Cognizant’s 2024 revenue growth, fueled by acquisitions of Thirdera and Belcan, marks a recovery from 2023’s decline. Despite the acquisition boost, organic growth remains modest, with healthcare driving significant revenue.
Cognizant Technology Solutions Corporation, headquartered in New Jersey, has reported a notable revenue rebound for 2024, reaching $19.74 billion, a 1.98% increase from the previous year. This recovery comes after a challenging 2023, which saw a slight revenue decline of 0.4%. However, much of this growth is attributed to strategic acquisitions, raising questions about the sustainability of this growth without factoring in these recent acquisitions.
In 2024, Cognizant, originally founded in Chennai, India, expanded its market position through two significant acquisitions. The first, in January 2024, was the $430 million purchase of Thirdera, which bolstered the company’s artificial intelligence capabilities. Later in the year, Cognizant acquired Belcan, a leader in engineering research and development, for $1.3 billion. These acquisitions together contributed 2% to the company’s overall revenue growth.
Despite this, the company has shown signs of slower organic growth. Excluding the impact of the acquisitions, Cognizant’s growth remains modest, with the company acknowledging that its quarterly performance was less robust. In the December 2024 quarter, Cognizant’s revenue only grew by 0.75%, amounting to $5.08 billion.
Ravi Kumar S., Cognizant’s CEO, remains optimistic about the company’s performance, emphasizing comprehensive organic growth. He highlighted that while the Americas remain a key market, international markets are also beginning to contribute significantly.
Cognizant’s net profit for the year rose by 5.36%, totaling $2.24 billion, driven by improved operating margins, which reached 14.7%, an increase of 80 basis points compared to the previous year. The company achieved this by reducing its headcount by about 10,900 employees during 2024, which helped lower staff costs.
The company’s workforce, largely based in India, stood at approximately 336,800 employees by the end of the year. Cognizant’s healthcare sector was a major contributor to its revenue growth, bringing in about $5.93 billion over the year and accounting for a third of its quarterly revenue.
Looking ahead, Cognizant has issued an optimistic revenue forecast for 2025, projecting between $20.3 billion and $20.8 billion in total revenue. The company expects organic revenue growth of 1-3.5%, despite ongoing pressures in certain sectors such as aerospace and automotive.
In conclusion, while Cognizant’s 2024 results demonstrate a recovery, much of this is driven by strategic acquisitions, leaving some uncertainty about the company’s future growth without such external boosts. However, with a strong presence in healthcare and an improving financial outlook, Cognizant remains cautiously optimistic about its prospects for 2025.
