CTSH 10-K & 10-Q changes, risk factors and insider trading

Investing in our common stock involves a high degree of risk. YouBefore making an investment decision, you should carefully consider the risks described below in addition to the other information set forth in this Annual Report on Form 10-K, including “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, beforeand makingthe another investmentdocuments decision.and materials we file with the SEC, as well as news releases and other information we publicly disseminate from time to time. The disclosure below reflects our beliefs and opinions as to the factors, events, or contingencies that could materially and adversely affect us in the future. References to past events are provided as examples only and are not intended to be a complete list or representation as to whether or not the other risks described below have occurred in the past. The risks described below are not the only risks or uncertainties we face. Additional risks and uncertainties not previously known to us, or that we currently see as immaterial, may also adversely affect us. The occurrence of any of the following risks or additional risks and uncertainties not presently known to us, or that we currently believe to be immaterial, could materially and adversely affect our business, financial condition, prospects, or results of operations. In such case, the trading price of our common stock could decline, and you may lose all or part of your original investment. Our actual results could differ materially from those anticipated in theour forward-looking statements as a result of specific factors, including the risks and uncertainties described below.

Additionally, macroeconomic and geopolitical developments, including public health crises, escalating global conflicts, supply chain disruptions, labor market constraints, rising rates of inflation and high interest ratesdevelopments may amplify many of the risks discussed below to which we are subject. The extent of the impact of macroeconomic and geopolitical developments on our financial and operating performance depends significantly on the duration and severity of such macroeconomic and geopolitical developments, the actions taken to contain or mitigate their impact and any changes in client behaviors as a result thereof.

Our results of operations could be adversely affected by economicmacroeconomic and geopolitical conditions globally and in particular in the markets in which our clients and operations are concentrated.

Global macroeconomic conditions have a significant effect on our business as well as the businesses of our clients. Volatile, negative or uncertain economic conditionsand geopolitical conditions, including as a result of recession or slowing economic growth, inflation, higher interest rates, tightening of credit markets and changes in trade policy (including trade disputes, the threat or imposition of tariffs or other trade restrictions and related retaliatory actions), have in the past and could in the future cause our clients to reduce, postpone or cancel spending on new or existing projects with us, negatively affecting our business and making it more difficult for us to accurately forecast client demand and have available the right resources to profitably address such client demand, including as a result of inflation, higher interest rates, tightening of credit markets, trade disputes, recession or slowing growth, among others.demand. For example, in 2024the recent past some of our clients continued to reduce their discretionary spending in response to economic and geopolitical uncertainty, which negatively impacted our revenues. Clients may reduce demand for services quickly and with little warning, which may cause us to incur extra costs where we have employed more personnel than client demand supports. Further, our business depends on our ability to obtain payment from our clients of the amounts they owe us for the work we perform. Macroeconomic or geopolitical conditions, including recessionary or inflationary pressures, trade disputes or other challenges could result in financial difficulties for our clients,clients whichthat have in the past and could in the future cause clients to delay payments to us, request modifications to their payment arrangements or default on their payment obligations to us.

The markets we serve and operate in are highly competitive, subject to rapid change and characterized by a large number of participants, as described in “Part I, Item 1. Business-Competition.” We compete on the basis of reputation and experience, strategic advisory capabilities, digital servicesand AI capabilities, performance and reliability, responsiveness to customer needs, financial stability, corporate governance and competitive pricing of services. The less we are able to differentiate our services and solutions and/or clearly convey the value of our services and solutions, the more difficulty we have in winning new work in sufficient volumes and at our target pricing and overall economics. In addition to large, global competitors, we face competition in many geographic markets from numerous smaller, local competitors that may have more experience with operations in these markets, have well-established relationships with our desired clients, or be able to provide services and solutions at lower costs or on terms more attractive to clients than we can. Additionally, we face competition from clients' in-house technology resources, such as GCCs, which may provide a lower cost alternative to our services. Consolidation activity may also result in new competitors with greater scale, a broader footprint or vertical integration that makes them more attractive to clients as a single provider of integrated products and services. In addition, concurrent use by many clients of multiple professional service providers means that we are required to be continually competitive on the quality, scope and pricing of our offerings or face a reduction or elimination of our business. Competitors may also be willing, at times, to take on more risk or price contracts lower than us in an effort to enter the market or increase market share. If we are not able to supply clients with services that they deem superior and successfully apply current business models with market level pricing while managing discounts, we may lose business to competitors and face downward pressure on gross margins and profitability. Any inability to compete effectively would materially adversely affect our business, results of operations and financial condition.

Our relationships with our third-party alliance partners, who supply us with necessarytechnology, componentsincluding to the servicesplatforms and solutions we offer our clients,software, are also critical to our ability to provide many of our services and solutions that address client demands. Some of our third-party alliance partners are also clientsdemands or suppliers for our internal operations.requirements. There can be no assurance that we will be able to maintain such relationships or that such componentstechnology will be available on the expected timelines or for the anticipated prices. Among other things, such alliance partners may in the future decide to compete with us, form exclusive or more favorable arrangements with our competitors or otherwise reduce our access to their products,technology, thereby impairing our ability to provide the services and solutions dependent on such technology demanded or required by clients. In addition, some of our third-party alliance partners are also our clients or suppliers of technology for our internal operations. Any performance failure on the part of our alliance partners, or the discontinuance by such alliance partners of servicestechnology that we have relied on them to performprovide for our clients,clients or ourselves, could delay or prevent our performance orunless require us towe engage alternative third parties to performprovide the servicesequivalent technology at our cost or toprovide performthe themequivalent technology ourselves, any of which could deprive us of potential revenue or adversely impact our profitability. In addition, our third-party alliance partners may also experience reduced demand for their technology, including as a result of changes in technology, which could reduce demand for our services and solutions.

Our use of AI technologies may not be successful and may present business, financial, legal,legal and reputational risks.

We expect the proliferation of AI will have a significant impact on our industry, and we believe our ability to compete in this space will be critical to our financial performance. We increasingly use AI-based technologies, including GenAI, in our client offerings and our own internal operations. We have incurred and plan to continue to incur significant development and operational costs to build and support our AI capabilities, including costs to ensure ongoing compliance with the complex and rapidly evolving legal landscape around AI and automation. If we fail to develop and implement AI solutions that meet our internal and client needs orneeds, if we are unable to offer or bring AI-enabled solutions to market as effectively or with the same speed as our competitors, or if our clients do not accept new pricing models that reflect the value of our AI-enabled solutions, we may fail to recoup our investments in AI and our financial performance, competitive position, business and reputation may be adversely impacted.

AI technology and services require access to high-quality datasets, models (including foundation models,models), and other AI system components. We currently rely, in part, on third parties to provide these components. In the future, we may face difficulties acquiring the necessary rights from third parties due to market competitioncompetition, pricing changes, licensing restrictions and other factors. This challenge could hinder our ability to develop, implement or maintain AI technologies. To overcome this, we may need to invest in alternative strategies, such as forming alliancespartnerships or developing our own resources.

