Business

Cognizant Technology Solutions continued to make progress on its growth strategy in the second quarter (ended June 30) as the company benefited again from its shift to digital services and solutions, according to CEO Francisco D’Souza. “We’re now about halfway through executing the financial strategy we announced 18 months ago,” he said Aug. 2 on an earnings call. “As this quarter’s results show, we’re making solid progress on key aspects of our plan and we’re on track to meet our goals for the year,” he told analysts.

During Q2, Cognizant’s digital revenue “grew in the low 20 percent range – well above company average and is approaching 30 percent of total revenue, reflecting our continuing shift to digital revenues,” he said.

Cognizant’s “emphasis on digital services is helping us win more business with attractive margins and that enables us to deliver higher-quality growth for the company,” he said.

He went on to spotlight two new areas of work that Cognizant is doing in response to what he said was growing demand from clients: artificial intelligence (AI)/analytics and cloud.

“Through our digital business practice, we use data and analytics optimized with machine learning” and AI, along with “intimate knowledge of our clients’ businesses, to help them drive greater levels of personalization, productivity and growth,” he told analysts.

He added: “Cognizant operates one of the world’s largest AI practices, measured by numbers of professionals and scope of services.”

As an example of what Cognizant has done with that technology, he noted it was recently able to help one major banking industry client combat “costly credit card fraud losses” using ML algorithms.

“We see abundant opportunity to apply AI and machine learning to our clients’ businesses to help them improve their operational performance and generate new growth,” he said.

Cloud, meanwhile, is “another enabler of end-to-end digital transformation,” he told analysts, adding: “By year end, we expect our global cloud workforce to exceed 20,000 associates.” Currently, about 50% of Cognizant’s cloud-focused associates work in its digital systems and technology practice, which he said, “brings together applications, infrastructure and security to help clients rapidly deliver new applications and services, support product development at scale, and shrink time to value from years to months.”

Total Cognizant Q2 revenue grew 9.2% from a year ago to $4.01 billion. But profit dipped slightly, to $456 million (78 cents a share) from $470 million (80 cents a share). That decline, however, was “primarily due to net non-operating foreign exchange losses driven by the depreciation of the Indian rupee versus the prior year period and the initial funding of the Cognizant U.S. Foundation,” the company said in its earnings news release.

Cognizant expects to report revenue of $4.06 billion-$4.10 billion for the third quarter and $16.05 billion-$16.30 billion for this fiscal year, it said. It also now expects to report non-GAAP earnings per share (EPS) of at least $1.13 for Q3 and at least $4.50 for the year. Cognizant increased its fiscal year EPS estimate due to the company’s “solid performance” in Q2, according to CFO Karen McLoughlin.