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Cognizant’s Contract Evolution: Why Fixed-Price Deals and AI Productivity Are Changing the Margin Story!

Cognizant Technology Solutions has shown a consistent upward trajectory in financial performance over the past year, demonstrating growth in revenue and profitability that outpaces prior expectations. The company’s revenue increased by 3.8% year-over-year in constant currency during Q4, with the full-year total reaching $21.1 billion, marking a 6.4% growth aided by strategic acquisitions. Notably, Financial Services was a standout segment, with a 7% rise in constant currency revenue, reaching its highest since 2016. This increase was buoyed by strong performance in North America, specifically within banking, financial services, and insurance sectors. Cognizant saw considerable traction in signing large deals, including several mega deals eclipsing $500 million in value, and reported an upward trend in overall bookings. The steady growth was supported by an adjusted operating margin improvement of 50 basis points compared to the prior year, despite rising employee compensation costs.