US-based Cognizant Technology Solutions came out with a muted first-quarter report card and trimmed the upper end of its full-year guidance, but said that it expected a strong return to growth in its key financial services business for the rest of the year, calming investors who rewarded the company's shares.
At 8.30pm IST, Cognizant's shares were trading up 3.3% at $59.51 on Nasdaq on Friday.
For the June quarter, Cognizant forecast strong sequential revenue growth between 4.4% and 6.3% - indicating business as usual for a company that has grown faster than all its large-cap Indian outsourcing rivals over the past decade and consistently snatched market share away from former sector stars such as Infosys and Wipro.
"We anticipate a return to positive sequential growth in our financial services practice for the balance of this year. Going forward this year, we expect a return to positive sequential growth in our healthcare segment as the pressure from industry consolidation is expected to be partially offset by anticipated project ramp-ups and a strong pipeline," Cognizant CEO Francisco D'Souza said in a postearnings conference call.
"Our Q2 revenue guidance reflects a strong rebound in sequential growth, putting us on a solid trajectory for the rest of the year. We expect broad-based momentum, across service lines, geographies and industries in Q2," he added.
Teaneck, New Jersey-based Cognizant's strong second-quarter guidance, helped mask what was an otherwise lacklustre first quarter by the company's own lofty standards. Cognizant reported its slowest quarterly revenue growth in nearly 14 years and cut the upper end of their full-year revenue guidance, saying that it now expects revenue to grow up to 13% for the full year.
In a post-earnings interview, Cognizant CEO of IT services Raj Mehta conceded that Cognizant had made a "far from ideal" start to the year, but added that the company had already faced its worst and expects an improved performance over the next few quarters.
"The outlook for the business is still very healthy - the softness that we saw in banking, we think that has calmed down. We are projecting a strong growth for banking for the rest of the year," Mehta told ET.
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.