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Cognizant: Cognizant Q3 income down 30% to $348 million – Latest News

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IT major Cognizant has reported about 30 per cent drop in September quarter net income at USD 348 million (around Rs 2,578.3 crore). The US-based company, which posted a net income of USD 497 million in September 2019 quarter, said it expects its FY2020 revenue to be “at the high end of the previously guided range of approximately USD 16.7 billion”.

For the September 2020 quarter, Cognizant’s revenue was almost flat at USD 4.2 billion, including a negative 130 basis points impact from the exit of certain content services, Cognizant said in a statement.

Cognizant – which has about 2 lakh employees based in India – follows January-December as financial year.

“Against a challenging demand environment, we continued to strengthen our portfolio, execute our digital strategy and increase our competitiveness,” Cognizant Chief Executive Officer Brian Humphries said.

Clients are realising they can distinguish themselves if they embrace disruption and transform, and the company is committed to making that easy for them, he added.

Cognizant’s headcount stood at 2,83,100 at the end of the September 2020 quarter.

The company said its year-to-date bookings increased 15 per cent, and since the beginning of the third quarter till October 27 it has returned to shareholders over USD 700 million through share repurchases and USD 120 million in dividends.

“FY2020 revenue is expected to be at the high end of the previously guided range at approximately USD 16.7 billion, or a decline of 0.4 per cent in constant currency,” the company said.

In FY2019, the company had posted a revenue of USD 16.8 billion.

“Our cost discipline and strong year-to-date cash flow enabled continued investments in growth initiatives. We took further actions to increase our financial flexibility in support of our strategic priorities,” the firm’s Chief Financial Officer Jan Siegmund said.

Since the beginning of the third quarter, Cognizant has returned over USD 800 million of capital to shareholders through share repurchases and dividends, Siegmund added.

In terms of verticals, Cognizant saw its financial services (34.6 per cent of topline) revenue decline 1.5 per cent year-on-year, driven by declines in both banking and insurance.

Growth in regional banks and capital markets in North America was offset by weakness in select global banking accounts and in Europe, Cognizant said.

Revenue of healthcare, which accounts for 29 per cent of the total revenues, grew 4.8 per cent year-on-year, driven by life sciences.

Growth in bio pharmaceutical clients and revenue from acquisition of Zenith Technologies offset weakness in medical device clients, it said.

Products and resources revenue was down 4 per cent year-on-year. The decline was driven by retail, consumer goods, travel and hospitality clients that were particularly adversely affected by the pandemic, partially offset by double-digit constant currency growth in manufacturing, logistics, energy and utilities, Cognizant said.

Products and resources accounted for 21.9 per cent of the total revenue.

Communications, media and technology increased 0.2 per cent year-on-year and contributed 14.5 per cent of the total revenue.

The company said the communication and media vertical grew 0.2 per cent year-on-year.

“Growth within our communications and media clients was more than offset by a negative 920 basis point impact from our 2019 strategic decision to exit certain content related services,” Cognizant said.

Excluding that impact, communications, media and technology grew approximately 9 per cent in constant currency.

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