Cognizant revises full year guidance for CY2021; Q1 revenue up 4.2%
Nasdaq-listed IT major Cognizant reported a better set of numbers for the first quarter of CY2021, as the company saw recovery in its healthcare vertical. The company also revised upwards its full year revenue guidance from 7 per cent to 9 per cent (5.5-7.5 per cent in constant currency). At the end of its fiscal year in December 2020, the company had guided for a revenue growth of 5.5 to 8.5 per cent (4-7 per cent in constant currency).
Revenue for the first quarter ended March 31, 2021 grew to $4.4 billion, a growth of 4.2 per cent year-on-year, and 2.4 per cent in constant currency. Its digital revenue grew by 15 per cent y-o-y and now represents 44 per cent of its total revenue.
“In the first quarter, we successfully executed our strategy of embracing digital, investing in international expansion and repositioning the Cognizant brand. Cloud migration and digital adoption create a significant opportunity for Cognizant in the coming years,” said the company’s Chief Executive Officer, Brian Humphries.
He also shared his concern over the rising number of Covid-19 cases in India. “The ongoing humanitarian crisis, especially in India, is deeply concerning. We have made a series of investments to support India in this time of need and continue to prioritise the health and safety of our associates while we serve our clients,” he said.
Cognizant has so far invested $700 million in acquisitions. Financial services’ (33.1 per cent of revenues) revenue grew 0.5 per cent year-over-year, and decreased 1.7 per cent in constant currency. Revenue growth generated by digital services in both banking and insurance was offset by declining non-digital revenue as the company said its clients continued to optimise the cost of supporting their legacy systems and operations.
Healthcare (29.3 per cent of revenues) revenue grew 7.9 per cent year-over-year, or 7 per cent in constant currency. “Our healthcare revenue benefited from increased demand for our integrated payer software solutions and continued strong demand among our life sciences clients,” said the company in the statement.
During the first quarter, the company repurchased 3.1 million shares for $234 million at an average price of $75.80 under its share repurchase programme. As of March 31, 2021, there was $2.6 billion remaining under the current share repurchase authorisation. In May 2021, the company declared a quarterly cash dividend of $0.24 per share for shareholders of record on May 20, 2021. This dividend will be payable on May 28, 2021.
“Our first-quarter performance reflects solid revenue growth in our digital services and consistent execution of our strategy,” said Jan Siegmund, chief financial officer, “To support our commercial momentum, we are increasing our investments in recruiting and talent,” he said.
Cognizant reported attrition of 21 per cent for the quarter, with voluntary attrition at 18 per cent, one of the highest in the industry. The company has a total headcount of 296,500 employees.
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