COGNIZANT'S LAST CO-FOUNDER STEPS DOWN FROM BOARD

Firm projected to grow 2-4% as exit from content business hits top line

After spending nearly two and a half decades in the company he co-founded with three others, Francisco D’souza, vice-chairman, has decided to sign off. The company announced his departure from the board effective

March 31. The company also announced the appointment of Vinita Bali to its board as a new independent director, effective

February 24.

IT services major Cognizant beat Street estimates with better-than-expected revenue growth numbers for the quarter ended December 2019 (the firm follows January-december cycle). However, revenue guidance for 2020 remained tepid as it is estimated to grow the top line by 2-4 per cent in the current year.

The estimates took into account an impact of 110 basis points owing to the IT firm’s decision to exit the content services business, the Teaneck, New Jersey-based IT firm said. This revenue growth projection could also be the lowest compared to TCS, Infosys, Wipro and HCL Technologies, though these firms are yet to give their estimates for financial year 2020-21 (FY21). The firm’s net profit declined 39 per cent at $395 million for the fourth quarter (Q4) compared to $648 million a year ago. The fall in net profit was attributed to increase in restructuring charges, which rose to $101 million from $7 million a year earlier.

Revenues stood at $4.3 billion, an increase of 4.2 per cent in constant currency term (YOY) in Q4. Operating margin remained flat at 17 per cent during this period. The company is projected to grow its revenues in the range of 2.8-3.8 per cent in constant currency terms during Q1 2020. The subdued revenue growth estimates are because of its exit from content services business, which is likely to have a 60 basis points impact in the quarter.

“Our steady progress against key initiatives is increasingly evident in our commercial and financial performance,” said Brian Humphries, CEO at Cognizant. “We enter 2020 with renewed vigour and optimism.” In calendar year 2019, Cognizant’s net profit declined 12 per cent YOY to $1.8 billion, while its revenues rose 5.2 per cent to $16.8 billion in constant currency terms.