rupee depreciation. We delivered this result despite increased compensation costs, including our merit cycle and variable compensation, which drove a significant portion of our gross margin change year over year. Variable compensation for the majority of our associates is expected to be the highest since 2018, and we remain committed to investing in talent to fuel our growth. In November, the Government of India implemented certain provisions of the Code on Social Security or Labor Code as part of a broader labor law consolidation initiative. These rules did not have a material impact on our P&L in the quarter but did result in a one-time increase to our defined benefit liability on our balance sheet with a corresponding increase to accumulated other comprehensive income. We anticipate a modest increase in our defined benefit costs perspective. Now, to additional details on EPS, cash flow, and capital allocation. Fourth-quarter adjusted diluted EPS was $1.35, up 12% year over year. This drove full-year EPS of $5.28, up 11% from the prior year. DSO of eighty-one days declined one day sequentially and increased three days year over year. Fourth-quarter free cash flow was up approximately $800 million and brought the full-year amount to $2.7 billion, representing more than 100% of net income. During the fourth quarter, we returned nearly $500 million of capital to shareholders through share repurchases and dividends, bringing the full-year total to approximately $2 billion. We ended the quarter with cash and short-term investments of $1.9 billion or net cash of $1.3 billion. These amounts exclude about $730 million, which was deemed restricted cash and held in escrow ahead of the closing of the Three Cloud acquisitions on January month. Our M&A pipeline is healthy, and we intend to maintain an active acquisition strategy to strengthen our capabilities aligned with our AI Builder strategy. We believe our robust free cash flow and strong balance sheet provide us with flexibility to invest strategically in the quarters ahead while continuing to return significant capital to shareholders. Now turning to 2026 guidance. For the first quarter, we expect revenue to grow 2.7% to 4.2% year over year in constant currency. This includes approximately 100 basis points from our recently completed acquisition of Three Cloud. The midpoint of this range implies a modest sequential decline on an organic basis, due in part to lower bill days in Cuba. For the full year, we expect revenue to grow 4% to 6.5% in constant currency. This includes an inorganic contribution of approximately 150 basis points, of which approximately one-third is expected to come from future M&A. The midpoint of the range implies organic revenue growth of approximately 3.8%, which is consistent with our 2025 performance. This is also approximately 150 basis points above the midpoint of our initial 2025 organic growth guidance provided last year. At the midpoint, our full-year guidance implies stronger sequential growth in the second and third quarters compared to 2025. Similar to our guidance philosophy last February, the midpoint is based on our current visibility and the discretionary demand environment as we see it today. Our adjusted operating margin guidance is 15.9% to 16.1%, which represents 10 to 30 basis points of expansion and is in line with the outlook we provided at our Investor Day last year. Similar to 2025, we expect expansion will be driven by cost discipline and SG&A leverage. We expect free cash flow conversion of 90-100% of net income. The adjusted effective tax rate is expected to be in the 25% to 26% range. The midpoint implies a modest increase year over year, driven in part by discrete beneficial items in 2025 that we do not expect to repeat in 2026. Our expected weighted average diluted share count is approximately 475 million. This leads to adjusted diluted EPS guidance of $5.56 to $5.70, representing 5% to 8% year-over-year growth. Expected EPS growth is being driven by anticipated revenue growth, margin expansion, and lower share count. This is being partially offset by a higher tax rate, lower interest income as a result of lower assumed interest rates, and an increase in non-operating expenses related to the India labor code changes. For 2026, we expect to return approximately $1.6 billion of capital to shareholders, including approximately $1 billion towards share repurchases and the remainder toward our regular dividend. This leaves ample expected free cash flow available for future M&A. As always, we will evaluate these plans regularly. In the absence of strategic and accretive acquisition targets, we expect to return capital to shareholders and not build cash on the balance sheet. Finally, as we mentioned last quarter, we continue to evaluate a potential primary offering and secondary listing in India. We have engaged various financial and legal advisers as well as the regulators in India to assess the idea. As always, we remain committed to acting in the best interest of our shareholders, and this process aligns with this commitment. As of today, the board and management team continue to evaluate the proposal and have not yet made a decision. In summary, 2025 was a successful year. As we look toward 2026, we are well-positioned to continue our momentum. As Ravi mentioned earlier, our ambition is to lead as an AI builder and maintain our position in our industry's winner circle. With that, we will open up the call for your questions.

Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. In the interest of time, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Jason Kupferberg with Wells Fargo. Please proceed with your question.

Good morning, Nice to see these numbers. I just wanted to start on the AI topic. And obviously, some new data points coming out from certain industry participants just over the last couple of days. For example, talking about expediting ERP implementations pretty significantly. It certainly seems to us, like, Cognizant to date has been a net winner from AI. To get your perspective on how that plays out in '26 and maybe just in light of some of these recent headlines, what percent of your total revenue currently comes from package implementation? Thanks.

Thank you for that question. You know, this has happened over tech revolutions before. When a new technology comes, we kind of think the old technology will go away, but the new technology will actually provide more opportunities. I see this as an increase in our total addressable spend. I mean, if you're referring to what's happening in the last few days, I can tell you any tool, any technology will not magically generate value on the other side. You need a bridge. And that bridge is what companies like Cognizant do. I'm gonna be precise on what I mean. You can't apply this technology on existing old processes. So you have to reinvent and reimagine a process. This is a technology that is very contextual in nature. It's not written on the microprocessor, which is deterministic. It's very probabilistic, which means we have pioneered something called context engineering, which is grounding this technology in the reality of an enterprise, understanding the heterogeneity of an enterprise. I mean, two SAP implementations are not the same, just to go back to the package work you spoke about. And it is about understanding the hustle, the flows, and everything else. Integrating deterministic software, which was written for the last twenty-five years, with probabilistic software, which will be written for the next twenty-five years. And building flows where digital and human labor can work together, integrating it into the operating and the physical layers of an enterprise. I think all of this is a lot of heavy lift. I mean, if this was all real, and if this was it, it would have switched on magically without anybody doing anything. We would have seen the drift of value already. And that's not happened yet. There is, you know, our study said there's $4.5 trillion of labor which can actually be amplified with higher productivity out of the $15 trillion in the United States in the last few years. It's not drifted yet because all of this has to be done. Equally, going back to what you just asked, there is technical debt. There is a lot of backlog. There is the elastic of software, the traditional software, leave it all the new software we're gonna write, which can actually expand. So we see this as a net new tailwind for us on two swim lanes. On the traditional software, apply it, you know, and do more for less and get more consumption because of elasticity, take out technical debts, take out the backlog. On the other end, apply this on a much new addressable spend, which classical software didn't penetrate. So I see this as more of a bigger opportunity for us and a higher surface area for us to actually operate. So this is a tailwind. We are cutting out to be winners. Our builder strategy is working. And our three-vector strategy we spoke about, both on applying this to traditional software and writing new agentic software, which can actually capture significantly more surface area and enterprises. We think it's a phenomenal opportunity. Now enterprise software package, you spoke about, you know, package software has been there for the last twenty years. There has been deterministic code. There's been systems of recording it. We're gonna apply layers of AI value on top of it, actually generate more value than before. So there is gonna be a coexistence of deterministic and probabilistic software, and there's gonna be interplay between the two. Okay.

Understood. Thanks for all that color. And just a numbers one, for Jatin. I wanted to ask about gross margins. It sounded like the year-over-year decline in Q4 was primarily due to higher variable comp, which is arguably a good problem to have just given the overall financial performance of the company this year. But any other gross margin dynamics we should be thinking about in terms of 2026? Do you expect gross margins to be up year over year? And just to clarify, are you seeing any like-for-like pricing pressure as part of the year-over-year declines in gross margin currently? Thanks, guys.

