Cognizant has decided to withdraw its revenue guidance for calendar year 2020 against the backdrop of fluid economic environment and COVID-19-driven market uncertainties.
“The long-term fundamentals of our business remain strong. However, given the unprecedented nature of this crisis, uncertainty around its duration and its impact on our ability to forecast performance, the company is withdrawing its 2020 guidance that was provided on February 5, 2020,’’ said Brian Humphries, CEO,Cognizant, on Thursday.
However, he said he was happy to see business momentum in the first two months of the quarter and was grateful to all associates for their commitment and professionalism which enabled Cognizant to meet its previously-announced revenue guidance.
He further said, “We acted decisively to limit COVID-19’s impact on our business, including rapidly enabling work-from-home capabilities across delivery teams. We are committed to helping our clients as they navigate unprecedented business challenges as well as supporting the efforts of governments globally to contain the spread of the virus.’’
“In this fluid environment where uncertainty prevails, we are well-positioned with deep client relationships across more than a dozen industries, and a strong balance sheet that provides solid financial flexibility.”
Cognizant said its first quarter revenue was expected to be in the $4.22 billion to $4.23 billion range, up 2.7-2.9% (3.4-3.6% in constant currency) over the corresponding quarter last year. Financial performance in the first two months of the quarter was on track to exceed previous guidance, driven by strong performance across North America.
During the latter part of March, the company said, COVID-19 had increasingly affected business, largely due to delays in project fulfilment as delivery, particularly in India and the Philippines, shifted to work-from-home and reduced client demand, primarily in the travel and hospitality industries.
Cognizant expects the pandemic to further reduce client demand in Q2, as its societal and economic impact causes broader disruptions across industries.
Cognizant has taken some proactive steps to strengthen its financial flexibility, including drawing down $1.74 billion on its revolving credit facility on March 23, 2020, bringing its total cash and investment balance as of March 31 to approximately $4.7 billion, or net cash of $2.2 billion.