Cognizant Q1 profit dips 6% to $546 mn; revenue down 1%

U.S.-based IT services major Cognizant has reported a 1.1% decline in revenue at $4.8 billion in the January-March quarter of 2024. The company recorded 6% decline in profit at $546 million against $580 million a year ago.

The company’s operating margin of 14.6% was flat year-over-year, and the adjusted operating margin of 15.1% expanded 50 basis points YoY.

The New Jersey-based IT services company’s trailing 12-month bookings stood at $25.9 billion. During the first quarter of 2024, the company returned $284 million to shareholders through share repurchases and dividends.

"During the first quarter, we delivered revenue above the high-end of our guidance range and continued to make progress against our strategic priorities," says Ravi Kumar S, Chief Executive Officer.

He says the company built upon the large deal momentum of 2023, signing 8 deals during the quarter, each with a total contract value (TCV) 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."

Jatin Dalal, chief financial officer, Cognizant says the first quarter's adjusted operating margin of 15.1% expanded by 50 basis points year-over-year, driven due to the company’s NextGen programme.

Dalal says the company’s recently completed acquisition of Thirdera, a ServiceNow partner, is opening new growth opportunities and expanding the pipeline.

Total headcount at the end of the first quarter was 3,44,400, a decrease of 3,300 from Q4 2023 and a decrease of 7,100 from Q1 2023. The company’s voluntary attrition in tech services on a trailing twelve-month basis was 13.1% as compared to 23.1% for the period ended March 31, 2023. Cognizant houses the majority of its employees in India (estimated around over 2.5 lakh in India), followed by North America, Central Europe and the UK.

The company says it repurchased 1.4 million shares for $110 million during the first quarter under its share repurchase programme. As of March 31, 2024, there was $1.7 billion remaining under the share repurchase authorisation. In April 2024, the company declared a quarterly cash dividend of $0.30 per share for shareholders of record on May 20, 2024. This dividend will be payable on May 29, 2024.

Cognizant’s second-quarter and full-year 2024 guidance shows the company expects second-quarter revenue is expected to be $4.75-$4.82 billion, a decline of 2.9% to a decline of 1.4%. The full-year 2024 revenue is expected to be $18.9-$19.7 billion, a decline of 2.2% to growth of 1.8% as reported. “This assumes up to 100 basis points of inorganic contribution.”