Cognizant beats quarterly expectations, names new CEO
By Akanksha Rana and Arjun Panchadar
(Reuters) - Cognizant Technology Solutions Corp on Wednesday beat Wall Street estimates for quarterly results as it benefited from higher spending by clients in the healthcare and financial industries, sending its shares up 2 percent.
The company said Francisco D'Souza, its chief executive officer since 2007, will give up the role to become executive vice chairman. Brian Humphries, CEO of Vodafone Business, will replace D'Souza, effective April 1.
Before joining Vodafone in 2017, Humphries was a senior executive at companies including Dell and Hewlett Packard.
While services to big banks remain its biggest source of income, revenue from financial services rose just 1.7 percent to $1.45 billion in the quarter.
"The pressure in our banking business has primarily been driven by some of our largest banking clients," Chief Financial Officer Karen McLoughlin said during a conference call with analysts.
However, the company said it expected recovery in the sector over the course of 2019.
Its healthcare services revenue grew nearly 7 percent, adding $1.20 billion to the total revenue.
Cognizant said excluding the impact of exchange rates, it expects first-quarter revenue between $4.21 billion to $4.24 billion. Analysts on average were expecting revenue of $4.21 billion, according to IBES data from Refinitiv.
The company competes with Accenture as well as with major Indian IT companies such as Tata Consultancy Services, Wipro and Infosys.
Like its peers, Cognizant has been focusing on cloud computing, cybersecurity and analytics to reduce its dependence on IT services, where margins are falling as clients demand more work for less money.
Digital now accounts for about 30 percent of its revenue. It accounted for about 27 percent of total annual revenue a year earlier.
Cognizant reported net income of $648 million, or $1.12 per share, in the fourth quarter ended Dec. 31, compared with a net loss of $18 million, or 3 cents per share, a year earlier
Excluding items, the consulting and outsourcing services provider earned $1.13 per share, beating the average analyst estimate of $1.07 per share.
Revenue rose nearly 8 percent to $4.13 billion and narrowly beat the average analyst estimate of $4.11 billion.
Shares of the company were trading up at $72.72.
(Reporting by Akanksha Rana in Bengaluru; Editing by Arun Koyyur)
