Cognizant Shares Rise with Positive Outlook After Beating Q3 Earnings and Revenue Estimates

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Cognizant Shares Rise with Positive Outlook After Beating Q3 Earnings and Revenue Estimates

TEANECK, N.J. - Cognizant Technology Solutions Corp. (NASDAQ:CTSH) reported third-quarter results that exceeded analyst expectations and provided an optimistic outlook for the full year. As a result, the company’s shares rose by 1.48% in after-hours trading.

The IT Services company reported adjusted earnings of $1.25 per share, surpassing the consensus estimate of $1.15. Revenue increased by 3% year-over-year to $5.04 billion, exceeding expectations of $4.98 billion.

Cognizant's performance was bolstered by strong growth in its Health segment, which saw revenues rise by 7.8% year-over-year. The company’s Financial Services segment returned to growth, increasing revenue by 0.7% year-over-year.

CEO Ravi Kumar S. stated, "Third-quarter revenue growth came in at the upper end of our guidance range. This was driven by once again strong performance from our largest segments, Health and Financial Services."

Looking ahead, Cognizant raised its full-year 2024 earnings forecast to between $4.63 and $4.67 per share, above the analyst consensus of $4.62. The company also narrowed its full-year revenue forecast to a range of $19.7 to $19.8 billion, compared to the previous estimate of $19.6 to $19.8 billion.

Cognizant expects fourth-quarter revenues to be between $5.0 and $5.1 billion.

The company reported a book-to-bill ratio of 1.3x over the last 12 months, indicating strong future revenue potential. Cognizant signed six agreements during the quarter, each with a total contract value exceeding $100 million.

CFO Jatin Dalal noted, "Our focus on operating expenses and the savings we achieved through our NextGen program have allowed us to increase our Adjusted Operating Margin by approximately 40 basis points year-to-date."

Cognizant concluded the quarter with 340,100 employees, an increase of 3,800 from the previous quarter, but a decrease of 6,500 year-over-year. In the third quarter, the company repurchased 3.1 million shares for $228 million.