We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Cognizant (CTSH) Q1 Earnings Beat Estimates, Revenues Down Y/Y
Read MoreHide Full Article
Cognizant Technology Solutions (CTSH - Free Report) reported first-quarter 2024 non-GAAP earnings of $1.12 per share, which beat the Zacks Consensus Estimate by 0.9% and increased 0.9% year over year.
Revenues of $4.76 billion beat the consensus mark by 0.83%. The top line decreased 1.1% year over year and 1.2% at constant currency (cc). Acquisitions contributed 70 basis points (bps) to top-line growth.
On a trailing twelve-month basis, bookings increased 1% year over year to $25.9 billion, which represented a book-to-bill of approximately 1.3 times. Cognizant’s first-quarter bookings included eight deals that exceeded $100 million each. Of these eight deals, two were in the APJ region.
Top-Line Details
Financial services revenues (29.1% of revenues) decreased 6.2% year over year (down 6.5% at cc) to $1.385 billion. The decline was attributed to a challenging demand environment.
Health Sciences revenues (29.7% of revenues) declined 1.2% year over year (down 1.3% at cc) to $1.416 billion. Soft discretionary spending negatively impacted top-line growth.
Products and Resources revenues (23.8% of revenues) increased 1.3% year over year (up 0.9% at cc) to $1.13 billion.
Cognizant Technology Solutions Corporation Price, Consensus and EPS Surprise
Communications, Media and Technology revenues (17.4% of revenues) were $826 million, which increased 5.2% from the year-ago quarter (up 5.7% at cc). The segment benefited from new acquisitions and the ramp of new bookings.
Region-wise, revenues from North America decreased 0.7% year over year (down 1.7% at cc) and accounted for 74% of total revenues.
Revenues from Europe were flat year over year (down 2.4% at cc) and made up 19.7% of total revenues. Revenues from the U.K. decreased 4.6% (down 7.7% at cc). Continental Europe revenues increased 4.8% (up 3.1% at cc).
The Rest of the World revenues decreased 8.5% year over year (down 3.7% at cc) and represented 6.3% of total revenues.
Operating Details
Selling, general & administrative expenses, as a percentage of revenues, decreased 130 bps year over year to 16.1%.
Total headcount at the end of the first quarter was 344,400, down 7,100 year over year and 3,300 sequentially.
Voluntary attrition - Tech Services on a trailing-12-month basis declined to 13.1% from 23.1% for the period ended Mar 31, 2023.
Cognizant reported a GAAP operating margin of 14.6%, unchanged on a year-over-year basis.
The company incurred $23 million in costs related to the NextGen program, negatively impacting the GAAP operating margin by 50 bps.
Non-GAAP operating margin (adjusted for NextGen charges) of 15.1% expanded 50 bps year over year.
Balance Sheet
Cognizant had cash and short-term investments of $2.23 billion as of Mar 31, 2024 compared with $2.64 billion as of Dec 31, 2023.
As of Mar 31, 2024, the company had a total debt of $631 million, down from $639 million reported as of Dec 31, 2023.
It generated $737 million in cash from operations compared with $737 million in the previous quarter.
Free cash flow was $659 million compared with free cash flow of $755 million reported in the prior quarter.
In the first quarter of 2024, the company returned $284 million through share repurchases.
Guidance
Cognizant expects second-quarter 2024 revenues between $4.75 billion and $4.82 billion, indicating a decline of 2.9% to 1.4% (a decline of 2.5-1% on a cc basis).
In the Financial Services segment, Cognizant continues to expect the challenging macro environment to hurt spending rates, thereby negatively impacting top-line growth.
For 2024, revenues are expected to be $18.9-$19.7 billion, indicating a decline of 2.2% to growth of 1.8% on a reported basis (down 2% to growth of 2% on a cc basis). Acquisitions are expected to contribute 100 bps.
Adjusted operating margin for 2024 is expected to be between 15.3% and 15.5%. Adjusted earnings for 2024 are expected between $4.50 and $4.68 per share.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell).
CTSH’s shares have underperformed the Zacks Computer & Technology sector year to date. Shares have declined 13.5%, while the broader sector has gained 6.9%.
Image: Bigstock
Cognizant (CTSH) Q1 Earnings Beat Estimates, Revenues Down Y/Y
Cognizant Technology Solutions (CTSH - Free Report) reported first-quarter 2024 non-GAAP earnings of $1.12 per share, which beat the Zacks Consensus Estimate by 0.9% and increased 0.9% year over year.
