Cognizant beats quarterly profit expectations as demand for IT services gradually recovers

Cognizant Technology Solutions beat Wall Street estimates for third-quarter earnings on Wednesday, helped by a recovery in demand as more companies turn to the IT services provider.

The results indicate a recovery in the business environment, with customers increasingly relying on Cognizant’s IT and consulting services to digitize their business operations.

The company’s adjusted earnings per share came in at $1.25 in the quarter ended Sept. 30, compared with estimates of $1.15 per share, according to data compiled by LSEG.

“We are seeing a gradual recovery in spending cycles and gaining a larger share of the financial services industry,” CEO Ravi Kumar said after the earnings report.

Cognizant, which is primarily a consultancy, is diversifying its portfolio by entering the aerospace and defense sector with the $1.3 billion acquisition of Belcan in June.

Rival Accenture exceeded quarterly revenue and profit expectations thanks to strong demand for its services in late September.

The New Jersey-based company expects fourth-quarter revenue of between $5 billion and $5.1 billion, compared with analyst estimates of $5.09 billion.

Cognizant now expects annual revenue of between $19.7 billion and $19.8 billion, up from previous expectations of $19.3 billion to $19.5 billion.

The company’s third-quarter revenue was $5.04 billion, compared to average analyst expectations of $5 billion.