Cognizant's Q3 net profit declines 19.8% to $525 million
Cognizant has experienced a 19.8% drop in net profit for Q3, falling to $525 million from $629 million the previous year. The NASDAQ-listed firm has also adjusted its full-year 2023 revenue growth forecast to $19.3-19.4 billion. This represents a decrease of 0.7% to flat, both as reported and in constant currency, due to uncertainties in discretionary spending and a weaker Q4. Revenue for Q4 is anticipated to range between $4.69-$4.82 billion, a decline of 4% to 1.2% in constant currency.
CEO's comments on Q3 performance
Cognizant CEO, Ravi Kumar S, stated that the company improved its fundamentals during Q3, as evidenced by increased customer satisfaction scores, reduced voluntary attrition, and sustained growth in bookings. He further noted that they are investing to ensure Cognizant is well-positioned to support clients in their efforts to cut costs, undergo digital transformation, and adopt generative AI. Kumar also highlighted that the major deals secured this year will provide a solid foundation for Cognizant's growth next year.
Adjusted operating margin and bookings growth
The company's full-year adjusted operating margin is projected to be around 14.7%, at the upper end of its previous range. Jan Siegmund, the outgoing CFO, mentioned that this demonstrates their ongoing commitment to improving operational discipline. Wipro veteran Jatin Dalal will succeed Siegmund in December. Q3 bookings saw a 9% YoY increase, and on a trailing twelve-month basis, bookings rose 16% YoY to $26.9 billion. Cognizant signed three large deals exceeding $100 million during Q3.
Q3 growth drivers and attrition rate
Q3 growth was primarily fueled by the communications, media, and technology sectors, which experienced a 7.3% revenue increase in constant currency. This was followed by products and resources, which grew 0.6%. Revenue from financial services fell 4%, while Health Sciences saw a 0.8% decline. The voluntary attrition rate, on a trailing 12-month basis, dropped to 16.2% in the June quarter from 19.9% in the previous three months. The total headcount at the end of Q3 was 346,600.
