Cognizant Bookings Drop 7% as Growth Slows: Rapid Earnings Reaction
Cognizant’s revenue rose 4.6%, but acquisitions and resold products supplied roughly 4 points of it. Here’s what the core business looks like without them, and why falling bookings matter.
Cognizant's bookings for the third quarter fell 7% as growth slowed, according to the company's earnings report. The company's revenue grew by 4.6% to approximately $5.7 billion, but a significant portion of this growth came from acquisitions and resold third-party products, accounting for around 4 points. When these factors are excluded, the core consulting and outsourcing business showed minimal growth, with bookings also declining.
The company's earnings growth was largely the result of share buybacks rather than higher profits. Cognizant's financial performance is largely driven by its Health Sciences and Products and Resources segments, both of which experienced declines. The company's management projects a growth rate of 3.2% to 4.7% constant currency for the fourth quarter, indicating ongoing slowing.
This outlook is largely based on acquired revenue, suggesting that the company is relying on external funding to support its buybacks and acquisitions.
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