10-K – 2026-02-12 – ctsh-20251231.htm

The case proceeded to a retrial on September 24, 2024, and on October 4, 2024, the jury returned a verdict in favor of plaintiffs. On December 5, 2025, the USDC-CDCA awarded plaintiffs $ 16  million in interim attorneys’ fees and costs; and separately found in plaintiffs’ favor on their claim that Cognizant policies had a disparate impact on non-South Asian and non-Indian employees in view of the same evidence presented at the retrial. In addition to trials on certain non-class claims, the case will now proceed to the second phase to determine individualized liability and damages, if any, for each class member. As a result of the verdict, each non-South Asian and non-Indian class member who pursues claims in the second phase will be entitled to a rebuttable presumption that all termination decisions were discriminatory and to the possibility of recovering punitive damages if they prevail. We believe that class certification was improper, and that the second phase of the case will confirm that individualized issues should have precluded class certification. Cognizant will continue to vigorously defend itself and pursue all available appellate arguments concerning class certification, the September 24, 2024 trial, and related orders at the appropriate time. Beca use we cannot predict the number of individual plaintiffs who will proceed to the second phase, or the outcome of those cases, and in view of the appellate arguments regarding class certification, we are unable to reasonably estimate a possible loss or range of loss. We have not recorded any accruals related to the ultimate outcome of this matter.
Many of our engagements involve projects that are critical to the operations of our clients’ business and provide benefits that are difficult to quantify. Any failure in a client’s systems or our failure to meet our contractual obligations to our clients, including any breach involving a client’s confidential information or sensitive data, or our obligations under applicable laws or regulations could result in a claim for substantial damages against us, regardless of our responsibility for such failure. Although we attempt to contractually limit our liability for damages arising from negligent acts, errors, mistakes, or omissions in rendering our services, there can be no assurance that the limitations of liability set forth in our contracts will be enforceable in all instances or will otherwise protect us from liability for damages. Although we have general liability insurance coverage, including coverage for errors or omiss ions, we retain a significant portion of risk through our insurance deductibles and the re can be no assurance that such coverage will cover all types of claims, continue to be available on reasonable terms or will be available in sufficient amounts to cover one or more large claims, or that the insurer will not disclaim coverage as to any future claim. The successful assertion of one or more large claims against us that exceed or are not covered by our insurance coverage or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, results of operations, financial position and cash flows for a particular period.
In the normal course of business and in conjunction with certain client engagements, we have entered into contractual arrangements through which we may be obligated to indemnify clients or other parties with whom we conduct business with respect to certain matters. These arrangements can include provisions whereby we agree to hold the indemnified party and certain of their affiliated entities harmless with respect to third-party claims related to such matters as our breach of certain representations or covenants, our intellectual property infringement, our gross negligence or willful misconduct or certain other claims made against certain parties. Payments by us under any of these arrangements are generally conditioned on the client making a claim and providing us with full control over the defense and settlement of such claim. It is not possible to determine

Cognizant F-34
December 31, 2025 Form 10-K

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the maximum potential liability under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement. Historically, we have not made material payments under these indemnification agreements and therefore they have not had a material impact on our operating results, financial position, or cash flows. However, if events arise requiring us to make payment for indemnification claims under our indemnification obligations in contracts we have entered, such payments could have a material adverse effect on our business, results of operations, financial position and cash flows for a particular period.

