Coforge reports decline in Q1 profit due to Cigniti acquisition

IT service provider Coforge has announced its financial results for the quarter ended June 30, showing mixed performance. The company reported an 8.1% year-over-year (YoY) revenue growth in Q1FY25, but profits declined by 19.42% compared to the same period last year. 

Compared to the previous quarter, Coforge experienced a 1.79% increase in revenue. However, profits saw a significant drop of 40.46%. 

The decline in profit is attributed to a one-time expense related to the stake acquisition of Cigniti Technologies, announced in May. This acquisition impacted the company's profit, which fell 40.5% to ₹133.2 crore in the April to June 2024 period, down from ₹223.7 crore in the previous quarter. A year ago, the company's profit was ₹165.3 crore. Without the acquisition impact, the “normalised profit” showed a 38.2% YoY increase to ₹228.5 crore. 

Margins were affected due to acquisition-related expenses amounting to ₹79.5 crore. Coforge's EBITDA margins declined to 17.9% from 19.0% in the previous quarter but increased from 16% a year ago. This increase is expected to help Coforge meet its guidance of a 50 basis points adjusted EBITDA expansion for this fiscal year over last year. 

“FY25 has started on a strong note, with a healthy increase in EBITDA margin by 210 bps over last year, and OCF (operating cash flow) of $23.2 million. A very strong executable order book, backed by the highest-ever headcount addition, sets us up for continued growth ahead,” said Sudhir Singh, chief executive officer at Coforge.  

Coforge’s total global headcount increased by 1,886 people from the previous quarter, bringing the total number of employees to 26,612 as of the end of June.