Cognizant beats estimates with 4.2% rise in revenues; profit falls 39%

IT services major Cognizant beat Street estimates with better than expected revenue growth numbers for the fourth quarter ended December 2019 (the firm follows January-December cycle). However, revenue guidance for 2020 remained tepid as it is estimated to grow the top line by 2-4 per cent in the current year.

The estimates took into account an impact of 110 basis points owing to the IT firm’s decision to exit the content services business, the Teaneck, New Jersey-based IT firm said. This revenue growth projection could also be the lowest compared to competitors such as Tata Consultancy Services, Infosys, Wipro and HCL Technologies, though these firms are yet to give their estimates for financial year 2020-21 (FY21). The firm’s net profit declined 39 per cent at $395 million for the fourth quarter (Q4) compared to $648 million a year ago. The fall in net profit was attributed to increase in restructuring charges, which rose to $101 million from $7 million a year earlier.