Nasdaq-listed Cognizant Technology Solutions has forecast its first quarter 2023 revenue to be in the range of $4.71-4.76 billion, a decline of 1% to flat in constant currency. It has not provided a full-year guidance and said it intends to provide an update in its next earnings release in early May.
The Teaneck, New Jersey-based firm posted a 9.5% decline in net profit to $521 million for the December quarter from $576 million a year ago, even as revenues grew 4.1% in constant currency from the year-ago period to $4.8 billion. The company follows the calendar year.
For the full year 2022, revenues grew 7.5% in constant currency to $19.4 billion. This was slightly above the 7% guidance it provided during the July-September quarter.
“The trust and longevity that define Cognizant’s strategic partnerships with global clients provide exciting opportunities to further strengthen and grow these relationships as we expand our portfolio of digital services,” said Ravi Kumar S, chief executive officer, Cognizant, whose appointment was announced on January 12. Kumar succeeds outgoing CEO Brian Humphries, who is currently overseeing the transition and will be departing from the company on March 15.
Bookings in the fourth quarter grew 12% year-on-year. For the full-year, bookings grew 4% to $24.1 billion, which represented a book-to-bill of approximately 1.2x. Bookings for the fourth quarter and full-year include a 10-year, $1 billion services agreement with CoreLogic signed in December 2022 that extends and expands a partnership established in 2011.
The company’s digital revenue grew 13% annually in constant currency and contributed 51% to the total revenues for the December quarter as digital bookings continued to grow. As part of its digital bets, Cognizant has been focussing on areas of digital engineering, artificial intelligence (AI) and analytics, cloud, and internet of things (IoT).
Revenue from financial services declined 1.4% in constant currency and included a 180 basis point negative impact related to the previously disclosed sale of the Samlink subsidiary (completed February 1, 2022). This was partially offset by growth among public sector clients in the UK and insurance clients.
Health Sciences revenue grew 5.4% in constant currency, driven by digital services among pharmaceutical and healthcare payer clients.
Products and resources revenue grew 6.8% in constant currency, driven by digital services among logistics, automotive, utilities, consumer goods, and travel and hospitality clients.
Communications, Media and Technology revenue grew 9.3% in constant currency, driven by strength among digital native companies.
The voluntary annualised attrition rate reduced to 19% in the December quarter from 29% in the preceding three months indicating that the company’s measures to contain attrition are slowly bearing fruit. The total headcount stood at 355,300 employees as of December 31.