Cognizant posts sluggish growth in September quarter

CHENNAI: Cognizant reported tepid growth for the July-September quarter with revenue at $4.9 billion up just 2.4% year-on-year (5.6% in constant currency CC terms). Quarterly profits stood at $629 million up roughly 15% from the same quarter last year.
The quarter's performance and an uncertain macro environment prompted Cognizant to revise its revenue outlook for the full year 2022. Cognizant now expects full year revenue to be at $19.3 billion (7% growth in CC terms) compared to 8.5-9.5% it guided for during the last quarter.
In a sign of softening demand, bookings in the quarter declined 2% year-over-year. The company managed to arrest attrition by a few percentage points as voluntary attrition came in at 29% this quarter down from 32% in the quarter ended June 2022 but still up from 24% in the same quarter last year. As of September 30, Cognizant has 349,400 employees.
"Revenue and bookings were below our expectations as company specific fulfillment challenges were compounded by the impact of an uncertain macroeconomic backdrop," Cognizant CEO Brian Humphries said. "While a non-certain macroeconomic backdrop impacted bookings and revenue, the primary driver of the revenue shortfall relates to a reduction in US onshore billable resources in recent quarters, following a period of elevated attrition, a reduction in visa travel and a Covid-induced shift in the near and offshore delivery centers," Humphries told analysts in the earnings call. He said the company has already initiated a "series of actions" to increase US onshore billable resources.
Revenue from financial services, the IT giant's key strength over the years, declined 1.5% year-over-year, but grew 1.6% in CC terms. Health Sciences revenue grew 3.8% year-over-year, or 5.5% in CC. Products and Resources revenue grew 3.7% year-over-year, or 8.2% in CC, and Communications, Media and Technology revenue grew 6.0% year-over-year, or 10.4% in CC.