Sure. So, yes, Q4 impact on gross margin was predominantly on account of higher bonus funding that we did for the full year. In quarter four, led by a strong operating margin performance for the full year that we were able to deliver. Apart from that, there was also a salary increase, as you are aware, which came through effective first November into the gross margin. So I would say those are the two factors that played out a bit in quarter four. I think the right way to see our gross margin is for the full year. And the full-year impacts are predominantly one, you know, the Belcan impact for the full year in 2025 gross margins. And the second is essentially slightly, I mean, essentially, the higher bonus for 2025. And as you mentioned, it's a good thing to have. Looking ahead for 2026, I mean, there is a productivity lag pressure in the industry. And therefore, the expectation that for a dollar value, you get a superior throughput than what you traditionally enjoyed through traditional productivity levers in the past. And that does impact the revenue, but I wouldn't call it a drag on margins yet so long as you are able to execute on your internal productivity measures and keep the cost curve below the price curve continuously, and that's what you have seen. We have been able to deliver revenue per employee productivity and profit per employee productivity in the previous twelve months. So far, we have been able to execute well against that market momentum for productivity, and therefore, I would say we are entering 2026 with that confidence. Going forward, we'll have to continue to watch out for the moment in the market. We do think that we have a few levers apart from AI productivity, and a couple of them are really the continued improvement in Pyramid. We hired 20,000 fresh college graduates in 2025, and we'll continue to look at that. And that does impact the long-term cost structure of the organization. And we'll continue to look at other traditional measures like offshoring and utilization beyond AI perk that I spoke about. So overall, we have things we can work through for 2026.

Thanks.

Thank you. Our next question comes from the line of Tien-Tsin Huang with JPMorgan. Please proceed with your question.

Really strong large deal activity again here in the fourth quarter. So I want to ask your confidence and your ability to grow off of that larger base in '26 over '25. How does the pipeline look for larger deals in '26? And any good line of sight into deal ramps being timely. Thanks.

Thank you, Tien-Tsin, for that question. Yeah. I think we've had a great bookings quarter, 9% YoY, TTM 5%. 50% increase in TCV on large deals for the full year and 60% increase in TCV of large deals in quarter four. And we are very excited about the fact that our fixed price business now is almost 50%. I mean, you know, three years ago, that used to be 41 to 42%. So we can, in some ways, fixed price it, share the productivity of the clients, and actually pass on some to ourselves. We're keeping that, you know, we are one of the we are probably the only player in our peer group which talks about code-assisted and autonomous software engineering. 32% of our code is AI-assisted. So we have now activated two swim lanes. In 2024, a lot of the large deals were productivity-led. Now we are seeing innovation-led vector two, vector three, as I call it. We did $1.2 billion deals in Q4. So it was a start. We crossed $10 billion. That's a record of starts. We have one $1 billion deal in quarter four, have five mega deals in the full year, and we have two mega deals in quarter four. So we have a strong pipeline, and we have reactivated both the swim lanes. And we are starting to do the transition of that work, and therefore, we see a solid quarter two and quarter three. In fact, we see more acceleration during the year of ramp-up as well as more deals on the way. So I'm very excited about the fact that this has become a tailwind for us. AI is a tailwind for us.

No. Terrific. It's impressive. And so just clarify, you mentioned it there, Ravi or Jatin, if you wanna chime in. The confidence in the faster sequential growth beyond the first quarter being higher than the pattern in the last couple of years. So it sounds like that's really just what you see in terms of the large deals ramping and the timeliness of that?

Sure. So to me, there are two factors that play there. One, of course, is the strong bookings that we are walking in 2026 with. And the second is there is some amount of seasonality between quarters also in 2026 compared to '25. For example, in Q1, there are lower bill days in '26 compared to the number of bill days that we had in Q1 in 2025. Which automatically means that the sequential number improves in quarter two compared to quarter one in 2026. So these are the two factors that give us confidence that we can execute better sequential growth in the middle of the year. And that's what we have assumed in our guidance range, including the ramp-up of deals, you know, which we have closed in quarter four.

