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Cognizant (CTSH) to Report Q2 Earnings: What's in Store?

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Cognizant Technology Solutions (CTSH - Free Report) is scheduled to report its second-quarter 2024 results on Jul 31.

CTSH expects second-quarter 2024 revenues to be between $4.75 billion and $4.82 billion, indicating a decline of 2.9% to 1.4%. Acquisitions are expected to have contributed 100 bps.

The Zacks Consensus Estimate for second-quarter revenues is pegged at $4.81 billion, indicating a year-over-year decline of 1.63%.

The consensus mark for earnings is pegged at $1.12 per share, unchanged in the past 30 days.

 

Cognizant’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 8.79%.

Let’s see how things have shaped up for the upcoming announcement.

Factors to Note

Cognizant’s second-quarter 2024 performance is likely to have benefited from an expanding clientele and a robust pipeline that includes a favorable mix of new opportunities.

Cognizant signed eight deals with a total contract value of $100 million or more in first-quarter 2024, indicating strong demand for large deals. This is likely to have been a contributing factor in the quarter under review.

Its robust network of partners, which includes the likes of Gentherm (THRM - Free Report) , Microsoft (MSFT - Free Report) and CNO Financial Group (CNO - Free Report) , is likely to have driven growth during the second quarter.

CTSH recently collaborated with Gentherm to provide engineering services, including systems engineering, validation and model-based development, aiming to enhance agility and scalability in product development through cloud-native technologies and virtualization. Benefits from this partnership are likely to have been reflected in the to-be-reported quarter’s performance.

Cognizant, in collaboration with Microsoft, announced an expanded partnership aiming to leverage generative AI and Copilots to drive innovation across industries, focusing on transforming enterprise operations and enhancing employee experiences.

In first-quarter 2024, Cognizant announced the continuation of its partnership with CNO Financial, a leading provider of insurance, financial services and workforce benefits solutions to middle-income America. The company will help optimize and enhance CNO Financials’ technology-based services and solutions with cloud and digital technologies.

Cognizant’s investments in generative AI, including their collaboration with Microsoft and NVIDIA, are expected to have positioned them well in the market. The advanced AI capabilities and training initiatives are likely to have enhanced their service offerings and drive future growth.

The company’s robust generative AI capabilities, driven by its growing investments to train thousands of employees in generative AI, are expected to have been a key growth catalyst in the to-be-reported quarter.

Cognizant sees a significant opportunity in generative AI and plans to invest approximately $1 billion in its generative AI capabilities over the next three years.

CTSH’s NextGen initiative is expected to have played a pivotal role in enhancing operational efficiency in the to-be-reported quarter.

However, Cognizant’s weakness in the Financial Services segment and challenging macro environment is expected to have hurt spending rates and affect top-line growth in the to-be-reported quarter.

Cognizant currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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