Cognizant Technology stock hits near 7-month low on tightened guidance
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Cognizant Technology (NASDAQ:CTSH) stock slid to a near 7-month low on Thursday after the IT firm lowered its guidance in its Q1 earnings report.
CTSH expects 2022 adj. EPS of $4.45-$4.55 vs. prior outlook of $4.46-$4.60. Consensus estimate is $4.56.
2022 revenue is projected to be $19.8B-$20.2B (+9-11% in constant currency) vs. prior outlook of $20B-$20.5B (+8.5-11.5% in constant currency). Consensus estimate is $20.14B.
"Our updated 2022 constant currency guidance includes improved organic revenue growth outlook and lower inorganic contribution, reflecting a disciplined acquisition strategy," said CFO Jan Siegmund.
CTSH expects Q2 revenue of $4.90B-$4.94B, +6.8-7.8%, below consensus estimate of $4.98B.
In a post-earnings call, CEO Brian Humphries said CTSH expects bookings growth acceleration in Q2 and 2022 given a healthy pipeline.
He said the labor market continues to see attrition, demand supply imbalances and inflationary pressure. 
Q1 voluntary attrition fell 5 points to 26% on an annualized basis. "... we anticipate attrition will remain elevated for the year and will increase in Q2, reflecting seasonality," said Humphries.
Q1 operating margin was 15% vs. 15.2%, down ~20 bps, hurt by higher compensation costs, including cost of subcontractors. 
Meanwhile, Q1 revenue grew 9.7% to $4.8B. Financial services revenue rose 4.8% on demand for digital services, partially offset by clients' focus on cost optimization. Healthcare revenue grew 8.1%, driven by increased demand among life sciences clients.
Products and resources revenue grew 13.2%, helped by strong client demand and acquisitions. Communications, media and technology revenue grew 18.1% on strong demand among digital native firms.
CTSH stock declined 15.2% YTD.