Cognizant CEO Ravi Kumar said the company saw strong growth in health sciences and financial services accounts and the common theme is using artificial intelligence to take out costs.
Speaking on Cognizant's first quarter earnings call, Kumar noted that "we saw healthy discretionary spending as clients continue to invest in cloud and data modernization and in building foundations for AI-led innovation."
Like other services firms, Cognizant is well aware of a volatile economic picture. Kumar explained the backdrop:
"The macro environment changed sharply in early April and continues to evolve in real time. As our clients navigate this period of elevated uncertainty, they're partnering with us to re-baseline the cost of technology deployment. And we continue to see opportunities related to productivity, efficiency and cost takeout."
That reality has been a common theme among Cognizant's rivals as well as financial services firms. Simply put, the projects that can provide returns and provide wiggle room on expenses amid tariffs and other geopolitical shocks win out.
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For Cognizant, the AI momentum is paying off. Cognizant reported first quarter earnings of $1.34 a share on revenue of $5.1 billion, up 7.5% from a year ago. Non-GAAP earnings were $1.23 a share. Cognizant's results topped expectations.
As for the outlook, Cognizant projected revenue growth of 5.9% to 7.4% and full year revenue of $20.5 billion to $21 billion, up 3.9% to 6.4%.
Kumar said several of Cognizant's large deals in the first quarter were driven by AI projects that drove efficiency and savings. Cognizant has been investing in AI-driven software for industries as well as embedded software, IoT and engineering services. Cognizant has more than 1,400 generative AI engagements at the end of the first quarter, up from 1,200 at the end of the fourth.
These engagements break out like this:
- AI-led productivity efforts to shed tech debt.
- Industrialized IT and using AI to better integrate systems.
- Agentification, which is just starting but has the most potential. "We are seeing early agentification experiments from our clients in financial services, retail and healthcare. To illustrate an example, working with Google LLM models, our teams have developed more than 20 agentic solutions, addressing many of healthcare's most pressing challenges. Our work touches efficiency, customer experience, clinical decisioning and regulation," said Kumar.
Those three areas reinforce each other and ultimately drive cost savings and innovation, said Kumar.
For now, Cognizant noted that it is seeing slower decision making from customers. "In April, we did begin to see some slowdown in client decision-making and discretionary spending. This has been more pronounced with select clients in certain segments, including health sciences and products and resources. We believe the impact has been isolated so far in the second quarter, and we are closely monitoring development for implications across our broader portfolio," said CFO Jatin Dalal.
However, Dalal noted that the current backdrop is "presenting opportunities" as enterprises prioritize cost optimization, vendor consolidation and productivity. Health sciences and financial services is seeing strong demand. Communications, media and technology revenue was flat.
