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Cognizant Technology Solutions 8-K Report, Financial Results (Feb 5, 2025)

Reports
Earnings & Results·Regulation FD·Exhibits & Filings
Filing Date
Filed February 5, 2025
Period End
February 5, 2025
Security
CTSH
In the record · 2016–202610-K1110-Q338-K105

CTSH filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 105 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Jun ’18Jun ’18
  2. Leadership change8-K · Jul ’20Jul ’20
  3. Material agreement8-K · Oct ’22Oct ’22
  4. Material agreement8-K · Oct ’26Oct ’26

01—Abstract

Summary

Summary of the 8-K filed February 5, 2025. Cited figures are marked; the original filing is the authoritative source.

Cognizant (CTSH) reported fourth-quarter and full-year 2024 results that landed at the high end of its guidance, with Q4 revenue of $5.08 billiona up 6.8% year-over-year (6.7% in constant currency) and full-year revenue of $19.74 billion up 2.0% (1.9% constant currency).

Profitability improved: full-year GAAP operating margin rose to 14.7% from 13.9%, and Adjusted Operating Margin rose 20 basis points to 15.3%, above guidance. Adjusted Diluted EPS was $4.75b versus $4.55 in 2023, while GAAP diluted EPS rose to $4.51 from $4.21. Acquisitions of Belcan and Thirdera contributed roughly 200 basis points to full-year growth and about 450 basis points in Q4, so organic growth remained modest.

Trailing twelve-month bookings were $27.1 billionc, up 3%, with Q4 bookings up 11% and a book-to-bill of about 1.4x. Cash generation and capital returns were solid but lower than 2023. Full-year operating cash flow fell to $2.12 billion from $2.33 billion and free cash flow to $1.83 billion from $2.01 billion, largely because of working-capital changes and a $360 million India tax payment in Q1.

The company returned $1.2 billiond to shareholders through buybacks and dividends, and net cash declined to $1.34 billion from $2.00 billion as debt rose to $908 million, reflecting the acquisitions. The NextGen restructuring program concluded in 2024 with cumulative charges of $363 million. For 2025, management guided to revenue of $20.3 to $20.8 billion, which is 2.6% to 5.1% reported growth or 3.5% to 6.0% in constant currency, and Adjusted Operating Margin of 15.5% to 15.7%, implying 20 to 40 basis points of expansion.

Adjusted Diluted EPS guidance is $4.90 to $5.06. The quarterly dividend was raised 3% to $0.31 per share. The key debates for investors are whether organic growth can accelerate beyond low single digits and whether the bookings momentum and AI-led offerings translate into revenue.

02—Key points

Key Highlights

  1. Q4 2024 revenue of $5.08B grew 6.8% YoY (6.7% constant currency), at the high end of guidance; roughly 450 bps of that growth came from acquisitions.
  2. Full-year 2024 revenue of $19.74B grew only 2.0% YoY, with acquisitions (Belcan, Thirdera) contributing about 200 bps.
  3. Adjusted Operating Margin expanded 20 bps to 15.3% for FY2024; GAAP operating margin rose 80 bps to 14.7%, aided by completion of the NextGen restructuring program.
  4. Adjusted Diluted EPS of $4.75 (up from $4.55); GAAP diluted EPS of $4.51 (up from $4.21).
  5. Bookings of $27.1B TTM (+3% YoY), with Q4 bookings up 11% and a book-to-bill of about 1.4x; company signed a record 29 large deals in 2024.
  6. Free cash flow fell to $1.83B from $2.01B; net cash dropped to $1.34B from $2.00B after $1.6B spent on acquisitions and higher debt.
  7. 2025 guidance: revenue of $20.3–$20.8B (3.5%–6.0% constant currency), Adjusted Operating Margin of 15.5%–15.7%, and Adjusted Diluted EPS of $4.90–$5.06; quarterly dividend raised 3% to $0.31.

03—Questions

Frequently Asked Questions

  1. How did Cognizant perform in Q4 and full-year 2024 versus prior year?

    Q4 2024 revenue was $5.08 billion, up 6.8% reported (6.7% constant currency), and GAAP diluted EPS was $1.10 versus $1.11, while Adjusted Diluted EPS rose to $1.21 from $1.18. For full-year 2024, revenue was $19.74 billion, up 2.0%, GAAP operating margin improved to 14.7% from 13.9%, and Adjusted Diluted EPS increased to $4.75 from $4.55.

  2. How much of the growth came from acquisitions versus organic growth?

    Acquisitions of Belcan and Thirdera contributed about 450 basis points to Q4 2024 revenue growth and about 200 basis points to full-year 2024 growth. Excluding these, growth was low, and the full-year 2024 constant-currency growth was 1.9%, so organic growth remained modest.

  3. What is management guiding for 2025?

    Full-year 2025 revenue is guided to $20.3–$20.8 billion, or 2.6%–5.1% reported growth (3.5%–6.0% constant currency). Adjusted Operating Margin is guided to 15.5%–15.7% (20–40 bps expansion), Adjusted Diluted EPS to $4.90–$5.06, and Q1 2025 revenue to $5.0–$5.1 billion. Guidance is as of February 5, 2025.

  4. Why did free cash flow and net cash decline in 2024?

    Operating cash flow fell to $2.12 billion from $2.33 billion, mainly due to a $510 million negative swing in working capital changes and a $360 million India tax payment in Q1 2024. Free cash flow was $1.83 billion. Net cash fell to $1.34 billion from $2.00 billion because of $1.6 billion in acquisition payments funded partly by new revolver borrowings, which raised long-term debt to $875 million.

  5. What did Cognizant return to shareholders, and what is the outlook for capital returns?

    The company returned $1.2 billion in 2024 through $605 million of share repurchases and $600 million of dividends. About $1.24 billion remained under the buyback authorization at year-end. In February 2025 the board declared a quarterly dividend of $0.31 per share, a 3% increase, payable February 26, 2025.

04—Continue

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