Cognizant Q3 income down 30% to USD 348 mn

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.

IT major Cognizant has reported about a 30 percent 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 the 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 realizing 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 percent, 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 percent 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 percent of topline) revenue declined 1.5 percent 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 Europe, Cognizant said.

Revenue of healthcare, which accounts for 29 percent of the total revenues, grew 4.8 percent year-on-year, driven by life sciences. Growth in biopharmaceutical clients and revenue from the acquisition of Zenith Technologies offset weakness in medical device clients, it said. Products and resources revenue was down 4 percent 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 percent of the total revenue.

Communications, media, and technology increased by 0.2 percent year-on-year and contributed 14.5 percent of the total revenue. The company said the communication and media vertical grew 0.2 percent 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 percent in constant currency.

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