Cognizant net income down 6.64% in March quarter, revenue meets guidance

Firm added 1,400 employees during the quarter, to a total of 261,400 at the end of March, 2018

IT major Cognizant Technology Solutions Corporation has posted a 6.64 per cent decline in net income during the quarter ended March 31, 2018, at $520 million, from $557 million during the same quarter a year ago.

The revenue for the first quarter has met the guidance at $3.91 billion, up 10.45 per cent from the $3.55 billion registered in the corresponding quarter of previous year. 

“We achieved solid financial results in the first quarter and progressed our shift to digital services and solutions,” said Francisco D'Souza, Chief Executive Officer. 

“First quarter results demonstrate solid execution of our plan to drive sustainable revenue growth while increasing margins," said Karen McLoughlin, Chief Financial Officer. 

"Our full-year 2018 non-GAAP diluted EPS guidance reflects a higher than originally anticipated effective income tax rate due to the updated interpretation of the US Tax Cuts and Jobs Act of 2017," McLoughlin added. 

Cognizant's strong balance sheet and cash flows continue to support both the capital return programme and the company's investments in the business, to drive future growth and continue the shift to digital service and solutions, added McLoughlin.

“Cognizant has built the capabilities and scale to help clients digitise their offerings, create personalised customer experiences, instrument their operations, and modernise their IT infrastructure. This digital-at-scale value proposition is winning with clients and positioning us well to deliver a strong 2018," averred D'Souza.

In its guidance, the company has said that the second quarter of the year is expected to see a revenue in the $4-$4.04 billion range. 

While it had earlier forecasted a $16-$16.30 billion revenue for the full year 2018, the guidance after the first quarter of the year is to reach a revenue size of $16.05-$16.30 billion.

Cognizant is on track to complete its plan, announced in February 2017, to return $3.4 billion to its shareholders by 2018-end and entered into an accelerated share repurchase (ASR) agreement with a financial institution in March 2018, to repurchase an aggregate of $300 million of Cognizant's Class A common stock.

The company added 1,400 employees during the quarter, to a total of 261,400 at the end of March, 2018, from 2,60,000 on December 31, 2017.

Communications, Media and Technology, which account for 13 per cent of Cognizant's revenue at $509 million, saw the highest growth of 18.4 per cent during the three months ended March 2018, while financial services, which make up 37.3 per cent, grew to at $1.46 billion, which was the least at 6.2 per cent year-on-year.