BENGALURU: Cognizant Technology Solutions Corp. raised its 2021 revenue growth guidance to 9-10% in constant currency from 5.6-7.6% it had guided earlier as business is picking up especially in the digital transformation space. Cognizant, which follows the calendar year, expects revenue for the September quarter to grow 10-11% in constant currency in the range of $4.69-4.74 billion.
The Teaneck, New Jersey-based firm posted revenues of $4.6 billion, up 12% annually in constant currency, for the second quarter ended June driven by digital revenues that grew 20% year-on-year. Cognizant said this is its highest-ever quarterly revenue, and the largest-percentage quarterly growth since 2015 that beat its own guidance range.
Cognizant which has been very active in making acquisitions, deployed $1.5 billion on acquisitions, share repurchases and dividends year-to-date. Some of its key acquisitions this year include—Linium, Servian, Magenic, ESG Mobility, and TQS Integration—targeted at strengthening its focus areas in cloud, data, digital engineering, and internet of things (IoT).
“We delivered a strong second quarter," said Brian Humphries, chief executive officer, Cognizant. “Through targeted investments, we have been shifting our portfolio to faster-growing market segments while extending our capabilities and partnerships to help clients build modern businesses. I see a stronger, more competitive Cognizant emerging, with growing commercial momentum. We are bullish on the industry and our prospects within it."
Revenue from financial services (32.8% of revenues) grew 4.8% in constant currency, which included the benefit of recently completed acquisitions and growth in digital revenue. Revenue declines related to the non-digital services continued to pressure results as clients optimize the cost of supporting their legacy systems and operations, the company said.
Healthcare business (28.9% of revenues) grew 13.4% in constant currency partly driven by the integrated software solutions for healthcare clients and broad-based demand from life sciences customers.
Revenue from products and resources (23% of revenues) increased 17.8% in constant currency which included the benefit of recently completed acquisitions and was driven by manufacturing, logistics, energy and utilities clients.
Revenues from communications, media, and technology (15.3% of revenues) grew 17.9% in constant currency. Revenue growth included the benefit of recently completed acquisitions and increased demand from technology clients. The impact from the exit of certain content-related services negatively impacted segment growth by approximately 190 basis points.
Cognizant’s attrition rate for the June quarter increased to 31% from 21% in the preceding quarter indicating strong demand in the industry. It employed more than 300,000 employees for the first time in its history, marking the company’s highest-ever headcount to date.
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