New Jersey-based IT major Cognizant’s revenue for the October-December quarter declined 2.4% quarter-on-quarter to $4.76 billion, a likely eight-quarter low due to continued weakness in demand and limited tech spending by clients.
For the full year, the company posted a revenue of $19.4 billion, down 0.3% in constant currency, which was within the downward revised guidance the company had announced in the preceding quarter.
Net profit during the quarter was up 6.2% sequentially at $558 million on the back of healthy deal wins, acquisitions and steady margins. For the full year, the same was at $2.1 billion against $2.29 billion in FY22.
Revenue from financial services and health sciences, Cognizant’s top two verticals witnessed declines of 5.8% and 2.1%, respectively.
During the quarter, income from operations improved to $724 million, up 5.5% sequentially. For the full year, it declined to $2.68 billion from $2.96 billion in FY22. Full year operating margin was at 15.1%, which was 40 basis points above its guidance.
In 2024, the company expects its adjusted operating margin to be in the range of 15.3% to 15.5%, or 20 to 40 basis points of expansion.
Ravi Kumar S, CEO, Cognizant, said, “We delivered Q4 revenue within our guided range and we’ve maintained our commercial momentum. Full-year bookings of $26.3 billion represent an increase of 9% year-over-year, driven by new clients and large deals. To keep advancing our ability to design and deliver solutions, we continue to invest in generative AI, cloud, data modernisation, digital engineering and IoT. I believe Cognizant is now in a significantly stronger position than a year ago to help our clients transform their businesses to prepare for the future as they navigate ongoing macro-economic pressures”.
Jatin Dalal, CFO, who joined the company in December 2023, said, “Fourth quarter’s sequential improvement in adjusted operating margin to 16.1% reflects our ongoing operational rigour and our nextgen cost optimisation programme, which have enabled us to exceed our margin commitment and continue to invest in our strategy to improve future revenue growth. We were also pleased to deliver full-year free cash flow of $2 billion, which represented 95% of net income”.
Cognizant’s bookings in the fourth quarter declined 6% year-on-year. For the full year, bookings grew 9% year-on-year to $26.3 billion, which represented a book-to-bill of approximately 1.4x.
For the second quarter in a row, Cognizant’s total headcount increased and this time by 1,100 sequentially to end Q4 at 3,47,700. Attrition for tech services on a trailing-twelve-month basis declined to 13.8% compared to 25.6% for the year ended December 31, 2022.
