DBT Bureau
Pune, 31 Oct 2024
- Revenue of $5.0 billion, increased 3.0% year-over-year or 2.7% in constant currency, the high end of our guidance ranges
- Operating margin of 14.6%, sequentially flat and increased 60 basis points year-over-year; year-to-date operating margin of 14.6%, increased 110 basis points year-over-year
- Adjusted Operating Margin of 15.3%, increased 10 basis points sequentially and decreased 20 basis points year-over-year; year-to-date Adjusted Operating Margin of 15.2%, increased 40 basis points year-over-year
- Trailing 12-month bookings of $26.2 billion; book-to-bill of 1.3x
- Strong growth in Health Sciences, up 7.8% year-over-year or 7.6% in constant currency, and return to growth in Financial Services, up 0.7% year-over-year, or 0.5% in constant currency
- Full-year 2024 revenue guidance narrowed to growth of 1.4% to 1.9% in constant currency, unchanged at the midpoint
- Full-year 2024 Adjusted Operating Margin guidance of approximately 15.1%, flat year-over-year
Cognizant disclosed its third-quarter 2024 financial results.
“Revenue growth in the third quarter was at the high end of our guidance range, driven by another quarter of strong performance in our largest segments, Health Sciences and Financial Services,” said Ravi Kumar S, Chief Executive Officer. “Investments in AI-driven platforms, like our Neuro suite and Flowsource, are resonating with our clients and supporting our large deals’ success. In the third quarter, we signed six deals with a total contract value of more than $100 million each, bringing our year-to-date count to nineteen, which is more than we signed in the full year 2023. In August, we officially welcomed Belcan to the Cognizant family, and we are excited about the opportunities to jointly expand our presence in the growing ER&D market.”
“In the third quarter, we delivered organic revenue growth both sequentially and year-over-year while also achieving sequential gross margin expansion, driven by better utilization and AI-led productivity, and Adjusted EPS growth of more than 7% year-over-year,” said Jatin Dalal, Chief Financial Officer. “Our focus on operating cost discipline and savings generated through our strong execution under the NextGen program has allowed us to expand year-to-date Adjusted Operating Margin by approximately 40 basis points. As we look ahead, our fourth quarter year-over-year organic revenue growth is expected to be stronger than it was in the prior year period, and our large deal momentum provides us a strong foundation to build upon in 2025.”
Bookings
Bookings in the third quarter were flat year-over-year. On a trailing twelve month basis, bookings declined 2% year-over-year to $26.2 billion, which represented a book-to-bill of approximately 1.3x. During the quarter, Cognizant signed six deals each with a total contract value of $100 million or greater.
Employee Metrics
Voluntary attrition – Tech Services on a trailing twelve months basis was 14.6% as compared to 16.2% for the period ended September 30, 2023. Total headcount at the end of the third quarter was 340,100 including Belcan, an increase of 3,800 from Q2 2024 and a decrease of 6,500 from Q3 2023.
Return of Capital to Shareholders
The Company repurchased 3.1 million shares for $228 million during the third quarter under its share repurchase program. As of September 30, 2024, there was $1.4 billion remaining under the share repurchase authorization. In October 2024, the Company declared a quarterly cash dividend of $0.30 per share for shareholders of record on November 19, 2024. This dividend will be payable on November 27, 2024.
Fourth Quarter and Full-Year 2024 Guidance
- Fourth quarter revenue is expected to be $5.0 – $5.1 billion, growth of 5.1% to 7.1%, or an increase of 4.8% to 6.8% in constant currency.
- Full-year 2024 revenue is expected to be $19.7 – $19.8 billion, growth of 1.6% to 2.1% or an increase of 1.4% to 1.9% in constant currency basis. This assumes approximately 200 basis points of inorganic contribution.
- Full-year 2024 Adjusted Operating Margin3 is expected to be approximately 15.1%, flat year-over-year.
- Full-year 2024 Adjusted Diluted EPS3 is expected to be in the range of $4.63 to $4.67.
