Cognizant warns of slower growth; shares fall

REUTERS - IT services provider Cognizant Technology Solutions Corp said it expects full-year sales to grow at a slower pace than previously forecast, citing weakness at some clients and delays in booking revenue from some large deals.

Cognizant's shares fell 5.8 percent premarket after the company cut its revenue growth forecast for the year to "at least 14 percent" from 16.5 percent.

"Due to weakness at certain clients and longer than anticipated sales cycles for certain large integrated deals, we are adopting a more conservative stance for the remainder of the year," Chief Executive Officer Francisco D'Souza wrote in a statement.

Cognizant's latest full-year forecast translates to revenue of at least $10.1 billion. Analysts were expecting full-year revenue of $10.34 billion, according to Thomson Reuters I/B/E/S.

The company also forecast current-quarter revenue to range between $2.55 billion and $2.58 billion, below the average analyst estimate of $2.66 billion.

Coznizant provides services such as claims processing, billing and call center operations to insurers, hospitals and some state-run healthcare exchanges set up under President Barack Obama's Affordable Care Act, also known as Obamacare.

For the second quarter, Cognizant's profit came in above the average analyst estimate, helped by higher IT spending in North America and Europe and growth in its healthcare business division.

The company's net income in the second quarter ended June 30 rose to $371.9 million, or 61 cents per share, from $300.4 million, or 49 cents per share, a year ago.

Analysts on average had expected 58 cents per share.

Revenue rose 16.5 percent to $2.52 billion, in line with analysts' expectations.

Revenue from North America rose 15 percent, accounting for about 77 percent of total revenue. Revenue from Europe, which accounts for about a fifth of total revenue, rose 20.4 percent.

Cognizant's rivals Tata Consultancy Services Ltd and Infosys Ltd reported better-than-expected profit for the same period.

Cognizant's shares were trading at $47.05 premarket after closing at $49.98 on the Nasdaq on Tuesday.

(Reporting by Soham Chatterjee, Supantha Mukherjee and Lehar Maan in Bangalore; Editing by Simon Jennings and Saumyadeb Chakrabarty)