Cognizant Technology Solutions (CTSH) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $5.044 billion, up 3.0% year-over-year and at the high end of guidance, with acquisitions contributing 200 basis points to growth.

• Adjusted operating margin was 15.3%, while GAAP operating margin was 14.6%, both showing improvement year-over-year.

• Adjusted EPS grew to $1.25 and GAAP EPS to $1.17, both up year-over-year; net income for Q3 was $582 million.

• Large deal momentum continued with six deals over $100 million signed in Q3 and 19 year-to-date, surpassing the prior year's total.

• Strategic acquisitions, notably Belcan and Thirdera, expanded capabilities in engineering, aerospace, and automation.

Financial highlights

• Free cash flow for Q3 was $791 million; operating cash flow was $847 million; net cash position at $809 million as of September 30, 2024.

• Bookings for the trailing twelve months were $26.2 billion, with a book-to-bill ratio of 1.3x.

• Share repurchases in Q3 ranged from $133 million to $228 million; $1.4 billion remains authorized.

• Cash and short-term investments stood at about $2 billion; total debt was $1,216 million.

• Returned $391 million to shareholders in Q3 via share repurchases and dividends.

Outlook and guidance

• Q4 2024 revenue expected at $5.0–$5.1 billion, up 5.1%–7.1% year-over-year.

• Full-year 2024 revenue guidance narrowed to $19.7–$19.8 billion, up 1.6%–2.1% as reported, with 200 basis points of inorganic contribution.

• Full-year adjusted operating margin expected at approximately 15.1%; adjusted EPS guidance raised to $4.63–$4.67.

• Belcan acquisition expected to generate over $100 million in annual revenue synergies within three years and be accretive to EPS in 2026.

• NextGen program costs for 2024 expected at $105 million, with total program charges of $335 million.