Cognizant Q3 net up 11.8%, cuts FY16 revenue guidance

IT services firm Cognizant today reported 11.8 per cent rise in net profit to USD 444.4 million in the July-September quarter, but cut its annual revenue forecast for the third straight time this year.
Besides, it also disclosed that it has identified "potentially improper payments" worth USD 5 million being made for company-owned facilities in India and that certain members of its senior management may have been "aware" or "participated" in matters under probe.
The US-based firm, which posted 8.4 per cent jump in revenues to USD 3.45 billion in the September quarter, met its guidance of USD 3.43-3.47 billion topline for the third quarter.

It said it expects full-year revenue to be between USD 13.47 billion and USD 13.53 billion, compared to a revenue of USD 12.41 billion in 2015. This translates to an annual growth of 8.5-9 per cent.
Cognizant -- which follows a January-December financial year -- had predicted revenue growth between 10-14 per cent at the beginning of the year.
The muted forecast is similar to those made by rivals like TCS, Infosys and Wipro. These companies, too, had disappointed investors with tepid performance in September quarter and had warned of softness in sectors like banking and financial services.

While software body Nasscom had earlier forecast the industry's export revenue to grow by 10-12 per cent for 2016-17, it is now looking at a downward revision of the target amid global macroeconomic uncertainties and impact of Britain's exit from the European Union.

An announcement on the same is expected later this month.
Talking about the probe, Cognizant CEO Francisco D'Souza on a concall said during the course of its investigation, the company found that "certain members of senior management may have been aware of or participated in the matters under investigation".
"Based on the results of the investigation to date, those who may have been involved are no longer with the company or in a senior management position," he added.
In September, Cognizant had said it was conducting an internal investigation into possible violations of the US Foreign Corrupt Practices Act amid allegations that the IT major had made "improper payments to obtain permits and building licences in India".