Understood. Well done on all the deals here. Thank you.

Our next question comes from the line of Keith Bachman with BMO Capital Markets. Please proceed with your question.

Hi. Many thanks. I wanted to ask about the risk and opportunities of the fixed price, or success-based contracts are now about 50% of total. And what I'm trying to understand is your pricing I think you're pricing these contracts on assumed cost curves that leverage new innovations including AI, and I just wanna understand how you know, a, is there more are these are the prices more aggressive today than they have been? B, how should investors think about the risk and the opportunities of overage and underage in terms of achieving those cost curves? In other words, are you sharing those risks with the customers? But if you could just speak to the changing nature of the economic risks associated with these success-based contracts.

Sure. So, you know, there are various types of fixed price engagements, but essentially, I mean, they have one thing in common is that the larger component of delivery risk resides with the service providers like us. And, essentially, we underwrite the productivity in the beginning of the contract and we deliver to that productivity to the customer irrespective of whether we are able to achieve that outcome from a cost standpoint or not. The history of the industry is that we always have found ways through new technological progress to be able to deliver it. Specifically, in light of the whole large deal momentum that Cognizant has been able to achieve, we have a very, I would say, very robust process of bid versus date that we monitor every month the performance of the deals that we have won and how we are delivering our operating margin and revenue performance against those promises. And I'm happy to share that we deliver on aggregate of the portfolio very close to the expected margins that we had planned, which means we are in aggregate not having any overrun or also not significant underrun. So overall, we are tracking to the budgeted goal for our customers as we go, and that we will continue to do. That is something that is crucial in times like this when technology is shifting. And overall, we feel we are performing well.

I just wanna add two quick points to Jatin. If you look at it, in some ways, we are sharing the productivity, sharing the risk with our clients, but we are actually doubling down on execution. Look at our revenue per person and margin per person. It's gone up by 5% trailing twelve months, 8% margin, and 5% revenue trailing twelve months, which essentially means we are able to share with our clients the productivity, win, and actually, price to win and deliver to margins. That's our motto. And I think with this nonlinear opportunity with the technology, you can be ahead of the curve and do that. The second, I would believe, which is a very important shift, historically, if you look at it, go back to the nineties, companies like ours used to own the outcomes. And we used to price on outcomes. And then the enterprise software, both on-prem and SaaS, and then the plumbing on the cloud kind of abstracted layers of that value. And outcome-based was hard because there were so many people in the mix. We are fast forward. We can own the outcomes. We can own the outcomes. We can make this a platform play. We can make it nonlinear cost and nonlinear revenue. And we can take over operations of companies and give them a service. That is the reason why our BPO business is actually growing at 9%. Why on why? 9% of the BPO business is growing because we are able to do that very well. We are able to deliver outcomes on the value chain and share the benefits.

Yeah. We thank you, Ravi. This sort of led into my next question durability of BPO. I think, you know, two years ago, many, including ourselves, had some concerns about the you know, what AI would do to BPO. It's been I think, one of the more robust parts of the market. And it seems clients need help in setting AI into BPO. And my question is, how durable is this? In other words, once you get those processes established in BPO, enabled by AI, does that create longer-term headwinds, or is there enough momentum here this is a multiyear tailwind or good growth within the context of BPO?

You know, that's a great question. I mean, look. This is total addressable spend, which is 10 times or maybe 20 times more than tech spend because you're embedding technology data into process and in recent times, machine learning and AI. You know, Cognizant has had nine to 10% growth in BPO for three years in a row. And the reason why we have done so is because we have always been on the cutting edge. We think this is a longish tailwind because operations of companies are a much bigger addressable spend. And we think we have an opportunity not just to transform, reinvent, reimagine flows in a company, we also have the ability to maintain them. There might be no I think we are underestimating how much that reinvention will need. It's decades of work. We are underestimating how much it needs to maintain. I mean, this is a contextual technology. It has to be grounded. It has to be situational. And we, you know, the effort needed to maintain and manage deterministic technology is less than the effort needed to maintain a probabilistic technology. So we have actually more work to do in maintaining than before. So I see this as a significant tailwind to our BPO business. We call it intuitive operations. You know? Even before AI into picture. So that's how we see this.

