IT services major Cognizant posted 1.8 per cent dip in net profit at $ 416 million for the December quarter from $ 424 million in the year-ago period, on account of certain “out-of-period corrections”.
Its revenue during the reported quarter was up 7.1 per cent to $ 3.46 billion from $3.23 billion in the year-ago period.
“In connection with the company's ongoing internal investigation disclosed on Form 8-K furnished September 30, 2016, we recorded out-of-period corrections during the third and fourth quarters of 2016 related to certain payments that were previously capitalised that should have been expensed,” it said.
Cognizant's board has also approved a plan to return $ 3.4 billion of capital through dividends and share repurchases over next two years.
The company – which follows January-December as its fiscal – saw net profit falling 4.3 per cent to $ 1.55 billion for the full year 2016. (Photo: Cognizant)
Its revenue grew 8.6 per cent to $ 13.49 billion compared to 2015, meeting the company's topline forecast of $ 13.47 billion and $ 13.53 billion.
For 2017, Cognizant expects its revenue expected to be in the range of $ 14.56-14.84 billion, which translates into 7.9-10 per cent growth.
Cognizant has given a revenue forecast of $ 3.51-3.55 billion for the January-March 2017 quarter.
“As we enter 2017, the time is right for us to accelerate the shift to digital services and solutions to meet the growing demands from our clients to transform their business models in the face of the rapid business and technology shifts disrupting their industries,” Cognizant Chief Executive Officer Francisco D'Souza said.
To meet this opportunity, Cognizant is evolving its business model to focus on aggressively scaling its digital capabilities, driving efficiencies in core business, and launching a robust capital return programme, he added.
Cognizant will aggressively scale its digital capabilities across geographies and industry segments through both organic investments, in areas such as re-skilling and new technology practices, and through acquisitions.
“The company is intensifying its M&A efforts to expand intellectual property, industry expertise, and platform and technology capabilities, by focusing primarily on strategic tuck-in acquisitions,” it added.
Cognizant's capital return plan will be funded by current US cash balances, future cash flows from US operations and incremental debt financing, it said.
The plan is designed to preserve the company's financial flexibility to invest in future growth opportunities, it added.
“The Board of Directors intends to continue to review the capital return plan for potential future increases, including the quarterly dividend, subject to company financial performance, economic outlook and any other relevant considerations,” it said.