Cognizant Q4 income down 20% to $316 million

IT major Cognizant has reported about 20 per cent drop in net income to $316 million (around Rs 2,303.2 crore) for the December quarter.

The US-based company, which posted a net income of $395 million in the December 2019 quarter, said it is seeing a strengthening in demand environment.

For the fourth quarter of 2020, Cognizant's revenue declined 2.3 per cent to $4.18 billion from $4.28 billion in the year-ago period.

"Fourth-quarter revenue was $4.2 billion, a decline of 3 per cent year-over-year in constant currency," Cognizant Chief Executive Officer Brian Humphries said in an investor call.

This included a negative 120 basis point impact from the exit of content moderation services and the negative 250 basis points impact related to the anticipated exit from a large financial services engagement, he added.

Cognizant - which has about 2 lakh employees based in India - follows January-December as financial year.

"We enter 2021 with growing confidence given our strategic, operational and commercial progress, and a strengthening demand environment. In fact, we're on track to bring in more new hires in Q1 than ever before as we ramp our hiring capacity to accommodate our growth plans for 2021 and beyond," he said.

Humphries exuded confidence in client portfolio, and deal review and solutioning processes - many aspects of which the company has overhauled in the past year.

"We maintained our momentum in the quarter, with full-year 2020 bookings growth in the mid-teens. With over one year of data, assumption tweaks and refinements behind us, our analytics have been improved on Pipeline to Bookings, Bookings growth, including renewals and new business, and Bookings to revenue," he said.

Cognizant clocked a net income of $1.39 billion in 2020, down 24.4 per cent from $1.84 billion in 2019. Revenue was lower marginally at $16.65 billion in 2020 from $16.78 billion in the previous year.

The company now expects its first-quarter revenue to be in the range of $4.34-$4.38 billion, translating into a growth of 2.8-3.8 per cent (1-2 per cent growth in constant currency).

For the year 2021, revenue is expected to be between $17.6-18.1 billion, a growth of 5.5-8.5 per cent (4-7 per cent rise in constant currency).

Humphries noted that since January this year, the company has announced approximately $1.6 billion in acquisitions, all focused on the company's strategic priorities of digital engineering, data and AI, cloud and IoT.

"...we are now almost two years into a project to ensure Cognizant returns to its rightful place as an industry bellwether. We accomplished a great deal in 2020 despite being faced with the complexities of COVID and a ransomware attack," he added.