Cognizant net profit falls 30% to $348 mn in Q3; revenue flat at $4.2 bn

Teaneck-based IT major Cognizant has reported a decline of 30 per cent in net income at $348 million for the quarter ended September 30, 2020, as compared to $497 million in the same quarter last year. 

The revenue stood flat at $4.2 billion for the quarter on a YoY basis, a negative 130 basis points impact from the full exit from certain non-strategic content services business. However, the company said it was confident of achieving the higher end of the previously guided range of approximately $16.7 billion or a decline of 0.4 per cent in constant currency for the full year.

The highest growth in revenue during the quarter came from healthcare vertical which grew 4.8 per cent to $1,231 million. The growth was driven by the life sciences businesses. The company added that growth in bio-pharmaceutical clients and revenue from the acquisition of Zenith Technologies offset the weakness in medical device clients.

Communications, media and technology was the only vertical that witnessed growth, up 0.2 per cent to $616 million. Financial services that contribute around 34.6 per cent of overall revenue, fell by 1.5 per cent to $1,469 million. Products and resources too, declined 4 per cent to $927 million.

“Against a challenging demand environment, we continued to strengthen our portfolio, execute our digital strategy and increase our competitiveness,” said Brian Humphries, chief executive officer. “Clients are realising they can distinguish themselves if they embrace disruption and transform. We are committed to making that easy for them," he said.

Digital revenue as a percentage of total revenue was 42 per cent for the third quarter, representing approximately 13 per cent growth year-on-year.

The company has declared a quarterly cash dividend of $0.22 per share with record date fixed as November 19.

“Our cost discipline and strong year-to-date cash flow enabled continued investments in growth initiatives. We took further actions to increase our financial flexibility in support of our strategic priorities,” said Jan Siegmund, chief financial officer. “Since the beginning of the third quarter, we returned over $800 million of capital to shareholders through share repurchases and dividends.”

Number of employees as of September 30, 2020 was around 283,100 as against 289,900 employees in the same period last year. However, the number of employees during the quarter ended June 30 was 281,200.