Cognizant registered 3.4% decline (2.5% in constant currency) in revenue at $4 billion in the quarter under review from $4.14 billion in the year-ago period
NEW DELHI : IT company Cognizant has reported 29% drop in June quarter net income at $361 million (around ₹2,701 crore), and said it expects FY2020 revenue to be in the range of $16.4-16.7 billion.
The US-headquartered company, which has about 2 lakh employees based in India, registered 3.4% decline (2.5% in constant currency) in revenue at $4 billion in the quarter under review from $4.14 billion in the year-ago period.
Cognizant follows January-December as financial year. Its net income was at $509 million in June 2019 quarter.
"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," Cognizant CEO Brian Humphries said.
The company said its revenue across business segments was negatively impacted by the COVID-19 pandemic and the ransomware attack, primarily in the month of April.
Revenue and bookings improved sequentially through May and June, with increased client demand in areas such as cloud and enterprise application services, IT modernisation and digital engineering, it added.
Cognizant expects its FY2020 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%. In FY 2019, the company had posted a revenue of $16.8 billion.
The company also announced that Jan Siegmund will be appointed Chief Financial Officer, effective September 1, 2020.
He will succeed Karen McLoughlin, who will continue in the CFO role through August 31, 2020, and will remain with the Company in an advisory role through December 31, 2020. She has worked with Cognizant since 2003 and served as CFO for eight years.
Siegmund most recently served as CFO of Automatic Data Processing, a global human capital management technology and service provider.
The company saw its financial services (34.9% of revenues) revenue decline 5.2% year-on-year, or 4.3% in constant currency, driven by fall in both banking and insurance.
"North America saw mixed trends with relatively better performance in banking, driven by regional banks. We continue to see weakness across global banking accounts and capital markets," it said.
Healthcare (28.9% of revenues) revenue grew 2% year-on-year, or 2.2% in constant currency. The segment's revenue growth was driven by increases from life sciences clients, specifically by revenues from the acquisition of Zenith, it said.
Products and Resources revenue was down 6.5% year-on-year, or 5% in constant currency. The decline was driven by retail, consumer goods, travel and hospitality clients that were particularly adversely affected by the pandemic, partially offset by double-digit constant currency growth in manufacturing, logistics, energy and utilities, Cognizant said. Products and Resources accounted for 21.7% of the total revenue.
Communications, Media and Technology revenue fell 4.4% year-on-year, or 3.2% in constant currency, driven by a negative 790 basis point impact from Cognizant's 2019 strategic decision to exit certain content-related services. Excluding that impact, it said the segment grew approximately 5% in constant currency.
Communications, Media and Technology contributed 14.5% of the total revenue.
The company said Communication and Media was flat, with the growth of certain communications clients offset by weakness with entertainment clients exposed to studios, cable TV and theme parks.
"We made progress against our cost structure initiative allowing us to fund investments aligned to our long-term growth strategy and delivered solid operating performance in a challenging environment. Strong free cash flow further strengthened our balance sheet and provides us with ample financial flexibility," Cognizant CFO Karen McLoughlin said.
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