US-based Cognizant Technology Solutions, which over the past five years posted a scorching run of growth and won market share from rivals such as TCS and Infosys, reported its slowest quarterly revenue growth in nearly 14 years and cut the upper end of their full-year revenue guidance, a move that is likely to disappoint investors.
For the full year, Cognizant forecast revenues in the range of $13.65 billion to $14 billion, implying a growth range of 10-13% -- the upper end down marginally from the $14.20 billion it had predicted in February. For the June quarter, Cognizant forecast revenues in the range of $3.34 billion to $3.40 billion.
For the March quarter, Cognizant posted a net profit of $441.2 million, compared to $382.9 million in the year-ago period. Revenue grew 10% to $3.2 billion.
Teaneck, New Jersey-based Cognizant said that it was hurt by slow spending from top healthcare customers and would continue to take a hit from banking and financial services clients due to volatile market conditions.
"As anticipated, during the first quarter we saw softness in our healthcare segment due to M&A activity, as well as softness in our banking segment due to financial market volatility," said Gordon Coburn, president at Cognizant. "As we move into the second quarter, we are quite pleased with our momentum with new and existing clients, which we expect to drive sequential revenue growth in the second quarter of $140 to $200 million.
"Based on first quarter results and our visibility on deals ramping up throughout the year, we have tightened our 2016 revenue guidance range to $13.65-$14 billion, representing approximately 10-13% growth year-over-year," said Karen McLoughlin, Chief Financial Officer at Cognizant.
For the first time in several quarters and years, Cognizant also failed to outpace growth rates of large Indian arch-rival Infosys, which is increasingly starting to resemble its former bellwether self under the stewardship of former SAP products guru Vishal Sikka.
Earlier during the week, Infosys CEO Sikka said that Infosys remained firmly on track to achieve its ambitious goal of touching $20 billion of revenue by 2020.