Revenues of $4.76 billion beat the consensus mark by 0.83%. The top line decreased 1.1% year over year and 1.2% at constant currency (cc). Acquisitions contributed 70 basis points (bps) to top-line growth.
On a trailing twelve-month basis, bookings increased 1% year over year to $25.9 billion, which represented a book-to-bill of approximately 1.3 times. Cognizant’s first-quarter bookings included eight deals that exceeded $100 million each. Of these eight deals, two were in the APJ region.
Top-Line Details
Financial services revenues (29.1% of revenues) decreased 6.2% year over year (down 6.5% at cc) to $1.385 billion. The decline was attributed to a challenging demand environment.
Health Sciences revenues (29.7% of revenues) declined 1.2% year over year (down 1.3% at cc) to $1.416 billion. Soft discretionary spending negatively impacted top-line growth.
Products and Resources revenues (23.8% of revenues) increased 1.3% year over year (up 0.9% at cc) to $1.13 billion.
Cognizant Technology Solutions Corporation Price, Consensus and EPS Surprise
Cognizant Technology Solutions Corporation price-consensus-eps-surprise-chart | Cognizant Technology Solutions Corporation Quote
Communications, Media and Technology revenues (17.4% of revenues) were $826 million, which increased 5.2% from the year-ago quarter (up 5.7% at cc). The segment benefited from new acquisitions and the ramp of new bookings.
Region-wise, revenues from North America decreased 0.7% year over year (down 1.7% at cc) and accounted for 74% of total revenues.
Revenues from Europe were flat year over year (down 2.4% at cc) and made up 19.7% of total revenues. Revenues from the U.K. decreased 4.6% (down 7.7% at cc). Continental Europe revenues increased 4.8% (up 3.1% at cc).
The Rest of the World revenues decreased 8.5% year over year (down 3.7% at cc) and represented 6.3% of total revenues.
Operating Details
Selling, general & administrative expenses, as a percentage of revenues, decreased 130 bps year over year to 16.1%.
Total headcount at the end of the first quarter was 344,400, down 7,100 year over year and 3,300 sequentially.
Voluntary attrition - Tech Services on a trailing-12-month basis declined to 13.1% from 23.1% for the period ended Mar 31, 2023.
Cognizant reported a GAAP operating margin of 14.6%, unchanged on a year-over-year basis.
The company incurred $23 million in costs related to the NextGen program, negatively impacting the GAAP operating margin by 50 bps.
Non-GAAP operating margin (adjusted for NextGen charges) of 15.1% expanded 50 bps year over year.
Balance Sheet
Cognizant had cash and short-term investments of $2.23 billion as of Mar 31, 2024 compared with $2.64 billion as of Dec 31, 2023.
As of Mar 31, 2024, the company had a total debt of $631 million, down from $639 million reported as of Dec 31, 2023.
It generated $737 million in cash from operations compared with $737 million in the previous quarter.
Free cash flow was $659 million compared with free cash flow of $755 million reported in the prior quarter.
In the first quarter of 2024, the company returned $284 million through share repurchases.
Guidance
Cognizant expects second-quarter 2024 revenues between $4.75 billion and $4.82 billion, indicating a decline of 2.9% to 1.4% (a decline of 2.5-1% on a cc basis).
In the Financial Services segment, Cognizant continues to expect the challenging macro environment to hurt spending rates, thereby negatively impacting top-line growth.
For 2024, revenues are expected to be $18.9-$19.7 billion, indicating a decline of 2.2% to growth of 1.8% on a reported basis (down 2% to growth of 2% on a cc basis). Acquisitions are expected to contribute 100 bps.
Adjusted operating margin for 2024 is expected to be between 15.3% and 15.5%. Adjusted earnings for 2024 are expected between $4.50 and $4.68 per share.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell).
CTSH’s shares have underperformed the Zacks Computer & Technology sector year to date. Shares have declined 13.5%, while the broader sector has gained 6.9%.
Arista Networks (ANET - Free Report) , AMETEK (AME - Free Report) and NVIDIA (NVDA - Free Report) are some better-ranked stocks that investors can consider in the broader sector. While Arista Networks sports a Zacks Rank #1 (Strong Buy) at present, AMETEK and NVIDIA carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks shares have gained 8.3% year to date. ANET is set to report its first-quarter 2024 results on May 7.
AMETEK shares have gained 5.5% year to date. AME is set to report its first-quarter 2024 results on May 2.
NVIDIA shares have gained 67.6% year to date. NVDA is set to report its first-quarter fiscal 2025 results on May 22.