The company's reliance on financial services sector has been weighing on its overall revenue growth.
Cognizant reported a disappointing first quarter with a 15 percent drop in net profit to $441 million compared to $520 million for the same period last year.
Cognizant also cut its revenue guidance for 2019 as it sees lower than expected growth in financial services and healthcare sector for the remainder of the year.
The company had set its revenue guidance for 2019 at 7-9 percent in constant currency. However the company has now revised it to the range of 3.6-5.1 percent for the year and the guidance for the second quarter to 3.9-4.9 percent.
"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," Karen McLoughlin, Chief Financial Officer, said in a press statement.
Cognizant revenue for the first quarter stood at $4110 million, up 5 percent, from $3912 million for the same period last year. Financial services that account for 34.9 percent of revenues declined 1.7 percent year-on-year (YoY). However the other segments including healthcare, media and technology and products and resources grew.
"Cognizant's growth and performance in the quarter leaves room for improvement," said Brian Humphries, Chief Executive Officer. "While I am encouraged by our client centricity, our employees' winning spirit and our innovation, we are not yet delivering against the market opportunity. We are committed to strengthening our execution to invest in growth and drive shareholder value."
The decline in financial services, the company said, was primarily impacted by continued softness in its business with a few of Cognizant’s largest banking clients and several insurance and North American regional banking clients. During the quarter the company made progress in furthering its platforms and solutions strategy for banking clients through the acquisition of MeritSoft, the company added.
Though healthcare that accounts for about 22.2 percent grew by 3.9 percent YoY, the segment revenue was negatively impacted by continued industry consolidation as well as the accelerated movement of work to a captive at a large North American client. Life Sciences delivered above company average growth, driven by large enterprise deals and momentum with our industry specific platforms.
Product and resources (22.2 percent of revenue) grew 11.3 percent driven by double digit growth across key industries and continued strength in cloud and digital engineering services and increased demand for interactive, IoT and analytics solutions across clients. Communications, media and technology vertical (14.5 percent of revenues) grew 16.9 percent yoy led by growth among technology clients.By end of March 31, 2019, the company had 2.85 lakh employees with attrition of 19 percent.The Great Diwali Discount!
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