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Sep 30, 2023
Cognizant Q3 2023 Earnings Report
Announced third quarter 2023 financial results, demonstrating revenue within guidance and adjusted operating margin above expectations.
Key Takeaways
Cognizant's Q3 2023 revenue reached $4.9 billion, a 0.8% increase year-over-year, with a record trailing 12-month bookings of $26.9 billion, up 16% year-over-year. The company's fundamentals were strengthened with higher customer satisfaction scores, lower voluntary attrition and continued growth in bookings. Full-year revenue guidance narrowed to -0.7% to flat, and adjusted operating margin guidance is now ~14.7%.
Revenue of $4.9 billion increased 0.8% year-over-year, declined 0.2% in constant currency
Record trailing 12-month bookings of $26.9 billion, up 16% year-over-year
Operating cash flow of $828 million; free cash flow of $755 million was ~144% of net income
Share repurchase expectation for 2023 increased by $200 million to $1 billion
Cognizant
Cognizant
Cognizant Revenue by Segment
Cognizant Revenue by Geographic Location
Revenue by Segment
Health Sciences Revenue
CapyFin.comFinancial Services Revenue
CapyFin.comProducts and Resources Revenue
CapyFin.comCommunications, Media and Technology Revenue
CapyFin.comRevenue by Geographic Location
North America Revenue
CapyFin.comEurope - Total Revenue
CapyFin.comRest of World Revenue
CapyFin.com Forward Guidance
Cognizant anticipates Q4 2023 revenue between $4.69 - $4.82 billion, a decline of 3.1% to 0.3%, or a decline of 4.0% to 1.2% in constant currency. Full-year 2023 revenue is expected to be $19.3 - $19.4 billion, a decline of 0.7% to flat. Full-year 2023 Adjusted EPS is expected to be in the range of $4.39 to $4.42 and Adjusted Operating Margin is expected to be approximately 14.7%.
Positive Outlook
- Full-year 2023 Adjusted Operating Margin is expected to be approximately 14.7%.
- Expanded relationship with The FA will see Cognizant become the Digital Transformation Partner of The FA, Official Partner of the Emirates FA Cup, Official Partner of the Women’s FA Cup, Official Partner of The FA Community Shield, and Official Partner of England Football.
- Announced launch of a global strategic go-to-market partnership with Vianai to accelerate human-centered generative AI offerings.
- Announced a five-year renewal with ISS, a leading workplace experience and facility management company.
- Opened AI Innovation Hub in London in partnership with Google
Challenges Ahead
- Fourth quarter revenue is expected to be $4.69 - $4.82 billion, a decline of 3.1% to 0.3%, or a decline of 4.0% to 1.2% in constant currency.
- Full-year 2023 revenue is expected to be $19.3 - $19.4 billion, or a decline of 0.7% to flat, both as reported and in constant currency.
- Recent discretionary spending pressure impacting near-term revenue expectations.
- Ongoing economic uncertainty
- Rebuilding its digital banking system on Google Cloud
Revenue & Expenses
Visualization of income flow from segment revenue to net income