IT major Cognizant has reported a second quarter revenue of $3.37 billion, up 9.2% from $3.09 billion in the second quarter of 2015. The net income of the IT giant declined to $252.4 million, compared to $420.1 million in Q2 of last year. In the third quarter the company expects revenue to be in the range of $3.43 billion to $3.47 billion. Revenue guidance for the entire fiscal year has been kept in the range of $13.47 billion to $13.60 billion.
According to Cognizant, in May 2106 its principal operating subsidiary in India repurchased shares from its shareholders, which are non-Indian Cognizant entities, resulting in a one-time remittance of $2.8 billion of cash from India. $1.2 billion, or $1.0 billion net of taxes, was transferred to the U.S. with the other $1.6 billion remaining overseas. As a result of this transaction, Cognizant will incur an incremental income tax expense of $237.5 million in 2016. $190.0 million of this amount has already been recognised in the Q2 results and the remaining $23.7 million will be recognized in each of the quarters ending September 30, 2016 and December 31, 2016.
Commenting on the results, Francisco D’Souza, CEO of Cognizant said, “Our second quarter performance, as anticipated, represented broad-based revenue growth across service lines, geographies and industries, including healthcare and financial services.” “While our revised guidance reflects the impact of near-term macroeconomic headwinds, our longer term outlook and underlying business fundamentals remain strong. We continue to see an expanding market opportunity ahead and are well positioned to capitalize on the digital transformations taking place among enterprises around the world,” he added.