Cognizant Projects Lowest-Ever Revenue Growth
Cognizant Technology Solutions Corp lowered its full-year revenue growth outlook after its earnings for the first quarter came below analyst expectations.
The Nasdaq-listed information technology firm, which has most of its employees working in India, cut its revenue growth guidance for the year ending December 2019 to 3.6-5.1 percent in constant currency from 7-9 percent earlier. The company has been reporting single-digit revenue growth annually since 2016.
This would be the slowest growth that the company has seen since 1996, according to Bloomberg data. While the company was incorporated in 1994, Bloomberg has data as far back as 1996.
Karen McLoughlin, the chief financial officer at Cognizant, said the slower growth in financial services and healthcare for the remainder of 2019 was the reason for lowering the guidance.
The expected earnings per share for the year was also revised downwards to $3.87-3.95 per share from $4.4 per share stated at the end of December 2018.
In the January-March quarter, the company's performance was below analyst expectations with revenue declining 0.5 percent sequentially to $411 million. GAAP operating margins fell to 13.1 percent from 16.8 percent quarter-on-quarter with the GAAP diluted earnings per share for the quarter falling to $0.77 against $1.12 in the previous quarter.
The company, however, expects to keep operating margin over 17 percent in the ongoing fiscal.
The IT industry in India does not need to worry just yet. “A large part of the slippages seems specific to Cognizant and not representative of growth across the industry,” Kotak Institutional Equities said.
The broking firm, however, does not rule out risk from the financial services vertical. The clients from the capital market segment have turned cautious in spending outlook, it said.
Broking firm Nirmal Bang said the commentary on banking and financial services does not bode well for the Indian IT services sector considering the vertical contributes 30-40 percent to revenues for most companies.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
