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News » Cognizant posts mixed Q4 results, profits up despite lower revenue

Cognizant posts mixed Q4 results, profits up despite lower revenue

Cognizant posts mixed Q4 results
Photo from Cognizant

NEW JERSEY, UNITED STATES —  IT services and consulting firm Cognizant reported mixed results for its fourth quarter finances in 2023 during its earnings call on Wednesday.

In its latest report, the firm saw a 1.7% year-over-year (YoY) dip — or 2.4% in constant currency — in its Q4 revenue to $4.76 billion. Cognizant said that the decline was driven by continued weakness in demand and limited tech spending by clients amid macro uncertainties.

However, net profit for the quarter rose 7% to $558 million compared to $521 million last year, backed by healthy deal wins, acquisitions, and steady margins.

For the full year 2023, revenue declined 0.4% to $19.4 billion, within the company’s guidance range. Meanwhile, annual bookings grew 9% to $26.3 billion, including large deal signings worth over $100 million.

“I’m grateful to our nearly 350,000 employees for their tremendous year-long work enhancing our strength as industry experts, collaborative partners, and passionate innovators for our clients,” said Cognizant CEO Ravi Kumar S. 

“We delivered Q4 revenue within our guided range, and we’ve maintained our commercial momentum,” he added.

Cognizant also posted strong profitability despite the slight revenue decline. Its Q4 adjusted operating margin improved to 16.1%, leading to a full-year margin of 15.1%, ahead of guidance.

Looking ahead, Cognizant expects full-year 2024 revenue growth of -1.8 % to +2% YoY in constant currency. It sees adjusted operating margin expanding 20-40 basis points to 15.3-15.5%.

Cognizant said it would continue investing in key areas like artificial intelligence (AI), cloud, data modernization, and digital engineering to drive future growth. It also emphasized rigorous cost optimization efforts that enabled it to exceed margin commitments in 2023 while funding these growth investments.

Meanwhile, voluntary attrition within the company dropped sharply to 13.8% in Q4 2023, down from 25.6% in Q4 2022. 

At the same time, Cognizant returned $1.7 billion to shareholders via buybacks and dividends and increased its quarterly dividend by 3% to $0.30 per share.

Cognizant ranked #5 in the 2023 Time Doctor OA500, the first objective index of the world’s top 500 outsourcing companies. The 2024 edition of the OA500 will be released this month.

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