Okay. Thank you, gentlemen. Much appreciated.

Thank you. Our next question comes from the line of Jim Schneider with Goldman Sachs.

Good morning. Thanks for taking my question. As you talked on the Health Sciences script about the cost benefits to those companies sort of outweighing any kind of regulatory pressures you're seeing. Clearly, in the payer space, there's been a lot of debate about additional regulatory burdens and cost pressures. Just would love to understand your level of confidence in the relative growth for your Health Sciences segment this year relative to your full-year guidance overall?

Thank you. Our health sciences business grew at six-plus percent, way higher than our company average. It's a business where we probably are the number one player in the market. We have a platform with half a trillion dollars of transactions flowing through it. We have 200 million members. We have a moat, which is super differentiated. There is a lot of labor sitting around it. And I think with the uncertainty of regulation in the payer side, you will want to transform those layers of value around the TriZero business. And shift that money to care. Because there is uncertainty around spend cycles. We're seeing more traction with companies that are willing to apply AgenTek in and around the traditional platform. And we see this capture of these value pools in new spend areas for Cognizant. We have started to partner with Palantir, which I spoke about. We have a partnership with Microsoft. We have a partnership with AWS. We are doing with Google Cloud. We're putting all these layers, and we're identifying the labor attached to it so that the administrative costs are gonna go down. And that money is gonna be underwritten for care. So there is more hustle and more work because of the uncertainty and the need and the paranoia about transformation so that this money is gonna be moved to care. Equally, there is a lot of work around applying agent takes to, say, bedside care. Or applying agentic to the life cycle of patients all the way from before they start to get to a doctor to after they finish the visit to the doctor. In fact, some of the places I've mentioned one or two examples where we are able to take notes of doctors and nurses and identify the whole thing and create high productivity for health care workers. So I see this as a tailwind because of the fact that there's uncertainty around regulation. We are actually gonna see more transformation on the administrative layers which will then transfer that value to care. Of course, there's also a part of life sciences and providers ecosystems there. And remember, the regulatory pressure is only on Medicaid and Medicare. It's not on commercial health care. But having said that, I think that uncertainty provides an opportunity to constantly innovate and transform and also to adhere to new regulatory norms using technology to adhere to new regulatory norms.

Thank you. And then maybe as a follow-up, you sort of discussed many things that are sort of impacting gross margins at this point, whether that be the kind of outcome-based pricing, the fixed pricing, and also the pyramid. Can you maybe talk about when do you see line of sight to sort of gross margin inflecting on a year-over-year basis at some point during the course of this year? Thank you.

Yep. So, Sachin, we'll I mean, we have guided for the overall operating margin line. I want to guide at both the lines. But our endeavor would be to strive to reach that improvement in the gross margin line too. As I shared before, 2025 doesn't worry me because I know these core margins have remained protected. The dilution that you see in 2025 is coming predominantly because of Belcan, which has a structurally more on-site centric work, and therefore, it is not about lower profitability. But since you add a business that is more on-site centric, it is bound to have a lower gross margin, as you know. So it is not it is just a portfolio that has a particular characteristic which got added to the larger portfolio, that's one reason. And the second reason is really the higher bonus payout, which I think is a good thing for our employees. So I know we are protected and sustained the margin in '25. We will work towards, of course, improving them in the future.

I just wanna add two quick things here. Look. We are broadening the pyramid. We have a thesis that the value is actually gonna be more at the bottom. With higher productivity. Last year, we added more school graduates than the previous year. This year, we're gonna add more school graduates than the previous year. So that's gonna give a tailwind to it. Our productivity sharing with our clients and how much we are gonna keep back, is, you know, the 5% revenue per person and 8% revenue margin per person, that's gonna help. And, you know, good discipline operating has also helped. So there is a tailwind on it, and we're not worried about keeping our expensive margins for 2026 and beyond.

