Cognizant Q3 net profit up 15.6 per cent; lowers 2022 revenue guidance

BENGALURU: Nasdaq-listed IT services company Cognizant has reported a 15.6% increase in net profit to $629 million for the third quarter that ended in September 2022, compared to $544 million in the year-ago period. The company follows the calendar year. Its revenues in the September quarter stood at $4.9 billion.

For the second time, the company has revised its 2022 revenue guidance. It revises full-year 2022 revenue growth guidance to 4.5%, or 7.0% in constant currency. This is lower than its previous guidance- 8.5%-9.5%.

"Revenue and bookings were below our expectations as company-specific fulfilment challenges were compounded by the impact of an uncertain macroeconomic backdrop," said Brian Humphries, CEO, Cognizant. "We are confident the steps we are taking will return the company to accelerated growth over the medium to long term," he added.

Cognizant's fourth quarter revenue guidance is expected to be $4.72-$4.77 bn, a decline of 0.2%-1.2%. The company's operating margin and adjusted operating margin stood at 16.4%, an increase of 100 and 60 basis points y-o-y, respectively. Also, the board of directors approved an increase of $2 billion to the share repurchase authorisation.

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The company's financial services revenue declined 1.5% y-o-y, but grew 1.6% in constant currency. It said growth was driven by digital services among public sector clients in the UK and insurance clients.

Health Sciences revenue grew 3.8% y-o-y, or 5.5% in constant currency, driven by digital services among pharmaceutical and healthcare payer clients.

Cognizant's bookings in the quarter declined 2% y-o-y and represented an in-period book-to-bill of approximately 1.0x. This resulted in trailing 12-month bookings of $23.1 billion, which represented a book-to-bill of approximately 1.2x, the company said in a statement.