Cognizant Technology Solutions (CTSH) Q4 2024 earnings summary

Executive summary

• Q4 2024 revenue grew 6.8% year-over-year to $5.1B, with full-year revenue up 2.0% to $19.7B, driven by large deal signings, operational execution, and significant contributions from acquisitions Belcan and Thirdera.

• Adjusted diluted EPS for Q4 2024 was $1.21, up from $1.18 in Q4 2023; full-year adjusted diluted EPS rose to $4.75 from $4.55.

• Completed the NextGen program, resulting in cost savings and improved adjusted operating margin.

• Expanded AI capabilities and launched new platforms, including Flowsource and Neuro AI, while integrating acquisitions.

• Improved client satisfaction and employee engagement, with historic highs in NPS and low voluntary attrition.

Financial highlights

• Q4 2024 adjusted operating margin was 15.7%; full-year adjusted margin was 15.3%, both showing year-over-year expansion.

• Q4 2024 operating cash flow was $920M; free cash flow was $837M. Full-year operating cash flow was $2.12B; free cash flow was $1.83B.

• Returned $1.2B to shareholders and invested $1.6B in acquisitions during 2024.

• Trailing twelve-month bookings reached $27.1B, up 3% year-over-year, with a book-to-bill ratio of 1.4x.

• Ended 2024 with $2.23B in cash and equivalents, net cash of $1.34B.

Outlook and guidance

• 2025 revenue expected at $20.3–$20.8B, growth of 2.6%–5.1% (3.5%–6.0% in constant currency).

• Q1 2025 revenue expected at $5.0–$5.1B, up 5.6%–7.1% year-over-year.

• Adjusted operating margin guidance for 2025 is 15.5%–15.7%, with EPS expected at $4.90–$5.06.

• Free cash flow for 2025 projected to exceed 90% of net income; $1.2B planned return to shareholders.

• Belcan expected to contribute over 250 basis points to 2025 growth, mainly in the first half.