Cognizant raises 2021 revenue guidance as digital biz grows

The digital business contributed 44% to the company’s total revenue in the March quarter, up from 39% in the same quarter of the previous year.Premium
The digital business contributed 44% to the company’s total revenue in the March quarter, up from 39% in the same quarter of the previous year.
 2 min read . Updated: 06 May 2021, 11:13 AM IST Ayushman Baruah

BENGALURU : Cognizant Technology Solutions Corp. raised its 2021 revenue growth guidance from 4-7% to 5.6-7.6% in constant currency, it had earlier guided that the business is picking up, especially in the digital transformation space. The revenue for the second quarter is expected to grow 8-9% in constant currency in the range of $4.42 billion-$4.46 billion.

The Teaneck, New Jersey-based firm posted revenues of $4.4 billion, up 2.4% annually in constant currency, for the first quarter ended March, driven by digital revenues that grew 15% year-on-year.

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The digital business now contributed 44% to the company’s total revenue in the March qua, up from 39% in the same quarter of the previous year. The company follows the calendar year.

Cognizant deployed $700 million on acquisitions, share repurchases, and dividends in Q1. It announced four acquisitions in the March quarter—Linium, Servian, Magenic, and ESG Mobility—targeted at strengthening its focus areas in cloud, data, digital engineering, and internet of things (IoT).

“In the first quarter, we successfully executed our strategy of embracing digital, investing in international expansion, and repositioning the Cognizant brand. Cloud migration and digital adoption will create a significant opportunity for Cognizant in the coming years," said Brian Humphries, chief executive officer, Cognizant.

Revenue from financial services (33.1% of revenues) declined 1.7% in constant currency, as revenue growth generated by digital services in both banking and insurance was offset by declining non-digital revenue as clients continued to optimize the cost of supporting their legacy systems and operations.

Healthcare (29.3% of revenues) revenue grew 7% in constant currency as it benefited from increased demand for its integrated payer software solutions and continued strong demand among life science clients.

Revenue from products and resources (22.7% of revenues) increased 2.4% in constant currency. Revenue among manufacturing, logistics, energy and utilities clients grew double-digits for the fourth consecutive quarter while retail, consumer goods, travel and hospitality clients continued to be adversely affected by the covid-19 pandemic.

Revenues from communications, media and technology (14.9% of revenues) grew 3.1% in constant currency, including a significant benefit from recent acquisitions. Double-digit year-on-year revenue growth among technology clients was offset by the impact from the exit of certain content-related services, which negatively impacted year-on-year segment growth by 600 basis points.

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