Cognizant Q2 profit surges 22% to $566 mn, revenue flat

IT services major Cognizant Technology Solutions (Cognizant) has reported 22.2% year-on-year (YoY) growth in profit at $566 million for the April-June quarter (Q2 CY2024). The New Jersey-based company, which has a significant employee base in India, saw its profit surge 3.6% on a quarter-on-quarter basis.

The company's revenue of $4.9 billion, above its guidance range of $4.85 bn, dipped 0.7% YoY from $4.89 billion in the year-ago period, while surging 1.9% on QoQ.

Cognizant's operating margin of 14.6% was up from 11.8% in the second quarter of 2023, while adjusted operating margin stood at 15.2%, which expanded 100 basis points year-over-year.

"In the second quarter, we delivered revenue above the high end of our guidance range, expanded adjusted operating margin, and maintained our large deal momentum," said Ravi Kumar S, chief executive officer. "We believe our performance this quarter and the improved organic growth outlook for the full year demonstrate how our execution against these priorities is beginning to translate to our results and support long-term shareholder value."

In terms of bookings, Q2 FY23 saw 5% surge year-over-year, the company says. "On a trailing-twelve-month basis, bookings declined 1% year-over-year to $26.2 billion, representing a book-to-bill of approximately 1.4x."

The voluntary attrition on a trailing twelve-month basis was 13.6% as compared to 19.9% for the period ended June 30, 2023. The total headcount stood at 3,36,300, a decrease of 8,100 from Q1 2024 and a decrease of 9,300 from Q2 2023.

The company repurchased 0.9 million shares for $63 million during the second quarter under its share repurchase programme. In July 2024, Cognizant declared a quarterly cash dividend of $0.30 per share for shareholders of record on August 20, 2024. This dividend will be payable on August 28, 2024.

For the third quarter, Cognizant says it expects revenue to be $4.89-$4.96 billion, a decline of 0.2% to an increase of 1.3%, or flat to an increase of 1.5% in constant currency. Full-year 2024, the revenue is expected to be $19.3-$19.5 billion, a decline of 0.5% to an increase of 1.0% as reported and on a constant currency basis.

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. It recorded 6% decline in profit at $546 million against $580 million a year ago. 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.

Among its rivals, TCS reported a profit of ₹12,040 crore in the April-June quarter vs ₹11,074 crore in the same period last year. The revenue rose 5.4% YoY to ₹62,613 crore against ₹59,381 crore in the year-ago period. Infosys' Q1 profit surged 7.1% to ₹6,368 crore vs ₹5,945 crore in the year-ago period. Its revenue surged 3.6% year-on-year to ₹39,315 crore. Wipro's Q1 profit rose 4.6% to ₹3,003 crore YoY, while its revenue fell 3.8% to ₹21,964 crore.