Cognizant Q3 growth slower than rivals, raises full-year sales forecast

Cognizant Technology Solutions, India's second largest IT services exporter, grew slower than its nearest rivals in the July-September quarter. However, it has slightly upped its full-year revenue guidance, indicating a stable business environment.

The Nasdaq-listed company has reported revenues of $2.58 billion for its third quarter, up 2.5 per cent over the April-June quarter. While the result matched analyst expectations, the growth was lower than that of TCS, India's largest IT exporter. TCS had reported a revenue jump of 6.4 per cent sequentially. Infosys had raked a growth of 3.1 per cent in the same period.

In the April-June quarter, the company had faced headwinds because of several client transitions, which led to a slowdown in sales cycles. This had led the company to revise its expected growth rate in 2014 from 16 per cent that it hoped to muster at the end of Jan-March quarter to 14 per cent.

Cognizant, however, now expects to earn full-year revenue of between $10.13 billion and $10.16 billion, and it translates to a growth of nearly 15 per cent. The guidance excludes any impact from the acquisition of the US-based healthcare IT services provider TriZetto Corp for $2.7 billion in September. The move was expected to add more muscle to Cognizant's $2.5 billion healthcare business.

The company's net income stood at $355.6 million or $0.58 per diluted share. The operating margins were at 17.7 per cent. "There is a tremendous opportunity in the marketplace as the advent of new digital technologies, global economic pressures, and an evolving regulatory environment force businesses across all industries to change and adapt faster than ever before," CEO Francisco D'Souza said in a statement.

"Cognizant is ideally positioned to help clients worldwide address these competitive challenges with end-to-end solutions that address their dual mandate of improved efficiency and of innovation using the latest social, mobile, analytics, cloud and sensor technologies," he added.