Cognizant quarterly profit rises 9.7%; revenue guidance too up

Led by strong growth in healthcare business, IT services major Cognizant on Monday notched up a 9.7 per cent increase in net profit at $382.9 million for the March quarter and also marginally upped its revenue guidance for the 2015 fiscal.

Cognizant's net profit stood at $348.9 million in the first quarter of 2014.

The US-based firm saw its revenue grow 20.2 per cent to $2.91 billion in the reported quarter from $2.42 billion in the year-ago period, higher than its own guidance of $2.88 billion.

The better-than-expected numbers are in contrast to those from its Indian counterparts like TCS and Infosys that posted muted quarterly earnings impacted by currency fluctuations.

Cognizant has marginally increased its revenue forecast for the fiscal 2015 to be up at least 19.3 per cent (to $12.24 billion) from its earlier forecast of at least 19 per cent growth ($12.21 billion) compared with 2014.

For the April-June 2015 quarter, it expects its revenue to be at least $3.01 billion.

"Our strong revenue performance this quarter versus our guidance was driven primarily by organic growth of our core businesses and is a reflection that our strategy and offerings are resonating with our clients," Cognizant Chief Financial Officer Karen McLoughlin said on an investor call.

"In addition, we are pleased to increase our full-year revenue and earnings per share (EPS) guidance to reflect the overperformance during the first quarter," she added.

TCS reported 12.4 per cent y-o-y growth in revenue at Rs 24,220 crore while Infosys' grew 7.8 per cent (constant currency) to $2.1 billion in the January-March 2015 quarter.

During the quarter, Cognizant added about 6,200 employees, taking its total headcount to about 2,17,700 globally.

Its annualised attrition, including BPO and trainees, stood at 14 per cent during the quarter.

Healthcare services business grew 42.7 per cent year-on- year while financial services and manufacturing/retail/ logistics were up 13.4 per cent and 7.2 per cent, respectively.

In terms of geographies, North America business grew 24.8 per cent (accounting for 78.7 per cent of the quarter's revenues), Europe 1.2 per cent (16.3 per cent) and the rest of the world 23.7 per cent (4.9 per cent).

"We had another great quarter and a solid start to 2015. Our sequential growth was well ahead of our previous guidance... The shift towards digital is front and centre for our clients. Our digital offerings are seeing strong traction in the market. In addition, as clients deploy digital technologies, it's creating demand for our traditional services in areas like legacy modernisation and integration," Cognizant Chief Executive Officer Francisco D'Souza said.