Nuance, Cognizant post solid quarterly results, predict some near-term COVID-19 impact
A trio of technology and service provider companies on Thursday posted quarterly results that showed the varying impact of the COVID-19 pandemic so far. Nuance and Cognizant reported solid results for the last quarter while anticipating some dampened customer demand in the near term. Nevertheless, they both said they'll emerge from the crisis in a position of strength. Rimini Street, meanwhile, beat revenue expectations for the last quarter as companies cutting their budgets sought out its services.
Rimini Street, the leading third-party support provider for Oracle and SAP software products, reported a basic and diluted net loss per share of 6 cents for its first quarter. Quarterly revenue was $78 million, up 18.5 percent year-over-year.
Analysts were expecting earnings of 5 cents per share on revenue of $76.3 million.
The pandemic had no material impact to the company's client service delivery or sales execution, CEO Seth A. Ravin said 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 reported 2,077 active clients as of March 31, up 12.1 percent year-over-year.
Annualized Subscription Revenue was $310 million for the 2020 first quarter, an increase of 17.7 percent year-over-year. Revenue Retention Rate was 92 percent for the trailing 12 months ended March 31, 2020 compared to 92 percent for the comparable period ended March 31, 2019.
The company is currently providing second quarter revenue guidance to be in the range of $77 million to $80 million, and maintaining full year 2020 revenue guidance in the range of $310 million to $320 million.
Nuance Communications, which makes voice recognition software, beat market estimates with non-GAAP earnings per diluted share of 21 cents on revenue of $369.3 million.
Analysts were expecting earnings of 17 cents on revenue of $352.99 million.
The company achieved 11 percent year-over-year organic revenue growth, with strength from both its Healthcare and Enterprise segments. Enterprise reported 19 percent annual revenue growth, the highest in 10 years, driven by Nuance's Intelligent Engagement solutions.
Healthcare revenue grew 10 percent year-over-year, driven by strong growth in Dragon Medical cloud and increased demand from Nuance's newer cloud-based solutions, PowerScribe One and CDE One.
"Despite COVID-19, we had another excellent quarter," CEO Mark Benjamin said in a statement. "Given our compelling financial and operating position, we fully expect to weather the disruption of this pandemic. However, we also expect a near-term impact on our business, particularly within Healthcare, given the significant reduction in elective procedures and the reprioritization of initiatives by hospitals to focus on COVID-19."
He continued, "Despite the uncertain near-term operating environment, I believe the markets we serve will expand post COVID-19 as our customers appreciate the critical need for AI-based solutions, remote access capabilities for healthcare workers, and increased demand for telehealth, and security and fraud protection solutions. We remain an incredibly resilient company, and I am confident that we will emerge from this pandemic stronger."
The professional services company Cognizantpublished mixed results, with a quarterly adjusted diluted EPS of 96 cents on revenue of $4.2 billion, up 2.8 percent from the year-ago quarter.
Analysts were expecting earnings of 93 cents on revenue of $4.22 billion.
"We executed well in what was a challenging quarter, and posted our strongest quarterly signings since 2017," CEO Brian Humphries said in a statement. "While we expect a challenging demand environment throughout 2020, we believe the pandemic is accelerating the secular trends of core modernization and cloud migration as companies shift to digital business models. These and other related IT trends play directly to Cognizant's strategy. I am confident we will emerge from this crisis in a position of strength."
Cognizant's financial services business (comprising 34.3 percent of its revenues) grew 1 percent year-over-year.
Healthcare sales (28.3 percent of revenues) grew 2.5 percent year-over-year, driven by double-digit growth in life sciences. This was partially offset by a low-single digit decline in revenue within healthcare.
Products and Resources (22.6 percent of revenues) revenue grew 4.4 percent year-over-year, driven by growth across retail and consumer goods, manufacturing, logistics, energy and utilities. This was partially offset by softness in the travel and hospitality industries.
Communications, Media and Technology (14.8 percent of revenues) revenue grew 5.2 percent year-over-year, driven by broad-based growth across all the industries in this segment.
Given the continued uncertainty, Cognizant is not providing a business outlook at this time.