Cognizant Technology Solutions reported a 30 per cent decline in net profit to $348 million for the third quarter ended September 30, 2020, as against $497 million in the same quarter last year, and $361 million for the June quarter.
Revenue of $4.2 billion was down 0.1 per cent, including a negative 130 basis points impact from the exit of certain content services. Since the beginning of Q3 through October 27, the company returned to shareholders over $700 million through share repurchases and $120 million in dividends, says a release.
For fiscal 2020 the revenue is expected to be at the high end of the previously guided range at approximately $16.7 billion.
“Against a challenging demand environment, we continued to strengthen our portfolio, execute our digital strategy and increase our competitiveness,” said Brian Humphries, Chief Executive Officer. “Clients are realizing they can distinguish themselves if they embrace disruption and transform. We are committed to making that easy for them,” he added.
During the third quarter financial Services (34.6 per cent of revenues) revenue decreased 1.5 per cent year-over-year driven by declines in both banking and insurance. Healthcare (29 per cent of revenues) revenue grew 4.8 per cent year-over-year driven by life sciences. Growth in bio-pharmaceutical clients and income from our acquisition of Zenith Technologies offset weakness in medical device clients. Within healthcare, performance among payer clients improved, the release said.
Products and Resources (21.9 per cent of revenues) revenue decreased by 4 per cent year-over-year. The decline was driven by retail, consumer goods, travel and hospitality clients that were adversely affected by the pandemic, partially offset by double-digit constant currency growth in manufacturing, logistics, energy and utilities.
Communications, Media and Technology (14.5 per cent of revenues) revenue increased by 0.2 per cent year-over-year. Growth within our communications and media clients was more than offset by a negative 920 basis point impact from the 2019 strategic decision to exit certain content-related services, the release said.
“Our cost discipline and strong year-to-date cash flow enabled continued investments in growth initiatives. We took further actions to increase our financial flexibility in support of our strategic priorities,” said Jan Siegmund, Chief Financial Officer. “Since the beginning of the third quarter, we returned over $800 million of capital to shareholders through share repurchases and dividends.”