Revenue: $5.1 billion, up 6.7% year over year in constant currency for Q4 2024.
Full-Year Revenue: $19.7 billion, increased 1.9% year over year in constant currency.
Adjusted Operating Margin: 15.7% for Q4 2024; full-year margin of 15.3%.
Health Sciences Revenue Growth: Over 10% year over year.
Financial Services Revenue Growth: Approximately 3% year over year.
Free Cash Flow: $837 million for Q4 2024; $1.8 billion for the full year.
Cash and Short-term Investments: $2.2 billion at year-end.
Net Cash: $1.3 billion at year-end.
Bookings Growth: 11% year over year for Q4 2024.
Full-Year EPS Guidance for 2025: $4.90 to $5.06, representing 3% to 7% growth.
Expected Revenue Growth for 2025: 2.6% to 5.1% or 3.5% to 6% in constant currency.
Expected Adjusted Operating Margins for 2025: 15.5% to 15.7%.
Capital Returned to Shareholders in 2024: $1.2 billion through share repurchases and dividends.
Release Date: February 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Cognizant Technology Solutions Corp (NASDAQ:CTSH) reported strong year-over-year revenue growth of 6.7% in constant currency for Q4 2024, driven by large deal signings and improved organic growth.
The company successfully completed its NextGen program, which contributed to an improved adjusted operating margin of 15.7% for the quarter.
Cognizant Technology Solutions Corp (NASDAQ:CTSH) expanded its AI capabilities significantly, introducing new platforms like Flowsource, Neuro Edge, and Neuro Cybersecurity, enhancing its service offerings.
The company achieved a historic high in client satisfaction scores (NPS) in 2024, indicating strong customer relationships and service quality.
Strategic acquisitions, such as Thirdera and Belcan, have strengthened Cognizant Technology Solutions Corp (NASDAQ:CTSH)’s market position and contributed to its growth in new end markets.
Despite the positive revenue growth, the adjusted operating margin for the year declined by 40 basis points year-over-year, primarily due to the impact of acquisitions and increased compensation costs.
The Products and Resources segment faced pressure due to a cautious discretionary environment across end markets like automotive, aerospace, and manufacturing.
Communication, Media, and Technology segments experienced consistent pressure as clients focused on cost optimization, impacting discretionary spending.
The company anticipates a modest sequential margin decline in Q1 2025 due to typical seasonality, which may affect short-term profitability.
Cognizant Technology Solutions Corp (NASDAQ:CTSH) faces challenges in maintaining momentum in smaller deals, which are crucial for immediate revenue realization.
Story Continues
Q: Can you discuss the momentum in large deal bookings and your outlook for 2025? A: Ravi Singisetti, CEO, highlighted that Cognizant signed 29 large deals in 2024, up from 17 in 2023. The company has a strong book-to-bill ratio of 1.4 and is seeing a return of smaller deals, which are monetized within the same year. This momentum is expected to continue into 2025, with a broad spread across industries and geographies, making it resilient and sustainable.
Q: How does the growth outlook for 2025 compare to 2024, particularly across different industries? A: Ravi Singisetti, CEO, stated that growth is expected to be broad-based across industries. Healthcare showed over 10% year-over-year growth, and Financial Services is seeing a return of discretionary spending. The company is also seeing growth in communications, technology, and manufacturing, bolstered by the Belcan acquisition. The Americas remain a principal market, but international markets are starting to contribute more significantly.
Q: What are Cognizant’s plans for AI investments and how do they impact the IT services industry? A: Ravi Singisetti, CEO, explained that Cognizant is investing in AI to enhance productivity and innovation. The company has 1,200 AI projects underway, focusing on cloud migration, data modernization, and agentification. Cognizant’s AI platforms are helping clients accelerate their digital transformation, and the company sees AI as a force multiplier that will unlock new service pools and expand addressable spend.
Q: Can you elaborate on the margin performance and expectations for 2025? A: Jatin Dalal, CFO, noted that the fourth-quarter adjusted operating margin was 15.7%, driven by the NextGen program and operational improvements. The company expects margins to expand by 20 to 40 basis points in 2025, supported by AI-led productivity, continued operational rigor, and successful execution of large deals.
Q: How is Cognizant approaching hiring and talent management in 2025? A: Jatin Dalal, CFO, mentioned that Cognizant will continue to hire as needed to support growth, with an expected increase in headcount from the first quarter of 2025. The company is well-positioned in terms of talent availability across geographies and plans to leverage its capabilities to meet demand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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