In addition, the development, adoption,adoption and use of AI technologies arecontinue allto stillevolve in their early stagesrapidly and ineffective or inadequate AI development or deployment practices by us, our clients,clients or other third parties withmay whomnot wedeliver doanticipated businessefficiencies and could result in unintended consequences. Such consequences may include, for example, employeesoperational makingor decisionscompliance basedrisks; reliance on biasedoutputs that reflect biased, incomplete or inaccurate information; unauthorized disclosure of sensitive information; operational inefficiencies leading to decreased productivity; deliberate misuse; or infringement of third-party IP rights. Additionally, the use of AI by us or our business partners may create new or exacerbate existing cybersecurity vulnerabilities, including thosenovel whichrisk vectors that may not be recognizedimmediately atidentifiable. the time. TheOngoing uncertainty around the performance, safety and security of new and emerging AI applications requires continued significant investment in monitoring, validation and implementation of governance processes and controls across the AI lifecycle relating to test for security, accuracy, bias,bias and other variables -to ensure alignment with industry standards and meet customer expectations. These efforts that can be complex, costly,complex and resource intensive, could potentially impact our profit margins, may not sufficiently address risks and may cause decreased demand for our services or harm to our business, results of operations, financial condition,condition or reputation. Addressing these consequences may require significant operational costs to implement, manage, and maintain processes around the AI lifecycle that align with industry standards and meet customer expectations.

Furthermore, the legal and regulatory landscape surrounding AI technologies is rapidly evolvingevolving, uncertain and uncertain,varies withsignificantly jurisdictionsby jurisdiction. Authorities around the world are applying, or considering applying, laws and regulations related to IP, cybersecurity, export controls, privacy, data security,security and data protection to AI and automated decision-making,decision-making ortechnologies, generalas legalwell frameworksas onadopting AI,AI-specific regulatory frameworks, such as emerging U.S. state AI laws and the EU AI Act,Act which entered into force in 2024 and parts of which applybegan beginningapplying in 2025. These laws are continuouslysubject evolvingto ongoing interpretation and developingimplementation and may impose obligations on companies developing and using AI or automated decision-making technologies. Given the rapid ratepace of changeregulatory development and the oftenpotential uncertainfor divergent or evolving scope, interpretation,interpretation and application of these laws and regulations, which may be in conflict across jurisdictions, we may not always be able to anticipate how courts and regulators will apply existing laws to AI,AI predictor how new AI-specific legal frameworks will addressbe AI,implemented, or otherwise ensure compliance with these frameworks. AsRegulatory a result, weapproaches may havediffer or conflict across jurisdictions, which could require us to expend resources to adjusttailor ouror limit certain AI-related offerings in certainspecific jurisdictionsmarkets. ifFor the legal frameworks on AI are not consistent across jurisdictions, andexample, the EU AI Act may increase costs or impact the operation of our AI services. Compliance with new or changing laws, regulations, industry standards or ethical requirements and expectations relating to AI may impose significant operational costscosts, requiringrequire usadditional investment in governance, documentation and controls, or necessitate changes to change our service offerings or business practices, particularly as we expand the use of such technologies,technologies. orIn maycertain circumstances, these requirements could delay, limit or prevent our ability to develop, deploy,deploy or use AI technologies. Failure to appropriatelyeffectively conformnavigate toand comply with this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm. Although we maintain a responsible AI framework aligned with recognized international standards that includes risk assessment processes, oversight structures and controls across the AI lifecycle, it may not be sufficient to identify, assess, and mitigate all AI-related risks. The effectiveness of our responsible AI framework depends on numerous factors, including the accuracy of risk assessments, the adequacy of implemented controls, and our ability to adapt to rapidly changing AI capabilities and use cases. There can be no assurance that our responsible AI framework will adequately identify, assess and prevent all AI-related risks.

Finally, AI technology mayis besubject viewedto negatively by theheightened public dueand media scrutiny, including with respect to mediaworkplace scrutiny over issues such as job displacement,impacts, privacy and ethical AI concerns. ThisNegative negativepublic perception cancould adversely affect customer demand and our investments in AI technology, bothwhich directlycould andin indirectly.turn adversely affect our business or reputation.

Our success is dependent, in large part, on our ability to keep our supply of skilled employees, including project managers, IT engineers and senior technical personnel, in particular those with experience in key AI and digital areas, in balance with client demand around the world and on our ability to attract and retain senior management with the knowledge and skills to lead our business globally. We must hire or reskill,upskill, integrate, retain and motivate our large workforce with diverse skills and expertise to serve client demands acrossaround the globe, respond quickly to rapid and ongoing technological, industry and macroeconomic developments and grow and manage our business. In 2021 and most of 2022, we and, we believe, the IT industry generally, experienced unprecedented attrition. For the year ended December 31, 2024 our Voluntary Attrition - Tech Services was 15.9% as compared to 13.8% for the year ended December 31, 2023. If our attrition levels increase significantly, it could materially adversely affect our business and results of operations. We also must continue to maintain a senior leadership team that, among other things, is effective in executing on our strategic goals and growing our service capabilities. The loss of senior executives, or the failure to attract, integrate and retain new senior executives as the needs of our business require, could have a material adverse effect on our business and results of operations.

Competition for skilled labor is intense and, in some jurisdictions in which we operate and in key AI and digital areas, there are more open positions than qualified personsindividuals to fill these positions. We compete for employees not only with other companies in our industry but also with companies in other industries, such as software services, engineering services and financial services companies, as well as our clients' GCCs. In addition, changes in immigration laws or policies, or varying applications of immigration laws and policies, couldhave limitlimited the availability of certain work visas in the U.S., which could exacerbate competition for skilled labor. Our business has experienced in the past and may experience in the future significant employee attrition,attrition at levels which hascould causedcause us to incur increased costs to hire new employees with the desired skills. While we strive to adjust pricing to reduce the impact of compensation increases on our operating margin, weWe may not be successful in recovering thesethrough increases,price increases or other mechanisms any increases we make to compensation, which could adversely affect our profitability and operating margin. Costs associated with recruiting and training employees are significant. If we are unable to hirehire, retain or deploy employees with the needed skillsets or if we are unable to adequately equip our employees with the skills needed, this could materially adversely affect our business.

Our goals for profitability and capital return rely upon a number of assumptions, including our ability to improve the efficiency of our operations and make successful investments to grow and further develop our business. Our profitability is impacted by our ability to accurately estimate, attain, and sustain revenues from client engagements, margins and cash flows over contract periods and general macroeconomic and geopolitical conditions. Our profitability also depends on the efficiency with which we run our operations (including our ability to leverage new technologies such as AI to improve productivity) and the cost of our operations, especially the compensation and benefits costs of our employees. We have incurred, and may continue to incur, substantial costs related to implementing our strategy to optimize such costs, and we may not realize the ultimate cost savings that we expect. We may not be able to efficiently utilize our employees if increased regulation, policy changes or administrative burdens of immigration, work visas or client worksite placement prevents us from deploying our employees on a timely basis, or at all, to fulfill the needs of our clients. Our utilization rates are further affected by a number of factors, including our ability to transition employees from completed projects to new assignments, hire and assimilate new employees, forecast demand for our services and thereby maintain an appropriate headcount in each of our geographies and workforce and manage attrition, and our need to devote time and resources to training, professional development and other typically non-chargeable activities. Increases in wages and other costs, including as a result of attrition, may also put pressure on our profitability.

