 "Cognizant")
Nasdaq-listed Cognizant Technology Solutions reported its net profit has declined 16.5 per cent to $525 million for the third quarter ended September. The information technology (IT) and outsourcing firm’s profit for the same period last year stood at $629 million.
Consequently, Cognizant has narrowed its 2023 revenue growth guidance to $19.3-19.4 billion, a decline of 0.7 per cent to flat, both as reported and in constant currency. This was on the back of the uncertainty in discretionary spending and a seasonally soft fourth quarter.
The revenue for the fourth quarter is expected to be in the range of $4.69-$4.82 billion, a decline of 4 per cent to 1.2 per cent in constant currency, due to furloughs and lower number of working days in the December quarter.
In comparison, the dollar revenue of Tata Consultancy Services (TCS) grew 2.8 per cent annually in constant currency to $7.2 billion, while the revenue of Infosys grew 2.5 per cent to touch $4.7 billion.
“We strengthened the company’s fundamentals during the third quarter as reflected in higher customer satisfaction scores, significantly lower voluntary attrition, and continued growth in bookings, despite the ongoing economic uncertainty,” said Ravi Kumar S, chief executive officer of Cognizant.
“We are investing to put Cognizant in the best position to serve clients as they strive to reduce costs, digitally transform their businesses and embrace generative AI,” he said.
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Kumar told reporters during a post-earnings call that the large deals won this year, a sizable percentage of which are new deals, will give Cognizant runway for the next year.
“It’s hard to predict next year, but we will continue to double down on large deals. We are in times when the period of change and period of uncertainty have come together.”
The full year 2023 adjusted operating margin is expected to be approximately 14.7 per cent, at the high-end of its prior range.
“This reflects our continuing focus on enhancing operational discipline,” said Jan Siegmund, the outgoing chief financial officer. Wipro veteran Jatin Dalal will be replacing Siegmund in December.
Kumar, the former Infosys president, joined Cognizant as CEO on January 12 this year, succeeding Brian Humphries, who departed the company on March 15, after helping with the transition.
Bookings in the third quarter grew 9 per cent year-on-year (Y-o-Y).
On a trailing-twelve-month basis, bookings grew 16 per cent Y-o-Y to $26.9 billion, which represented a book-to-bill of approximately 1.4x. It signed three large deals over $100 million during the third quarter.
On a trailing-twelve-month basis, bookings grew 16 per cent Y-o-Y to $26.9 billion, which represented a book-to-bill of approximately 1.4x. It signed three large deals over $100 million during the third quarter.
The growth for the third quarter was driven by communications, media and the technology sector whose revenues grew 7.3 per cent in constant currency, followed by products and resources, which grew 0.6 per cent annually in constant currency.
The revenues from financial services, its largest vertical, declined 4 per cent in constant currency, while Health Sciences declined 0.8 per cent on an annual basis.
The voluntary attrition rate, on a trailing 12-month basis, reduced to 16.2 per cent in the June quarter, from the 19.9 per cent in the preceding three months, indicating a downward trend prevalent across the industry.
The total headcount at the end of the third quarter stood at 346,600, an increase of 1,000 from Q22023, and a decrease of 2,800 from Q32022.
