Cognizant Q2 Net profit declines 29%: appoints new CFO

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New Jersey headquartered technology issuer Cognizant Technology Solutions Corp. on Thursday posted an almost 29 % y-o-y decline in net profit to $361 million for the 2nd quarter ended June, against $509 million for the same period last year. The impact of the covid-19 pandemic and the maze ransomware assault early in the quarter dented sales.

It mentioned a revenue of $4 billion, down 3.4 % which includes a negative 210 basis points impact due to the exit of content services enterprise. In the 1st quarter the organization had stated that it would face a $50-70 million impact in the 2nd quarter due to the attack.

The company furnished a guidance in this quarter. For the full year 2020, it expects income to be in the range of $16.4-16.7 billion, or a decline on a constant currency foundation of 2.0-0.5 %. This assumes an estimate of a negative 20 foundation points (bps) foreign exchange impact and a negative 110 bps affect 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 enterprise after 17 years of service. Jan Siegmund will be appointed chief financial officer (CFO), effective 1 September. Current CFO Karen McLoughlin will continue in her role via end of August and will remain with the organization in an advisory position until end of this year. McLoughlin’s exit comes after 2 other recent exits by organisation veterans, Ramkumar Ramamurthy, Country Managing Director, Cognizant India, and Pradeep Shilige, Global Delivery Head.

Cognizant’s digital business continues to make progress as it grew 14% y-o-y in the June quarter and now represented 42% of the total revenues. The first half 2020 bookings growth of almost 50% was fuelled by digital engineering, artificial intelligence (AI) & analytics, interactive, and software-as-a-service (SaaS).

We delivered a strong 2nd quarter performance while 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, said Brian Humphries, chief executive officer, Cognizant.

The company’s economic services revenue, which accounts for 34.9 % of complete revenue, reduced 5.2 % year-over-year due to declines in both banking and insurance. However, healthcare income grew 2.0 % year-over-year. Digital income as a percentage of complete income was 42 % for the 2nd quarter and grew 14 % year-over-year.

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