Note 15 — Employee Benefits

Defined Contribution Plans
We contribute to defined contribution plans, including 401(k) savings and supplemental retirement plans in the United States. Total expenses for our contributions to our U.S. plans were $ 124 million, $ 115 million and $ 117 million for the years ended December 31, 2025, 2024 and 2023, respectively.
In addition, we maintain employee benefit plans that cover substantially all India-based employees. The employees’ provident fund, pension and family pension plans are statutorily defined contribution retirement benefit plans. Under the plans, employees contribute up to 12.0 % of their eligible compensation, which is matched by an equal contribution by the Company. For these plans, we recognized a contribution expense of $ 152 million, $ 151 million and $ 149 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Outside of the United States and India, we incurred expenses of $ 125  million, $ 104  million and $ 107  million for the years ended December 31, 2025, 2024 and 2023, respectively, related to our contributions to defined contribution plans.
Defined Benefit Pension Plans
We offer defined benefit pension plans that are statutorily required and primarily cover employees in certain countries. Our primary plan is in Switzerland, which provides pension benefits based on a participant’s contributions, the Company’s matching contributions and a minimum pension guarantee. As of December 31, 2025 and 2024, the net liability recognized on the balance sheet for our pension plans was $ 55  million and $ 63  million, respectively. The net periodic pension costs recognized in the income statement for the years ended December 31, 2025, 2024 and 2023 were $ 13  million, $ 21  million, $ 16  million, respectively.
Other Defined Benefit Plans
We offer a gratuity plan in India that is a statutory defined benefit plan providing lump sum benefits to employees on separation or retirement. We maintain an employees’ gratuity fund with a government-owned insurance corporation to fund a portion of the estimated obligation. As of December 31, 2025 and 2024, the amount accrued under the gratuity plan was $ 205 million and $ 80 million, respectively, which is net of fund assets of $ 250 million and $ 231 million, respectively . During the fourth quarter of 2025, the Labor Code reforms implemented by the Government of India caused our gratuity liability for prior services to increase by $ 147  million, which we recognized as a component of other comprehensive income. We recognized gratuity benefit expense of $ 10 million, $ 4 million and $ 56 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Note 16 — Stock-Based Compensation Plans

Our 2023 Incentive Plan provides for the issuance of a total of 25.0 million shares of Class A common stock to eligible employees, less (i) the number of shares granted under the 2017 Incentive Plan between March 24, 2023 and June 6, 2023, plus (ii) any shares subject to awards under the prior 2017 and 2009 Incentive Plans that are forfeited after June 6, 2023. The 2023 Incentive Plan does not affect any awards outstanding under the prior plans. The Purchase Plan provides for the issuance of up to 50.0 million shares of Class A common stock to eligible employees. As of December 31, 2025, we have 20.2 million and 9.8 million shares available for grant under the 2023 Incentive Plan and the Purchase Plan, respectively.

Cognizant F-35
December 31, 2025 Form 10-K

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The allocation of total stock-based compensation expense between cost of revenues, selling, general and administrative expenses and restructuring charges as well as the related income tax benefit were as follows for the three years ended December 31:

(in millions) 2025 2024 2023
Cost of revenues $ 26   $ 26   $ 30  
SG&A expenses 155   150   153  
Restructuring charges
—   ( 1 ) ( 7 )
Total stock-based compensation expense $ 181   $ 175   $ 176  
Income tax benefit $ 37   $ 38   $ 34  

Restricted Stock Units and Performance Stock Units
We granted RSUs that vest in quarterly or annual installments over periods of up to four years to employees, including our executive officers. A summary of the activity for RSUs granted under our stock-based compensation plans as of December 31, 2025 and changes during the year then ended is presented below:

Number of
Units
(in millions) Weighted Average
Grant Date
Fair Value
(in dollars)
Unvested at January 1, 2025
2.8   $ 73.47  
Granted 2.4   81.98  
Vested ( 2.1 ) 74.93  
Forfeited ( 0.4 ) 78.48  
Unvested at December 31, 2025
2.7   $ 79.08  

The total vesting date fair value of vested RSUs was $ 164  million, $ 172  million and $ 176  million for the years ended December 31, 2025, 2024 and 2023, respectively. The weighted-average grant date fair value of RSUs granted in 2025, 2024 and 2023 was $ 81.98 , $ 77.66 and $ 65.95 , respectively. As of December 31, 2025, $ 149 million of total remaining unrecognized stock-based compensation cost related to RSUs is expected to be recognized over the weighted-average remaining requisite service period of 1.5 years.

