Cognizant cuts full-year forecast on lower financial, healthcare demand
(Adds details from results, updates share move)
May 2 (Reuters) - Cognizant Technology Solutions Corp cut its full-year revenue forecast and missed its first-quarter results on Thursday, due to lower demand in its financial services and healthcare business.
The IT services and outsourcing company's shares fell as much as 6 percent in after-hours trading.
The company said it expected its financial services unit to be hit by lower demand from banks, insurers and North American regional lenders, with the healthcare business facing the brunt of the recent spate of consolidation.
"Our revised full-year outlook reflects the first-quarter underperformance and expectations of slower growth in financial services and healthcare for the remainder of 2019," said Chief Financial Officer Karen McLoughlin.
McLoughlin also signaled cost cuts in the wake of lowered revenue expectations for the year.
The company forecast 2019 revenue growth in the range of 3.6 percent and 5.1 percent in constant currency. It had earlier forecast revenue growth between 7 percent and 9 percent.
The results come against the backdrop of management changes.
Former Vodafone executive Brian Humphries on April 1 assumed charge from long-time Chief Executive Officer Francisco D'Souza.
Revenue in its financial services unit fell 1.7 percent to $1.44 billion in the quarter. Growth in the business, Cognizant's biggest, has been sluggish and that has weighed on overall revenue growth.
Healthcare services revenue increased nearly 4 percent to $1.17 billion, but missed the $1.20 billion forecast by three analysts polled by Refinitiv.
Total revenue rose to $4.11 billion from $3.91 billion, but fell short of the average analysts' estimate of $4.16 billion, according to IBES data from Refinitiv.
Excluding items, the company earned 91 cents per share, missing estimate of $1.04.
The results were unveiled just ahead of the scheduled press release time, sending shares sharply lower. They finally closed down 7.7 percent.
(Reporting by Sayanti Chakraborty in Bengaluru; Editing by Bernard Orr and Sriraj Kalluvila)
