Cognizant Retains Full-Year Guidance at 3.5-6%, Q1 Profit up 21.4% Cognizant now has approximately 1,400 early GenAI engagements compared to 1,200 at the end of the fourth quarter.
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Nasdaq-listed IT major Cognizant has retained its full-year revenue growth guidance at 3.5-6 per cent in constant currency even as there is caution in the industry due to uncertain macro-economic conditions heightened by the tariff wars.
Cognizant's second quarter revenue is expected to be in the range of USD 5.14-5.21 billion, a growth of 5-6.5 per cent in constant currency.
The New Jersey-based company reported a net profit of USD 663 million, up 21.4 per cent from the year-ago period on the back of revenues of USD 5.1 billion, up 8.2 per cent YoY in constant currency, above the high end of its guidance range.
The acquisition of Belcan contributed about 400 basis points to the YoY revenue growth. Cognizant follows the calendar year.
"We started the year on a strong note, delivering revenue and adjusted operating margin ahead of our expectations, reflecting our steadfast focus on the execution of our strategy over the last several years," said Ravi Kumar S, CEO, Cognizant.
"The breadth and depth of our portfolio, combined with our deep industry and domain expertise, position us well as a strategic partner for clients in an increasingly complex macroeconomic environment. Today, productivity, cost reduction and resiliency are especially important, and we believe our differentiated AI and platform capabilities are helping clients navigate the near-term uncertainty while embarking on longer-term AI-led transformation," he added.
The company's operating margin for the first quarter stood at 16.7 per cent, up 210 basis points YoY.
"Our first quarter performance reflects strong operational rigor in a period of elevated uncertainty. We delivered revenue above the high-end of our guidance and expanded adjusted operating margin by 40 basis points year-over-year. This drove adjusted EPS growth of 10 per cent year-over-year, which was ahead of revenue growth," said Jatin Dalal, Chief Financial Officer. "In 2025, we expect to return about USD 1.7 billion to shareholders through buybacks and dividends, while preserving flexibility to invest for growth."
Cognizant now has approximately 1,400 early GenAI engagements compared to 1,200 at the end of the fourth quarter. "We see the development of AI playing out in three distinct vectors. In the near term, we see Vector 1, which is focused on AI-led productivity as an opportunity for enterprises to address the estimated USD 2 trillion of technical debt on their balance sheets. In quarter one, AI written code increased to more than 20 per cent for us and is a pioneering opportunity for our developer communities," Kumar said.
Vector 2 involves industrializing AI by localizing, customizing and integrating AI into enterprise technology landscapes. Vector 3 is about new opportunities of identification as it has the potential to unlock many new labor pools and to create a significant multiplier effect on total addressable spend.
On a trailing-twelve-month basis, bookings increased 3 per cent YoY to USD 26.7 billion, which represented a book-to-bill of approximately 1.3x. Bookings in the first quarter declined 7 per cent YoY. First quarter bookings included four large deals, which are deals with total contract value of USD 100 million or greater.
Growth for the first quarter was driven across verticals and geographies. In terms of segments, growth was driven by the products and resources at 13.6 per cent, followed by Health Sciences at 11.4 per cent and Financial Services at 6.5 per cent in constant currency. Geography wise, growth was driven by North America at 9.7 per cent followed by Rest of World at 7.1 per cent and Europe at 3 per cent YoY in constant currency.
