Revenue Analysis
Total and Operating Revenue: CTSH’s total revenue has shown a marginal fluctuation over the periods, moving from $4,812 million in Q1 2023 to a peak of $4,896 million in Q3 2023 before a slight decrease to $4,760 million in Q1 2024. The operating revenue mirrors the total revenue consistently over these periods.
Gross Profit: Gross profit margins have shown some improvement, with the figures moving from $1,669 million in Q1 2023 to $1,684 million by Q3 2023, and finally achieving $1,614 million by Q1 2024. Notably, the highest gross profit within this timeframe occurs in Q3 2023.
Cost Management
Cost of Revenue: Costs of revenue have ranged significantly, from $3,121 million in Q1 2023 to a peak of $3,192 million in Q3 2023. This suggests a varying cost structure that aligns with the changes in revenue.
Operating Expense: Operating expenses have seen relatively consistent increases from $967 million in Q1 2023 to $930 million in Q3 2023, and up to a high of $896 million by Q1 2024.
Total Expenses: There’s been a general increase in total expenses from $4,110 million in Q1 2023 to $4,139 million in Q3 2023, culminating in $4,042 million by Q1 2024.
Profitability Analysis
EBITDA: EBITDA has shown a varied performance, from $879 million in Q1 2023, increasing to $942 million in Q3 2023, and then slightly decreasing to $866 million in Q1 2024.
Operating Income: Operating income has improved from $702 million in Q1 2023 to $758 million in Q3 2023, followed by a slight decrease to $718 million in Q1 2024.
Pretax Income: Pretax income shows an increasing trend from $738 million in Q1 2023, peaking at $749 million in Q4 2023, and a slight dip to $722 million in Q1 2024.
Net Income: Net income too indicates healthy performance, moving from $463 million in Q2 2023 and peaking at $580 million in Q1 2023. The last quarter analyzed shows a net income of $546 million in Q1 2024.
Cash Flow Indicators
Reconciled Depreciation: Over the periods, reconciled depreciation figures grew from $132 million in Q1 2023 to $146 million in Q3 2023, which indicates increasing capital expenditure.
Interest Expense: Interest expenses have remained steady, reflecting a stable financial structure without significant changes to debt levels across the periods under review.
Taxation
Tax Rate: The taxation rate for CTSH fluctuated, starting from 21.409% in Q1 2023 and rising to 26.835% by Q3 2023, and slightly decreasing to 24.792% by Q1 2024.
Tax Provision: Corresponding with the tax rates, tax provisions increased from $158 million in Q1 2023 to a high of $195 million in Q4 2023.
Tax Effect Of Unusual Items: The tax effect of unusual items varied significantly, showing the impact of irregular items on the reported tax figures.
Shareholder Metrics
Diluted and Basic EPS: EPS for both diluted and basic shares showcased an upward movement from $0.91 (Q2 2023) to $1.14 (Q1 2023), and then a minor drop to $1.1 by Q1 2024. Consistency in these figures indicates stable profitability.
Average Shares: The average number of shares outstanding has slightly increased over the periods, potentially diluting individual share value somewhat.
Net Income Available to Common Stockholders: This figure has closely tracked the net income and reflects the direct earnings available to shareholders.
Conclusion
CTSH demonstrates relatively stable financial performance with considerable strength in its profitability metrics despite some fluctuations in revenue and costs. The steady state of cash flow indicators and taxation suggests a managed financial strategy. Continued monitoring of gross profit margins and operating expenses will be crucial for maintaining profitability. It’s advisable for CTSH to continue this trajectory whilst seeking opportunities to reduce costs and enhance revenue.