IT services major Cognizant today posted a 22.8 per cent jump in net profit to USD 348.9 million in the January-March quarter, buoyed by strong growth in the UK and higher spending by clients on consulting and technology services.
The New Jersey-headquartered firm had registered a profit of USD 284.2 million in the first quarter of 2013.
Revenue in the first quarter of 2014 climbed 19.9 per cent to USD 2.42 billion, in line with the company's forecast.
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Business in the UK region, which accounted for 11.5 per cent of the quarter's revenue, grew 28.2 per cent year-on-year to more than USD 1 billion.
"The strength in the UK revenue came from multiple clients across several industries, including financial services and high technology. Consulting and technology services was up 5.5 per cent sequentially and 23.7 per cent year over year," Cognizant Chief Financial Officer Karen McLoughlin said on a conference call.
Consulting and technology services (formerly known as application development) and outsourcing services (formerly known as application management) represented 51 per cent and 49 per cent of revenue, respectively, for the quarter.
Outsourcing services were essentially flat sequentially and up 16.1 per cent from Q1 a year ago.
Cognizant expects revenue to increase to between USD 2.5 billion and USD 2.53 billion in the second quarter, compared with USD 2.16 billion a year earlier. For 2014, Cognizant has maintained its guidance for revenue to be at least USD 10.3 billion, up 16.5 per cent from 2013.
"We remain confident in the overall demand environment and in our ability to deliver our previously stated revenue guidance of at least USD 10.3 billion for 2014," Cognizant President Gordon Coburn said.
The European region's business grew 35 per cent y-o-y, accounting for 19.4 per cent of the quarter's revenue.
The North American market grew 16.1 per cent (75.8 per cent of revenue), while the rest of the world saw revenue rising 28.4 per cent.
Financial services saw a 19.7 per cent growth from a year ago, while manufacturing, retail & logistics and healthcare grew over 20 per cent.
"Clients are facing a dual mandate of how to 'run better' and simultaneously 'run different'. This was particularly true in Q1 where we observed certain customers optimising their 'run better' spend to further invest in their 'run different' initiatives.
"During Q1, we continued to see expansion of application development work in our public sector services business," McLoughlin said.
