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IT services company Cognizant on Tuesday posted a healthy set of numbers in its financial year second quarter ended June 30, 2013 reaffirming the belief of a strong recovery in demand for technology outsourcing services in global markets, especially in North America.
The Nasdaq-listed listed company which follow the similar offshore model like many other Indian IT players, not only posted a better than expected revenue growth, it also revised its annual revenue guidance upward by two percentage points to 19%. This is much ahead of industry body Nasscom’s annual growth guidance of 12-14%.
In the quarter under review, Cognizant reported $300.4 million in profit, indicating a growth of 19.2% when compared with the corresponding quarter in the previous fiscal. The revenues in the quarter grew at a healthy pace of 20.4% to $2,161 million ($2.16 billion) on year-on-year basis backed by all-round performance by key verticals and geographies.
On the sequential quarter basis, the net profit grew 5.7% and revenues grew 7%. In the quarter under review, Cognizant added $141 million revenues over the previous quarter, making it the second highest incremental revenue addition in Cognizant’s history.
'As we celebrate the 15th anniversary of our public listing on the Nasdaq, we are delighted to yet again deliver industry-leading revenue growth,' said Francisco D’Souza, CEO of Cognizant.
'Our 15 year record of revenue and earnings growth is a testament to our long-term strategy of reinvesting in our business to stay relevant to our clients’ changing needs and to provide increasing value as we grow each of those trusted relationships,' he added.
'We are well positioned to capitalize on these opportunities due to our unique combination of management consulting and operational capabilities in areas such as large-scale programme management and change management. With our robust global delivery model, we make the complexities of managing large scale transformation programs seamless and transparent to our clients,' said Francisco D’Souza, CEO of Cognizant.
The company saw broad-based growth across geographies, industries and services. North America, which accounts for close to 78% of Cognizant’s overall revenues, grew six% sequentially and 17% on year-on-year basis. Europe, the second largest market for the company with a revenue contribution of around 18%, grew 37% YoY basis and 11.2% sequentially, making it one of the best performances by any offshore-centric IT services company in the region.
Among the key verticals, Financial Services which accounts for over 42% of its overall revenues grew 6.5% sequentially and 23.6% on YoY basis. Among other verticals, Healthcare grew by 11.8% YoY and 6.2% sequentially; Manufacturing, Retail & Logistics posted 8.4% sequential growth and 28.7% growth.
For the third quarter of 2013, Cognizant has given a guidance of around $2.25 billion, indicating a growth of least 4.1% over the previous quarter. For the whole year, the company expects its revenue to be at least $8.74 billion, a growth of at least 19% over the previous year.
'Economic pressures and long-term secular industry shifts have been driving fundamental changes in client demands,' said Gordon Coburn, President of Cognizant.
'Clients are increasingly turning to Cognizant to address their dual mandate of running better, or enhancing performance in their current businesses, and running different, or helping improve the positioning of their businesses for future success,' he added.
