BackCognizant April-June net profit down 29%, appoints new CFO
The company has seen a series of senior-level exits lately. Most recently, Ramkumar Ramamoorthy quits CMD for IndiaCognizant expects its 2020 revenue between $16.4 billion and $16.7 billion, a decline of 2.0-0.5% on constant currency basis
PremiumBENGALURU: Cognizant Technology Solutions Corp. on Thursday posted a nearly 29% y-o-y decline in net profit at $361 million for the second quarter ended June as the impact of the covid-19 pandemic and the maze ransomware attack early in the quarter dented sales. The company follows the calendar year.
Cognizant also announced that Jan Siegmund will be appointed chief financial officer (CFO), effective 1 September. Current CFO Karen McLoughlin will continue in her role through end of August and will remain with the company in an advisory role till end of this year.
The Teaneck, New Jersey-based firm’s revenue for the first quarter stood at $4 billion, down 3.4% from the year-ago quarter including a negative 210 basis points impact from the exit of certain content services business and the ransomware attack. In the last quarter, the company had refrained from providing a guidance for Q2 due to the continued uncertainty on the duration of the covid-19 pandemic.
Cognizant expects its full year 2020 revenue to be in the range of $16.4-16.7 billion, or a decline of 2.0-0.5% on constant currency basis. This assumes an estimate of a negative 20 basis points foreign exchange impact and a negative 110 basis points impact from the exit of certain content services business.
The operating margin for the fourth quarter stood at 14.1% down from 15.1% in the preceding quarter.
"We delivered a solid second quarter performance whilst continuing to improve our competitiveness. Against an uncertain economic backdrop, we remain steadfast in investing in our clients and our associates, and in executing our digital strategy to position Cognizant for accelerated momentum," said Brian Humphries, chief executive officer, Cognizant.
Cognizant’s digital business continues to make progress as it grew 14% y-o-y in the June quarter and now represented 42% of the total revenues. The first half 2020 bookings growth of almost 50% was fuelled by digital engineering, artificial intelligence (AI) & analytics, interactive, and software-as-a-service (SaaS).
Revenue from financial services (34.9% of revenue) declined 5.2% y-o-y driven by declines in both banking and insurance. Healthcare (28.9% of revenue) grew 2.0% y-o-y driven by increases from life sciences clients, specifically by revenues from our acquisition of Zenith.
Revenue from products and resources (21.7% of revenue) declined 6.5% y-o-y driven by retail, consumer goods, travel and hospitality clients that were particularly adversely affected by the pandemic, partially offset by double-digit constant currency growth in manufacturing, logistics, energy and utilities.
Communications, media and technology (14.5% of revenue) also declined 4.4% y-o-y, driven by driven by impact from the strategic decision to exit certain content-related services in 2019.
The company has seen a series of senior-level exits in the recent past. Most recently, Ramkumar Ramamoorthy who was the chairman and managing director (CMD) for India left the company on 18 July after spending 23 years in the company. Pradeep Shilige also resigned as global delivery head after a 24-year stint. Andy Stafford has been hired as the new global head of delivery with immediate effect, though Shilige will be with the company till 30 September to ensure smooth transition.
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