Select Company, Client and Partnership Announcements
The portfolio of capabilities Cognizant is building to harness and advance an AI-led future, combined with deep domain expertise and growing operational discipline, continues to resonate in the marketplace. Cognizant’s progress has been accelerated through the following strategic acquisitions, platform enhancements, partnerships, and client wins:
Strategic Acquisitions
- The Company completed the acquisition of Belcan for approximately $1.3 billion in cash and stock during the third quarter. Belcan is a leading global supplier of Engineering Research & Development (ER&D) services for the commercial aerospace, defense, space, marine and industrial verticals. This strategic acquisition strengthens Cognizant’s engineering capabilities, builds on its leadership in the Internet of Things (IoT) and Digital Engineering practice areas, and increases its presence in the aerospace and defense (A&D) services market.
Platform Enhancements
- Announced the debut of Cognizant Neuro® Cybersecurity, a new addition to Cognizant’s Neuro suite of platforms, designed to amplify cybersecurity resilience by integrating and orchestrating point cybersecurity solutions across the enterprise. Cognizant Neuro Cybersecurity provides an AI-enabled, user-friendly interface designed to enhance real-time decision-making to preserve security and protect enterprise networks and data.
- Announced Multi-Agent Orchestration for Cognizant’s Neuro® AI Platform, aimed at enabling enterprises to rapidly discover, prototype, and develop AI use cases that can improve decision-making, leading to better company performance and new revenue opportunities. The enhanced Cognizant Neuro® AI platform is backed by multiple patents and can be leveraged for almost any industry or business challenge involving data analysis, from inventory management and dynamic pricing to fraud reduction and efficient staff allocation.
Partnerships
- Announced a new collaboration with NVIDIA to bring enhanced capabilities to our data modernization offering. We plan to leverage the Cognizant Data and Intelligence Toolkit to offer services on the NVIDIA RAPIDS library of frameworks and APIs. These services aim to help clients drive efficiency in cloud infrastructure operations and enable AI readiness.
- Expanded our strategic partnership with ServiceNow to be the first partner to bring its new Workflow Data Fabric to market. Workflow Data Fabric is an enhanced integrated data layer that unifies business and technology data across the enterprise, powering all workflows and AI agents with real-time, secure access to data from any source.
- Signed a strategic collaboration agreement with Amazon Web Services (AWS), with plans to deliver advanced technology solutions and cloud computing services, focused on enhancing smart manufacturing capabilities for global enterprises across industries. This latest expansion of Cognizant’s collaboration with AWS is designed to meet the growing market demand for IoT, data, artificial intelligence (AI) and cloud adoption in Industry 4.0 applications, such as digital twins, simulations, manufacturing execution systems, edge computing, and operational technology (OT) cybersecurity solutions.
- Partnered with Palo Alto Networks to deliver AI-driven cybersecurity capabilities and services for enterprises across industries. The agreement enables Cognizant to deepen its expertise and broaden its services across Palo Alto Networks Precision AI-powered Network Security Platform, Code-to-Cloud Platform and Security Operations Platform. Together, Cognizant and Palo Alto Networks aim to deliver solutions to help clients consolidate security products across functions with the goal of reducing complexity, and improving overall levels of security through platformization.
Client Wins
- Selected by mecwacare, an aged care and community services provider, as its strategic delivery partner to launch an innovative digital transformation program. This digital transformation aims to modernize mecwacare’s existing enterprise applications and fragmented IT systems by optimizing service delivery and enabling a future powered by deep data, analytics and AI.
- Selected by the England and Wales Cricket Board (ECB) as its Official Digital Technology Transformation Partner to reimagine the recreational cricket experience through technology. Cognizant will be the key strategic partner for the ECB’s recreational game systems program – aiming to develop integrated and user-friendly digital products that simplify numerous administrative tasks involved in running recreational cricket, and provide a streamlined and inclusive digital experience that facilitates a more meaningful engagement for all participants with the game.
- Announced a five-year strategic relationship with du, the leading telecom and digital services provider in the United Arab Emirates, aimed at accelerating du’s digital transformation. The collaboration is focused on enhancing du’s internal capabilities to help the company remain at the forefront of the rapidly evolving telecommunications landscape. The collaboration will integrate Cognizant’s advanced solutions to enhance du’s service quality and customer satisfaction
- Announced a deal with KOMBIT, a municipally owned IT company responsible for strategically operating critical IT solutions for 98 Danish municipalities, to transform public service application testing in Denmark. The agreement aims to enhance quality assurance operational efficiency and improve user experience across 26 public service apps for Danish municipal IT solutions.
