Cognizant Technology Solutions reported a 20 per cent drop in net profit to $316 million in the fourth quarter ended December 31, 2020, as against $395 million in the corresponding quarter last year. Revenue declined by 2 per cent to $4.18 billion ($4.28 billion). Full-year net profit declined by 24 per cent to $1.39 billion ($1.84 billion) on a flat revenue of $16.65 billion ($16.78 billion).
The quarterly and full-year revenue included the impact of the anticipated exit from a customer engagement and the exit from certain content services, the company said in a press release.
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Settlement offer
Cognizant made an offer in the fourth quarter to settle and exit a large customer engagement in the financial services segment in Continental Europe. The offer includes, among other terms, a proposed one-time payment and forgiveness of certain receivables. As a result of this offer, in the fourth quarter of 2020, it recorded a reduction of revenue of $107 million and additional expenses of $33 million, primarily related to the impairment of long-lived assets, the release said.
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Brian Humphries, CEO, Cognizant, in the release said, “Having strengthened our portfolio, and anticipating the exit of a large financial services engagement, we enter 2021 reinvigorated by our growing commercial momentum, investments in our future, and our vision to become the pre-eminent technology services partner to clients globally.”
The IT major announced that first quarter revenue is expected to be $4.34-$4.38 billion, or growth of 2.8-3.8 per cent. Full-year 2021 revenue is expected to be $17.6-$18.1 billion, or growth of 5.5-8.5 per cent.