Cognizant's Profit Surge: A Beacon of Recovery in IT Services Demand
Wednesday, Oct 30, 2024 7:26 pm ET
1min read Cognizant Technology Solutions Corp. (CTSH) has reported a robust quarterly profit, surpassing analysts' estimates and signaling a gradual recovery in the IT services demand. The company's bottom line came in at $582 million, or $1.17 per share, compared to $525 million, or $1.04 per share, in the same period last year. Excluding items, Cognizant's adjusted earnings stood at $1.25 per share, outpacing the consensus estimate of $1.15 per share.
Cognizant's revenue for the quarter rose 3.0% year-over-year to $5.044 billion, driven by strong performance in its largest segments, Health Sciences and Financial Services. The company's focus on AI-driven platforms, such as Neuro suite and Flowsource, has resonated with clients, supporting its large deals strategy. In the third quarter, Cognizant signed six deals with total contract values exceeding $100 million each, bringing its year-to-date count to nineteen, more than the full-year 2023 total.
The company's operating margin expanded to 14.6%, up from 14.0% in the same period last year. Adjusted operating margin increased to 15.3%, compared to 15.5% in the prior-year quarter. Cognizant's focus on cost discipline and the NextGen program has allowed it to expand year-to-date Adjusted Operating Margin by approximately 40 basis points.
Cognizant's acquisition strategy has also contributed to its revenue growth and market expansion. The company's acquisition of Belcan, a leading global supplier of Engineering Research & Development (ER&D) services, added approximately 200 basis points to its year-over-year revenue change. This strategic move has opened up new opportunities for Cognizant to expand its presence in the growing ER&D market.
Looking ahead, Cognizant expects its fourth-quarter revenue to be in the range of $5.0 to $5.1 billion, representing growth of 5.1% to 7.1% year-over-year. The company's full-year 2024 revenue guidance has been narrowed to growth of 1.4% to 1.9% in constant currency, unchanged at the midpoint. Cognizant's Adjusted Operating Margin guidance for the full year remains at approximately 15.1%, flat year-over-year.
Cognizant's strong performance in the quarter underscores the gradual recovery in IT services demand. The company's focus on AI-driven platforms, cost discipline, and strategic acquisitions has positioned it well for continued growth and market leadership in the professional services sector. As investors seek stable profits and cash flows, Cognizant's dividend-focused strategy offers an attractive alternative to speculative ventures like AI that lack profitability.
Cognizant's revenue for the quarter rose 3.0% year-over-year to $5.044 billion, driven by strong performance in its largest segments, Health Sciences and Financial Services. The company's focus on AI-driven platforms, such as Neuro suite and Flowsource, has resonated with clients, supporting its large deals strategy. In the third quarter, Cognizant signed six deals with total contract values exceeding $100 million each, bringing its year-to-date count to nineteen, more than the full-year 2023 total.
The company's operating margin expanded to 14.6%, up from 14.0% in the same period last year. Adjusted operating margin increased to 15.3%, compared to 15.5% in the prior-year quarter. Cognizant's focus on cost discipline and the NextGen program has allowed it to expand year-to-date Adjusted Operating Margin by approximately 40 basis points.
Cognizant's acquisition strategy has also contributed to its revenue growth and market expansion. The company's acquisition of Belcan, a leading global supplier of Engineering Research & Development (ER&D) services, added approximately 200 basis points to its year-over-year revenue change. This strategic move has opened up new opportunities for Cognizant to expand its presence in the growing ER&D market.
Looking ahead, Cognizant expects its fourth-quarter revenue to be in the range of $5.0 to $5.1 billion, representing growth of 5.1% to 7.1% year-over-year. The company's full-year 2024 revenue guidance has been narrowed to growth of 1.4% to 1.9% in constant currency, unchanged at the midpoint. Cognizant's Adjusted Operating Margin guidance for the full year remains at approximately 15.1%, flat year-over-year.
Cognizant's strong performance in the quarter underscores the gradual recovery in IT services demand. The company's focus on AI-driven platforms, cost discipline, and strategic acquisitions has positioned it well for continued growth and market leadership in the professional services sector. As investors seek stable profits and cash flows, Cognizant's dividend-focused strategy offers an attractive alternative to speculative ventures like AI that lack profitability.
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