Cognizant Q2 results: Net profit declines 29%; new CFO appointed

Mumbai: New Jersey-headquartered technology provider Cognizant reported a 29 per cent decline in net profit to $361 million for the second quarter ended June, against $509 million for the same period last year.

It reported a revenue of $4 billion, down 3.4 per cent including a negative 210 basis points impact due to the exit of content services business and due to a ransomware attack earlier this year. In the first quarter the company had said that it would face a $50-70 million impact in the second quarter due to the attack.

The company provided a guidance in this quarter. For the full year 2020, it expects revenue to be in the range of $16.4-16.7 billion, or a decline on a constant currency basis of 2.0-0.5 per cent. This assumes an estimate of a negative 20 basis points (bps) foreign exchange impact and a negative 110 bps impact from the exit of certain content services business, according to the company.

Cognizant also announced that current CFO Karen McLoughlin has decided to retire from the company after 17 years of service. Jan Siegmund will replace McLoughlin as the CFO effective September 1, 2020. Siegmund most recently served as CFO of Automatic Data Processing, a human resources software and services company. McLoughlin’s exit comes after two other recent exits by company veterans, Ramkumar Ramamoorthy, Country Managing Director, Cognizant India, and Pradeep Shilige, Global Delivery Head.

According to the company, bookings in the first half of 2020 increased 14 per cent. It said that there was increased client demand in areas such as cloud and enterprise application services, IT modernization and digital engineering.

Chief Executive Officer Brian Humphries, commenting on the performance said, "We delivered a solid second quarter performance whilst continuing to improve our competitiveness. Against an uncertain economic backdrop, we remain steadfast in investing in our clients and our associates, and in executing our digital strategy to position Cognizant for accelerated momentum."

The company’s financial services revenue, which accounts for 34.9 per cent of total revenue, decreased 5.2 per cent year-over-year due to declines in both banking and insurance. However healthcare revenue grew 2.0 per cent year-over-year.

Digital revenue as a percentage of total revenue was 42 per cent for the second quarter and grew 14 per cent year-over-year.