Cognizant 2024 forecast looks weak with lower full-year revenue, shares dip
Cognizant Technology Solutions, on February 6, projected a full-year revenue below estimates, causing a 4 percent drop in its shares during extended trading, Reuters reported. This highlights the ongoing decline in demand for IT services.
Various sectors are reducing technology and outsourcing expenses, opting to bring some processes in-house. This shift is in response to the challenges posed by persistent inflation and higher interest rates.
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IT Services Sector Experiences Slowdown
The IT services sector is witnessing a slowdown due to these factors. Last month, Tata Consultancy Services reported its slowest profit growth since 2020, while Infosys fell short of profit targets in the latest quarter.
Cognizant, heavily reliant on North American and European customers, anticipates revenue between $19 billion and $19.8 billion in 2024. Analysts, as per LSEG data, were expecting $19.8 billion.
The company’s forecasts for full-year adjusted profit and first-quarter revenue also fell short of expectations.
Also Read | Wipro lost its CFO to Cognizant, then it also lost a Big Client
Cognizant’s Q4 revenue dipped by 1.7 percent to $4.76 billion as of December 31, aligning with expectations. However, adjusted earnings surpassed expectations by 14 cents, reaching $1.18.
Revenue from financial services and health sciences, Cognizant’s top two customer segments, experienced declines of 5.8 percent and 2.1 percent, respectively.
Cognizant was in the news last year for appointing Jatin Dalal as its CFO, a week after he resigned from the Indian information technology (IT) major Wipro.
Dalal took over the role from Jan Siegmund in December, who was due to retire in early 2024, the IT services firm said in a statement.
Dalal spent over two decades at Wipro, where he joined as a manager at its treasury operations and most recently held the position of president and CFO. Wipro’s shares fell about 3 percent the day after his exit.
Dalal became Wipro’s CFO in 2015, and with CEO Thierry Delaporte steered the company through the pandemic as demand for digital services boomed. The company’s shares rose 57 percent and 85 percent in 2020 and 2021, compared to 55 percent and 60 percent growth in India’s Nifty IT index in the same period.
“We are pleased to welcome Jatin to Cognizant and confident he will help us achieve our goals as we continue to focus on driving revenue growth,” Cognizant CEO Ravi Kumar S said in the statement.
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Published: 07 Feb 2024, 10:26 AM IST
Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.