Cognizant Q4 net profit down 9.6% YoY, meets annual guidance for FY22

IT services firm reports rise in headcount, says voluntary attrition declining

Nasdaq-listed Cognizant on Friday reported its fourth quarter FY22 net profit at $521 million, down 9.5 per cent year-on-year. Revenue for the quarter increased 1.3 per cent at $4.8 billion in reported terms and it was up 4 per cent in constant currency.

The IT services firm, which follows the January-December financial calendar, did not provide the full-year revenue guidance number for FY23. It said that for the first quarter of the new fiscal year it expects revenue to be in the range of $4.71-4.76 billion, a decline of 1.5 per cent to 2.5 per cent.

The company reported a revenue of $19.4 billion for the full year to meet guidance.

"The trust and longevity that define Cognizant’s strategic partnerships with global clients provide exciting opportunities to further strengthen and grow these relationships as we expand our portfolio of digital services,” said Ravi Kumar S, Cognizant’s chief executive officer. “My immediate focus is on creating the conditions for our associates to excel and ensuring that all 355,000 of us operate with a growth mindset.”

Cognizant recently announced management changes, giving the reins to Kumar from Brian Humphries.

Bookings in the fourth quarter grew 12 per cent year-on-year. For the full-year, bookings grew 4 per cent to $24.1 billion, which represented a book-to-bill of approximately 1.2x. Bookings for the fourth quarter and full-year include a 10-year, $1 billion services agreement with CoreLogic signed in December 2022 that extends and expands a partnership established in 2011.

Cognizant’s total headcount at the end of the fourth quarter was 355,300, an increase of 5,900 from Q3 2022 and 24,700 from Q4 2021. Voluntary attrition, on a quarterly annualised basis, declined to 19 per cent from 29 per cent in Q3 2022 and 31 per cent in Q4 2021. Voluntary attrition, on a trailing-twelve-month basis, declined to 26 per cent from 28 per cent in Q4 2021.

“We exited the year with a meaningful improvement in voluntary attrition, which will help us put greater focus on improving our commercial momentum," said Jan Siegmund, Cognizant’s chief financial officer. "We also continued to execute our balanced capital allocation framework, returning nearly $2 billion to shareholders through dividends and share repurchases in 2022, and announcing four acquisitions in the last three months alone.”

Kumar also added that India is key for the company.

“India is likely to be the world's technology talent hub for the next decade. India's population has a demographic profile and digital talent pool unmatched by any other country. We will continue to capitalize on the surge in the IT talent in India as we intensify efforts to the recruit from India tier-2 cities as well. Our large associate base in India is an ongoing source of strength and differentiation for Cognizant and one in which we will continue to invest,” he added.