Thank you.

Thank you. Our next question comes from the line of Bryan Bergin with TD Cowen. Please proceed with your question.

Wanted to start with just kind of a bookings to growth question. So can you help bridge the ACV growth performance in 2025 to your 2026 growth guide? I'm just curious how you're factoring things pipeline diversion and really the midpoint of the range as well as things like short-term work. Can you detail that first? And then I'll ask my follow-up here. On the margin front, just SG&A, you've driven meaningful savings here in '25. You've actually held the dollar level flat for, like, three years. Understanding it wasn't optimized before, I'm just thinking how much more meaningful room do you have in that SG&A line to continue to help you?

Yeah. So on ACV, definitely we saw some amount of softness in quarter four, but I would also characterize that with the bundling of smaller deals being given out as consolidated contracts, and therefore, you see significant TCV of large deals which corresponds to that shrinkage for the smaller deals. That's a sort of industry dynamic that we see in times like this. So while that is definitely a data point, it is not something that is a challenge from a growth standpoint. On your sorry. Can you just repeat your second question?

Yeah. Just on SG&A. So you've done a great job there, right, for a couple of years. I'm just curious how much more room you have to optimize that base to continue to help if gross margin isn't gonna stabilize sooner?

SG&A continues to be an area of focus for us. So while we have done a good job in '25 and '24, so two years in a row, but that has now additional opportunity in the form of the deployment of AI in the corporate work that we do. So certainly, we will continue to push that in 2026 too.

Alright. Thank you.

Our next question comes from the line of James Faucette with Morgan Stanley. Please proceed with your question.

Thank you so much. Just wanted to ask a couple of quick follow-up questions. On near-term activity and sales engagement, I think you've mentioned a little bit of softness there at least in the fourth quarter. Can you just give a little more color there? Where were you seeing that? Is it just in near-term bookings, and how are you feeling about the potential for discretionary work to come back? I know that that's been something that everybody's been looking forward to coming back a little bit more aggressively, and clearly, you're doing well in kind of the larger deals, but just wondering about kind of more of the faster-term business.

Yeah. So, you know, look, we'll continue to see more large deal momentum. I mean, if you wanna share productivity with clients and win and use the process of consolidation, wallet share swap. Let's say, phenomenal opportunity. Innovation levers are trying to kick in now. That's gonna help us on smaller deals and discretionary. Look at financial services. We did nine-plus percent quarter four, and we did seven-plus percent for the full year. Financial services is a lot of discretionary. So and it's our largest vertical. And financial services performance in 2025 is the best we have had since 2018. So it is actually a good tailwind. I think there's gonna be as the pivot for AI shifts significantly from productivity to innovation, we're gonna see more discretionary flowing in. There is a talk of physical AI, which is now starting to hit manufacturing and automotive and aerospace and industries of that kind, that will also create opportunity. As the AI experiments will start to go into production, we're gonna see discretionary new value pools opening up. So overall, I think financial services is positive news, and it's one of our most cutting-edge industries and the highest exposure. So the others will follow. So I do see the unlock. Of course, the macro has to support for the acceleration. You know, for discretionary, the macro has to support. What I'm not worried about is, you know, actually, I would say if the AI advances have to trickle drift to the businesses, I would actually believe that that is actually gonna support the discretionary to come back. It's gonna be a catalyst. It's gonna trigger a CapEx cycle on enterprises to drift that value. And it will flow through to us. So that's how I'm seeing it. Financial services is a starting point, which has already happened. The others will follow.

Yeah. Thanks for pointing out financial services. That stood out to us as well. And then just quickly, I know you gave a quick summary of the work that you're doing, India listing. Can you just give us a rough idea of what you're thinking about in terms of time frame or when at least we should be able to put together a calendar and time frame list? I know that's a key concern or at least thought for a lot of investors.

