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Cognizant posts 38% jump in Q1 net income, guides for 7-9% revenue growth in 2021

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NEW DELHI: US-based Cognizant Technology Solutions Corp on Thursday reported a 37.60 per cent year-on-year rise in consolidated net income at $505 million for the March quarter compared with $367 million reported for the same quarter last year. Revenues rose 4.16 per cent to $4,401 million from $4,225 million in the year-ago period. Revenue growth in constant currency terms stood at 2.4 per cent.

The IT firm said digital revenue jumped 15 per cent YoY and now accounts for 44 per cent of total, up from 39 per cent in the prior-year period. It gave a guidance for 7-9 per cent (5.6-7.6 per cent in constant currency terms) revenue growth in 2021. June quarter revenue growth is seen at 10.5-11.5 per cent.

“In the first quarter, we successfully executed our strategy of embracing digital, investing in international expansion and repositioning the Cognizant brand. Cloud migration and digital adoption create a significant opportunity for Cognizant in the coming years,” said Brian Humphries, Chief Executive Officer. “The ongoing humanitarian crisis, especially in India, is deeply concerning. We have made a series of investments to support India in this time of need and continue to prioritize the health and safety of our associates while we serve our clients,” said CEO Brian Humphries.

The company said revenue growth generated by digital services in both banking and insurance did not fully offset declining non-digital revenue as clients continued to optimise the cost of supporting their legacy systems and operations. It said healthcare revenues benefited from increased demand for integrated payer software solutions and continued strong demand among life sciences clients.

Revenue among manufacturing, logistics, energy and utilities clients grew in double digits in constant currency terms for the fourth consecutive quarter even as retail, consumer goods, travel and hospitality clients continued to be adversely affected by the COVID-19 pandemic.

Meanwhile, growth was driven by communications and media clients, which benefited significantly from recently completed acquisitions. Double-digit year-on-year revenue growth among our technology clients was offset by the impact of exit from certain content-related services, which regatively impacted YoY segmental growth by 600 basis points.

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