Cognizant reports Q1 2023 results with $580M net profit, announces NextGen program and job cuts
Highlights
- Cognizant Technology Solutions' net profit for Q1 2023 was $580 million, up 3% YoY.
- The company's revenue for Q1 2023 was $4.8 billion, down 0.3% YoY.
- Cognizant's digital business grew 13% YoY and accounted for 46% of total revenue.
- The company's financial services segment, its largest revenue contributor, declined 6% YoY, while its healthcare segment grew 5%.
- Cognizant announced a restructuring program called NextGen that will impact about 3500 jobs and result in a pre-tax charge of approximately $250 million in Q2 2023.
- The company raised its quarterly dividend by 7% to $0.29 per share and plans to return $1.4 billion to shareholders through share repurchases and dividends in 2023.
- Cognizant expects its revenue growth for the full year 2023 to be between (1.2%) and 0.8%, or (1.0%) and 1.0% in constant currency.
Cognizant Technology Solutions, one of the world's leading professional services companies, reported its first quarter 2023 financial results on May 3, 2023. The company posted a net profit of $580 million, up 3% year-over-year, and a revenue of $4.8 billion, down 0.3% year-over-year. The company also announced a restructuring program called NextGen that will impact about 3500 jobs.
The company said that the NextGen program will help fund continued investments in its people, growth opportunities and realignment of its real-estate to reflect its hybrid work model. The program will result in a pre-tax charge of approximately $250 million in the second quarter of 2023, of which about $180 million will be related to severance and termination benefits.
Cognizant's CEO Ravi Kumar S said that the company had a strong bookings growth in the first quarter, which included several large deals and a healthy mix of new and expansion work. He also said that he was encouraged by the reduction in voluntary attrition among tech services employees, which declined to 23% from 26% in Q4 2022 and 30% in Q1 2022.
The company's revenue growth was driven by its digital business, which grew 13% year-over-year and accounted for 46% of the total revenue. The company's financial services segment, which is its largest revenue contributor, declined 6% year-over-year, while its healthcare segment grew 5%. The company's products and resources segment grew 9%, while its communications, media and technology segment grew 4%.
The company also raised its quarterly dividend by 7% to $0.29 per share and said that it expects to return $1.4 billion to shareholders through share repurchases and dividends in 2023. The company expects its revenue growth for the full year 2023 to be between (1.2%) and 0.8%, or (1.0%) and 1.0% in constant currency.
Also read: Amazon Q1 Earnings Report
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