Cognizant net profit up 3% YoY in Q1 FY23, to sack 3,500 employees

IT giant, Cognizant reported a 3% YoY rise in its net profit to $580 million in the March quarter of FY23. However, the company reported a 0.3% YoY of decline in its revenue which stood at $4.8 billion in the quarter under review.

The company reported record 12-month bookings of $25.6 billion. In the first quarter of FY23, it witnessed a booking growth of 28% year-over-year. The company's operating cash flow stood at $729 million and free cash flow stood at $631 million.

The company expects of returning around $1.4 billion to shareholders through share repurchases and dividends in 2023.

The IT giant reported to have a total headcount of 3,51,500 in the March quarter which saw a decline of 3,800 employees during the same quarter in FY22. Its voluntary attrition rate declined to 23% in Q1 FY from 30% in Q1 FY22.

Cognizant's NextGen Program to affect 3,500 employees

The company will begin its NextGen program in the next quarter of FY23, to streamline its operational modal and corporate functions. As per the program, the company will operate with fewer layers to enhance agility. In connection with the program, the company expects to record costs of approximately $400 million with approximately $350 million of such costs anticipated in 2023 and approximately $50 million in 2024.

The company expects NextGen program to impact around 3,500 employees.

Cognizant FY23 guidance

Revealing its second quarter and full year guidance of FY23, Cognizant said that it expects the company's second quarter revenue to be at $4.83 - $4.88 billion, a decline of 0.6% to 1.6%, or a decline of 1.0% to flat in constant currency.

The company expects its revenue to decline by 1.2% on a yearly basis in FY23. Full-year 2023 adjusted operating margin is expected to be in the range of 14.2% to 14.7%.

“Our accelerated bookings growth in the quarter, which included several large deals and a healthy mix of new and expansion work, reflects the strengths of our services, our brand, and the longstanding relationships we have with our clients. I am also encouraged by the continuing reduction in our voluntary attrition,” said Ravi Kumar S, Chief Executive Officer. 

"We were pleased to deliver first quarter revenue above the high-end of our guidance range and strong free cash flow that supports our capital allocation priorities,” said Jan Siegmund, Chief Financial Officer.