Cognizant Q2 net income declines 3% to $456 mn on rupee depreciation

Cognizant has maintained its revenue guidance for the year in the range of $16.05 bn to $16.30 bn

Cognizant's second-quarter net income saw a marginal drop of three per cent to $456 million, compared to $470 million during the same quarter last year, owing to net non-operating foreign exchange losses driven by rupee depreciation. The company's revenue increased 9.2 per cent to $4.01 billion during the quarter ended June 30, 2018, as compared to $3.67 billion during the corresponding quarter of the previous year, which is in line with its guidance.   

The decrease in net income was primarily due to net non-operating foreign exchange losses driven by the depreciation of the Indian rupee against the prior year period and the initial funding of the Cognizant US foundation, said the company.  

"As our second-quarter results confirm, we're making solid progress on our plan to accelerate our shift to digital services and solutions," said Francisco D'Souza, chief executive officer and vice-chairman of the board. "We've been methodical in developing, aligning, and applying our portfolio of skills, services, and solutions to clients' needs, so they can become fully digital organisations. And we remain confident in our ability to invest for growth and achieve our financial targets," he added. 

Karen McLoughlin, the chief financial officer of the company, said, "Year-over-year non-GAAP operating margin expansion reflects strong operational execution and positions us well to absorb planned investments in the second half of the year." The company has raised its full-year non-GAAP earnings per share (EPS) guidance from the previous $4.47 to $4.50. The company has maintained its revenue guidance for the year in the range of $16.05 billion to $16.30 billion. 

As part of its Return of Capital programme, the company has declared a quarterly cash dividend of $0.20 per share on Cognizant Class A common stock for shareholders of record at the close of business on August 22, payable on August 31, 2018. In February 2017, the company announced a plan to return $3.4 billion to stockholders by the end of 2018 through a combination of $2.7 billion in stock repurchases and $0.7 billion in dividends. With the anticipated settlement of the accelerated share repurchase programme during the third quarter of 2018, the company will have completed its committed stock repurchases.