Companies

As pandemic hits business, Cognizant withdraws 2020 guidance

Our Bureau Chennai | Updated on April 09, 2020

Cognizant Technology Solutions is withdrawing its 2020 guidance (outlook) that was provided on February 5, given the ‘unprecedented’ nature of the coronavirus crisis, the uncertainty around its duration and its impact on the company’s ability to forecast performance.

This is the first time since inception that the company has withdrawn its guidance.

The company said its first quarter revenue is expected to be $4.22-4.23 billion, up 2.7-2.9 per cent (3.4-3.6 per cent in constant currency) from the prior-year quarter, including a negative 50 basis point impact from the exit of certain content services.

Financial performance in the first two months of the quarter was on track to exceed the previous guidance, driven by strong performance across its North America market, said the company in a statement. During the latter part of March, Covid-19 increasingly affected Cognizant’s business. This was largely due to delays in project fulfilment as delivery, particularly in India and the Philippines, shifted to work-from-home. There was reduced client demand, primarily in the travel and hospitality industries, it added.

Fall in demand

Entering the second quarter, Cognizant expects the pandemic to further reduce client demand as its societal and economic impact causes broader disruptions across industries.

However, the long-term fundamentals of the business remain strong, said the US-based software company with a strong offshore presence in India, announcing certain updates in response to the impact of the coronavirus on business operations.

“Our priorities remain the health and safety of our associates and the business continuity of our clients,” said Brian Humphries, CEO, Cognizant. “We are committed to helping our clients as they navigate unprecedented business challenges as well as supporting the efforts of governments globally to contain the spread of the virus.”

“In this fluid environment where uncertainty prevails, we are well-positioned with deep client relationships across more than a dozen industries, and a strong balance sheet that provides solid financial flexibility. As ever, we stand committed to help our clients manage through economic, technological and other disruptions through our innovative solutions and talented associates,” Humphries added. “Our 292,000 associates have risen to the challenge of serving our clients with empathy, initiative and courage, and confident that we will emerge from this global crisis stronger together.”

Cognizant has proactively taken steps to strengthen its financial flexibility, including drawing down $1.74 billion on its revolving credit facility on March 23, 2020, bringing the total cash and investment balance as of March 31 to approximately $4.7 billion. The company has no significant debt maturities until 2023, said the release.

Published on April 09, 2020

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