Cognizant sees 16% sequential drop in June quarter profit

By: |
Bengaluru | Published: August 4, 2017 6:21:11 AM

During the June quarter, Cognizant registered a net profit of $470 million as compared to $557 million reported during the previous quarter. The company follows a January-December fiscal.

Cognizant also saw its headcount decreasing by 4,400 during the quarter. (Image: PTI)

Cognizant, the Nasdaq listed IT services company with a major presence in India, has reported a 16% sequential drop in net profit for the three months ending June, impacted by the voluntary separation plan. The company also saw its headcount decreasing by 4,400 during the quarter. The IT major, however, marginally revised upwards the lower end of its revenue guidance for the year to 9-10% from the earlier guidance of 8-10%. During the June quarter, Cognizant registered a net profit of $470 million as compared to $557 million reported during the previous quarter. The company follows a January-December fiscal. Cognizant registered a 3.5% growth in sequential revenue for the June quarter to touch $3.67 billion. In the quarter prior to this, it had recorded a growth of 2.4%. For the third quarter of the fiscal, the IT major has given revenue growth guidance range of 1.7-3%.The company said it is also evaluating various strategies including real estate consolidation and possible additional severance programmes as part of its realignment.

The revenue growth registered by Cognizant was on similar lines like its peers – TCS and Infosys, which also recorded over 3% growth sequentially. The non-GAAP operating margin stood at 20% for the second quarter of 2017 as compared to 18.9% in the first quarter. Cognizant has already stated its intention to improve its non-GAAP operating margin to 22% in calendar year 2019. However, the net headcount for Cognizant declined at the end of second quarter to touch 256,800 as compared to 261,200 at the end of March. The company has already announced certain employee restructuring measures which include closer scrutiny of the performance benchmark and a voluntary separation packages for the senior executives.

Commenting on the performance of the company, Cognizant CEO Francisco D’Souza said, “Cognizant delivered strong second-quarter results, which reflect our continued progress in helping clients achieve the value of digitizing their entire enterprises, or what we call being digital at scale.” According to the CEO, the company remains committed to increasing its margin and improve capital returns. In terms of business verticals, the healthcare segment showed the highest sequential growth at 4.7% while financial services recorded 2.2%. Cognizant recorded 3.3% sequential growth from the North America region, showing strong signs of improvement in the key geography.

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.

Switch to Hindi Edition