Cognizant ups 2021 revenue forecast powered by growth in digital services revenues

Teaneck, New Jersey based information technology (IT) service firm Cognizant Technology Solutions Corporation has raised its 2021 revenue outlook to 9-10% in constant currency, up from the 5.6-7.6% projected in the previous quarter.  

The company expects the full year revenues for 2021 to be in the range of $18.4-$18.5 billion, backed by growth in demand for digital services. The company’s digital service revenues for the second quarter of 2021 ending July 30, grew by nearly 20% year-on-year, representing 44% of the total revenue, up from 42% in the prior year period.

“Second quarter top-line results exceeded our guidance, driven by improved demand for our services and momentum in our digital revenue, and we increased our full-year 2021 revenue growth to 10.2-11.2%,” said Jan Siegmund, chief financial officer, in a statement issued by the company.

He further added, “To meet the strong client demand for our services, we have continued to scale our recruiting capabilities and invest in our people.”

In Q2, Cognizant recorded revenues at $4.6 billion, a 12% growth in constant currency terms year-on-year. Financial services continued to be the largest contributor in terms of revenues accounting for 32.8%, followed by healthcare, products and resources and communications, media and technology.

During the quarter, the company repurchased 4 million shares for $296 million as part of its share repurchase program, with $2.3 billion remaining under the current share repurchase authorization as on June 30, 2021.

Cognizant also deployed $1.5 billion on acquisitions, share repurchases and dividends year-to-date.

The company stated that it expected a modest sequential increase in adjusted operating margins for Q3, followed by a modest sequential decline in Q4. The revenue outlook for Q3 was expected to be in the range of $4.69-$4.764 billion, a 10-11% increase in constant currency over the corresponding quarter in the previous year.