Cognizant profit rises 11.3% to $356 million

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Bangalore | Published: November 6, 2014 3:58:37 AM

The new guidance, if met, will make Cognizant the second Indian company after TCS to cross $10 billion in revenue.

Cognizant, the Nasdaq-listed IT services major with a large presence in India, has reported an 11.3% year-on-year rise in net profit for the September quarter, in line with estimates, even as it raised its annual revenue guidance. Net profit stood at $355.6 million though, on a sequential basis, it declined 4.3%.

The IT services major, which competes with the likes of TCS, Infosys and Wipro, revised its annual revenue guidance to the 14.6-15% range, translating into $10.13-10.16 billion for 2014. The new guidance, if met, will make Cognizant the second Indian company after TCS to cross $10 billion in revenue. At the end of second quarter, the IT major had in fact lowered its revenue guidance to 14% from 16%. For the third quarter,

Cognizant reported a revenue of $2.58 billion, recording sequential growth of 2.5% (11.9% year-on-year). The IT major has for the fourth quarter given a revenue growth guidance of 1.1-2.3%. Its global headcount is now close to 2 lakh.
CEO Francisco D’Souza said, “There is a tremendous opportunity in the marketplace as the advent of new digital technologies, global economic pressures and an evolving regulatory environment force businesses across all industries to change
and adapt faster than ever before.”

The company’s operating margin was 19.5% for the quarter, within its target range of 19-20%. “Revenue growth was slightly ahead of our revised forecast and, as expected, non-GAAP operating margins were within our target range of 19-20% as we absorbed the impact of annual wage increases during Q3,” said Karen McLoughlin, Chief Financial Officer.

Cognizant, which generates 68% of its revenue from two key verticals, financial services and healthcare, saw sequential growth rate trail the company’s average.

Cognizant President Gordon Coburn said, “Our overall demand environment remains strong and our results this quarter highlight that we are competing, winning and executing transformational engagements for clients in various industry segments globally.”

Cognizant made a net headcount addition of 12,300 during the quarter, taking its total employee base to 199,700. This makes Cognizant the second Indian company, after TCS, to cross employee strength of 2,00,000.

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