Cognizant Technology Solutions Corp (CTSH, Financial) released its 8-K filing on February 5, 2025, detailing its financial performance for the fourth quarter and full-year 2024. The company, a global IT services provider headquartered in Teaneck, New Jersey, reported a fourth-quarter revenue of $5.1 billion, marking a 6.8% increase year-over-year, which exceeded the analyst estimate of $5.072 billion. For the full year, revenue reached $19.7 billion, a 2.0% increase from the previous year.
Performance Highlights and Challenges
Cognizant’s performance in 2024 was bolstered by strategic investments in AI-led platforms and acquisitions, such as Thirdera and Belcan, which contributed approximately 200 basis points to the year-over-year revenue growth. The company’s operating margin improved to 14.7%, an increase of 80 basis points from the previous year. However, challenges such as increased voluntary attrition in tech services, which rose to 15.9% from 13.8% in 2023, could pose potential risks to maintaining operational efficiency.
Financial Achievements and Industry Impact
The company’s adjusted operating margin for the year was 15.3%, reflecting a 20 basis point increase. This improvement is significant in the software industry, where operational efficiency and margin expansion are critical for sustaining competitive advantage. Cognizant’s trailing 12-month bookings grew by 3% to $27.1 billion, driven by an 11% increase in fourth-quarter bookings, underscoring strong demand for its services.
Income Statement and Key Metrics
For the fourth quarter, Cognizant reported a GAAP diluted EPS of $1.10, slightly below the analyst estimate of $1.11. However, the adjusted diluted EPS was $1.21, surpassing expectations. The company’s operating cash flow for the year was $2.124 billion, with a free cash flow of $1.827 billion, highlighting robust cash generation capabilities.
| Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 |
|---|---|---|---|---|
| Revenue | $5,082 million | $4,758 million | $19,736 million | $19,353 million |
| GAAP Operating Margin | 14.8% | 15.2% | 14.7% | 13.9% |
| Adjusted Operating Margin | 15.7% | 16.1% | 15.3% | 15.1% |
| GAAP Diluted EPS | $1.10 | $1.11 | $4.51 | $4.21 |
| Adjusted Diluted EPS | $1.21 | $1.18 | $4.75 | $4.55 |
Analysis and Future Outlook
Cognizant’s strategic focus on AI and digital transformation initiatives has positioned it well for future growth. The company’s guidance for 2025 anticipates revenue growth of 3.5% to 6.0% in constant currency, with an adjusted operating margin expansion of 20 to 40 basis points. This outlook reflects confidence in sustaining growth momentum and operational improvements.
We ended the year strong, delivering Adjusted Operating Margin of 15.7% in the fourth quarter and 20 basis points expansion for the full year, above our guidance,” said Jatin Dalal, Chief Financial Officer.
Overall, Cognizant Technology Solutions Corp (CTSH, Financial) demonstrated resilience and strategic foresight in 2024, setting a solid foundation for continued success in the evolving IT services landscape.
Explore the complete 8-K earnings release (here) from Cognizant Technology Solutions Corp for further details.
link