Cognizant Q4 net profit falls to 9.5 per cent; forecasts further revenue dip in Q1
Cognizant, which follows the calendar year, expects its first-quarter revenue to be $4.71-$4.76 billion, a decline of 1.5 per cent to 2.5 per cent.
Published: 03rd February 2023 04:13 PM | Last Updated: 03rd February 2023 04:13 PM | A+A A-
BENGALURU: Nasdaq-listed IT services company Cognizant on Friday posted a 9.5 per cent decrease in net profit at $521 million for the fourth quarter ending December 2022. Cognizant's net profit in the same quarter last year stood at $576 million.
Beating Street estimates, Cognizant reported a 1.3 per cent increase in its revenues at $4.83 billion compared to $4.77 billion in the year-ago period. The company had said in the previous quarter that its fourth-quarter revenue guidance will be $4.72-$4.77 billion, a decline of 0.2 per cent-1.2 per cent.
Cognizant, which follows the calendar year, expects its first-quarter revenue to be $4.71-$4.76 billion, a decline of 1.5 per cent to 2.5 per cent, or a decline of 1.0 per cent to flat in constant currency.
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. "The impairment is principally driven by the company's expectation of lower volumes. This charge negatively impacted each of Q4 2022 GAAP and Adjusted Operating Margin by 120 basis points and each of full-year 2022 GAAP and Adjusted Operating Margin by 30 basis points," Cognizant said.
Its financial services revenue in Q4 declined 4.3 per cent y-o-y, and included a 180 basis point negative impact related to the previously disclosed sale of the Samlink subsidiary (completed February 1, 2022). "This was partially offset by growth among public sector clients in the United Kingdom and insurance clients," the company informed.
The company's bookings in the fourth quarter grew 12 per cent y-o-y, and for the full year, bookings grew 4% to $24.1 billion, which represented a book-to-bill of approximately 1.2x.
Cognizant's newly appointed CEO Ravi Kumar S said, "The trust and longevity that define Cognizant's strategic partnerships with global clients provide exciting opportunities to further strengthen and grow these relationships as we expand our portfolio of digital services."
He added, "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."
In Q4, the company added 5,900 employees. Voluntary attrition, on a quarterly annualised basis, declined to 19 per cent from 29 per cent in Q3 2022 and 31% in Q4 2021. Voluntary attrition, on a trailing-twelve-month basis, declined to 26 per cent from 28 per cent in Q4 2021.