Cognizant sees weak fourth quarter as financial services growth drags
Cognizant Technology Solutions Corp on Tuesday blamed weakness in its financial services sector for dismal revenue and profit forecasts for the fourth quarter that missed analysts` estimates. Cognizant Technology Solutions Corp on Tuesday blamed weakness in its financial services sector for dismal revenue and profit forecasts for the fourth quarter that missed analysts` estimates.
Cognizant Technology Solutions Corp on Tuesday blamed weakness in its financial services sector for dismal revenue and profit forecasts for the fourth quarter that missed analysts` estimates.
Shares of the IT services firm fell 3 percent, with the company also cutting the top end of its full-year revenue forecast.
While services to big banks remain its biggest source of income, revenue from the sector rose just 2.6 percent to $1.46 billion in the third quarter, missing expectation of $1.50 billion.
In the past few quarters, Cognizant`s reliance on financial services sector has been hurting its overall revenue growth.
"Our guidance does not anticipate any significant recovery in banking in the fourth quarter," Chief Financial Officer Karen McLoughlin told Reuters. "It`s too early to say what happens in 2019."
McLoughlin said while the company`s U.S. clients in the financial services sector has started spending more, weakness persists in Europe.
Cognizant has been increasingly focusing on cloud computing, cyber-security and analytics consulting to reduce its dependence on traditional technologies to service finance and healthcare sectors, where margins are falling as clients demand more work for less money.
To beef up digital and cloud services, the company in the recent quarters also embarked on an acquisition spree and most recently bought app developer Softvision in a $550 million deal.
The company expects current-quarter revenue to be between $4.09 billion to $4.13 billion and profit to be at least $1.05 per share. Analysts were expecting profit of $1.14 per share on revenue of $4.17 billion, according to Refinitiv data.
Cognizant`s net income fell to $477 million, or 82 cents per share, in the third quarter ended Sept. 30. Excluding items, Cognizant earned $1.19 per share. Revenue rose to $4.08 billion from $3.77 billion.
Analysts on an average had expected profit of $1.13 per share and revenue of $4.08 billion.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: Which has given higher return on Rs 11 lakh investment; see calculations
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
09:07 PM IST