Initial funding of Cognizant US Foundation also impacted bottom line, says company
Nasdaq-listed IT services major Cognizant on Thursday reported a 12% quarter-on-quarter decline in its net profit for the second quarter ended June 30, 2018, at $456 million. The decline in profit was primarily due to the forex loss of $80 million during the quarter. The company said that the initial funding of the Cognizant US Foundation also impacted the bottom line.
The New Jersey-based Cognizant’s revenue during the quarter grew 2.5% compared with the preceding quarter at $4.01 billion, supported by strong spending by clients in the healthcare and financial sector. The company’s revenue growth was in line with the guidance. Cognizant had guided its second-quarter revenue to be in the range of $4.00 billion to $4.04 billion.
Commenting on the company’s performance, Francisco D’Souza, chief executive officer and vice chairman of the board, said: “As our second-quarter results confirm, we’re making solid progress on our plan to accelerate our shift to digital services and solutions.”
He further said, “We’ve been methodical in developing, aligning and applying our portfolio of skills, services, and solutions to clients’ needs, so they can become fully digital organisations. And we remain confident in our ability to invest for growth and achieve our financial targets.”
The company, with close to three-fourths of its employees based in India, said for the third quarter of 2018 ending September 30, 2018, the revenue is expected to be in the range of $4.06 billion to $4.10 billion. The company also reiterated that the full year 2018 revenue is expected to be in the range of $16.05 billion to $16.30 billion.
“Year-over-year, non-GAAP operating margin expansion reflects strong operational execution and positions us well to absorb planned investments in the second half of the year,” said Karen McLoughlin, chief financial officer.
As on June 30, the company had a total employee strength of about 268,900, witnessing an addition of 7,500 people.
In terms of business verticals performance, financial services, which contribute 36.7% of the total revenue, posted an annual growth of 4.5%, while healthcare that contributes 28.9% of overall revenue grew 10.1% annually; communications, media and technology grew 15.8%.
The North America geography, which accounted for 76.6% of its revenues, grew 7.6% annually. However, the company’s business grew 30.9% in the rest of Europe, and overall Europe grew 19.2%.