Cognizant Jan-March revenue up 10.7%
Cognizant Technology Solutions Corp on Friday reported a 2.4% sequential revenue increase in the quarter to March, which came at the top end of management’s stated expectation, as it benefited from higher client spending.
The Nasdaq-listed firm, which has most of its 261,200 employees based in India, reaffirmed its revenue growth forecast of 8-10% for calendar year 2017.
From a year ago, Cognizant’s revenue in the three months ended March 31 rose 10.7% to $3.55 billion. The company had guided for revenue of between $3.51 billion and $3.55 billion in the quarter.
Net income rose to $557 million in the first quarter from $441 million in the year-ago period, said the company, which follows a January-December accounting year. Analysts polled by Bloomberg had expected Cognizant to report revenue of $3.52 billion and net income of $508.33 million.
The Teaneck, New Jerseybased company estimates revenue to be between $3.63 billion and $3.68 billion in the April-June period—a sequential increase of between 2.4% and 3.8%, lower than the 4% and 6.25% guidance by the company a year ago.
Although Cognizant’s sequential growth during the JanuaryMarch period was lower than the 2.7% sequential dollar revenue growth reported by Wipro, it was better than Tata Consultancy Services and Infosys’ 1.5% and 0.7%, respectively.
Cognizant reported 7.1% sequential growth in revenue from clients in the retail, manufacturing and logistics industries, which bring 21% of the company’s business. Client spending in financial services, which account for 39% of company’s total business, improved 1.6%.
Nonetheless, its soft guidance for the current quarter (traditionally a strong quarter) is worrying news for India’s largest outsourcing companies, as it reflects weakening demand for solutions offered by them.
Infosys expects dollar revenue growth of between 6.1% and 8.1% in the current financial year. TCS does not offer any quarterly or yearly growth outlook. Wipro’s management does not expect any growth in the April-June period.
Cognizant expects to grow between 8% and 10% this year, after its 8.62% growth in 2016.