(Reuters) - Cognizant Technology Solutions Corp missed estimates for quarterly revenue and forecast a weak third quarter, hurt by lower-than-expected spending from clients in the financial industry, sending its shares down as much as 8.6 percent.
Revenue from its financial services sector, which accounts for more than a third of its total revenue, rose 4.5 percent to $1.47 billion, but missed analysts’ estimates of $1.53 billion.
“Spending from insurance clients remained strong but within the banking sector there was a mixed growth rate around some of the large global financial institutions, primarily large European banks,” Chief Financial Officer Karen McLoughlin said.
Cognizant competes with consulting and outsourcing services provider Accenture, as well as with major Indian IT companies such as Tata Consultancy Services, Wipro and Infosys.
Like its peers, Cognizant has been focusing on cloud computing, cyber-security and analytics to reduce its reliance on IT services, where margins are falling as clients demand more work for less money.
Digital now accounts for about 30 percent of its revenue.
Cognizant said it expected current-quarter revenue of $4.06 billion to $4.10 billion and profit of at least $1.13 per share. Analysts on average are estimating revenue of $4.12 billion and profit of $1.14 per share.
Total revenue rose 9.2 percent to $4.01 billion, but was below analysts’ estimate of $4.03 billion, according to Thomson Reuters I/B/E/S.
Net income fell to $456 million, or 78 cents per share, in the second quarter ended June 30 from $470 million, or 80 cents per share, a year earlier.
Excluding items, the company earned $1.19 per share, while analysts were expecting $1.10 per share.
Shares of the Teaneck, New Jersey-based company were down 5.7 percent to $77.43 in morning trading on Thursday. They have risen 18 percent this year.
Reporting by Arjun Panchadar in Bengaluru; Editing by Anil D'Silva