We face challenges related to growing our business organically as well as inorganically through acquisitions, and we may not be able to achieve our targeted growth rates.rates or successfully acquire, invest in or integrate businesses.

Additionally, we expect to continue pursuing strategic and targeted acquisitions and investments to enhance our offerings of services and solutions or to enable us to expand our talent, experience and capabilities in key AI and digital areas or in particular geographies or industries. We may not be successful in identifying suitable opportunities, completing targeted transactions or achieving the desired results or strategic objectives in the timeframe we expect or at all, such opportunities may divert our management's time and focus away from our core business and realizing the desired results of a particular transaction may depend upon competition, market trends, regulatory developments, additional costs or investments and the actions of suppliers or other third parties. We may face challenges in effectively integrating acquired businesses into our ongoing operations, including the implementation of controls, processes and policies appropriate for a multinational public company at acquired companies that may have previously lacked such functions in areas such as cybersecurity, IT and privacy, among others, and in assimilating and retaining key executives and employees of those businesses into our culture and organizational structure, and these risks may be magnified by the size and number of transactions we execute.

In order to provide our services and solutions, we depend on global information technology networks and systems, to process, transmit, host and securely store electronic information (including our confidential information and the confidential information of our clients) and to communicate among our locations around the world and with our clients, supplierssuppliers, vendors and alliance partners (including numerous cloud service providers). Security breaches, employee malfeasance, or human or technological error have in the past and could in the future cause shutdowns or disruptions of our, our vendors' or our clients' operations and potential unauthorized access and/or disclosure of our or our clients’ sensitive data, which in turn could jeopardize projects that are critical to our operations or the operations of our clients’ businesses and have other adverse impacts on our business or the business of our clients.

In addition, the products, services and software that we provide to our clients, or the third-party components we use to provide such products, services and software, have in the past and may in the future unintentionally contain or introduce cybersecurity threats or vulnerabilities to our clients’ information technology networks. Furthermore, the security measures we implement for our cybersecurity solutions clients may not function as expected or be sufficient to identify or protect against certain cybersecurity attacks. Our clients maintain their own proprietary, sensitive, or confidential information that could be compromised in a cybersecurity attack,incident, or their systems may be disabled or disrupted as a result of such an attack.incident. Our clients, regulators, or other third parties have and may in the future attempt to hold us liable for any such losses or damages resulting from such an attack,incident, including through contractual indemnification clauses.

Like other global companies, we and our clients, suppliers, alliance partners (including numerous cloud service providers) and other vendors we interact with face threats to data and systems, including by nation state threat actors, insider threats (including inappropriate access), perpetrators of random or targeted malicious cyberattacks, computer viruses, malware, worms, bot attacks or other destructive or disruptive software and attempts to misappropriate client information and cause system failures and disruptions. For example, we have experienced a security incident involving a ransomware attack, which resulted in unauthorized access to certain data and caused significant disruption to our business. Such attacks, or other currently unanticipated threats, could occur in the future. In addition, recent internationalgeopolitical tensions (including Russia’s invasion of Ukraine and conflicts in the Middle East) have heightened the overall risk of cyber-threats and, while we have taken steps to mitigate such risks, those steps may not be successful. The emergence and maturation of AI capabilities is already being used by malicious actors to amplify cybersecurity attacks. This development may also lead to new or more sophisticated methods of attack.attack and/or a more significant impact on affected parties.

A security compromise of our information systems, of our clients' information systems or of those of other businesses with which we interact,interact (including cloud service providers and software vendors) that results in confidential information being accessed by unauthorized or improper persons, could harm our reputation and expose us to regulatory actions up to and including criminal prosecution, client attrition due to reputational concerns or otherwise, containment and remediation expenses and claims brought by our clients or others for breaching contractual confidentiality and security provisions or data protection laws. Monetary damages imposed on us could be significant and may impose costs in excess of insurance policy limits or not be covered by our insurance at all, and our insurers may not continue to provide coverage on reasonable terms or may disclaim coverage as to any future claims. Techniques used by bad actors to obtain unauthorized access, disable or degrade service, or sabotage systems continuously evolve and may not immediately produce signs of intrusion, and we may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, a security breach could require that we expend substantial additional resources related to the security of our information systems, diverting resources from other projects and disrupting our businesses.

Although our cybersecurity risk management program utilizes various procedures and controls to mitigate our exposure to the risks described above, the cybersecurity threat landscape is rapidly evolving and increasingly sophisticated. There can be no assurance that the procedures and controls that we implement, or that our clients, suppliers, subcontractors and other third parties with whom we do business implement, will be sufficient to protect our information systems from the cybersecurity threats we face.threats. Additionally, any remediation measures that we have taken or that we may undertake in the future may be insufficient to prevent future attacks or insufficient for us to quickly recover from any future attack to efficiently continue our business operations.

Climate change, extremeExtreme weather and risks arising from the transition to a lower-carbon economy may impact our business.

There are inherent climate- and weather-related risks everywhere that we conduct our business. Developments related to regulatory, social or market dynamics, stakeholder expectations, national and international climate change policies, the actual or perceived frequency or intensity of extreme weather events or the availability and functionality of critical infrastructure and resources, in addition to other factors resulting from such developments or that may not otherwise be known to or anticipated by us, could significantly disrupt our supply chain, our clients' operations and our ability to deliver services. Such events could significantly increase our costs and expenses and harm our revenues, cash flows and financial performance. Further, natural disasters and adverse weather events, such as droughts, wildfires, storms, sea-level rise and flooding, occurring more frequently, with less predictability or with greater intensity,intensity due to climate change or other drivers, could cause community disruptions and impact our employees’ abilities to commute or to work from home safely and effectively. For example, we have substantial global delivery operations in Chennai, India, a city that has experienced severe rains and related flooding. Our exposure to these economic and other risks from climate change could be exacerbated if government or market action to address climate change and its effects is insufficient or unsuccessful.

FailureEvolving toand meetconflicting ESGsustainability and societal related expectations or standards or achieve our ESG ambitions could adversely affect our business or damage our reputation.

