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At 21%, Cognizant sees highest IT attrition in January-March quarter

Cognizant, today announced its first quarter 2021 financial results.

“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 Brian Humphries, Chief Executive Officer. “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 prioritize the health and safety of our associates while we serve our clients.”

First Quarter 2021 performance by business segment
Financial Services (33.1% of revenues) revenue grew 0.5% year-over-year, and decreased 1.7% in constant currency, as revenue growth generated by our digital services in both banking and insurance was offset by declining non-digital revenue as our clients continue to optimize the cost of supporting their legacy systems and operations.

Healthcare (29.3% of revenues) revenue grew 7.9% year-over-year, or 7.0% 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.

Products and Resources (22.7% of revenues) revenue grew 4.6% year-over-year, or 2.4% in constant currency. Revenue among manufacturing, logistics, energy and utilities clients grew double-digits for the fourth consecutive quarter while retail, consumer goods, travel and hospitality clients continued to be adversely affected by the COVID-19 pandemic.

Communications, Media and Technology (14.9% of revenues) revenue grew 5.0% year-over-year, or 3.1% in constant currency, including a significant benefit from recent acquisitions. Double-digit year-over-year revenue growth among our technology clients was offset by the impact from our exit of certain content-related services, which negatively impacted year-over-year segment growth by 600 basis points. Additionally, clients exposed to studios and theme parks continued to be adversely affected by the COVID-19 pandemic.

Return of capital to shareholders
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 program. As of March 31, 2021, there was $2.6 billion remaining under the current share repurchase authorization. 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.”

Second Quarter and full year 2021 outlook
The Company provided the following guidance:

  • Second quarter revenue is expected to be $4.42-$4.46 billion, or growth of 10.5-11.5% (8.0-9.0% in CC). This assumes an estimated positive 250 basis points foreign exchange impact.
  • Full year 2021 revenue is expected to be $17.8-$18.1 billion, or growth of 7.0-9.0% (5.5-7.5% in CC). This assumes an estimated positive 150 basis points foreign exchange impact.
  • Full year 2021 Adjusted Operating Margin2 is expected to be in the range of 15.2-15.7%
  • Full year 2021 Adjusted Diluted EPS2 is expected to be in the range of $3.90-$4.02

CT Bureau

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