Cognizant June Q1 Net Up 86%, Revises Annual Revenue Guidance
US-based Cognizant posted an overall 86 per cent jump in June quarter's net profit at $470 million, helped by lower taxes and strong growth in verticals like healthcare.
The IT firm's revenues also grew 8.9 per cent to $3.67 billion in the reported period, prompting it to raise the lower-end of its growth outlook to 9-10 per cent for the ongoing fiscal.
Cognizant, which follows January-December as a fiscal, had earlier said it expected a topline growth of 8-10 per cent this year. For the third quarter, it expects revenues to be in the range of $3.73-3.78 billion.
"In light of our strong first-half results, we've raised the lower end of our full-year guidance range. We now expect full-year revenue to be in the range of $14.70-14.84 billion," Cognizant CEO Francisco D'Souza said on an investor call.
However, Cognizant that has a majority of its workforce in India, saw its headcount reducing by 4,400. Its headcount stood at 2, 56,800 people in the June quarter compared to 2, 61,200 employees at the end of March 2017.
Cognizant's earnings per share at $0.80 per share was higher this quarter against the year-ago period (where it was $0.41) on account of higher income tax expense in the June 2016 period.
"In May 2016, our principal operating subsidiary in India repurchased shares from its shareholders, which are non-Indian Cognizant entities, valued at $2.8 billion," Cognizant said in its filing.
As a result of the transaction, Cognizant had incurred an incremental income tax expense of $190 million in the second quarter of 2016, it added.
The company has seen its revenues growing across all segments and geographies.
Financial services grew 4.1 per cent year-on-year, while healthcare and communications, media and technology verticals witnessed 9.5 per cent and 16.8 per cent growth.
North America region saw revenues rising 8.7 per cent, while Europe and Rest of World registered 5.7 per cent and 21.2 per cent growth, respectively. The United Kingdom region, however, saw revenues declining 7.4 per cent year-on-year.
Explaining the reduction in headcount, Cognizant CFO Karen McLoughlin said the annualised attrition stood at 23.6 per cent during the quarter, including BPO and trainees.
"Our attrition level was higher than normal given reductions resulting from performance evaluations and the voluntary separation programme," she added.
McLoughlin said while the company "carefully" manages headcount, it will continue to hire and invest in critical skills to grow its digital business. "And we expect attrition to decline in the coming months," she said.
(PTI)
