Cognizant, a leading global IT services company, has reported a 20% drop in net profit for the second quarter of 2023. The company’s net profit fell to $463 million compared to $577 million in the same quarter last year. Revenue also saw a slight decline of 0.4% year-over-year, reaching $4.9 billion.
During the second quarter, Cognizant faced restructuring charges of $111 million. While the company experienced a decline in revenue from the financial services and communication, media, and technology sectors, it saw growth in the healthcare and products & resources verticals.
Despite the challenges, Cognizant reported a 17% year-over-year increase in bookings for the second quarter. On a trailing twelve-month basis, bookings grew 14% to $26.4 billion, representing a book-to-bill ratio of approximately 1.4x.
The company’s total headcount at the end of the second quarter was 345,600, marking a decrease of 5,900 from the previous quarter but an increase of 4,300 compared to the same quarter last year. Voluntary attrition in the tech services sector also decreased to 19.9% on a trailing twelve-month basis, compared to 23.1% in Q1 2023 and 31.1% in Q2 2022.
S Ravi Kumar, Chief Executive Officer of Cognizant, expressed satisfaction with the company’s progress amid the uncertain economic backdrop. He highlighted the strong bookings growth and sequential revenue growth, as well as the success of the Cognizant Neuro AI platform, which has already garnered over 100 early engagements.
Furthermore, Cognizant announced that its CFO, Jan Siegmund, will retire in early 2024. Siegmund will continue in his role until a successor is identified and a transition period is completed.
Jan Siegmund, Chief Financial Officer of Cognizant, commented on the company’s second-quarter results, noting that revenue exceeded expectations and profitability was slightly ahead of projections. He also mentioned the success of the NextGen program, which has enabled cost reduction and investments for growth. Cognizant has returned over $700 million to shareholders year-to-date while maintaining a balanced capital allocation approach.
Looking ahead, Cognizant provided guidance for the third quarter and full-year 2023. The company expects third-quarter revenue to range between $4.89 billion and $4.94 billion. For the full year, Cognizant projects revenue of $19.2 billion to $19.6 billion.
In conclusion, Cognizant’s second-quarter results reflect a drop in net profit and a slight decline in revenue. However, the company saw growth in the healthcare and products & resources verticals and recorded significant bookings growth. With a balanced capital allocation approach and a focus on cost reduction and growth investments, Cognizant is positioning itself for future success in a challenging economic environment.