Shifting stakeholder expectations and evolving regulatory and disclosure standards around ESGsustainability and societal matters could impact our business. We are subject to, and expect to become increasingly subject to, laws, regulations and international treaties relating to ESG, including the European Union's Corporate Sustainability Reporting Directive (CSRD) and California's climate change disclosure requirements.sustainability. As these new laws, regulations, treaties and similar initiatives and programs continue to be adopted and implemented, we will be required to comply or potentially face market access limitations, enforcement actions, civil suits or sanctions, including fines. If new laws or regulations are more stringent than current legal or regulatory requirements, we may experience increased compliance burdens and costs to meet such obligations. If we fail to comply with new laws, regulations, treaties, or reporting requirements, our reputation and business could be adversely impacted. Our ability to meet our ESGsustainability ambitions is also subject to external factors outside of our control including the ability and willingness of our suppliers to reduce emissions and the advancement of new emission reducing technologies. In addition, global clients often rely on ESGsustainability rating systems for bids and buying practices, and yet the criteria used in the ratings may conflict and change frequently, and we cannot predict how these third parties will score us, nor can we have any assurance that they score us or other companies accurately, or that we will be able to score well as such criteria change. We supplement our participation in ratings systems with published disclosures of our ESGsustainability and societal activities, but some investors may desire other disclosures that we do not provide.

At the same time, an increasing number of stakeholders, including regulators, and lawmakers have expressed or pursued contraryconflicting views, legislation and investment expectations with respect to ESG ratingssustainability and ambitions,societal includingratings, theambitions enactmentand or proposal of “anti-ESG” legislation, regulation or policies,disclosures, which may expose us to additional legal, financial or reputational risks based upon our ESGsustainability and societal ambitions and disclosures. IfWe may be unable to satisfy all of our ESGstakeholders practiceson dothese not meet investor or other stakeholder expectationsmatters, and standards,as whicha continue to evolve,result our reputation, our ability to attract or retain employees and our business could be negatively affected.

If our risk management, business continuityresilience and disaster recovery plans are not effective and our global delivery capabilities are impacted, our business and results of operations may be materially adversely affected and we may suffer harm to our reputation.

Our business model is dependent on our global delivery capabilities, which include coordination betweenamong our delivery centers in India, our other global and regional delivery centers, the offices of our clients and our associates worldwide. System failures, outages and operational disruptions may be caused by factors outside of our control, such as hostilities (including the ongoing conflicts between Russia and Ukraine and in the Middle East),hostilities, political unrest, terrorist attacks, cybersecurity incidents, power or water shortages or telecommunications failures, natural or man-made disasters or other catastrophic events (including the impact of extreme weather conditions), and public health emergencies, epidemics and pandemics, affecting the geographies where our people, equipment and clients are located. Our risk management, business continuityresilience and disaster recovery plans may not be effective at predictingpredicting, mitigating, or mitigatingresponding to the effects of such disruptions, particularly in the case of catastrophic events or longer term, increasingly severe developments that may occur as a result of climate change.events. Even if our operations are unaffected or recover quickly from any such events, if our clients cannot timely resume their own operations due to a catastrophic event, they may reduce or terminate our services, which may adversely affect our results of operations. Any such disruption may result in lost revenues, a loss of clients, liabilities relating to disruptions in service, expenditures to repair or replace damaged property and reputational damage, and could demand significant management time and attention, any of which would have an adverse effect on our business, results of operations and financial condition.

A substantial portion of our employees in the United States and in many other jurisdictions, including countries in Europe, rely upon temporary work authorization or work permits, which makes our business particularly vulnerable to changes and variations in immigration laws and regulations, including written changes and policy changes to the manner in which the laws and regulations are interpreted or enforced, and potential enforcement actions and penalties that might cause us to lose access to such visas. The political environment in the United States, the United Kingdom and other countries in recent years has included significant support for anti-immigrant legislation and administrative changes. Many of these recent changes have resulted in, and various proposed and enacted changes may result in, increased difficulty in obtaining timely visas, whether as a result of visa application rejections, delays in processing applications, significantly increased costs to obtain visas, prevailing wage requirements for our employees on visas or otherwise, which could in turn impact our ability to staff projects. In addition, immigration reform, including as a result of changes to immigration policies, and the increased uncertainty surrounding such policies in light of the incoming U.S. administration's expected immigration agenda,agenda and related litigation, may have a material adverse impact on companies like ours that have a substantial percentage of our employees on visas. Our principal operating subsidiary in the United States utilizes a high number of skilled workers holding H-1B and L-1 visas and, as a result, may be subject to increased costs and visa processing delays upon the effectiveness of any such laws, regulations, policy changes or executive orders. In the EU, many countries continue to implement new regulations to move intoensure compliance with the EU Directive of 2014 to harmonize immigration rules for intracompany transferees in most EU member states and to facilitate the transfer of managers, specialists and graduate trainees both into and within the region. The changes have had significant impact on mobility programs and have led to new notification and documentation requirements for companies sending employees to EU countries. Recent changes or any additional adverse revisions to immigration laws and regulations in the jurisdictions in which we operate may cause us delays, staffing shortages, additional costs or an inability to bid for or fulfill projects for clients, any of which could have a material adverse effect on our business, results of operations and financial condition.

We provide services to clients and have operations in many parts of the world and in a wide variety of different industries, subjecting us to numerous, evolving, and sometimes conflicting, standards, laws and regulations on matters as diverse as trade controls and sanctions, immigration (including temporary work authorizations or work permits), content requirements, trade restrictions, tariffs, taxation, antitrust laws, anti-money laundering and anti-corruption laws (including the FCPA and the U.K. Bribery Act), the environment, including climate change regulation and reporting requirements, government affairs, internal and disclosure control obligations, data security, privacy and data protection, intellectual property, employment and labor relations, human rights and AI. For example, we are required to comply with increasingly complex and changing data security and privacy laws and regulations in the many jurisdictions in which we operate that regulate the collection, storage, use, disclosure, transfer and security of personal data, including U.S. federal and state laws (such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act, and the Health Insurance Portability and Accountability Act), and non-U.S. laws, such as the India Digital Personal Data Protection Act, 2023, the U.K. General Data Protection Regulation (“GDPR”) and the E.U. GDPR. These laws and regulations are continuously evolving and developing, creating significant uncertainty as they may be interpreted and applied differently from country to country, creating inconsistent or conflicting requirements. We face significant regulatory compliance costs and risks as a result of the size and breadth of our business, and these costs may increase as a result of changes in government policy. For example, the Government of India implemented the Labor Code, which we expect to modestly increase our defined benefit costs prospectively. Certain aspects of the Labor Code rely on the issuance of rules and regulations. Additionally, the Government of India is in the process of clarifying certain aspects of the Labor Code. The issuance of rules and regulations as well as the outcome of these clarifications could increase new employment obligations, create operational and administrative burdens, trigger higher compliance penalties, and enforcement uncertainties during the transition period, which may experienceresult in increased costs in 20252026 and future years fordue employmentto and post-employment benefits in India as a result of the issuance of the Code on Social Security, 2020, which enhancedexpanded social security coverage (a portion of which is paid by the employer) and extendedemployment such benefits to all workers.coverage.

Our worldwide effective income tax rate may increase or our financial condition may be materially impacted as a result of developments, changes in interpretations and assumptions made, additional guidance that may be issued and ongoing and future actions the Company has or may take with respect to our corporate structure and intercompany arrangements. For example, our cash flows could be materially affected by the issuance of additional interpretive guidance by the U.S. Treasury regarding the capitalization and amortization of research and experimental expenses for tax purposes, as more fully described in Note 11 to the consolidated financial statements.

