Nuance, Cognizant Post Strong Quarterly Performance, Expects Any Near-Term Effect of COVID-19

Both Complexity and Cognizant suggest they’re going to emerge from the pandemic in a position of power. Meanwhile, Rimini Street sees fresh prospects for global economic downturn.

On Thursday, a trio of technology and service providers announced quarterly results showing the varying effects of the COVID-19 pandemic so far. Nuance and Cognizant posted good results for the last quarter, while expecting some dampened consumer demand in the near term. They both said, however, that they will emerge from the crisis in a position of power. Meanwhile, Rimini Street outperformed the revenue forecasts for the last quarter as companies slashing their budgets pursued its services.

Rimini Lane, the leading third-party service provider for Oracle and SAP software products, posted a basic and diluted net loss of 6 cents per share for its first quarter. Quarterly revenue was $78 million, up 18.5 per cent year-on-year.

Analysts predicted sales of $76.3 million at 5 cents per share.

The pandemic did not have any material effect on the company’s client service delivery or sales results, said CEO Seth A. Ravin in a statement.

“Having already saved our clients nearly $5 billion to date, we are the right company, at the right time, with proven solutions that are helping organizations immediately slash IT operating costs, save jobs, stabilize operations and focus their more limited resources on strategic initiatives,” Ravin said. “Prior to the pandemic, we were making investments to meet increasing global demand for our expanded product and service portfolio. This increased demand was reflected in our previously issued – and today re-affirmed – 2020 guidance for accelerated year-over-year revenue growth. We are now accelerating those investments to service additional opportunities resulting from the global economic slowdown.”

Rimini Street registered 2,077 active customers as of March 31, up 12.1 per cent year-over-year.

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Annualized subscription revenue amounted to $310 million for the first quarter of 2020, a rise of 17.7% year-over-year. Revenue retention rate was 92% for the 12-month period ended March 31, 2020 compared to 92% for the same period ended March 31, 2019.

The company is currently offering second quarter revenue guidance in the range of $77 million to $80 million and maintaining full 2020 revenue guidance in the range of $310 million to $320 million.

Nuance Communications, which produces voice recognition software, beat industry expectations with non-GAAP earnings per diluted revenue share of 21 cents to $369.3 million.

Analysts expected earnings of 17 cents on sales of $352.99 million.

The company generated an organic revenue growth of 11 percent year-on-year, with support from both its Healthcare and Business divisions. Enterprise announced an annual revenue increase of 19 per cent, the highest in 10 years, led by Nuance’s Intelligent Engagement solutions.

Healthcare revenue increased by 10% year-on-year, led by strong growth in the Dragon Medical Cloud and increased demand from Nuance’s newer cloud-based solutions, PowerScribe One and CDE One.

“Following COVID-19, we had another excellent quarter,” said CEO Mark Benjamin in a statement. “Given our strong financial and operational position, we fully expect the disruption of this pandemic to be resolved. However, we also expect a near-term effect on our sector, especially within Healthcare, given the significant reduction in elective procedures and the reprioritisation of hospital programs to concentrate on COVID-19.”

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Analysts expected earnings of 93 cents on sales of $4.22 billion.

“We’ve been doing well in what was a difficult quarter, and we’ve recorded our best quarterly signings since 2017,” said Brian Humphries, CEO. “While we anticipate a daunting market environment across 2020, we assume that the pandemic is driving global developments in core automation and cloud transformation as businesses transition to digital business models. These and other related IT trends are closely aligned with Cognizant’s strategy. I am optimistic that we will emerge from this crisis in a position of strength.”

Healthcare sales (28.3 percent of revenues) increased 2.5 percent year-on-year, led by double-digit growth in life sciences. This was partially offset by a low-single-digit fall in healthcare income.

Products and Services (22.6 per cent of revenues) grew 4.4 per cent year-over-year, led by increases through retail and consumer goods, manufacturing, logistics, electricity and utilities. This was partially offset by the softness of the travel and hospitality industries.

Communications, Media and Technology (14.8% of revenues) revenue increased 5.2% year-on-year, led by broad-based growth across all sectors in this sector.

In view of the continuing uncertainty, Cognizant is not providing a business outlook at this time.

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