We granted PSUs that vest over periods up to four years to employees, including our executive officers. The vesting of PSUs is contingent on meeting certain financial performance targets, market conditions and continued service. A summary of the activity for PSUs granted under our stock-based compensation plans as of December 31, 2025 and changes during the year then ended is presented below. The presentation reflects the number of PSUs at the maximum performance milestones.

Number of
Units
(in millions) Weighted Average
Grant Date
Fair Value
(in dollars)
Unvested at January 1, 2025
1.5   $ 76.76  
Granted 0.8   90.15  
Vested ( 0.1 ) 92.06  
Forfeited ( 0.2 ) 81.01  
Adjustment at the conclusion of the performance measurement period
( 0.4 ) 65.57  
Unvested at December 31, 2025
1.6   $ 84.71  

The total vesting date fair value of vested PSUs was $ 5  million, $ 15  million and $ 22  million for the years ended December 31, 2025, 2024 and 2023, respectively. The weighted-average grant date fair value of PSUs granted in 2025, 2024 and 2023 was $ 90.15 , $ 83.63 and $ 67.82 , respectively. As of December 31, 2025, $ 29  million of the total remaining unrecognized stock-based compensation cost related to PSUs is expected to be recognized over the weighted-average remaining requisite service period of 1.2 years.

All RSUs and PSUs have dividend equivalent rights, which entitle holders to the same dividend value per share as holders of common stock. Dividend equivalent rights are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs and PSUs and are accumulated and paid when the underlying shares vest.

Cognizant F-36
December 31, 2025 Form 10-K

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Purchase Plan
For the years ended December 31, 2025, 2024 and 2023, the Purchase Plan provided for eligible employees to purchase shares of Class A common stock at a price equal to 95 % of the fair market value per share of our Class A common stock on the last date of the purchase period. This plan has been deemed non-compensatory and, therefore, no compensation expense has been recorded. During the years ended December 31, 2025, 2024 and 2023, we issued 0.8  million shares, 0.9  million shares and 1.1  million shares, respectively, of Class A common stock under the Purchase Plan.

Note 17 — Segment Information

Our chief executive officer is our chief operating decision maker. Our CODM regularly reviews the performance of our business by four industry-based operating segments, which are our four reportable business segments: Health Sciences, Financial Services, Products and Resources, and Communications, Media and Technology.

We have an industry-led go-to-market strategy, with client partners, account executives and client relationship managers aligned to the specific industries they serve. Our CODM is regularly provided segment revenues and operating profit, including budget‑to‑actual variances in segment revenue, to formulate industry-focused strategic priorities, allocate financial resources, set targets and key performance indicators, and evaluate the results of such strategies. These strategic priorities, targets and key performance indicators are translated and applied to each client account, rolling up to respective industry-based operating segments. Our hiring and deployment plans are devised according to the strategic priorities and targets set for the client accounts.

In the first quarter of 2025, we made certain changes to the internal measurement of segment operating profit for the purpose of evaluating segment performance and resource allocation. The primary reason for the change was to reflect a more complete cost of delivery. Specifically, segment operating profit now includes an allocation of certain corporate costs, which were previously included in "unallocated costs." We have reported 2025 segment operating profits using the new allocation methodology and have recast the 2024 results to conform to the new methodology. While we have recast the 2024 results to conform to the new methodology, it is impracticable for us to recast our 2023 segment operating results as the detailed information required for the allocation of such costs to the segments is not reasonably available.

Revenue from each client is attributed to the operating segment that is most closely aligned with the client's business we serve. Segment operating profit represents income from operations excluding certain unallocated corporate costs. Our CODM is not regularly provided with segment expenses. A portion of depreciation and amortization expense, certain corporate costs, the impact of the settlements of the cash flow hedges, the gain on the sale of property and equipment and expenses related to our NextGen program are not allocated to individual segments. Accordingly, such expenses are excluded from segment operating profit and are included below as “unallocated costs” and adjusted against our total income from operations.

