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Cognizant Technology Solutions has reported a 7 per cent increase in net profit to $558 million in the fourth quarter ended December 31, 2023, as against $521 million in the corresponding period last year. Revenue was marginally down at $4,758 million ($4,839 million).
For the full year ending December 31, 2023, the company reported a reduced net profit of $2.12 billion as against $2.29 billion. Revenue was $19.35 billion ($19.42 billion).
Guidance (all growth rates YoY)
The company, with a large presence in India, has given a weak forecast for the year 2024, with first-quarter revenue expected to be $4.68 billion - $4.76 billion, a decline of 2.7 per cent to 1.2 per cent. Full-year 2024 revenue is expected to be $19 billion - $19.8 billion, a decline of 1.8 per cent to growth of 2.2 per cent as reported.
The lower guidance could be due to a weakness in the global demand for IT services. For instance, the US-based research firm Information Services Group has said demand for IT and business services in the Americas - the largest market for IT services - was down in the December quarter as economic and geopolitical concerns continued to weigh on the market.
The Americas ISG Index, which measures commercial outsourcing contracts with annual contract value (ACV) of $5 million or more, shows fourth-quarter ACV for the combined market—including both managed services and cloud-based as-a-service (XaaS)—came in at $11.8 billion, down 5 per cent from a year ago, and off 4 per cent sequentially from the third quarter. It was the fourth time in the last six quarters the region’s growth fell into negative territory, the ISG said.
Bookings
Cognizant said bookings in the fourth quarter declined 6 per cent year-over-year. For the full year, bookings grew 9 per cent year-over-year to $26.3 billion, which represented a book-to-bill of approximately 1.4X.
Employee Metrics
Total headcount at the end of the fourth quarter was 347,700, an increase of 1,100 from Q3 2023 and a decrease of 7,600 from Q4 2022. Voluntary attrition - Tech Services for the year ended December 31, 2023 was 13.8 per cent as compared to 25.6 per cent for the year ended December 31, 2022, the release said.
Ravi Kumar S, Chief Executive Officer, Cognizant, commenting on the results in the release said, “We delivered Q4 revenue within our guided range and we have maintained our commercial momentum. Full-year bookings of $26.3 billion represent an increase of 9 per cent year-over-year, driven by new clients and large deals.”
To keep advancing the ability to design and deliver solutions, the company continues to invest in generative AI, cloud, data modernisation, digital engineering and IoT. “Cognizant is now in a significantly stronger position than a year ago to help our clients transform their businesses to prepare for the future as they navigate ongoing macro-economic pressures.”
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