Cognizant revenue up a meagre 2.2% q-o-q

Written by fe Bureau | Bangalore | Updated: Feb 6 2014, 14:18pm hrs
CognizantCognizant says revenue will cross $10 bn this year; projects at least $2.42 bn for Q1 of 2014. PTI
Cognizant, the US-headquartered IT services major with a large presence in India, has reported a 2.2% rise in sequential revenue growth for the three-month period ended December in a season that is generally considered weak. This performance pales in comparison with those recorded by its Indian peers like TCS, Wipro and HCL Technologies, which posted higher growth in the December quarter. Cognizant, however, has projected that it would cross annual revenues of $10 billion in 2014.

Net income stood at $324.3 million, recording sequential growth of 1.4% while on a year-on-year basis it rose 16.3%. Cognizant reported revenues of $2.35 billion for the fourth quarter, recording y-o-y growth of 20.9%. For the first quarter of 2014, Cognizant has given a revenue guidance of at least $2.42 billion, which translates into sequential growth of 2.9%.

The December quarter also marked a slowdown in the North American market, which accounts for 77% of the companys revenues. Cognizant grew 1.7% in the market while the UK registered a marginal decline of 0.2%. The company received a major boost from continental Europe, where it recorded 8.8% sequential growth.

CEO Francisco D'Souza said, Our strategy through these twenty years (it was set up in 1994) has been to challenge the status quo and constantly reinvent for the future, thus positioning us to help our clients build stronger businesses. We believe that we are well positioned to continue to do so in 2014 and beyond.

The financial services and healthcare verticals of Cognizant recorded positive growth while all the other segments showed a decline. President Gordon Coburn said, Our growth during 2013 was broad-based across our industries, geographies and service lines. This strong growth was fueled by our clients on-going drive to run better for more efficient and productive operations and to run different to create the capabilities and business models they need for future success.

For the full year 2013, Cognizant reported revenues of $8.843 billion, a jump of 20.4% compared to 2012. net income for the year was $1.2 billion, with yearly growth of 16.8%. For 2014, it has provided a revenue guidance of $10.3 billion with an annual growth of at least 16.5%.

The IT major ended 2013 with a total headcount of approximately 1,71,400, with a net addition of 5,000 during the December quarter.

Baird Equity Research in its note on Wednesday said, Q4 results were in line with consensus and 2014 guidance was lower than the Street, albeit, likely viewed as conservative.

Cognizant also announced a two-for-one stock split on its Class A common stock in the form of a 100% stock dividend. Stockholders of record as of February 21, 2014 will be entitled to one additional share of Class A common stock for each share held on the record date.

The stock split underscores our confidence in the strength of the business model and in our prospects for 2014 and beyond, said Karen McLoughlin, CFO. We further strengthened our balance sheet during 2013, allowing us to continue to support our industry-leading growth, by investing in service line capabilities, industry expertise, new technologies, new delivery platforms, and expanded geographical reach.