Cognizant Q1 net up 37.6 pc to $505 million; expects to log 7-9% revenue growth in FY2021

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May 06, 2021 11:44 AM

IT company Cognizant has reported a 37.6 per cent rise in its March quarter net income at USD 505 million, and said it expects its revenue to grow 7-9 per cent during the year.

cognizant, revenue growth in FY2021, cognizant q1, multi-million dollar investment to assist India, acquisitions, share repurchases and dividendsCognizant's total headcount stood at 296,500 people with voluntary attrition at 18 per cent.

IT company Cognizant has reported a 37.6 per cent rise in its March quarter net income at USD 505 million, and said it expects its revenue to grow 7-9 per cent during the year. The company, which follows January-December financial year, said its net profit was at USD 367 million in the March 2020 quarter.

The US-headquartered company, which has about 2 lakh employees based in India, saw its March 2021 quarter revenue growing 4.2 per cent to USD 4.4 billion over the year-ago period. “In the first quarter, we successfully executed our strategy of embracing digital, investing in international expansion and repositioning the Cognizant brand. Cloud migration and digital adoption create a significant opportunity for Cognizant in the coming years,” Cognizant Chief Executive Officer Brian Humphries said.

He added that the ongoing humanitarian crisis, especially in India, is deeply concerning. During an investor call, Humphries said Cognizant is making a multi-million dollar investment to assist India through the crisis.

“This is focused on covering operational expenses at hospitals throughout India that are caring for COVID-19 patients. Funding the efforts of UNICEF in India to deploy oxygen generation plants, COVID diagnostic testing and medical supplies and partnering with one of India’s leading hospital chains to set up vaccination centers in locations across the country, including some of Cognizant’s own facilities,” he added.

This is in addition to the ongoing support of associates, which includes homecare and hospitalisation assistance, vaccination cost reimbursement for associates and their families, and making vaccine availability easier for those with disabilities, he noted.

“The impact of the pandemic on industry attrition rates, absenteeism and client delivery remains somewhat uncertain. We monitor our situation daily, and we’ll continue to prioritise the health and safety of our associates while serving our clients who’ve been particularly supportive in recent weeks,” Humphries said.

Cognizant said it expects its June 2021 quarter revenues to grow 10.5-11.5 per cent to be between USD 4.42 billion and USD 4.46 billion. Revenue is expected to be USD 17.8-18.1 billion for the full fiscal year, up 7-9 per cent. Digital revenue grew about 15 per cent year-on-year and now represents 44 per cent of the revenue, up from 39 per cent in prior year-period.

“Our first-quarter performance reflects solid revenue growth in our digital services and consistent execution of our strategy. To support our commercial momentum, we are increasing our investments in recruiting and talent,” Cognizant Chief Financial Officer Jan Siegmund said. Cognizant’s total headcount stood at 296,500 people with voluntary attrition at 18 per cent.

“Shifting to a quarterly promotion cycle for billable associates, and implementing further salary increases and promotions for high demand skills and critical positions and ramping our hiring capacity by adding hundreds of recruiters and making 28,000 plus offers to new graduates in India, a new record… up from 17,000 hired in 2020,” Humphries said. He added that given “too much notice periods in India”, the company anticipates further sequential increases in attrition in the second quarter before a gradual recovery in the second half.

“Notwithstanding industry attrition challenges, we remain confident in Cognizant standing as a magnet for skilled talent and a great place to build a career,” he added. Humphries said Cognizant’s return-to-office strategy remains country-driven as the COVID situation differs throughout the world.

He added that currently, almost all of the company’s associates are working from home, and business travel remains on an exception-only basis. Cognizant said it has deployed USD 700 million on acquisitions, share repurchases and dividends in the first quarter of 2021.

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