Cognizant Technology Solutions reported a 13 per cent increase in net profit to $577 million in the quarter ended June 30, 2022 as against $512 million in the same period last year. Revenue was up 7 per cent at $4.91 billion ($4.6 billion), with growth reported across all business segments and geographies.
Q2 of calender year 2022 represents Cognizant’s fifth consecutive quarter of revenue growth and its highest quarterly revenue to date, said a release by the US-based technology company that has a large employee base in India.
Digital revenue grew 13 per cent year-over-year, representing 50 per cent of total revenue for the second consecutive quarter, indicating digital technologies are becoming increasingly mainstream
The headcount expanded to 3,41,300 employees globally - an addition of 40,100 YoY and 900 QoQ - in an intensely competitive labour market. Cognizant said its statistics show the company has been able to hire a new employee every 56 seconds, based on a 40-hour work week, the release said.
‘Attrition to remain elevated’
Voluntary trailing 12-month attrition was 32 per cent during the second quarter, as against 29 per cent in the same quarter last year.
Cognizant CEO Brian Humphries said, “In a period of unprecedented labour market conditions characterised by elevated attrition and significant wage inflation, we focused on our client commitments and delivered balanced financial results in the second quarter. As we position the company for sustained success we will continue to invest in our employees, clients and capabilities.”
Humphries told analysts while discussing the results that the increase in attrition was slightly above the seasonal uptick the company anticipated entering the quarter, impacting second quarter revenue performance. “While we have seen some signs of improvement in July resignation rates, we continue to expect elevated attrition for the remainder of the year,” he said.
Jan Siegmund, Chief Financial Officer, said, “for the full year, we are lowering the midpoint of our constant currency revenue growth guidance by about 1 point, which reflects, in part, the impact we have had while navigating the current industry supply-demand imbalances, elevated attrition and softer-than-expected hiring, particularly in North America. However, we are maintaining our margin expansion guidance, which reflects prioritisation of profitable growth, pricing initiatives and the rigour that we have put around selling, general and administrative expenses..”
On full-year revenue, Seigmund said, “we still expect inorganic growth to contribute approximately 100 basis points to growth, unchanged from prior guidance. This leads to a revised reported revenue guidance in the range of $19.7 billion to $19.9 billion, representing 6.3 per cent to 7.3 per cent growth. This compares to our prior guidance of $19.8 billion to $20.2 billion, which represents 7.2 per cent to 9.2 per cent growth.”
The second quarter is typically a higher attrition quarter that has to do with some of the bonus payments that the company issues at the end of March, he added.
“So we knew that we would have increased attrition that we don't expect to continue throughout the year. It did turn out to be a little bit higher, maybe also for the revenue impact that we identified,” said Siegmund.