News

Published: February 7, 2024
Updated: February 7, 2024

Cognizant Reports Q4 Profit Growth Despite Revenue Dip, Issues FY24 Guidance

Cognizant Technology Solutions, headquartered in Teaneck, New Jersey, has announced its financial results for the fourth quarter of 2023, revealing a notable increase in net profit amidst a slight decline in revenue. Additionally, the company has provided its revenue guidance for the fiscal year 2024.

Q4 Financial Performance:

Cognizant reported a 7% rise in net profit to $558 million for the December quarter, compared to $521 million in the same period the previous year. However, revenue decreased by 2.4% in constant currency terms to $4.75 billion, falling within the company's guided range of $4.69 to $4.82 billion.

FY24 Revenue Guidance:

For the fiscal year 2024, Cognizant forecasts its revenue to be in the range of $19.0 to $19.8 billion, indicating a potential decline of 2% to a growth of 2% in constant currency terms.

Comparison with Industry Peers:

In comparison, Tata Consultancy Services (TCS) witnessed a 1.7% growth in dollar revenue in constant currency terms to $7.3 billion for the December quarter, while Infosys experienced a 1% decline in revenue to $4.7 billion during the same period.

CEO's Perspective:

Ravi Kumar S, CEO of Cognizant, expressed satisfaction with the company's performance, highlighting a 9% year-on-year increase in full-year bookings, driven by new clients and large deals. Kumar emphasised ongoing investments in key areas such as artificial intelligence, cloud, data modernization, digital engineering, and the Internet of Things to enhance solution delivery capabilities.

Sector-wise Performance:

The growth in the fourth quarter was primarily led by the communications, media, and technology sector, with a 2.6% year-on-year increase in constant currency revenue. Meanwhile, the financial services sector witnessed a decline of 5.8%, and health sciences saw a 2.1% decrease year-on-year in constant currency terms.

Employee Metrics:

Cognizant reported a reduction in voluntary attrition rate to 13.8% in the December quarter, indicating a positive trend. The total headcount stood at 347,700 at the end of the fourth quarter, reflecting a slight increase from the previous quarter but a decrease compared to the same period in 2022.