Cognizant reports fall in Q2 net profit, maintains full year revenue outlook

Cognizant Technology Solutions on Thursday reported a net profit of $456 million, around 3 percent lower than in the corresponding quarter a year ago.

The fall in bottom line was largely because of the depreciation of the Indian rupee during the quarter and the initial funding of the Cognizant US Foundation.

The company reported a revenue of $4.01 billion for the quarter under review, up 9.2 percent year on year. Its operating profit margin was 16.7 percent, down from 17.7 percent in the previous quarter.

The IT services firm expects its third quarter revenue to be in the range of $4.06-4.10 billion. It maintained its full-year revenue forecast of $16.05-16.30 billion.

"As our second-quarter results confirm, we're making solid progress on our plan to accelerate our shift to digital services and solutions," said Francisco D'Souza, CEO and Vice Chairman of the Board at Cognizant.

D'Souza also said that  the company was confident in its "ability to invest for growth" and to achieve financial targets.

Revenue from the financial services vertical accounted for 36.7 percent of the company's overall revenue, 4.5 percent higher than in the corresponding quarter last year.

The New Jersey-based company attributed the growth in revenue from the insurance sector to large multi-service deals.

In an investor presentation, the company said it was winning fair share of digital revenue from large money center banks, offset by increasing pressure on run-the-bank spending.

It also said it was "beginning to see some large accounts return to growth".

Revenue from the healthcare vertical accounted for 28.9 percent of the company's overall revenue and rose 10.1 percent year on year.

Cognizant is looking at "opportunities in growing Medicare and Medicaid program servicing," and was well positioned in government programs with its TMG Health transaction, where it "added several new health plans to the program in the quarter".

Annualized attrition was at 22.6 percent, down 100 basis points from the second quarter of last year.