Cognizant’s Q1 Revenue Dips 1.1% To $4.76 Bn, Yet Exceeds Forecast

US-based IT player Cognizant Technology Solutions reported a slight decline in revenue for the first quarter of fiscal year 2024, with figures dropping 1.1 per cent year-over-year (YoY) to USD 4.76 billion. 

Despite the fall from USD 4.81 billion in Q1 FY23, the outcome was at the upper end of the company’s projected range of USD 4.68 to USD 4.76 billion, indicating resilience amidst a challenging market environment.

The decrease in revenue reflects a broader trend of reduced discretionary spending by clients, with Cognizant’s CEO, Ravi Kumar S, noting the ongoing economic uncertainties impacting client decisions. However, the company has been proactive, focusing on aiding clients to boost operational efficiencies and innovate, particularly in leveraging AI for business transformations.

Profitability also experienced a downturn, with net profits falling approximately 5.9 per cent to USD 546 million from the previous year’s USD 580 million in the same quarter. This dip aligns with the modest revenue contraction and ongoing investments in strategic areas aimed at long-term growth.

Cognizant has set a cautious yet hopeful revenue growth forecast for the second quarter of FY24, ranging from 0 to 1.5 per cent. 

During the quarter, Cognizant secured eight significant contracts, each worth at least USD 100 million, including three renewals and five new deals. This success in securing large contracts may bolster future revenue streams and reflects the firm’s strong market position despite prevailing economic pressures.

The company’s stock reacted positively to the news, rising over 4 per cent in after-hours trading on Nasdaq.