Yep. So as I mentioned in the opening remarks, we continue to make progress. We are engaged with our advisers. At this juncture, we are still thinking through the decision, the regulatory framework, and therefore, the around the imminent secondary sorry, primary offering and secondary listing. And at some point, we should be able to come back and tell you more about this. But at this juncture, I think it's a continued progress would be what I would suggest as an update from the previous quarter to this quarter.

And we have had constructive discussions with the regulators. So we're continuing to do what is right for our shareholders and continue to look for more investors to be a part of our growth story. So we'll keep you updated on that. Maybe we'll take one. Thank you.

Our final question today comes from the line of Rod Bourgeois with DeepDive Equity Research. Please proceed with your question.

Okay. Great. And I'll just ask one. Given the time here, Hey. You already addressed the question about AI being applied to ERP implementation. There's also new Claude plugins geared towards workflow automation. I wanted to ask to what extent you see such workflow automation abilities impacting your market opportunity and to what extent you already have a partnership all in that area. Thank you, Ravi.

Thank you, Rod. Look. We announced a partnership with Anthropic last year, late last year. The more AI can do, the more is the opportunity for us. It's very simple. I mean, let's talk about the plug into legal. How much software has been implemented in legal? There is so much paralegal work happening. In fact, we work for a professional services and a legal services company where we are agentifying all their paralegal work. That never existed before. Now there's a lot of labor around classical software. And all that labor needs more productivity. If you want to drift that value to higher productivity to the workers, in every function of a company, AI can be the catalyst. And that is a net new spend area for us. And that is what we're looking for. Those net new spend areas. This is a totally new addressable spend. And if you're embedding technology, you are able to integrate this technology to the system of record written in SaaS software and you're able to build those workflows, build those flows where humans and digital labor can work together and amplify the productivity. If you're able to reinvent those processes for higher throughput, higher velocity, using this tool as a catalyst, we're gonna up the productivity of enterprises and bump up the productivity of workers and we're gonna be the bridge to do that. So I see this as a unique new opportunity. The more it comes in I mean, remember, this technology is smart enough already. I mentioned in our remarks that $4.5 trillion of labor is already exposed to AI and it can create higher productivity. The reality is none of that is drifted to enterprises. None of that is drifted to enterprises. Need that bridge. And that bridge is all about contextual engineering. It is about reinventing the process. It's about redefining redesigning these flows in a company, integrating it into the SaaS layer so that there is interplay between deterministic and probabilistic layers. And it is also about integrating it into the physical and the operational layers of the company so that you can get that value. So that is the way forward. And, don't I mean, at this point in time, it is not about getting the smarter technologies. We already have smarter technologies. At this point in time, how do you drift that value to businesses? And, there is an urgency because you know, there's $405.1 billion dollars which has been spent on infrastructure in the last two years. And you have to get that value here, and there's trillions of dollars of value. And the shelf life of this technology is short. So I see this as a net positive. For more work, more surface area, more addressable spend. For companies like ours, and we call it the AI builder because we have this unique to be the bridge.

Thank you.

So thank you so much for joining the call. Thank you for your continued support. We've had an exciting 2025. You know, we have outpaced our own expectations on revenue, margin, EPS, EPS growth has been higher than revenue growth, expensive margins. This is what we said in the investor day. And we are continuing to keep our trajectory, accelerating our trajectory. We are on the top of our charts on our relative growth in comparison to our peers. And we hope to keep the Minas Circle performance in 2026 expansive margins, and EPS higher than revenue growth revenue growth at the middle of our range is actually higher than what we presented last year. And we are in a solid foundation. I think the boldest chapters are gonna be in 2627 as we go forward.

Thank you. This concludes today's Cognizant Technology Solutions year-end fourth quarter 2025 earnings conference call. You may now disconnect your lines. Thank you for your participation.