Cognizant’s Revenue Growth Misses The Sept Quarter Guidance

During the quarter, the company registered revenue of USD 4.9 billion, which grew 2.4 per cent year-over-year (YoY)

Cognizant’s revenue growth of 5.6 per cent in constant currency (c/c) missed the guided range of 7.5-8.5 per cent for the Q3 2022 quarter.

During the quarter, the company registered revenue of USD 4.9 billion, which grew 2.4 per cent year-over-year (YoY), or 5.6 per cent in constant currency. Its Operating Margin and Adjusted Operating Margin was 16.4 per cent, an increase of 100 and 60 basis points year-over-year, respectively.

The company’s operating cash flow was USD 1,032 million and free cash flow was USD 953 million.

Cognizant deployed over USD 1.5 billion on share repurchases and dividends year-to-date in Q3. Board of Directors of the company have approved an increase of USD 2 billion to the share repurchase authorization.

The US-based company also revised its full-year 2022 revenue growth guidance to 4.5 per cent, or 7.0 per cent in constant currency.

“Revenue and bookings were below our expectations as company specific fulfillment challenges were compounded by the impact of an uncertain macroeconomic backdrop,” said Brian Humphries, CEO at Cognizant, in a statement. 

Revenue growth slowed further across key verticals for the company. Financial services reported modest growth of 1.6 per cent YoY. Healthcare vertical’s growth has been moderating and slowed down to 5.5 per cent YoY in c/c. Products and resources grew 8.2 per cent, partly aided by acquisitions.

“We are confident the steps we are taking will return the company to accelerated growth over the medium to long term,” Humphries added. 

Commenting on Cognizant’s performance, Kotak Securities spokesperson said, “Infosys is catching up with CTSH in size, with the gap between the two down to just 6 per cent in revenues. The company has ceded wallet share in key verticals. Not much read-through for other IT services companies from these results.”