Cognizant Technology Solutions Corp Beats Profit Estimates

Cognizant Technology Solutions Corp beat estimates for the January-March quarter on Monday showing revenue growth of 2.9 per cent in the December 2011 quarter, the highest among the leading Indian IT firms. Revenues stood at $1.71 billion. Analysts on average were expecting full-year earnings of $3.45 per share on revenue of $7.54 billion.

For the March quarter, Cognizant reported a net income of $243.7 million or $0.79 a share compared to $208.3 million, or $0.67 a share, in the year-ago period, a rise of 17 per cent. On a yearly basis, revenues rose 24.8 per cent.

However, the firm moderated its full-year growth guidance citing "slower-than-anticipated acceleration in demand". In an indication that IT buying may be cooling, it revised its 2012 revenue growth downwards from 23 per cent to 20 per cent. Even so, Cognizant's 20 per cent growth guidance for 2012 is double of what Infosys hopes it will generate in 2012-13.

In April, Infosys had cited slowdown in deal closures and in deal ramp-downs in banking and financial services sectors. IT's bread-and-butter segment that contributes 40 per cent of revenues for many top firms, as the reason for poor revenue growth.

Cognizant's second quarter guidance suggests that the firm will match Infosys in quarterly revenues in June. While Infosys expects June quarter revenues between $1.77 and $1.78 billion, on Monday it guided to $1.79 billion. Before Monday's announcement, analysts were expecting Cognizant to pull in revenues of $1.84 billion in the June quarter beating Infosys hands down.

"Due to a slower-than-anticipated acceleration in demand as we entered the second quarter, we are adopting a more conservative stance for the remainder of the year and revising our guidance to at least 20 per cent revenue growth for 2012," Francisco D'Souza, chief executive officer, Cognizant, said. "We continue to believe that we have the right portfolio of services to sustain our industry leading growth and also meet the changing demands in the market as clients continue to grapple with their dual mandates of cost containment and innovation/business transformation."

Cognizant, the third largest firm after TCS and Infosys, follows a January-December fiscal. Though Cognizant is not listed in India, 75 per cent of its over 1.4 lakh employees are based in India.