Cognizant result: Cognizant Q3 profit falls 16.5%, narrows revenue guidance

US-headquartered information technology (IT) and outsourcing firm Cognizant’s reported its third-quarter profit declined 16.5% to $525 million for the third quarter of the financial year ending September. The year ago third quarter profit stood at $629 million.

The company’s revenue grew marginally by 0.8% year-on-year to $4.9 billion. In constant currency terms, the revenue declined 0.2%.

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Similar to industry outlook owing to lower discretionary spends by clients amid macro uncertainty, the Nasdaq-listed company shrunk its fourth quarter revenue outlook to be in the $4.69 – $4.82 billion range, a decline of 3.1% to 0.3%, or a decline of 4.0% to 1.2% in constant currency.

For the full year 2023 revenue is expected to be $19.3 – $19.4 billion, or a decline of 0.7% to flat, both as reported and in constant currency.

“We have narrowed our full-year revenue guidance range, which now reflects recent discretionary spending pressure and its impact to our near-term revenue expectations. We have also updated our adjusted operating margin guidance to approximately 14.7%, which is the high-end of our prior range, reflecting our continuing focus on enhancing operational discipline,” said Jan Siegmund, the firm’s Chief Financial Officer.

Deal bookings for the company in the third quarter grew 9% year-over-year. On a trailing-twelve-month basis, it grew 16% year-over-year to $26.9 billion, which represented a book-to-bill of approximately 1.4x.

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Ravi Kumar S, who took over as the chief executive officer of Cognizant earlier this year, said, “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 ongoing economic uncertainty.”“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 added.

Bucking industry trend, Cognizant’s total headcount increased by 1000 from the previous quarter to 346,600. However, it dipped by 2,800 from a year ago period. The company said its voluntary attrition in tech Services on a trailing-twelve-month basis, declined to 16.2% from 19.9% in Q2 2023 and 29.2% in Q3 2022.

The company also announced that its share repurchase expectation for 2023 increased by $200 million to $1 billion.

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