Nasdaq-listed IT major Cognizant Technologies reported revenues of $4 billion dollars, decline of 3.4 per cent year-on-year (YoY) for the second quarter of 2020. The adjusted operating margins stood at 14.1 per cent against 16.19 per cent (YoY) and the net income came at $361 million against $509 million of the corresponding quarter in the previous year. The revenue decline included a negative impact of 120 basis point from the complete exit of non-strategic content service business, which the company had announced earlier last year and also a 90 basis points negative impact from the ransomware attack on the fulfilment side. Cognizant also expects the full year revenue decline to be between 0.5-2% in constant currency terms and expects revenues of around $16.4 to $16.7 billion for calendar year 2020.
The company sees the operating margins to be around 15 per cent for the full year. With digital revenues now touching 42 per cent of the company's revenue mix, the company was making noteworthy progress in digital said Brian J. Humphries, CEO. "In first half of 2020, digital bookings growth of almost 50% was fuelled by digital engineering, AI and analytics, interactive, and software-as-a-service. I'm confident that our digital momentum will continue given the strength of leading indicators," he added. Speaking on the New Signature acquisition that the company announced just a couple of days ago, Brian said that it would provide the foundation for a dedicated Microsoft business group within Cognizant.
Providing an overview of the performance of the various business segments, Karen McLoughlin, CFO, said the financial services' vertical decline of 4.3 per cent (YoY) was a result of softness in both banking and insurance, with capital markets, which is roughly 40 per cent of total banking revenue continuing to be under severe pressure.
Products and resources saw a growth of 5 per cent. The growth was negated with double digit decline in travel and hospitality, retail and consumer goods, which the company expects to be under pressure for the rest of the year as well. "Healthcare grew 2.2%, led by strong double-digit growth in life sciences in Europe, primarily driven by the Zenith Technologies acquisition," she said.
In line with the announcement last year, Cognizant said nearly 7,000 people were already laid off under the Fit for Growth strategy plan, and the company had achieved over $425 million in annualised gross run rate savings. "We still expect annualised gross run rate savings of $500 million to $550 million in 2021 and charges to be in the $170 million to $200 million range," said Karen.
Cognizant also announced the appointment of a new Chief Financial Officer Jan Siegmund, effective September 1. The current CFO Karen McLoughlin, who has been with the company for 8 years, will however remain in an advisory role till the end of 2020.