Cognizant said its financial services revenue grew by only 0.5% year over year and decreased 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 continue to optimise the cost of supporting their legacy systems and operations.Beating street estimates, US-based IT services major Cognizant Technology Solutions — which has a significant presence in India — on Thursday reported a 37.6% jump in its net income to $505 million in the March quarter, compared to $367 million in the corresponding quarter of the last fiscal. The company, which follows the January-December calendar, said its revenue in constant currency terms grew by 2.4% to $4.4 billion from $ 4.2 billion, aided by the improved performance of its healthcare vertical.
CEO Brian Humphries said that in the first quarter, the company has executed the strategy of embracing digital, investing in international expansion and repositioning the Cognizant brand. Cloud migration and digital adoption create a significant opportunity for Cognizant in the coming years, he said.
“The ongoing humanitarian crisis, especially in India, is deeply concerning. We have made a series of investments to support India in this time of need and continue to prioritise the health and safety of our associates while we serve our clients,” he said.
The company, while providing its future guidance, said the second quarter revenue is expected to be at $4.42-$4.46 billion, or growth of 10.5-11.5%. This assumes an estimated positive 250 basis points foreign exchange impact. For the full 2021, revenue is expected to be at $17.8-$ 18.1 billion, or growth of 7-9%, an estimated positive 150 basis points foreign exchange impact.
Cognizant said its financial services revenue grew by only 0.5% year over year and decreased 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 continue to optimise the cost of supporting their legacy systems and operations.
Healthcare revenue grew 7.9% year over year, or 7% in constant currency. Its healthcare revenue benefited from increased demand for its integrated payer software solutions and continued strong demand among its life sciences clients.
“Our first quarter performance reflects solid revenue growth in our digital services and consistent execution of our strategy. To support our commercial momentum, we are increasing our investments in recruiting and talent,” said Jan Siegmund, CFO, Cognizant.
The products and resources revenue grew 4.6% year over year, or 2.4% in constant currency. Revenue among manufacturing, logistics, energy and utilities clients grew in the 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.
Cognizant’s communications, media and technology revenue grew 5% year over year, or 3.1% in constant currency, including a significant benefit from recent acquisitions. Double-digit year-over-year revenue growth among the technology clients was offset by the impact from the exit of certain content-related services, which negatively impacted year-over-year segment growth by 600 basis points, the company said.
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