Cognizant Technology Solutions, the US-based IT company with a large presence in India, reported a 9.6 per cent drop in net profit to $521 million for the fourth quarter that ended December 31, 2022, as against $576 million in the same quarter previous year. Revenue was marginally up by 1.3 per cent to $4.8 billion ($4.7 billion).
During the fourth quarter, the company recorded a $59 million ‘impairment of capitalised costs’ related to a large volume-based contract with a Health Sciences customer, says a release.
“Within financial services, revenue declined 1 per cent reflecting a negative impact of 180 basis points related to the previously disclosed sale of our Samlink subsidiary. This was partially offset by growth among public sector clients in the UK and insurance clients,” Jan Siegmund, CFO, Cognizant, told analysts.
For the full year ended December 31, 2022, the company reported higher net profit of $2.3 billion ($2.1 billion) on increased revenue of $19 billion ($18 billion).
The trust and longevity that define Cognizant’s strategic partnerships with global clients provide opportunities to further strengthen and grow these relationships as the company expands its portfolio of digital services, said S Ravi Kumar, CEO, Cognizant, who succeeded Brian Humphries as CEO in January.
“My immediate focus is on creating the conditions for our associates to excel and ensuring that all 355,000 of us operate with a growth mindset,” Kumar said in the release.
The Q4 bookings increased 12 per cent year-over-year, including the large agreement with CoreLogic announced last week. This opportunity is primarily a renewal of existing work with some modest increase in scope during the latter years of the contract.
For the full year, the company recorded bookings of $24.1 billion and a book-to-bill of approximately 1.2 times, unchanged from the trailing 12-month book-to-bill we reported last quarter.
“Outside the large renewal, bookings momentum remains muted, exiting this year. This has put pressure on our Q1 outlook,” he said.
“For the first quarter 2023, we expect revenue in the range of $4.71 billion to $4.76 billion, representing a year-over-year decline of minus 2.5 per cent to minus 1.5 per cent or a decline of minus 1 per cent to flat in constant currency. Our guidance assumes currency will have a negative 150 basis points impact as well as an inorganic contribution of approximately 100 basis points,” he said.
Total headcount at the fourth quarter end was 3,55,300, an increase of 5,900 from Q3, 2022 and an increase of 24,700 from Q4 2021.
Voluntary attrition, on a quarterly annualised basis, declined to 19 per cent from 29 per cent in Q3 2022 and 31 per cent in Q4 2021. Voluntary attrition, on a trailing-twelve-month basis, declined to 26 per cent from 28 per cent in Q4 2021, the release said.