Cognizant Q4 net up 12%; expects currency to affect revenues

IT services major Cognizant today said its net profit rose 12% to $362.89 million for the quarter ended December 31, helped by increased traction from consulting, digital and business segments.

It had posted net profit of $324.33 million in the year-ago period, the US-based firm said in a statement. A large part of the company's workforce is based in India.

Revenues rose by 16% to $2.74 billion in the October-December quarter of 2014, as against $2.36 billion in the year-ago period. The company follows January-December as its fiscal year.

Cognizant expects revenues in January-March quarter of 2015 to be at least $2.88 billion. For the entire year, it expects revenues to rise to at least $12.21 billion.

The firm expects currency exchange rates to negatively impact its revenues in 2015 by about 2%.

Cognizant CEO Francisco D'Souza said: "Despite unfavourable European currency movements during fourth quarter, we finished 2014 with strong revenue performance and believe we are well positioned to continue that momentum into 2015 on strength of integrated consulting, technology, digital and business services capabilities."

The firm added (net) about 11,800 employees, including TriZetto and the year-end headcount was around 211,500.

Cognizant President Gordon Coburn said: "Integration of our $2.8 billion acquisition of TriZetto, completed in the fourth quarter, is well underway and we're excited by the healthcare opportunities we see."

In September last year, Cognizant said it will acquire US-based TriZetto for $2.7 billion in an all cash deal, a move which will help the IT services firm tap the lucrative healthcare IT software and solutions market.

"As we crossed 200,000 employee mark, we've been able to recruit top talent from around the world and believe we are in a unique position in the market to address a wide range of opportunities fuelled by digital transformations across all of our industry segments, service lines and geographies," he added.

On the outlook, the firm said: "In the first quarter 2015 revenue are expected to be at least $2.88 billion. Full year 2015 revenue are expected to be at least $12.21 billion, up at least 19% compared to 2014."

For the entire 2014, net profit rose by 17% to $1.44 billion compared to $1.23 billion in 2013, while revenues were up 16% at $10.26 billion from $8.84 billion.

Cognizant closed 2014 on a strong note. Revenue growth, excluding the TriZetto acquisition, exceeded the guided range for the quarter, reflecting the strong demand for the firm's services, Cognizant CFO Karen McLoughlin said.

"Despite current exchange rates which will negatively impact 2015 revenue growth by approximately 2%, compared to average 2014 exchange rates, we are pleased to provide 2015 guidance of at least 19% compared to 2014," she added.