Cognizant Technology Solutions, a Nasdaq-listed IT services provider, announced a strong performance in its third quarter of fiscal year 2024 (Q3 FY24), reporting a net income of $582 million, which reflects a 10.8% year-on-year increase. The company has also revised its full-year revenue guidance to a range of $19.7 billion to $19.8 billion, projecting a growth of 1.4% to 1.9% in constant currency. This adjustment follows Cognizant’s acquisition of Belcan, an engineering, research, and development (ER&D) service provider, completed in August.
In terms of revenue, Cognizant recorded $5 billion in Q3 FY24, marking a 2.7% growth on a constant currency basis and a 3% increase on reported terms. This growth surpassed the guidance the company had provided in its previous quarter. The health sciences segment was particularly strong, growing by 7.8% year-on-year, while the Banking, Financial Services, and Insurance (BFSI) sector saw a modest increase of 0.7%. However, the communications, media, and technology sector experienced a decline of 3.7%.
Geographically, Cognizant’s North American business grew by 3.8%, and the rest of the world saw a 4.3% increase, though Europe faced challenges with a slight decline of 0.3%.
Cognizant’s CEO, Ravi Kumar, expressed optimism about the company’s performance, noting a return to organic growth. “This is a very strong quarter considering how the market has been. We are at a good inflection point in our journey, largely driven by large deals and the momentum we see on our AI platforms,” Kumar stated.
The company has invested heavily in AI-driven platforms such as its Neuro suite and Flowsource, which have resonated with clients and contributed to the success of large deals. In Q3, Cognizant signed six contracts valued at over $100 million each, bringing the total for the year to 19—exceeding the number of contracts signed throughout the entirety of 2023.
Despite this success, bookings for the quarter remained flat year-on-year. Over the trailing twelve months, bookings declined by 2% to $26.2 billion, with a book-to-bill ratio of approximately 1.3x. CFO Jatin Dalal highlighted the strong momentum at the top end of the deal spectrum while acknowledging some volatility and softness in the overall deal landscape. “We are leading the deal activity and participating across various sectors,” Dalal noted.
Cognizant’s total headcount at the end of Q3 reached 340,100, including Belcan, representing an increase of 3,800 from Q2 FY24 but a decrease of 6,500 from Q3 FY23. The company announced plans to resume campus hiring next year, with an attrition rate of 14.6% for the quarter.
Overall, Cognizant’s Q3 FY24 results reflect a solid performance amid a challenging market, driven by strategic investments in AI and significant contract wins.
