Cognizant Q4 net grows 16.7 pc to $423.4 mn

The US-based IT services firm Cognizant today posted a 16.7 per cent rise in net profit at USD 423.4 million for the December quarter, from USD 362.9 million a year ago, helped by growth in healthcare and North America and Rest of World (RoW) geographies.
The company, which has a large part of its workforce based in India, met its revenue guidance at USD 3.23 billion in the said quarter, up 17.9 per cent from USD 2.74 billion in October-December of 2014.
However, the management expects negligible change in January-March of 2016 from the preceding quarter and has forecast revenues to be in the range of USD 3.18-3.24 billion.

For the entire 2016, Cognizant expects to grow at 9.9-14.3 per cent, translating into a revenue of USD 13.65-14.20 billion.
While this is in line with Indian IT industry body Nasscom's estimates of 10-12 per cent growth for 2016-17, it is lower than its own 21 per cent growth it clocked in 2015.
For 2015, Cognizant saw net profit rising by 13.2 per cent to USD 1.62 billion while revenues were up 21 per cent at USD 12.42 billion.

"We are seeing a soft start to the year in banking and financial services, primarily due to macroeconomic concerns, and in healthcare on the back of the industry consolidation in the payer industry. Because of this reason and based on our current pipeline, we think we will end the year within this range," Cognizant President Gordon Coburn said on a concall.

Cognizant, which competes with Indian IT services firms like Tata Consultancy Services and Infosys, said it believes that the overall demand environment continues to be strong and it has a healthy pipeline.
The company follows January-December as its fiscal year.
"Our confidence stems from the fact that we have good momentum in our business and there are several large deals in the pipeline in healthcare. We also expect the key strategic deals we won last year to ramp up," he said.
Demand is driven by opportunities from digital transformation, services like BPO and infrastructure services that have hit critical mass, and opportunities to expand our services geographically, specifically in Europe and the Asia Pacific region, Coburn said.

Financial services, which account for over 40 per cent of Cognizant's revenues, grew 16.6 per cent yoy while healthcare revenues rose 23.2 per cent (with 29.4 per cent contribution).
Revenues from North America paced up at 18.7 per cent,
Europe 9.6 per cent and RoW 34 per cent yoy in the said quarter.
"We are pleased with our strong performance in 2015. Our investments in disruptive technologies, new business models and best-in-class delivery uniquely position us to enable clients to drive digital transformation at enterprise scale," Cognizant CEO Francisco D'Souza said.
The firm added (net) some 2,400 employees to take the year-end headcount to around 2,21,700. It added eight strategic customers in the quarter.

"In 2015, we strengthened our position as a leading digital transformation partner for our clients. While digital opportunities significantly expand our addressable market, our rapidly growing consulting, infrastructure and business process services and geographic market expansion, continue to be solid drivers of demand for our services," Coburn added.