Cognizant Q2 net dips 40% to $252.4 million on higher tax provision
US-based IT services major Cognizant saw its net profit dipping sharply by 40 percent in the June quarter at USD 252.4 million (around Rs 1,600 crore) on higher provisioning for income taxes.
New York: US-based IT services major Cognizant saw its net profit dipping sharply by 40 per cent in the June quarter at USD 252.4 million (around Rs 1,600 crore) on higher provisioning for income taxes.
The company, which competes with the likes of TCS and Infosys, had a net profit of USD 420.1 million in the year-ago period, it said in a statement today.
Cognizant's revenues however grew 9.2 percent to USD 3.36 billion in the said quarter from USD 3.08 billion a year-ago, just meeting its forecast of USD 3.34-3.40 billion topline for the second quarter.
The company follows January-December as its fiscal year.
However, for the entire year, Cognizant has again lowered its revenue forecast to be in the range of USD 13.47-13.60 billion from its earlier estimate of USD 13.65-14 billion.
At the beginning of the year, Cognizant had offered a revenue guidance of USD 13.65-14.20 billion for fiscal 2016.
"In May 2016, our principal operating subsidiary in India repurchased shares from its shareholders, which are non-Indian Cognizant entities, resulting in a one-time remittance of USD 2.8 billion of cash from India. (About) USD 1.2 billion, or USD 1 billion net of taxes, was transferred to the US with the other USD 1.6 billion remaining overseas," it added.
As a result of this transaction, Cognizant will incur an incremental 2016 income tax expense of USD 237.5 million.
Of this, USD 190 million was recognised in June quarter and USD 23.7 million will be recognised in each of the quarters ending September and December, 2016, it said.
"While our revised guidance reflects the impact of near-term macroeconomic headwinds, our longer term outlook and underlying business fundamentals remain strong.?We continue to see an expanding market opportunity ahead," Cognizant CEO Francisco D'Souza said.
He added that the second quarter performance represented broad-based revenue growth across service lines, geographies and industries, including healthcare and financial services.
For July-September quarter, it expects revenue to be in between USD 3.43 billion and USD 3.47 billion.
"The shift to digital continues to intensify and accelerate. Our strong second quarter revenue growth, adding incremental quarterly revenue of nearly USD 170 million, is the result of clients turning to Cognizant to help them define strategy and infuse new technologies to address key challenges and implement new business models," Cognizant President Gordon Coburn said.
Cognizant, which has a majority of its employees in India, added 11,300 people, taking its total headcount to over 2.44 lakh at the end of June 30.