 "Cognizant")
Cognizant Technology Solutions Corp's fourth-quarter revenue and profit forecasts missed analysts' estimates, hurt by weaker-than-expected spending by its financial clients and higher investment by the IT services firm in digital services.
The company said it expected current-quarter revenue to be between $4.09 billion to $4.13 billion and profit to be at least $1.05 per share, missing analysts' average estimate of $1.14 per share on revenue of $4.17 billion, according to Refinitiv data.
The company's reliance on financial services sector has been hurting its overall revenue growth in the past few quarters. While services to big banks remains its biggest source of income, revenue in this sector rose just 2.6 percent to $1.46 billion in the third quarter, missing expectation of $1.50 billion.
Cognizant has been increasingly focusing on cloud computing, cyber-security and analytics consulting to reduce its dependence on traditional technologies to service finance and healthcare sectors, where margins are falling as clients demand more work for less money.
To beef up digital and cloud services, the company in the recent quarters also embarked on an acquisition spree and most recently bought app developer Softvision in a $550 million deal.
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Cognizant said its revenue from healthcare services grew 9.6 percent to $1.19 billion, in line with analysts' estimates.
The company's net income fell to $477 million, or 82 cents per share, in the third quarter ended Sept. 30, from $495 million, or 84 cents per share, a year earlier.
Excluding items, Cognizant earned $1.19 per share. Revenue rose to $4.08 billion from $3.77 billion.
Analysts on an average had expected profit of $1.13 per share and revenue of $4.08 billion.
