Cognizant Q1 profit declines 6% to $546 million, revenue dips 1.2%

Nasdaq-listed Cognizant Technology Solutions has maintained its full-year 2024 revenue to be in the range of $18.9-19.7 billion, or a decline of 2 per cent to a growth of 2 per cent in constant currency. The second quarter revenue is expected to be in the range of $4.75-4.82 billion, a decline of 2.5 per cent to a decline of 1 per cent in constant currency.

The Teaneck, New Jersey-based firm posted a nearly 6 per cent decline in net profit at $546 million for the March quarter from $580 million a year ago.

The revenue declined 1.2 per cent in constant currency from the year-ago period to $4.76 billion, at the high-end of its own guidance range of $4.68-$4.76 billion, despite the macro-economic challenges and clients limiting discretionary spending. The company follows the calendar year.    

In comparison, the dollar revenue of Tata Consultancy Services (TCS) grew 2.2 per cent annually in constant currency to $7.36 billion for the March quarter. Infosys’ dollar revenue remained flat annually in constant currency to $4.6 billion.    

“During the first quarter, we delivered revenue above the high-end of our guidance range and continued to make progress against our strategic priorities,” said Ravi Kumar S, CEO, Cognizant. “We have built upon our large deal momentum of 2023, signing eight deals during the quarter, each with a total contract value 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.”

It’s been little over a year since Kumar, former Infosys president, joined Cognizant as its CEO on January 12 last year succeeding Brian Humphries, who left the company on March 15, 2023.          

The first quarter’s adjusted operating margin expanded 50 basis points YoY at 15.1 per cent. “It was driven by our NextGen program. We remain focused on operational excellence and cost discipline as our clients continue to limit discretionary spending,” said Chief Financial Officer Jatin Dalal.

Growth for the first quarter was mainly driven by the communications, media and technology sector whose revenue grew 5.7 per cent YoY in constant currency, followed by products and resources that nearly 1 per cent. Financial services declined 6.5 per cent while health sciences declined 1.3 per cent YoY in constant currency.

The voluntary attrition rate, on a trailing 12-month basis, fell to 13.1 per cent in the March quarter from 13.8 per cent in the preceding three months and 23 per cent in the year-ago period, indicating a downtrend trend visible across the industry. Total headcount at the end of the first quarter stood at 344,400, a headcount decline of 3,300 QoQ and 7,100 YoY.

First Published: May 02 2024 | 7:50 AM IST