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Cognizant Q1 profit declines 6% to $546 million, revenue dips 1.2%

2024 full-year revenue guidance unchanged at -2% to 2%; firm signed 8 large deals during the quarter with TCV of $100 million each

profit fell

Ayushman Baruah Bengaluru

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Nasdaq-listed Cognizant Technology Solutions reported a nearly 6 per cent decline in net profit to $546 million for the first quarter ended March 31, 2024, down from $580 million a year ago.

The company follows the calendar year.    

The revenue declined 1.2 per cent in constant currency from the year-ago period to $4.76 billion, above the upper-end of its growth guidance of -3.0 per cent to -1.5 per cent in constant currency.

The Teaneck, New Jersey-based firm has maintained its full-year 2024 revenue to be in the range of $18.9 to $19.7 billion, or a decline of 2.0 per cent to a growth of 2.0 per cent in constant currency as clients continue to limit discretionary spending.

The second quarter revenue is expected to be in the range of $4.75 to $4.82 billion, a decline of 2.5 per cent to a decline of 1.0 per cent in constant currency.

In comparison, the dollar revenue of Tata Consultancy Services (TCS) grew 2.2 per cent annually in constant currency to $7.36 billion for the March quarter.

Infosys’ dollar revenue remained flat annually in constant currency to $4.6 billion.    

“During the first quarter, we delivered revenue above the high-end of our guidance range and continued to make progress against our strategic priorities,” said Ravi Kumar S, CEO, Cognizant.

“We have built upon our large deal momentum of 2023, signing eight deals during the quarter, each with a total contract value of at least $100 million. As our clients navigate an uncertain economic environment, we are adapting to the market dynamics by helping them achieve operational efficiencies, supporting their innovation agendas, and preparing them for AI-driven transformation across their businesses,” he said.

Kumar said in a post-earnings media call that while the smaller deals of up to $20 million have “softened”, large deals continue to see strong momentum.

“We have 450 projects running on GenAI,” he said.

Cognizant continues to invest in India in terms of talent. It opened two new centres in Bhubaneswar and Indore in the last three months, Kumar said.  

It’s been little over a year since Kumar, former Infosys president, joined Cognizant as its CEO on January 12 last year succeeding Brian Humphries, who had quit on March 15, 2023.       

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The first quarter’s adjusted operating margin expanded 50 basis points year-on-year (YoY) at 15.1 per cent.

“It was driven by our NextGen program. We remain focused on operational excellence and cost discipline as our clients continue to limit discretionary spending,” said Jatin Dalal, Chief Financial Officer.

Growth for the first quarter was mainly driven by the Communications, Media and Technology sector whose revenue grew 5.7 per cent Y-o-Y in constant currency, followed by Products and Resources that grew nearly 1 per cent.

Revenue from Financial Services declined 6.5 per cent while Health Sciences declined 1.3 per cent YoY in constant currency.

The voluntary attrition rate, on a trailing 12-month basis, reduced to 13.1 per cent in the March quarter from 13.8 per cent in the preceding three months and 23 per cent in the year-ago period, indicating a downtrend trend visible across the industry. Total headcount at the end of the first quarter stood at 344,400, a decline of 3,300 employees QoQ and 7,100 YoY.

A comparison:

Cognizant Q1 2024 Q1 2023
Revenue $4.76 billion $4.8 billion
Net profit $546 million $580 million
Adjusted operating margin 15.10% 14.60%
Voluntary attrition rate 13.10% 23%

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First Published: May 02 2024 | 7:50 AM IST

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