Our business subjects us to considerable potential exposure to litigation and legal claims and we could be materially adversely affected if we incur legal liability.

We are subject to, and may become a party to, a variety of litigation or other claims and suits that arise from time to time in the conduct of our business. Our business is subject to the risk of litigation involving current and former employees, clients, our clients' customers, alliance partners, subcontractors, suppliers, competitors, shareholders, government agencies or others through private actions, class actions, whistleblower claims, administrative proceedings, regulatory actions or other litigation. While we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as deductibles and caps on amounts recoverable.

Our client engagements expose us to significant potential legal liability and litigation expense if we fail to meet our contractual obligations or otherwise breach obligations to third parties or if our subcontractors breach or dispute the terms of our agreements with them and impede our ability to meet our obligations to our clients. We also face considerable potential legal liability from a variety of other sources. Our acquisition activities have in the past and may in the future be subject to litigation or other claims, including claims from employees, clients, stockholders, or other third parties. We have also been the subject of a number of putative securities class action complaints and putative shareholder derivative complaints relating to the matters that were the subject of our now concluded internal investigation into potential violations of the FCPA and other applicable laws, and may be subject to such legal actions for these or other matters in the future. See "Part I, Item 3. Legal Proceedings" for more information. We establish reserves for these and other matters when a loss is considered probable and the amount can be reasonably estimated; however, the estimation of legal reserves and possible losses involves significant judgment and may not reflect the full range of uncertainties and unpredictable outcomes inherent in litigation, and the actual losses arising from particular matters may exceed our estimates and materially adversely affect our results of operations.

We rely on a combination of patent, copyright and trade secret laws, confidentiality procedures and contractual provisions to protect our IP. The existing laws in the various countries in which we provide services or solutions may offer only limited protection of our intellectual property and are subject to change at any time. Furthermore, the legal landscape surrounding IP protection of software technologies, including AI, is rapidly evolving and as a result there is uncertainty concerning the scope of IP protection for our software IP rights. We are engaging in and may in the future have to engage in legal action to protect our own IP rights. Enforcing our rights may require considerable time, money and oversight, and we may not be successful in our efforts.

Cognizant is one of the world’s leading professional services companies, engineering modern businesses and delivering strategic outcomes for our clients. We help clients modernize technology, reimagine processes and transform experiences so they can stay ahead in today's fast-changing world, where AI is beginning to reshapereshaping organizations in every field. WeAs an AI builder, we provide industrydeep expertise at the intersection of industry and close client collaboration,technology, combining criticalour perspective with aextensive flexibleknowledge engagementof style.our clients' organizations to build industry-specific platforms and incorporate context into systems, AI models and custom solutions. We tailor our services and solutions to specific industries with an integrated global delivery model that employs client service and delivery teams based at client locations and dedicated global and regional delivery centers. Our collaborative services include digital services and solutions, consulting, application development, systems integration, quality engineering and assurance, engineering research and development, application maintenance, infrastructure and security as well as business process services and automation. Digital, AI-enhanced services continue to be an important part of our portfolio, aligning with our clients' focus on becoming data-enabled, customer-centric and differentiated businesses.

During the year ended December 31, 2024,2025, revenues increased by $383$1,372 million as compared to the year ended December 31, 2023,2024, representing an increase of 2.0%,7.0%, or 1.9%6.4% on a constant currency basis1. Our recentlyacquisition completedof acquisitionsBelcan contributed 200260 basis points to revenue growth. Additionally, revenues were positively impacted by growth in our Health Sciences segment,and Financial Services segments, partially offset by weakness primarily in our Products and Resources (excluding the impactacquisition of our recently completed acquisitionsBelcan) and FinancialCommunications ServicesMedia and Technology segments.

Our operating margin and Adjusted Operating Margin2Margin1 increased to 16.1% and 15.8%, respectively, for the year ended December 31, 2025, from 14.7% and 15.3%, respectively, for the year ended December 31, 2024, from 13.9% and 15.1%, respectively, for the year ended December 31, 2023.2024. Our 20242025 GAAP and Adjusted Operating Margins were positively impacted by net savings generated from our NextGen programprogram, operational efficiencies and the beneficial impact of foreign currency exchange rate movements, whilepartially being negatively impactedoffset by increased compensation costs, primarily as a result of a merit increase cycle completed during the third quarter of 2024,costs and the dilutive impact of recentlythe completed acquisitions, primarily driven by transaction and integration related expenses and amortizationacquisition of acquired intangibles.Belcan. In addition, our GAAP operating marginsmargin for 2025 was positively impacted by 30 basis points, or $62 million, from the gain on sale of property and equipment, and our GAAP operating margin for 2024 and 2023, werewas negatively impacted by the NextGen charges, asboth discussed in Note 4 to our consolidated financial statements,of which were excluded from our Adjusted Operating Margin.Margin1.

We continue to expect theour clients' focus of our clients to be on their transformation into AI-ready, technology-driven, data-enabled, customer-centric and differentiated businesses. To support this transformation and drive greater business resiliency, we expect clients willhave continuedemanded toand may increasingly demand services and solutions that can enhancedeliver productivity and deliver cost savings. We believe clients will continue to contend with industry-specific changes driven by evolving digital technologies, uncertainty in the regulatory environment, industry consolidation and convergence as well as international trade policiespolicies, including tariffs, and other macroeconomic and geopolitical factors,factors. includingThis includes the uncertainty related to the global economy, which has affected and may continue to affect their demand for our services.services and discretionary work.

We increasingly use AI-based technologies, including GenAI, in our client offerings and our own internal operations. AI technologies and services are part of a highly competitive and rapidly evolving market. We plan to continue to make significant investments in our AI capabilities to meet the needs of our clients and harness AI's value in a flexible, secure, scalable and responsible way. As AI-based technologies or other forms of automation evolve, we expect that demand for some services that we currently perform for our clients may be reduced and our ability to obtain favorable pricing or other terms for some of our services may be diminished.

Potential tax law and other regulatory and administrative changes, including possiblejudicial U.S.decisions corporate income tax reform and the Code on Social Security, 2020 in India, among other items,thereon, may impact our future results. We expect that the Code on Social Security, 2020, if enacted as currently written, could result in a material one-time increase to our post-employment liability for past service and would also modestly increase our costs for employment and post-employment benefits prospectively. In addition, in March 2024, India and Mauritius signed a Protocol to amend the India-Mauritius Income Tax Treaty. We arecontinue currentlyto evaluatingevaluate the potential impact of the amendment, which, depending on its final terms when entered into force, could increase our effective income tax rate, as CTS India is a subsidiary of our wholly-owned Mauritius entity. For additional information, see Part I, Item 1A. Risk Factors.

