On COVID-19 disruption, Cognizant withdraws 2020 guidance

IT major Cognizant on Thursday said that it was withdrawing its 2020 guidance that was announced in February, on the back of the uncertainties in the business due to COVID-19.

The company said that the pandemic has resulted in delays in project fulfilment as delivery, particularly in India and the Philippines has mainly shifted to work-from-home mode.

The company also foresees reduced client demand, primarily in the travel and hospitality industries. Entering the second quarter, Cognizant expects the pandemic to further reduce client demand as its societal and economic impact causes broader disruptions across industries, the company said.

"The long-term fundamentals of our business remain strong. However, given the unprecedented nature of this crisis, uncertainty around its duration and its impact on our ability to forecast performance, the company is withdrawing its 2020 guidance that was provided on February 5, 2020." Cognizant said in a statement.

During the first quarter, Cognizant had completed the acquisitions of Code Zero and Lev and repurchased approximately 8 million shares. Since March 31, it has not initiated any new share repurchase programs.

Karen McLoughlin, Chief Financial Officer said, "We are confident that the combination of our strong balance sheet, and our robust operating and cash generative business model, will enable us to weather this disruption."

The company said that first-quarter revenue is expected to be $4.22-$4.23 billion, up 2.7-2.9% (3.4-3.6% in constant currency) from the prior-year quarter, including a negative 50 basis point impact from the exit of certain content services.