Cognizant's Q2 2025: Unraveling Contradictions in Client Spending, Labor Trends, and Revenue Growth

Client spending preferences and market conditions, labor market and headcount growth, bookings and revenue growth, large deal momentum and sustainability, AI-led productivity and large deal execution impact on margins are the key contradictions discussed in Cognizant's latest 2025Q2 earnings call.



Revenue Growth and AI Integration:
- Cognizant Technology Solutions reported revenue of $5.2 billion for Q2 2025, up 7.2% year-over-year in constant currency.
- The growth was driven by strong organic performance in Financial Services and Health Sciences, as well as strategic AI-led initiatives, such as Agentic AI, contributing to productivity and innovation.

Bookings Surge:
- Bookings grew 18% year-over-year, with trailing 12-month growth of 6%.
- This increase was attributed to six large deals with a total contract value of over $100 million, including two mega deals, each valued around $1 billion, reflecting significant momentum in AI-led projects and new spend cycles.

Operating Margin Expansion:
- Cognizant's operating margin improved by 40 basis points year-over-year to 15.6%.
- This was achieved through operational rigor, disciplined cost management, and the Indian rupee's depreciation, despite the dilutive impact of the Belcan acquisition.

Increased Headcount and Talent Development:
- Headcount grew by approximately 2% sequentially, led by hiring of recent college graduates, while trailing 12-month voluntary attrition declined by 60 basis points.
- This strategic hiring is part of efforts to prepare the workforce for an AI-led future and leverage emerging technology hubs like Visakhapatnam and Chennai.