The $17-billion Cognizant Technology Solutions Corporation reported a 30 per cent decline in net profit to $361 million for the second quarter ended June 30, 2020, against $509 million for the same period last year.
Revenue for the software major was $4 billion, down 3.4 per cent, including a negative 210 basis points impact from the exit of certain non-strategic content services business announced in Q3 2019 (Cognizant has now fully exited this subset of services), and the ransomware attack, says a press release. In May, Cognizant’s CFO Karen McLoughlin told analysts that the company anticipates revenue and margin impact to be in the range of $50 million to $70 million for the second quarter due to a ransomware attack in April.
Bookings in the first half of 2020 increased 14 per cent, says Cognizant, which has over 75 per cent of its employees working in India.
Brian Humphries, CEO, Cognizant, on the second quarter results, said, “I’m proud of our associates who maintained their focus on clients in the quarter despite being faced with unprecedented challenges. We delivered a solid second quarter performance whilst continuing to improve our competitiveness. Against an uncertain economic backdrop, we remain steadfast in investing in our clients and our associates, and in executing our digital strategy to position Cognizant for accelerated momentum.”
Outlook
Full the full year 2020, the company expects revenue to be in the range of $16.4-16.7 billion, or a decline on a constant currency basis of 2.0-0.5 per cent. This assumes an estimate of a negative 20 basis points (bps) foreign exchange impact and a negative 110 bps impact from the exit of certain content services business, the release said.
Humphries told analysts that Cognizant executed well in the second quarter of 2020 despite the unprecedented challenges of a global pandemic and a ransomware attack. Cognizant’s revenue growth and bookings momentum improved through the second quarter.
“Cognizant has the global scale, portfolio and strategic client relationships to be one of the single biggest beneficiaries of the shift to digital. We are still in the early stages of Digital, and the Covid-19 pandemic is single-handedly and significantly accelerating the shift to digital,” he said.
Cognizant has set out a vision “to become the pre-eminent technology services partner to the Global 2000 C-suite”. Cognizant aims to execute a set of bold moves to realise its vision that includes accelerating Digital, optimising the core business, transforming the commercial model, and supercharging its talent, he said.