Cognizant Reports Revenue Of $4.76 Billion For Q1 2024
Financial Results Exceed Expectations
Cognizant’s first quarter 2024 financial results, unveiled earlier this month, exceeded expectations and showcased resilience in the face of evolving market conditions.
In the first quarter of 2024, Teaneck, New Jersey-headquartered Cognizant, reported a revenue of $4.76 billion, slightly lower than the $4.81 billion recorded in the same period last year.
However, despite the challenges posed by the economic landscape, the company demonstrated its resilience, showcasing a year-over-year constant currency revenue growth of 1.2%, a testament to its ability to adapt and thrive in changing market conditions.
Key financial metrics for the company’s first quarter included a GAAP operating margin of 14.6% and an adjusted operating margin of 15.1%, representing a 50 basis points expansion compared to the previous year. Diluted earnings per share (EPS) stood at $1.10 on a GAAP basis and $1.12 on an adjusted basis.
Ravi Kumar S, CEO of Cognizant, expressed satisfaction with the company’s performance: “During the first quarter, we delivered revenue above the high-end of our guidance range and continued to make progress against our strategic priorities.”
Key Factors
Kumar, who was announced as the CEO of Cognizant on January 12, 2023, highlighted the company’s commitment to its clients, securing significant deals and signing eight agreements valued at over $100 million.
He also emphasised Cognizant’s dedication to assisting clients in navigating economic uncertainties by driving operational efficiencies and facilitating AI-driven transformations across their businesses, reinforcing the company’s customer-centric approach.
Jatin Dalal, CFO of Cognizant, attributed the expanded operating margin to the strategic decisions made under the company’s NextGen programme, underscoring Cognizant’s focus on operational excellence and cost discipline.
Dalal also highlighted the strategic acquisition of Thirdera, a ServiceNow partner, as a growth and pipeline expansion driver, demonstrating the company’s forward-thinking approach.
Despite a 6% year-over-year decline in bookings for the quarter, Cognizant maintained a healthy book-to-bill ratio of approximately 1.3x on a trailing 12-month basis, with bookings reaching $25.9 billion.
The company reported a decrease in total headcount to 344,400 by the end of the quarter, alongside a significant reduction in voluntary attrition within its tech services division.
Shareholder Value
Cognizant, which has a global workforce 344,400, has demonstrated its commitment to shareholder value through share repurchases and dividends. During the first quarter, the company repurchased 1.4 million shares for $110 million and declared a quarterly cash dividend of $0.30 per share.
Looking ahead, Cognizant guided for the second quarter and full year 2024, anticipating revenue declines of 1.4% to 2.9% for Q2 and a 2.2% decline to 1.8% growth for the entire year.
The company expects adjusted operating margins to expand by 20 to 40 basis points for the entire year, with adjusted EPS projected to range between $4.50 and $4.68.
Cognizant announced several strategic client engagements and partnerships to drive innovation and digital transformation across various industries.
Partnerships with industry giants such as Telstra, Microsoft, and Shopify underscored Cognizant’s role as a trusted advisor in enabling clients to leverage AI and cloud technologies for business optimisation.
The company’s Bluebolt grassroots innovation programme further solidifies Cognizant’s position as one of ‘America’s Most Innovative Companies 2024’.
Leading industry analysts, including Everest Group, IDC, HFS, ISG Provider Lens, and NelsonHall NEAT Reports, acknowledged Cognizant’s leadership in various service categories, reflecting the company’s industry-leading capabilities and market reputation.
Telstra Partnership
Meanwhile, Cognizant has unveiled a five-year strategic partnership with Telstra, a leading Australian telecommunications and technology company.
The partnership marks a pivotal moment in Telstra’s strategic vision. Telstra will leverage Cognizant’s expertise to enhance its software engineering and IT capabilities while embracing cutting-edge technologies like artificial intelligence (AI).
The collaboration is poised to revolutionise Telstra’s technological landscape by introducing novel methodologies to expedite software engineering processes and enhance operational efficiency.
By harnessing product engineering practices, Cognizant aims to elevate Telstra’s customer experience and accelerate its speed to market. With its expansive global footprint, Cognizant is committed to supporting Telstra’s objective of streamlining software engineering and IT operations, including the phased decommissioning of legacy systems.
Furthermore, the strategic alliance endeavours to enrich the employee experience at Telstra by fostering a culture of innovation and modernisation within the organisation.
By prioritising the development of a superior engineering environment, Cognizant aims to cultivate an atmosphere conducive to creativity and forward-thinking, driving Telstra towards extraordinary technological prowess and market competitiveness.
Featured image: Cognizant has a global workforce of 344,400. Credit: Cognizant
