Cognizant stock falls as bookings drop, guidance disappoints
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Cognizant (NASDAQ:CTSH) slides sharply after posting narrow-miss on second quarter's revenue at lower bookings, and soft guidance for the current quarter.
Q2 Revenue of $4.9B (+6.5% Y/Y) missed estimates by $20M.
By segment: Financial Services revenue rose 2.7% as reported while 5.1% in constant currency compared with same quarter last year; Health Sciences revenue grew 6.3% year-over-year, or 7.6% in constant currency; Products and Resources revenue grew 8.1% year-over-year, or 11.6% in constant currency; and Communications, Media and Technology revenue grew 16.1% year-over-year, or 19.5% in constant currency.
The New Jersey-based IT consulting company said, "The sale of the Samlink subsidiary, which closed on February 1, 2022, negatively impacted Financial Services segment revenue growth by approximately 190 basis points."
Q2 bookings declined 3% year-over-year. That converts to trailing 12-month bookings of $23.2B, which represented a book-to-bill of approximately 1.2x.
However, Non-GAAP EPS of $1.14 beat analysts expectations by $0.05.
Operating Margin of 15.5%, up 30 bps Y/Y.
Operating cash flow of $528M and free cash flow of $485M.
Buybacks and Dividend: The company repurchased worth $300M shares during the quarter that leaves $1.4B remaining under the existing share buyback program.
On Jul. 26, Cognizant declared a quarterly cash dividend of $0.27 per share, for shareholders of record on Aug. 19, 2022 payable Aug. 30, 2022.
"While quarterly bookings performance was below our expectations, our 1.2x book-to-bill supports our revenue growth outlook for 2022," said CFO Jan Siegmund. "We now expect to return approximately $1.8 billion to shareholders through share repurchases and dividends for the full year."
Q3 Outlook: Revenue is expected to be in the range of $4.98-$5.03B, growth of 5.0%-6.0% (7.5%-8.5% in constant currency), vs. consensus revenue of $5.04B
FY 2022 Guidance: Full-year revenue expected to be $19.7-$19.9B, or growth of 6.3%-7.3% (8.5%-9.5% in constant currency), vs. consensus of $19.93B;
Adjusted Operating Margin is expected to expand 20 basis points to 30 basis points to 15.6% - 15.7%;
and Non-GAAP EPS forecasted to range between $4.51-$4.57 vs. consensus of $4.55.
CTSH shares are down 8% premarket, Thursday, to trade at $65.