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Cognizant Technology Solutions reported a 12 per cent rise in the net profit to $509 million in the second quarter ended June 30, 2019. In the year-ago quarter, it had reported a net profit of $456 million.
The quarterly revenue rose to $4.14 billion, up 3.4 per cent from the year-ago quarter.
In a call with analysts, Cognizant CEO Brian Humphries, said, “While we are pleased that we met our revenue and margin guidance, we are not satisfied with this level of performance. Our second quarter results do not reflect what Cognizant is capable of achieving in this market environment, neither on revenue growth nor margin rate. So as we said about correcting these trends, I’m convinced that a large part of what we need to do is in our own control.”
While certain market dynamics have impacted the results, much of the weakness in banking and non-life sciences portion of healthcare is attributable to Cognizant-specific issues, he said.
Headcount up
Cognizant, which has over 75 per cent of its workforce in India, ended the June-quarter with around 2,88,200 employees, up from 2,85,800 in the preceding quarter.
Karen McLoughlin, CFO, told analysts that the annualised attrition rate of 23 per cent, was up from 19 per cent in first quarter but flat versus the prior-year quarter.
There is some seasonality to attrition. Typically, after bonuses are paid in March, the attrition picks up. “We continue to focus on our workforce strategy and management such as the announced retention programm to recognise and retain our best talent. We expect to incur an additional $48 million of compensation-related costs during the remainder of 2019 for this programme,” she said.
Outlook
Cognizant said the third quarter 2019 year-on-year revenue growth will be in the range of 3.8-4.8 per cent in constant currency. Full-year 2019 year-on-year revenue growth in the range of 3.9-4.9 per cent in constant currency.
Cognizant plans to hire over 500 revenue-generating associates, a combination of customer-facing and sales support professionals who will help expand existing accounts and generate new ones as well, CEO Humphries said.
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