Cognizant revenue dips 3.4% as cybersecurity attack impacted biz

Cognizant announced its revenue fell 3.4 percent to $4 billion in the second quarter of 2020 as Covid-19 pandemic and the ransomware attack impacted its business.
Cognizant CEOCognizant’s operating margin was 11.7 percent vs. 14.9 percent. Net income of Cognizant was $361 million vs. $509 million

Cognizant CEO Brian Humphries said: “We delivered a solid second quarter performance whilst continuing to improve our competitiveness. Against an uncertain economic backdrop, we remain steadfast in investing in our clients and our associates, and in executing our digital strategy to position Cognizant for accelerated momentum.”

Revenue across business segments was negatively impacted by the Covid-19 pandemic and the ransomware attack, primarily in the month of April. Revenue and bookings improved sequentially through May and June, with increased client demand in areas such as cloud and enterprise application services, IT modernization and digital engineering.

Cognizant revenue from Financial Services, which accounts for 34.9 percent of revenues, fell 5.2 percent, driven by declines in both banking and insurance.

Cognizant said revenue from Healthcare, which accounts for 28.9 percent of revenues, grew 2 percent driven by increases from life sciences clients, specifically by revenues from acquisition of Zenith. Revenue in healthcare declined low single digits.

Cognizant said revenue from Products and Resources, which accounts for 21.7 percent of revenues, decreased 6.5 percent, driven by retail, consumer goods, travel and hospitality clients. It achieved double-digit growth in manufacturing, logistics, energy and utilities.

Cognizant revenue from Communications, Media and Technology, which accounts for 14.5 percent of revenues, decreased 4.4 percent, driven by a negative 790 basis point impact from our 2019 strategic decision to exit certain content-related services.

Cognizant said full year 2020 revenue is expected to be in the range of $16.4-16.7 billion, or a decline on a constant currency basis of 2.0-0.5 percent. This assumes an estimate of a negative 20 basis points foreign exchange impact and a negative 110 basis points impact from the exit of certain content services business