Cognizant beats quarterly profit estimates on gradual recovery in IT services demand

(Reuters) – Cognizant Technology Solutions (NASDAQ:CTSH) beat Wall Street estimates for third-quarter profit on Wednesday, helped by recovery in demand as more businesses turn to the IT services provider.

The results signal a recovery in the business environment, with clients increasingly relying on the IT and consulting services offered by Cognizant to digitize their business operations.

The company’s adjusted profit 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 rebound of spend cycles and gaining wallet share in financial services,” CEO Ravi Kumar said on a post-earnings call.

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

Rival Accenture (NYSE:ACN) beat quarterly revenue and profit expectations on strong demand for its services in late September.

The New Jersey-based company expects fourth-quarter revenue in the range of $5 billion and $5.1 billion, compared to analysts’ estimates of $5.09 billion.

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

The company’s third-quarter revenue stood at $5.04 billion, compared to analysts’ average expectations of $5 billion.