- Selected by Alnylam Pharmaceuticals, a leading biopharmaceutical company and the pioneer in RNA interference (RNAi) therapeutics, as the technology services partner responsible for managing Alnylam’s global infrastructure and operations, cloud, security, platforms and advanced data and analytics. This agreement aims to scale Alnylam’s IT operations and accelerate its capabilities in delivering transformative medicines.
- Selected by FCCI Insurance Group, a provider of commercial property and casualty insurance, risk control services, and surety bonds, to collaborate with FCCI to implement a state-of-the-art policy administration system that enhances FCCI’s existing admitted commercial property and casualty offerings with (Excess & Surplus) E&S capability. The engagement leveraged Cognizant’s expertise in the insurance sector and Duck Creek Technologies’ Policy Active Delivery platform.
Select Analyst Ratings, Company Recognition and Announcements
- Recognized once again by Forbes as one of the World’s Best Employers. This award is presented in collaboration with Statista, the world-leading statistics portal and industry ranking provider. The World’s Best Employers 2024 were selected through an independent survey encompassing a vast sample of more than 300,000 participants across 50 different countries.
- Named to Fortune’s 2024 Change the World list, ranked seventh among 52 companies across a variety of industries and categories. This recognition celebrates the innovation and societal impact of Cognizant’s Synapse initiative to advance technology job training for 1 million people worldwide by 2026.
- Named one of America’s Greenest Companies by Newsweek magazine and has been recognized among the Top 300 companies in the U.S., based on environmental sustainability. Cognizant was also recognized recently with multiple awards for its sustainability efforts including a 2024 International Green Apple Environment Award in the Environmental Improvement category and two National Awards for Excellence in CSR & Sustainability for Best Environment-Friendly Project and Best Environmental Responsibility Initiatives.
- Ranked tenth on Newsweek’s list of America’s Most Reliable Companies 2025. The list is presented in collaboration with Statista, and companies were identified through an independent survey of more than 1,700 decision-makers who do business with B2B companies across the nation.
- Cognizant Foundation India celebrates 20 years of community impact. Since its inception, Cognizant Foundation India has partnered with over 300 non-profit organizations across the subcontinent and successfully implemented more than 600 projects, which have positively impacted economically and socially disadvantaged people across India. Most recently in 2023-24, Cognizant Foundation India supported 101 projects with 40 not-for-profit organizations reaching people across India.
Recognized as a Leader by Everest Group® in:
- Low Code Application Development Services – Microsoft Power Apps Services PEAK Matrix® Assessment, 2024
- Salesforce Services PEAK Matrix® Assessment, 2024
- Life & Annuity (L&A) Insurance IT Services PEAK Matrix® Assessment, 2024
- Retail and CPG Data, Analytics, and AI Services PEAK Matrix® Assessment, 2024
- Digital Workplace Services PEAK Matrix® Assessment 2024 – North America & Mid-Market Enterprises
- Healthcare Payer Business Process as a Service (BPaaS) – Solutions PEAK Matrix® Assessment, 2024
- Market Leader in HFS Horizon 3:
- IOT Services, 2024
- AADA Quadfecta Services for the Generative Enterprise™, 2024
- Leadership in ISG Provider Lens™:
- Multi Public Cloud Services, 2024
- Future of Work (Workplace) – Services, 2024
- AWS Ecosystem, 2024
- Workday Ecosystem, 2024
- Retail and CPG Services, 2024
- Next Gen ADM Services 2024, APAC, U.S, Europe
- Cognizant positioned as a leader in Avasant’s:
- Digital Workplace Services, 2024
- Salesforce Services, 2024
- Generative AI Services, 2024
- Data Management and Advanced Analytics Services, 2024
- Mortgage Business Process Transformation, 2024
- Financial Services Digital Services, 2024
- Revenue Cycle Management Business Process Transformation, 2024
- Recognized as a Global Leader in Constellation’s 2024 ShortList Reports:
- Customer Experience Operations Services
- AI-Driven Cognitive Applications
- Custom Software Development Services
- AI Services
- Public Cloud Transformation Services
- Digital Transformation Services