(a) Exclusive of depreciation and amortization expense3expense

•NorthRevenue Americagrowth revenues,across particularlyall ingeographies thewas primarily driven by our Financial Services and Health Sciences segment,segments, which were positively impacted by the ramp up of several recently won large deals;

•RecentlyOur completedacquisition acquisitionsof Belcan contributed 200260 basis points of growth to the overall changerevenue in revenues,growth, including approximately 600960 basis points of growth to our Products and Resources segmentsegment, (primarily in North America) and approximately 150 basis points of growth to oura Communications,lesser Mediaextent andthe TechnologyUnited segment (primarily in North America)Kingdom;

Our cost of revenues consists primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, project-related immigration and travel for technical personnel, subcontracting and costs of third-party products and services relating to revenues. The increase, as a percentage of revenues, was duedriven toby higherincreased compensation costs, primarilythe asdilutive a resultimpact of athe meritacquisition increaseof cycle,Belcan and the resaleresales of third-party products in connection with our integrated offerings strategy, partially offset by operational efficiencies and the beneficial impact of foreign currency exchange rate movements and operational efficiencies.movements.

SG&A expenses consist primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, immigration, travel, marketing, communications, management, finance, administrative and occupancy costs. The decrease, as a percentage of revenues, was primarily driven by the net savings generated from our NextGen program, partially offset by the impact of recently completed acquisitions, primarily as a result of transaction and integration related expenses.program.

Restructuring charges consist of costs related to the NextGen program. Restructuring charges were $134 million or 0.7%, as a percentage of revenues forDuring the year ended December 31, 2024,2025, aswe comparedrealized toa $229gain of $62 million oron 1.2%,the as a percentagesale of revenue,an foroffice thecomplex yearin ended December 31, 2023.India. For further detail on our restructuring charges see Note 45 to our consolidated financial statements.

Depreciation and amortization expense increased by 1.9%,4.0%, and wasremained relatively flat as a percentage of revenues, in 20242025 as compared to 2023.2024. The increase in amortization expenseexpense, driven by intangible assets related to our recentlyacquisition completedof acquisitionsBelcan, was partially offset by the decline of depreciation expense, which was driven by actions taken under our NextGen program.

The increase in our 20242025 GAAP operating margin and Adjusted Operating Margin5Margin4 was primarily driven by net savings generated from our NextGen programprogram, operational efficiencies and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs, primarily as a result of a merit increase cycle,costs and the dilutive impact of recentlythe completed acquisitions, primarily as a resultacquisition of transaction and integration related expenses and amortization of acquired intangibles.Belcan. In addition, our 2024GAAP operating margin for 2025 was positively impacted by 30 basis points, or $62 million, from the gain on sale of property and 2023equipment, and our GAAP operating marginsmargin werefor 2024 was negatively impacted by the NextGen charges, asboth discussed in Note 4 to our consolidated financial statements,of which were excluded from our Adjusted Operating Margin5.Margin.4 4 Adjusted Income From Operations and Adjusted Operating Margin are not measures of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.

Excluding the impact of applicable designated cash flow hedges, the depreciation of the Indian rupee against the U.S. dollar positively impacted our operating margin by approximately 2570 basis points in 2024.2025. Each additional 1.0% change in exchange rate between the Indian rupee and the U.S. dollar will have the effect of moving our operating margin by approximately 1817 basis points (excluding the impact of our cash flow hedges). In 2024,2025, the settlement of our cash flow hedges positivelynegatively impacted our operating margin by approximately 615 basis points, compared to a negativepositive impact of 135 basis points in 2023.2024.

In 2024,2025, segment operating margins across all our segments were negativelypositively impacted by increased compensation costs, partially offset bynet savings generated from our NextGen programprogram, operational efficiencies and the beneficial impact of foreign currency exchange rate movements.movements, Segmentpartially operating profit in the Health Sciences and Communications, Media and Technology segments was negatively impactedoffset by resalesincreased ofcompensation third-partycosts. productsIn in2025, connection with our integrated offerings strategy and higher costs typical to the initial phases of several recently won large deals. Segmentsegment operating profit in the Products and Resources segment was negatively impacted by the dilutive impact of the Belcan acquisition.acquisition Segment operating profit in the Financial Services segment was positively impactedand by reduced resales of third-party products in connection with our integrated offerings strategy.

The decrease in unallocated costs for 20242025 as compared to 20232024 was primarily driven by lowerthe 2025 gain on sale of property and equipment and the absence of NextGen charges, partially offset by higher amortization of intangible assets and certain corporate expenses as well as lower NextGen charges of $134 million in 2024 as compared to $229 million in 2023 (see Note 4 to our consolidated financial statements).costs.

The foreign currency exchange gains and losses were attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries. The gains on foreign exchange forward contracts not designated as hedging instruments related to the realized and unrealized gains and losses on contracts entered into to offset our foreign currency exposures. As of December 31, 2024,2025, the notional value of our undesignated hedges was $489$748 million. Interest income fordeclined thein year ended December 31, 2024 decreased by $7 million2025 as compared to 2023.2024, Whiledriven ourby a mix of lower invested balances decreasedand lower yields. Higher interest expense during the2024 yearwas endeddriven December 31, 2024, primarily due toby the requiredborrowing paymentof related to the ITD dispute in January 2024 (see Note 11 to our consolidated financial statements) and the Belcan acquisition in August 2024, we benefited from higher interest rates compared to the year ended December 31, 2023. Interest expense for the year ended December 31, 2024 increased by $13$600 million as compared to 2023 primarily due to the drawdown onunder our revolving credit facility into connectionpartially withfund the acquisition of Belcan acquisition.during the third quarter of 2024. The borrowing was subsequently repaid in the fourth quarter of 2024 and first quarter of 2025.

Our non-GAAP financial measures Adjusted Operating Margin and Adjusted Income from Operations exclude unusual items, such as the gain on sale of property and equipment in 2025 and NextGen charges.charges in 2024. Our non-GAAP financial measure Adjusted Diluted EPS excludes unusual items, such as the one-time income tax expense related to the enactment of the OBBBA, the gain on sale of property and equipment and NextGen charges, and net non-operating foreign currency exchange gains or losses and the tax impact of all the applicable adjustments. For further detail on the NextGen charges, see Note 4 to our consolidated financial statements. The income tax impact of each item excluded from Adjusted Diluted EPS is calculated by applying the statutory rate and local tax regulations in the jurisdiction in which the item was incurred. Constant currency revenue growth is defined as revenues for a given period restated at the comparative period’s foreign currency exchange rates measured against the comparative period's reported revenues. Free cash flow is defined as cash flows from operating activities plus proceeds from sale of property and equipment, net of purchases of property and equipment.

We believe providing investors with an operating view consistent with how we manage the Company provides enhanced transparency into our operating results. For internal management reporting and budgeting purposes, we use various GAAP and non-GAAP financial measures for financial and operational decision-making, to evaluate period-to-period comparisons, to determine portions of the compensation for executive officers and for making comparisons of our operating results to those of our competitors. We believe that the presentation of these non-GAAP financial measures, which exclude certain costs, read in conjunction with our reported GAAP results and reconciliations to the most comparable GAAP measure, as applicable, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations.

