**Cognizant Reports Revenue Growth Driven by Acquisitions**
Bengaluru: Cognizant Technology Solutions Corp. has rebounded from a lackluster performance in 2023, reporting revenue growth for the previous year, largely attributed to two significant acquisitions. However, concerns about revenue persist when excluding these acquisitions. The company, founded in Chennai and now based in New Jersey, acquired Belcan in September for $1.3 billion to enhance its presence in the engineering research and development (ER&D) sector. Earlier, in January, it purchased Thirdera for $430 million to bolster its artificial intelligence capabilities.
For 2024, Cognizant reported revenue of $19.74 billion, reflecting a 1.98% increase year-over-year. In contrast, the company’s revenue had decreased by 0.4% in 2023, totaling approximately $19.35 billion. Cognizant, which operates on a January-December financial calendar, indicated that its recent acquisitions contributed 200 basis points, or 2%, to its 2024 revenue growth, suggesting slower growth when excluding the impact of these new companies.
On a quarterly basis, the company experienced a modest performance, with its December-quarter revenue rising only 0.75% sequentially to $5.08 billion. This figure slightly surpassed that of Infosys Ltd, India’s second-largest software service provider, which reported revenue of $4.94 billion for the October-December period.
Ravi Kumar S., Cognizant’s CEO, expressed optimism during a post-earnings discussion with analysts, stating, “I’d say it’s all-round comprehensive organic growth we are looking at. I’m also excited about the fact that while the Americas is a principal market leading the way, international markets are beginning to contribute to this process.”
Another positive aspect of Cognizant’s 2024 performance was its net profit, which increased by 5.36% year-over-year to $2.24 billion. The company concluded 2024 with operating margins of 14.7%, an improvement of 80 basis points from the previous year, attributed to reduced staffing costs following a headcount reduction of approximately 10,900 employees.
Cognizant, which employs around 70% of its workforce in India, ended 2024 with approximately 336,800 employees. For the ongoing January-March quarter, the company anticipates revenue between $5 billion and $5.1 billion, with a full-year projection of $20.3 billion to $20.8 billion. On an organic basis, Cognizant expects revenue growth of 1% to 3.5% in constant currency terms for 2025, despite clients increasing their non-essential spending.
A BMO Capital Markets analyst acknowledged Cognizant’s improved profitability but noted concerns regarding the organic growth forecast. Keith Bachman, an analyst at BMO Capital Markets, remarked, “Cognizant delivered a reasonable quarter all around, particularly in margins, though we believe the organic revenue growth guide fell a bit short of expectations. We believe financial services spending is slowly improving.”