Cognizant reports $520-m profit in March quarter

By: |
Bengaluru | Published: May 8, 2018 4:39:04 AM

Nasdaq-listed IT services major Cognizant, which had reported a net loss in its fourth quarter of 2017, reported a profit of $520 million for the first quarter ended March 31, 2018, fuelled by the higher spending by healthcare and financial services clients.

cognizant it sectorCognizant had a total staff strength of 261,400 people at the end of March quarter

Nasdaq-listed IT services major Cognizant, which had reported a net loss in its fourth quarter of 2017, reported a profit of $520 million for the first quarter ended March 31, 2018, fuelled by the higher spending by healthcare and financial services clients.

In the last quarter of 2017, the company registered a loss of $18 million due to a one-time incremental income tax expense of $617 million, following the implementation of new tax reform Act in the US.

The New Jersey-based Cognizant’s revenue for the quarter also grew 2% against the previous quarter and stood at $3.91 billion. The company’s revenue growth was in line with the guidance and met the higher end of the guidance given in the previous quarter.

For the first quarter 2018 revenue guidance was in the range of $3.88 billion to $3.92 billion indicating a growth of 1.3% to 2.3% quarter on quarter.

Commenting on the results, Francisco D’Souza, CEO, Cognizant, said: “We have achieved solid financial results in the first quarter and progressed our shift to digital services and solutions.”

He further said: “Cognizant has built the capabilities and scale to help clients digitize their offerings, create personalised customer experiences, instrument their operations, and modernise their IT infrastructure. This digital-at-scale value proposition is winning with clients and positioning us well to deliver a strong 2018.” The non-GAAP operating margin remained steady at 20.3% for the first quarter of 2017.

The company with close to three-fourths of its employees based in India said, going forward for the second quarter ending June, it expects the revenue to be in the range of $4 billion. Cognizant expects its full year 2018 revenue to be in the range of $16.05 billion to $16.30 billion, which would be a growth of around 8-10% – better than Nasscom estimate. It had reported a consolidated revenue of $14.81 billion in the year 2017. According to IT industry body Nasccom, the industry is expected to grow 7-9% for the year ending March 2019.

“First quarter results demonstrate solid execution of our plan to drive sustainable revenue growth while increasing margins,” said Karen McLoughlin, CFO, Cognizant. “Our full year 2018 non-GAAP diluted EPS guidance reflects a higher than originally anticipated effective income tax rate due to the updated interpretation of the US Tax Cuts and Jobs Act of 2017. Our strong balance sheet and cash flows continue to support both our capital return programme and our investments in the business to drive future growth and continue our shift to digital service and solutions,” he added.

Cognizant had a total staff strength of 261,400 people at the end of March quarter, an increase by 1,400 people compared with 260,000 at the end of December. In terms of business verticals performance, the financial services posted an annual growth of 6.2% while healthcare grew 11.8% annually, communications, media and technology grew 18.4%.

The North America geography, which accounted for 76% of its revenues, grew 7.8% annually. However, the company received a boost from the UK and the rest of Europe, which grew 13.1% and 31.2%, respectively.
“As previously announced, on March 13, 2018, the company had entered into an accelerated share repurchase agreement to repurchase an aggregate of $300 million of Cognizant’s Class A common stock. We are on track to complete our plan, announced in February 2017, to return $3.4 billion to our shareholders by the end of 2018,” the company said.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

FinancialExpress_1x1_Imp_Desktop