Cognizant Q2 profit up 13%; hikes revenue outlook

Buoyed by strong growth in healthcare and financial services business, IT services firm Cognizant today posted a 12.9 per cent jump in net profit for the June quarter and revised its forecast for revenues to grow "at least 20.1 per cent" in the ongoing fiscal.
The US-based firm, which has major presence in India, has reported a net profit of USD 420.1 million in the second quarter of 2015 as against USD 371.9 million in the same period a year ago.
Revenues for the April-June 2015 quarter rose by 22.6 per cent to USD 3.09 billion as against USD 2.52 billion in the year-ago period, beating its own estimate of revenues to be "at least USD 3.01 billion".

The revenue was up over 6 per cent from USD 2.91 in the January-March quarter.
"Our second quarter sequential revenue increase in dollar terms was the strongest in our history. We're seeing robust demand for our services, a trend that has continued to accelerate from the first quarter," Cognizant CEO Francisco D'Souza said in a conference call.
He added that there is robust underlying demand across the geographies and industries that it serves.

"Clients are recalibrating their spending, moving dollars from lights-on maintenance and operations projects to new digital initiatives. We are in a strong position to capture the enormous opportunities that are emerging from the transition to digital business," he said.

Cognizant follows January-December as its fiscal year.
"Growth drivers are wins in digital, executing digital transformations and innovation-at-scale; driving new levels of operational efficiency for clients; and strategic investments paying off," Cognizant CFO Karen McLoughlin said.
Cognizant has also raised its revenue guidance for 2015 to USD 12.33 billion, up around 20.1 per cent compared to 2014 (from USD 12.24 billion or 19.3 per cent growth).
For the July-September quarter, Cognizant expects its revenue to be at least USD 3.14 billion.
"Our strong performance has allowed us to raise our full year revenue and EPS guidance for the second time this year, despite the impact to our full year revenues from the announcement that Health Net would be acquired by Centene Corporation," McLoughlin said.

Last month, Cognizant had anticipated a USD 100 million hit to its incremental revenue in July-December of 2015 stating that it expected its USD 2.7 billion contract with Health Net may not be implemented if the latter is acquired by Centene Corporation.
Financial services grew 18.1 per cent (accounting for 40.5 per cent of revenues), while healthcare was up 39 per cent (29.1 per cent of revenues) and
manufacturing/retail/logistics grew 12.4 per cent year-on-year (18.7 per cent of revenue).