Why Did Cognizant’s Q1 Bookings Decline by 7% Despite Revenue Growth?
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Synopsis
Cognizant, a leading global IT player, has reported a concerning drop in Q1 bookings. Despite achieving significant revenue growth, the company's bookings fell by 7%. What does this mean for its future? Discover the factors contributing to these trends.
Key Takeaways
- Cognizant reported a 7% YoY decline in Q1 bookings.
- Trailing 12-month bookings increased by 3% YoY.
- Revenue grew to $5.1 billion, a 7.5% rise from last year.
- GAAP operating margin improved to 16.7%.
- Plans to return $1.7 billion to shareholders in 2025.
New Delhi, May 1 (NationPress) The prominent global IT firm Cognizant has revealed a 7% year-on-year (YoY) decrease in bookings for the first quarter of the calendar year (Q1 CY25).
Nevertheless, bookings over the trailing 12 months increased by 3% YoY to reach $26.7 billion, driven by four significant contracts, each exceeding $100 million.
The company reported a revenue figure of $5.1 billion for Q1 2025, marking a 7.5% rise compared to the same quarter last year (Q1 CY24).
CEO Ravi Kumar S stated, “Our portfolio strength and industry expertise are positioning us well amid global uncertainty,” emphasizing that the firm’s AI-driven solutions are aiding businesses in reducing costs and enhancing productivity.
When adjusted for constant currency, revenue saw an increase of 8.2%. The company’s GAAP operating margin improved to 16.7%, a rise of 210 basis points YoY.
This figure was positively affected by a one-time gain of $62 million from the sale of an office property in India. Adjusted for this, the operating margin was at 15.5%, which is 40 basis points higher than Q1 of 2024.
GAAP stands for a set of accounting principles and standards utilized in the U.S. to ensure financial reporting consistency and transparency.
Cognizant’s GAAP earnings per share (EPS) were reported at $1.34, reflecting a 22% increase from the previous year’s quarter, with adjusted EPS at $1.23, indicating a 10% growth.
The company attributes this performance to its disciplined execution, robust operational efficiency, and strategic investments made in recent years.
CFO Jatin Dalal noted that despite external challenges, Cognizant managed to exceed revenue expectations and enhance margins.
“We aim to return $1.7 billion to our shareholders in 2025 via buybacks and dividends,” Dalal added.
As of March 31, Cognizant employed 336,300 individuals and plans to recruit 20,000 new graduates this year to strengthen its capabilities in managed services and AI-driven software development.
In other developments, Cognizant is currently engaged in legal disputes with Indian IT giant Infosys. The conflict escalated last month, with Infosys filing new charges in a U.S. district court in Dallas, Texas.
Infosys has accused Cognizant of misusing its monopoly power in the healthcare software sector through its TriZetto platform to suppress competition.
In response, Cognizant has requested the court to dismiss Infosys’ antitrust counterclaims, asserting that Infosys has not provided substantial evidence to back its accusations of monopolistic behavior.
Point of View
It's crucial to highlight that Cognizant's recent financial results reflect both resilience and challenges. While the 7% decline in bookings raises concerns, the increase in revenue and strategic initiatives in AI and managed services showcase the company's adaptability in a competitive market. Observers should keep a close eye on how these dynamics will unfold in the coming quarters.
NationPress
23/05/2025
Frequently Asked Questions
What caused Cognizant's booking decline in Q1?
Cognizant experienced a 7% year-on-year decline in bookings primarily due to external market conditions and increased competition.
How did Cognizant perform in terms of revenue?
Cognizant reported a revenue of $5.1 billion for Q1 2025, marking a 7.5% increase from the same quarter last year.
What is the significance of Cognizant's AI-driven solutions?
Cognizant's AI-led solutions are designed to help businesses reduce costs and improve productivity, positioning the company favorably in a challenging environment.
What is the company's plan for shareholder returns in 2025?
Cognizant plans to return $1.7 billion to shareholders through buybacks and dividends in 2025.
What legal issues is Cognizant currently facing?
Cognizant is involved in a legal dispute with Infosys, which has accused it of monopolistic practices in the healthcare software sector.