(1) ConsistsDuring 2025, we realized a gain of employee$62 separation,million facilityon exitthe andsale otherof costsan incurredoffice complex in connection with the NextGen program.India. See Note 45 to our consolidated financial statements for additional information.

Cash generated from operations has historically been our primary source of liquidity to fund operations and investments to grow our business. As of December 31, 2024,2025, we had cash, cash equivalents and short-term investments of $2,243$1,914 million.million and restricted cash of $733 million (see Note 18 to our consolidated financial statements). Additionally, as of December 31, 2024,2025, we had available capacity under our credit facilities of approximately $1.55$1.85 billion.

The decreaseincrease in cash provided by operating activities in 20242025 compared to 20232024 was primarily driven by the increase in net income, excluding the one-time, non-cash income tax expense of $390 million we recorded as a result of the enactment of the OBBBA, as well as the $360 million payment we made in January 2024 in relation to our dispute with the ITD in January 2024 (see Note 1110 to our consolidated financial statements)., which reduced cash from operating activities in 2024.

The increasedecrease in cash used in investing activities in 20242025 compared to 20232024 was primarily driven by higher payments for business combinationsacquisitions asin well2024 asand lowerthe proceeds from the sale of an office complex in India in 2025, partially offset by net maturities of investments in 2024.

The decreaseincrease in cash used in financing activities in 20242025 compared to 20232024 was primarily driven by lowerincreased repurchases of common stock during 2025 and netthe borrowingsborrowing under the revolving credit facility to finance the acquisition of Belcan acquisition.in 2024.

We have a Credit Agreement providing for a $650 million Term Loan and a $1,850 million unsecured revolving credit facility, which are each due to mature in October 2027. During the year ended December 31, 2025, we repaid the $300 million balance that was outstanding under the revolving credit facility, and had no outstanding balance as of December 31, 2025. We are required under the Credit Agreement to make scheduled quarterly principal payments on the Term Loan. We believe that we currently meet all conditions set forth in the Credit Agreement to borrow thereunder, and we are not aware of any conditions that would prevent us from borrowing part or all of the remaining available capacity under the revolving credit facility as of December 31, 20242025 and through the date of this filing. See Note 109 to our consolidated financial statements.

We expect operating cash flows, cash and short-term investment balances, together with the available capacity under our revolving credit facilities, to be sufficient to meet our operating requirements, including purchase commitments, tax payments, including the Tax Reform Act transition tax payment,payments and servicing our debt for the next twelve months. Our remaining Tax Reform Act transition tax payment of $157 million is due in the second quarter of 2025. In 2024, our Tax Reform Act transition tax payment was $123 million. Additionally, we have purchase commitments of approximately $1.1$2.3 billion that will be paid over the next fourfive years, of which approximately $440$800 million will be paid during the next twelve months. In addition, see Note 76 to our consolidated financial statements for a description of our operating lease obligations.

Revenue Recognition. Revenues related to fixed-price contracts for application development and systems integration services, consulting or other technology services are recognized as the service is performed using the cost-to-cost method, 76 Free cash flow is not a measurementmeasure of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information.

Revenue Recognition. Revenues related to fixed-price contracts for application development and systems integration services, consulting or other technology services are recognized as the service is performed using the cost-to-cost method, under which the total value of revenues is recognized on the basis of the percentage that each contract’s total labor cost to-date bears to the total expected labor costs. Revenues related to fixed-price application maintenance, quality engineering and assurance and business process services are recognized using the cost-to-cost method, if the right to invoice is not representative of the value being delivered. The cost-to-cost method requires estimation of future costs, which is updated as the project progresses to reflect the latest available information. Such estimates and changes in estimates involve the use of judgment. The cumulative impact of any change in estimates is reflected in the financial reporting period in which the change in estimate becomes known. Net changes in estimates of such future costs were immaterial to the consolidated results of operations for the periods presented.

At each acquisition date, we allocate goodwill and intangible assets to our reporting units based on how we expect each reporting unit to benefit from the respective business combination. OurA reporting unit is defined as an operating segment or one level below an operating segment. While we manage the business through our four industry-based operating segments, we have identified seven industry-based operating segments are our reporting units.units for purposes of goodwill allocation and impairment testing. We exercise judgment to allocate goodwill to the reporting units expected to benefit from each business combination. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. TheseSuch events or circumstances couldmay include a significant changechanges in the business climate, the regulatory environment, established business plans,strategies, operating performance indicatorsperformance, or competition.the Evaluationcompetitive oflandscape. Evaluating goodwill for impairment requires judgment, including the identification of reporting units, assignment of assets, liabilities and goodwill to reporting units and determination of the fair value of each reporting unit.

ThereExcept as disclosed in “Part II, Item 1A, Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, there have been no material changes in our risk factors from those disclosed in "Part I, Item 1A, Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, except as follows:2025.

During the quarter ended MarchJune 31,30, 2026, revenues increased by $298$236 million as compared to the quarter ended MarchJune 31,30, 2025, representing growth of 5.8%,4.5%, or 3.9%4.1% on a constant currency1 basis. Revenue growth was positively impacted by the ramp up of several recently won large deals and increasing demand for our intuitive operations and automation services as well as our AI and analytics services. Additionally, revenue growth was positively impacted by the sale of third-party products in connection with our integrated offerings strategy and our recently completed acquisition.acquisitions. See 'Revenues - Reportable Business Segments and Geographic Markets' within Results of Operations for further details.

Our GAAP operating margin andincreased Adjustedto Operating15.9% Margin1for werethe bothquarter ended June 30, 2026 from 15.6% for the quarter ended MarchJune 31,30, 2026,2025. as there were no adjustments for unusual items to report in our calculation ofOur Adjusted Operating MarginMargin1 forincreased thatto period. Our GAAP operating margin and Adjusted Operating Margin were 16.7% and 15.5%, respectively,16.0% for the quarter ended MarchJune 31,30, 2025.2026 Ourfrom operating margin15.6% for the quarter ended MarchJune 31,30, 2025. Our operating margins for the quarter ended June 30, 2026, as compared to the quarter ended MarchJune 31,30, 2025, waswere positively impacted by operational efficiencies and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs, the dilutive impact of our recently completed acquisitions and the impact of the sale of third-party products in connection with our integrated offerings strategy, the dilutive impact of our recently completed acquisition and increased compensation costs.strategy. In addition, our GAAP operating margin for the quarter ended MarchJune 31,30, 20252026 was negatively impacted by $84 million in costs related to Project Leap (see Note 4) and positively impacted by 120the basis$81 points,million orpartial $62reversal million, fromof the gain2019 onIndia saleDefined Contribution Obligation liability (see Note 11), both of property and equipment, which waswere excluded from our Adjusted Operating Margin.

