Bengaluru: Cognizant Technology Solutions Corp., the US IT firm that has most of its employees in India, topped analysts’ quarterly revenue estimates and raised its annual sales forecast for the third time this year. The Teaneck, New Jersey-based company said revenue in the three months ended 30 September rose 23.5% from a year earlier, and 3.3% from the June quarter, to $3.19 billion—higher than its earlier forecast of $3.14 billion.

Cognizant’s growth was driven largely by a 4.7% sequential improvement and a 43.3% jump from the year-ago period in business from clients in healthcare segment, which now accounts for a third of the company’s revenue.

The firm now expects its full-year revenue to grow by 21% to $12.41 billion, compared to its earlier forecast of $12.33 billion for the year ending December. It expects revenues in the October-December period to be at least $3.23 billion, or a sequential growth of at least 1.8%.

“We delivered another strong quarter, continuing with the strong momentum we saw in the first half of the year," Francisco D’Souza, chief executive officer, Cognizant, said in a post-earnings conference call.

Net income rose to $397 million in the September quarter from $355.6 million in the year-ago period. Analysts polled by Bloomberg expected Cognizant to report September quarter revenue of $3.16 billion and net income of $457.8 million.

“Increasingly, consulting has become an integral part of our comprehensive approach to help clients drive digital transformation, as over 60% of our consulting pipeline is focused in this area," said D’Souza, adding that for this reason, the company is raising its guidance for the third time this year.

Cognizant follows the calendar year as its fiscal year, unlike Tata Consultancy Services Ltd (TCS), Infosys Ltd and Wipro Ltd, which follow April-March financial year.

Considering that Cognizant reported a 6% sequential growth in revenue during the April-June period and a 6.2% sequential growth in January-March period, the growth in the second half of the year may appear to be softening for the company.

However, Cognizant’s growth in the second half of the year is better than its Indian rivals, including Infosys, which are pencilling in virtually no incremental business in the period starting October until March next year on account of more holidays, which results in fewer billable days for information technology (IT) vendors.

At the core of Cognizant’s strong performance was the healthcare space and the 3.6% growth in the US market, which accounts for 78.8% of Cognizant’s revenue. Europe, excluding the UK, which accounts for about 6.6% of revenue, grew a little slower at 2.2%, reflecting the broader trend of growth at Indian IT majors.

TCS, the country’s largest software exporter, reported a 3% sequential growth in the July-September period while Infosys’s revenue growth outperformed at 6%.

“Strong execution of ongoing projects and the continued focus by the management on consulting, along with the traditional IT maintenance work, continues to help Cognizant," said a Singapore-based analyst at a foreign brokerage.

A few analysts, including James Friedman of Susquehanna International Group Llp, said that Cognizant’s focus on offering solutions to fewer industries and geographies helps it execute better than its rivals. Cognizant generates about 70% of its revenue from banking, financial and healthcare sectors and generates 95% of its business from the US and Europe.

However, a worry for Cognizant remains a relatively higher attrition rate of 20%, although it remained at the level it was at the end of the April-June period.

On Wednesday, shares of Cognizant Technology Solutions Corp. were trading 3.07% lower at $66.046 apiece at 9.28pm IST while Nasdaq was 0.1% down at 5,139.93 points.

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