Cognizant Q2 net soars 86% to $470 mn, revises annual revenue guidance

New Jersey-based company raised lower-end of full-year revenue forecast to $14.7 bn from $14.56 bn

Information technology (IT) services firm Cognizant said second-quarter profits rose 86 per cent to $470 million and revenue grew 8.9 per cent to $3.67 billion as business grew across verticals.

The firm revised its guidance upwards for the year ahead at the lower end to 9-10 per cent ($14.70-14.84 billion) as against its previous forecast of 8-10 per cent growth. Shares of the company rose 3.1 per cent to $70.66 in pre-market trading on the Nasdaq on Thursday. Bloomberg estimate expected revenue to be $3.66 billion and profits at $535 million for the quarter.

For the third quarter ending September, Cognizant said it expects revenues to be in the range of $3.73-3.78 billion. The company follows a January to December financial year.

“Cognizant delivered strong second-quarter results, which reflect our continued progress in helping clients achieve the value of digitising their entire enterprises, or what we call being digital at scale,” said Cognizant chief executive Francisco D’Souza. “We remain dedicated to accelerating our shift to digital services and solutions as we continue to invest in our core business and execute our margin improvement and capital return programmes.”

The US-based Cognizant, which follows the model of Indian IT services firms, has four out of its five employees in low-cost locations such as India.

Explaining the higher earnings per share of $0.80 this quarter compared to $0.41 in the year-ago period, Cognizant said it had incurred an incremental income-tax expense in the June 2016 quarter. This was related to a one-time cash remittance of $2.8 billion from its India subsidiary to non-Indian Cognizant entities, it said.

“Our strong balance sheet and cash flows continue to support both our capital return programme and our investments in the business to drive future growth,” Cognizant Chief Financial Officer (CFO) Karen A McLoughlin said.