Cognizant Technology Solutions beat its Indian competitors — Tata Consultancy Services, Infosys and Wipro — with a better growth rate in both net profit and revenue in the September quarter due to good demand for its services from clients across industries and geographies.
The US-based information technology company, which has most of its employees working in India, reported a 12 per cent increase in net profit to $444 million for the third quarter ended September 30. Revenue rose 8 per cent to $3.5 billion.
Cognizant added 11,500 employees (net) during the quarter.
“We see ongoing client demand for our services across industries and geographies,” said Francisco D’Souza, Chief Executive Officer, Cognizant, in a press release.
Lower guidance For the fourth quarter, Cognizant expects revenue to be in the range of $3.45-3.51 billion and for fiscal year 2016 it is expected to be in the range of $13.47-13.53 billion, the release said.
However, the guidance for 2016 will be lower than the $13.65 billion to $14.20 billion indicated by the company while announcing its 2015 financial results in February this year.
September quarter revenue was within the guided range, indicating that the company continues to execute its stated strategy well, said Karen McLoughlin, Chief Financial Officer. “Our solid performance was also reflected in another strong quarter of cash flow generation as cash and investments, net of debt, increased by $390 million.”
Internal investigation On an internal investigation into certain payments relating to company-owned facilities in India, Cognizant told the US Securities and Exchange Commission, “We have concluded that we have a material weakness as of September 30, 2016. However, based on the results of the investigation to date, no material adjustments, restatements or other revisions to our previously issued financial statements are required.” In an update to the US Securities and Exchange Commission, the company said that to date, the investigation identified a total of approximately $5 million in payments that may have been improper.
During the three months ended September 30, the company recorded an out-of-period correction related to $3.1 million of such payments previously capitalised that should have been expensed.
The remaining $1.9 million of such payments remain under investigation.
On September 30, 2016, Cognizant disclosed that it was conducting an internal investigation into whether certain payments relating to company-owned facilities in India were made improperly and in possible violation of the US Foreign Corrupt Practices Act.