U.S.-headquartered information technology (IT) major Cognizant Technology Solutions, which has a huge presence in India, has reported an 86.5% rise in net income for the quarter ended June, 2017.
The second quarter report card is better than what the market had widely expected.
The rise in net income is primarily due to a significantly lower outgo on taxation during the quarter under review vis-a-vis the year-earlier period. Cognizant has made an income tax provision of $165 million for the quarter ended June 2017, compared with $343 million in the same quarter last year.
The net income of the company rose to $470 million from $252 million a year earlier.
‘One-off expense’
Cognizant said it had to incur an incremental income tax expense of $190 million in the second quarter of 2016 as its principal operating subsidiary in India repurchased shares valued at $2.8 billion from its shareholders, which are non-Indian Cognizant entities, in May last year. This $2.8 billion was a one-off cash remittance from the Indian subsidiary to non-Indian Cognizant entities, a company release said.
Revenue for the June quarter rose 8.9% to $3.67 billion from $3.37 billion in the same quarter of the previous year. The second-quarter revenue of the company rose 3.5% sequentially.
Financial services and healthcare verticals were dominant revenue earners for the company. Together, they contributed close to 67% of the total revenue in the quarter.
Revenue from the financial services sector rose 4.1%, and that from healthcare services, 9.5% in the second quarter.
Asserting that the second quarter report card reflected the progress the company had made in enabling clients to realise value in digitising their entire enterprise, Franciso D’Souza, CEO, said Cognizant was determined to accelerate its shift to digital services and solutions.
The company gave a revenue projection in the range of $3.73 billion to $3.78 billion for the third quarter. The company has revised the lower end of its annual guidance upwards. The guidance range changed from $14.56 billion-$14.84 billion, which it announced in the earlier quarter, to $14.7 billion-$14.84 billion (9-10% revenue growth).
Reiterating the execution capabilities of Cognizant, its chief financial officer Karen McLoughlin asserted that the strong balance sheet and cash flows would continue to support the capital return and investment programmes of the company.
The company said it had added seven new strategic customers in the June quarter, bringing the total to 343. The headcount fell by 4,400 during the quarter to 2,56,800. Annualised attrition was 23.6% resulting from performance evaluation and a voluntary separation programme.