Cognizant Faces Minor Revenue Drop Amid IT Spending Cuts

In its second-quarter financial report for 2023, Cognizant, a multinational IT services company, revealed a slight decline in revenue. The company reported a 0.4 percent drop, bringing its revenue to $4.9 billion. The dip in revenue was attributed to enterprises cutting down on their IT spending during the period.
Q2 2023 revenue of Cognizant
Cognizant has generated Q2 2023 revenue of $3.6 billion (down 1.8 percent) from North America; $1 billion (up 7 percent) from Europe and $300 million (down 4.9 percent) from the Rest of the World.

Cognizant has generated revenue of $1.5 billion (down 5.1 percent) from Financial Services; $1.4 billion (up 2.3 percent) from Health Sciences and $1.2 million (up 3.2 percent) from Product and Resources and $800 million (down 1.2 percent) from Communications, Media and Technologies business during Q2 2023.

Despite the revenue setback, Cognizant highlighted positive growth in bookings during the second quarter. Bookings surged by an impressive 17 percent compared to the same quarter in the previous year. On a trailing-twelve-month basis, bookings showed a steady increase of 14 percent, reaching a substantial $26.4 billion. This growth indicated a promising book-to-bill ratio of approximately 1.4x.

Cognizant also provided insights into its workforce figures. At the end of the second quarter, the company reported a total headcount of 345,600. This figure showed a decrease of 5,900 employees from the first quarter of 2023. However, in comparison to the second quarter of 2022, the company experienced a positive increase of 4,300 employees.

Furthermore, Cognizant announced a noteworthy improvement in voluntary attrition rates within its Tech Services division. On a trailing-twelve-month basis, voluntary attrition declined significantly to 19.9 percent, down from 23.1 percent in Q1 2023, and even more impressively from 31.1 percent in Q2 2022. This positive trend reflected the company’s efforts to retain its talent and build a stable workforce.

Ravi Kumar S, Chief Executive Officer of Cognizant, expressed satisfaction with the company’s overall performance during the quarter, especially considering the challenging and uncertain economic environment. Kumar acknowledged the maintained commercial momentum and celebrated the remarkable 17 percent year-over-year growth in bookings. A third of the in-quarter bookings were attributed to large deals, showcasing Cognizant’s ability to secure significant contracts.

Additionally, Cognizant reported successful early engagements with its Cognizant Neuro AI platform. The company’s initial investment in this platform has yielded over 100 early engagements as clients embrace the potential of generative AI.

Despite the slight revenue drop, Cognizant’s strong bookings growth and promising investments in innovative technologies indicate the company’s resilience and continuous progress in the IT services industry.

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