Discover Cognizant's Remarkable Q2 2023 Results and 7% Dividend Increase Amid Economic Challenges
Cognizant (CTSH), a renowned professional services company, recently unveiled its financial results for the second quarter of 2023. Despite facing an uncertain economic environment, the company demonstrated remarkable progress during the period. Cognizant's CEO, Ravi Kumar S, highlighted significant achievements, including impressive bookings growth, sequential revenue increase, and successful engagements with the Cognizant Neuro AI platform. Additionally, the company's Chief Financial Officer, Jan Siegmund, announced his retirement in early 2024, after contributing significantly to Cognizant for the past three years.
Cognizant's Q2 2023 revenue remained steady at $4.9 billion, with a slight year-over-year decline of 0.4%. However, in constant currency terms, the year-over-year decline was only 0.1%, showing promising signs of stability. The company's GAAP operating margin was 11.8%, while the adjusted operating margin was 14.2%, slightly exceeding expectations. GAAP diluted EPS was reported at $0.91, and adjusted diluted EPS stood at $1.10.
Despite economic challenges, Cognizant has decided to reward its shareholders with a 7% dividend increase year-over-year. On August 29, 2023, the company will pay a quarterly cash dividend of $0.29 per share to shareholders of record on August 21, 2023. This move showcases the company's commitment to providing value to its investors even in uncertain times.
Cognizant experienced a remarkable 17% year-over-year growth in bookings during the second quarter of 2023. The company's trailing-twelve-month bookings reached $26.4 billion, reflecting a book-to-bill ratio of approximately 1.4x. Additionally, Cognizant saw a decline in voluntary attrition for Tech Services, indicating improved employee engagement and satisfaction.
Cognizant's CFO, Jan Siegmund, announced his intention to retire in early 2024 to spend more time with family and focus on philanthropic endeavors. The company plans to ensure a smooth transition by identifying a suitable successor through a comprehensive search process that includes both internal and external candidates.
For the third quarter of 2023, Cognizant expects revenue to be in the range of $4.89 billion to $4.94 billion, representing a growth of 0.6% to 1.6%, or a decline of 0.5% to 0.5% in constant currency. Full-year 2023 revenue is projected to be between $19.2 billion and $19.6 billion, with a decline of 0.9% to growth of 1.1% or a decline of 1.0% to 1.0% in constant currency. The company's adjusted operating margin for 2023 is estimated to be in the range of 14.2% to 14.7%, with adjusted EPS ranging from $4.25 to $4.48.
Cognizant strengthened its position through various strategic partnerships. These include an extended and expanded collaboration with Gilead Sciences, an expanded partnership with ServiceNow, and a long-standing alliance with Google Cloud. Additionally, Cognizant partnered with Nuance Communications, AT&T, Accuray, and Orkla, further enhancing its portfolio of services and capabilities.
Cognizant celebrated its 25th year as a publicly listed company on NASDAQ and received accolades for its workplace diversity, board leadership, and partnerships. The company was also recognized as Microsoft's 2023 Intelligent Automation Partner of the Year and received several leadership positions in the Everest Group's PEAK Matrix® Assessments.
Cognizant's strong Q2 2023 results and commitment to enhancing shareholder value through a dividend increase reflect its resilience and strategic planning. The company's progressive approach to technological advancements and strategic partnerships positions it favorably in the competitive market. As Cognizant embarks on the search for a new CFO, it remains dedicated to providing innovative solutions and driving growth in the professional services sector.
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