Cognizant Q4 net income rises 2.1%, forecasts stronger growth for 2025

Nasdaq-listed IT services major Cognizant met its revenue guidance for the fourth quarter of calendar year 2024. The company guided for revenue growth for 2025 in the range of 3.5 per cent to 6 per cent in constant currency. The guidance is stronger than 2024, reflecting improving market conditions.

Cognizant’s revenue guidance for 2025 is higher than the growth it reported in 2024. Revenue for the full year 2024 grew 1.9 per cent in constant currency. The company’s fourth quarter revenue came in at $5.1 billion up 6.7 per cent year-on-year. The company managed to meet the higher end its guidance for growth.

Cognizant follows January-December financial calendar.

The company’s net income grew 2.1 per cent to $558 million, compared to $546 million in same quarter 2023. Net income was down 4.1 per cent sequentially.

“I am deeply grateful to our employees for their commitment to our strategic priorities and rigorous execution, which drove fourth quarter revenue growth to the high end of our guidance range. We exited the year with momentum — closing a record 29 large deals during the year — highlighting the effectiveness of our strategy,” said Ravi Kumar S, Chief Executive Officer.

Bookings in the fourth quarter increased 11 per cent year-over-year. On a trailing-twelve-month basis, bookings increased 3% year-over-year to $27.1 billion, which represented a book-to-bill of approximately 1.4x. During the quarter, Cognizant signed ten large deals, which are deals with total contract value of $100 million or greater.

In terms of growth drivers, North America grew 8.4 per cent YoY for the Q4 CY24. Europe was up 1.3 per cent and rest of world grew 3.9 per cent.

In terms of verticals, health sciences grew 10.4 per cent, financial services was up 2.8 per cent and communications, media and technology was up 0.4 per cent. The firm’s products and resources segment grew 11.3 per cent.

Jatin Dalal, Chief Financial Officer, said “We expect that our improved cost structure, achieved through the successful completion of our NextGen program, will help us sustain our pace of strategic investments in support of profitable growth. Our initial 2025 guidance calls for 3.5% to 6.0% constant currency revenue growth and 20 to 40 basis points of full-year Adjusted Operating Margin expansion.”

Cognizant’s Q4 headcount was down by 3,300 compared to Q3 FY24. The total headcount for the year was at 336,800. In Q3 too the company had reported a decrease of 6,500.

“In 2024, we accelerated investments in our AI-led platforms and added new capabilities with the acquisitions of Thirdera and Belcan, further strengthening and diversifying our portfolio. Our focus on client centricity, agility, and innovation is helping clients unlock the next wave of hyper productivity and enterprise-grade generative AI adoption.”