Cognizant Technology Solutions Corporation has reported a 40 per cent decline in net profit to $252.4 million during the second quarter ended June 2016 as against $420 million in the second quarter of 2015.

The decline was a result of higher taxes during the quarter because of one-time transaction of $190 million recognised during the quarter and higher operating margin.

Second quarter revenue of $3.37 billion was up 9.2 per cent from the year-ago.

Net employee addition for June quarter was approximately 11,300, says a company press release.

In May 2016, the company’s principal operating subsidiary in India repurchased shares from its shareholders, which are non-Indian Cognizant entities. This resulted in a one-time remittance of $2.8 billion of cash from India.

Cognizant said that $1.2 billion, or $1.0 billion net of taxes, was transferred to the US with the other $1.6 billion remaining overseas.

As a result of this transaction, Cognizant will incur an incremental 2016 income tax expense of $237.5 million, of which $190.0 million was recognized in the quarter ended June 30, 2016 and approximately $23.7 million will be recognized in each of the quarters ending September 30, 2016 and December 31, 2016.

“During the second quarter, we executed a one-time remittance of $2.8 billion from India, which increased cash in US by $1 billion, net of taxes, and in other international markets by $1.6 billion,” said Karen McLoughlin, Chief Financial Officer. “This provides additional financial flexibility in funding our strategic investments to drive long term growth for Cognizant.”

Outlook

For third quarter 2016, the company expects revenue to be in the range of $3.43 billion to $3.47 billion.

Fiscal 2016 revenue expected to be in the range of $13.47 billion to $13.60 billion, the release said.

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