We do not disclose assets by segment as a significant portion of the assets is used interchangeably among the segments and our CODM is not provided such information.
Information by reportable segment were as follows:

Year Ended December 31, 2025

(in millions) HS FS P&R CMT Total
Revenues
$ 6,347   $ 6,173   $ 5,285   $ 3,303   $ 21,108  
Less: other segment items
5,114   5,144   4,498   2,867   17,623  
Segment operating profit 1,233   1,029   787   436   3,485  
Less: unallocated costs 96  
Income from operations $ 3,389  

Cognizant F-37
December 31, 2025 Form 10-K

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Year Ended December 31, 2024

(in millions) HS
FS
P&R
CMT
Total

Revenues
$ 5,932   $ 5,753   $ 4,782   $ 3,269   $ 19,736  
Less: other segment items
4,859   4,838   4,011   2,876   16,584  
Segment operating profit 1,073   915   771   393   3,152  
Less: unallocated costs 260  
Income from operations $ 2,892  

As described above, in the first quarter of 2025 we made changes to the internal measurement of segment operating profits. While we have recast the 2024 results to conform to the new methodology, it is impracticable for us to recast our 2023 segment operating results as the detailed information required for the allocation of such costs to the segments is not reasonably available.

Year Ended December 31, 2023

(in millions) HS
FS
P&R
CMT
Total

Revenues
$ 5,674   $ 5,809   $ 4,628   $ 3,242   $ 19,353  
Less: other segment items
4,322   4,653   3,644   2,617   15,236  
Segment operating profit 1,352   1,156   984   625   4,117  
Less: unallocated costs 1,428  
Income from operations $ 2,689  

Other segment items for each reportable segment primarily include employee compensation and benefits, subcontractor costs, costs of third-party products and services related to revenue and project-related travel.
Geographic Area Information
Long-lived assets by geographic area are as follows:
(in millions) 2025 2024
Long-lived Assets: (1)

North America (2)
$ 300   $ 338  
Europe 67   72  
Rest of World (3)
566   584  
Total $ 933   $ 994  

(1)    Long-lived assets include property and equipment, net of accumulated depreciation and amortization.
(2)    Substantially all relates to the United States.
(3)    Substantially all relates to India.

Note 18 — Subsequent Events

Dividend
On February 3, 2026, our Board of Directors approved the Company's quarterly declaration of a $ 0.33 per share dividend with a record date of February 18, 2026 and a payment date of February 26, 2026.
Acquisition
On January 1, 2026, through the execution of a purchase agreement, we acquired 100 % ownership in 3Cloud, one of the largest independent Microsoft Azure services providers and a global leader in Azure-dedicated AI enablement solutions and products. This acquisition expands our Azure portfolio and deepens our expertise in complex, engineering-intensive engagements that enable AI-led business transformation. On December 31, 2025, we placed cash consideration of $ 733  million in escrow, which was deemed to be restricted cash and included in "Other noncurrent assets" in our consolidated statement of financial position. We are yet to complete the initial accounting for the acquisition and, therefore, unable to disclose the major classes of assets acquired and liabilities assumed, and any separately recognized transactions .

Cognizant F-38
December 31, 2025 Form 10-K

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Cognizant Technology Solutions Corporation
Valuation and Qualifying Accounts
For the Years Ended December 31, 2025, 2024 and 2023
(in millions)
 
(in millions)
Balance at
Beginning of
Period Charged to
Costs and
Expenses Charged to
Other
Accounts Deductions
/Other Balance at
End of
Period

Warranty accrual:
2025 $ 38   $ 43   $ —   $ 38   $ 43  
2024 $ 40   $ 38   $ —   $ 40   $ 38  
2023 $ 41   $ 40   $ —   $ 41   $ 40  
Valuation allowance—deferred income tax assets:
2025 $ 48   $ 390   $ —   $ 11   $ 427  
2024 $ 53   $ 1   $ —   $ 6   $ 48  
2023 $ 41   $ 14   $ —   $ 2   $ 53  

Cognizant F-39
December 31, 2025 Form 10-K