In addition to Project Leap, potentialPotential tax law and other regulatory and administrative changes, including judicial decisions thereon, may impact our future results. The Governmentgovernment of India implemented labor law reforms effective November 21, 2025, including the Code on Social Security, 2020.2020, Certainand additionally published The Social Security Rules in May 2026 and notified the Employees Provident Fund Scheme of 2026 in June 2026. The government of India continues to issue clarifications on various aspects of the Labor Code rely on the issuance of rulesCode, and regulations. Additionally, the Government of India is in the process of clarifying certain aspectsIndian ofstates theare Laboryet Code.to notify or operationalize their corresponding rules. The issuance of rules and regulations as well as the outcome of these clarifications could impact our compensation and benefit expenses in India. In addition, in March 2024, India and Mauritius signed a Protocol to amend the India-Mauritius Income Tax Treaty. We continue to evaluate the potential impact of the amendment, which, depending on its final terms when entered into force, could increase our effective income tax rate, as CTS India is a subsidiary of our wholly-owned Mauritius entity. For additional information, see "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

The following table sets forth, for the periods indicated, certain financial data for the three months ended MarchJune 3130:

Revenues of $5,413$5,481 million across our business segments and geographies were as follows for the three months ended MarchJune 31,30, 2026:

Foreign currency exchange movements impacted revenue across segments and geographiesgeographies, excluding North America, as shown in the tables above. Constant currency revenue growth was driven by the following factors:3

• Revenue growth across all geographies, primarily in our Financial Services segment, was positively impacted by the ramp up of several recently won large deals and increasing demand for our intuitive operations and automation services as well as our AI and analytics services;

• The sale of third-party products, primarily in North America,products in connection with our integrated offerings strategy,strategy contributed approximately 140170 basis points to overall revenue growth. These sales contributed 1,000175 basis points of growth to our North America region and 350 basis points of growth to our Continental Europe region. These sales contributed 350 basis points of growth to our Communications Media and Technology segment andsegment, 250 basis points of growth to our Financial Services segment and 125 basis points of growth to our Products and Resources segment;

• Our recently completed acquisitionacquisitions contributed approximately 90100 basis points to overall revenue growth, across all segments in North America;

• Excluding the sale of third-party products, ourOur Communications Media and Technology segment has seen and may continue to see weakness among communications and media customers,customers (in all geographies), partially offset by growth in technology customers.customers (primarily in North America).

SG&A expenses consist primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, immigration, travel, marketing, communications, management, finance, administrative and occupancy costs. The decrease, as a percentage of revenues, was primarily driven by the $81 million partial reversal of the 2019 India Defined Contribution Obligation liability and operational efficiencies, partially offset by the dilutive impact of our recently completed acquisition.acquisitions.

Depreciation and amortization expense increased by 3.7%2.9% during the firstsecond quarter of 2026 as compared to the firstsecond quarter of 2025. The increase was driven by amortization expense from intangible assets related to our recently completed acquisition.acquisitions.

OurThe increase in our GAAP and Adjusted Operating Margins4 for the quarter ended MarchJune 31,30, 2026, as compared to the quarter ended MarchJune 31,30, 2025, werewas positivelyprimarily impacteddriven by operational efficiencies and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs, the dilutive impact of our recently completed acquisitions and the impact of the sale of third-party products in connection with our integrated offerings strategy, the dilutive impact of our recently completed acquisition and increased compensation costs.strategy. In addition, our GAAP operating margin for the quarter ended MarchJune 31,30, 20252026 was negatively impacted by $84 million in costs related to Project Leap and positively impacted by 120the basis$81 points,million orpartial $62reversal million, fromof the gain2019 onIndia saleDefined Contribution Obligation liability, both of property and equipment, which waswere excluded from our Adjusted Operating Margin.

A predominant portion of our costs in India are denominated in the Indian rupee, representing approximately 22% of our global operating costs during the three months ended MarchJune 31,30, 2026. These costs are subject to foreign currency exchange rate fluctuations, which have an impact on our results of operations. We enter into foreign exchange derivative contracts to hedge certain Indian rupee denominated payments in India. These hedges are intended to mitigate the volatility of the changes in the exchange rate between the U.S. dollar and the Indian rupee. Net of the impact of the hedges, the depreciation of the Indian rupee positively impacted our operating margin for the three months ended MarchJune 31,30, 2026 by approximately 50100 basis points as compared to the three months ended MarchJune 31,30, 2025.

In the firstsecond quarter of 2026, segment operating margins across all our segments were positively impacted by operational efficiencies and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs and the dilutive impact of our recently completed acquisition and increased compensation costs.acquisitions. On a year-over-year basis, the timing of sales of third-party products positivelynegatively impacted the change in segment operating margin in Health Sciences, while negatively impacting Financial Services,Services and Product and Resources and Communications, Media and Technology.Resources. In addition, segment operating margin in Communications, Media and Technology was positively impacted by increased profitability of several large customers.

Total segment operating profit and operating margin were as follows for the three months ended MarchJune 3130:

Unallocated benefitscosts for the three months ended MarchJune 31,30, 20252026 represents Project Leap costs, partially offset by the 2025partial gain on salereversal of propertythe and2019 equipment.India Defined Contribution Obligation liability. See Note 14 and Note 11 to our unaudited consolidated financial statements for additional information.

The following table sets forth total other income (expense), net for the three months ended MarchJune 3130:

The foreign currency exchange gains were attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries. The gains and losses on foreign exchange forward contracts not designated as hedging instruments related to the realized and unrealized gains and losses on contracts entered into to offset our foreign currency exposures. As of MarchJune 31,30, 2026, the notional value of our undesignated hedges was $781$605 million. Interest income declined for the three months ended MarchJune 31,30, 2026, driven by the combination of lower invested balances and lower yields as compared to the three months ended MarchJune 31,30, 2025. Higher interest expense during the three months ended MarchJune 31,30, 20252026 was driven by the outstanding balance under our revolving credit facility during thatthe period. The increase in expenses in Other, net was related to our India defined benefit plans as a result of the enactment of the Labor Code reforms in 2025.

Our non-GAAP financial measures Adjusted Operating Margin and Adjusted Income from Operations exclude unusual items, such as Project Leap charges and the partial reversal of the India Defined Contribution Obligation liability in the second quarter of 2026, and the gain on sale of property and equipment in the first quarter of 2025. Our non-GAAP financial measure Adjusted Diluted EPS excludes unusual items, such as Project Leap charges, the partial reversal of the India Defined Contribution Obligation liability and the gain on sale of property and equipment, and net non-operating foreign currency exchange gains or losses and the tax impact of all the applicable adjustments. The income tax impact of each item excluded from Adjusted Diluted EPS is calculated by applying the statutory rate and local tax regulations in the jurisdiction in which the item was incurred. Constant currency revenue growth is defined as revenues for a given period restated at the comparative period’s foreign currency exchange rates measured against the comparative period's reported revenues.

The following table presents a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure for the three months ended MarchJune 3130:

(1)During the three months ended March 31, 2025, we realized a gainConsists of $62employee millionseparation, onfacility theexit saleand ofother ancosts office complexincurred in India.connection with Project Leap. See Note 14 to our unaudited consolidated financial statements for additional information.

The following table providessets a summary of cash flowsforth, for the threeperiods indicated, certain financial data for the six months ended MarchJune 3130: