Cognizant Q2 net rises 22% to $566 mn, revises FY24 guidance to $19.5 bn

Cognizant has revised its full-year revenue growth guidance for FY24 from $19.3 billion to $19.5 billion, representing a growth of -0.5% to 1%

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Nasdaq-listed IT services firm Cognizant has revised its full-year revenue growth guidance for FY24 from $19.3 billion to $19.5 billion, representing a growth of -0.5 per cent to 1 per cent. The company has provided guidance for Q3 revenue in the range of -0.2 per cent to 1.3 per cent, or $4.89 billion to $4.96 billion.

The company, which follows a January-December calendar, reported a net profit of $566 million, up 22.2 per cent on a year-on-year basis.

Revenue for the quarter stood at $4.85 billion, down 0.7 per cent year-on-year. On a sequential basis, the firm’s revenue grew by 1.9 per cent.

"In the second quarter, we delivered revenue above the high end of our guidance range, expanded adjusted operating margin, and maintained our large deal momentum," said Ravi Kumar S, Chief Executive Officer. "Progress against our strategic priorities is opening new opportunities with clients and allowing us to operate with greater agility. We believe our performance this quarter and the improved organic growth outlook for the full year demonstrate how our execution against these priorities is beginning to translate into our results and support long-term shareholder value."

The company noted growth in its banking and finance segment, which grew 5 per cent on a sequential basis. However, on a year-on-year basis, BFSI (Banking, Financial Services, and Insurance) was down 1.1 per cent. The Health Sciences segment was up 3 per cent sequentially and 1.5 per cent on a year-on-year basis, while the Products and Resources segment was down 4.3 per cent year-on-year.

"Sequential revenue growth of 2.1 per cent in constant currency, driven by our Financial Services and Health Sciences segments, was the strongest in two years," said Jatin Dalal, Chief Financial Officer. "Our NextGen programme has helped us fund investments to support revenue growth and deliver 70 basis points of adjusted operating margin expansion in the first half of 2024. We enter the third quarter with improved revenue momentum and remain committed to driving operational excellence."

The company reported that its total trailing 12-month TCV (Total Contract Value) was $26.2 billion. During the second quarter, the firm signed five $100 million deals and two $90 million deals.

Cognizant also saw a decline in its headcount on both a year-on-year and sequential basis. Total headcount at the end of the second quarter was 336,300, a decrease of 8,100 from Q1 2024 and a decrease of 9,300 from Q2 2023.

The company attributed the reduction in headcount to increased use of automation and AI, as well as a rise in its utilisation ratio. Utilisation for the quarter was 83 per cent, compared to 84 per cent in Q2 FY23 and 82 per cent in Q4 FY23.

Kumar noted that the company would consider adding headcount if it continues to see the momentum observed in this quarter.