Press Release
November 5, 2009
Cognizant Reports Record Third Quarter 2009 Results and Raises Guidance for FY2009 Revenue and EPS
Revenue for the quarter up 16% year-over-year and 10% sequentially
Cognizant Technology Solutions Corporation (NASDAQ: CTSH), a leading provider of information technology, consulting, and business process outsourcing services, today announced its third quarter 2009 financial results.
Highlights - Third Quarter 2009
- Quarterly revenue rose to $853.5 million, up 16% from the year-ago quarter and 10% sequentially.
- Quarterly diluted EPS on a GAAP basis was $0.45, compared to $0.38 in the year-ago quarter.
- Quarterly diluted EPS on a non-GAAP basis, which excludes stock-based compensation expense and income related to the repeal of the stock-based Indian fringe benefit tax, was $0.48, compared to $0.40 in the year-ago quarter.
- GAAP and non-GAAP diluted EPS includes the impact of $0.01 in net non-operating foreign currency exchange losses.
Revenue for the third quarter of 2009 rose to $853.5 million, up 16% from $734.7 million in the third quarter of 2008. GAAP net income was $136.6 million or $0.45 per diluted share compared to $112.8 million, or $0.38 per diluted share, in the third quarter of 2008. Diluted earnings per share on a non-GAAP basis was $0.48. GAAP operating margin for the quarter was 19%. Excluding stock-based compensation expense of $11.9 million and income of $1.3 million related to the repeal of the stock-based Indian fringe benefit tax, non-GAAP operating margin was 20.2%, above the Company's targeted 19-20% range. Earnings for the quarter included $2.9 million of net pre-tax non-operating foreign exchange losses. Reconciliations of non-GAAP financial measures to GAAP operating results and diluted EPS are included at the end of this release.
"We experienced strong organic growth across all industry sectors, geographies and service lines this quarter. The sequential revenue increase of $76.9 million is the largest in the history of the company," said Francisco D'Souza, President and CEO of Cognizant. "Our constant focus on customer service and reinvesting in our business continues to generate industry-leading results. Clients, who have come to rely on us to help them achieve operational efficiencies, are now increasingly approaching us to serve as a consultative business partner, as their industries face comprehensive upheavals from the recession, and secular shifts resulting from new technologies and other market forces."
Fourth Quarter & Full Year 2009 Outlook
The Company is providing the following guidance:
- Fourth quarter 2009 revenue anticipated to be at least $880 million.
- Fourth quarter 2009 diluted EPS expected to be $0.45 on a GAAP basis and $0.49 on a non-GAAP basis, which excludes $0.04 of estimated stock-based compensation expense.
- Fiscal 2009 revenue expected to be at least $3.255 billion, up at least 15.5% compared to 2008.
- Fiscal 2009 diluted EPS expected to be $1.75 on a GAAP basis, and $1.88 on a non-GAAP basis, which excludes $0.13 of estimated stock-based compensation and stock-based Indian fringe benefit tax expense.
- Due to continued volatility in the currency markets, EPS guidance excludes any future non-operating foreign currency exchange gain or loss.
"We are delighted that, despite the ongoing weak global economic environment, we delivered strong, broad-based revenue growth during the quarter. Our long-held strategy of investing in differentiated domain, relationship and service offering capabilities is enabling us to win marquee clients as well as grow our existing relationships," said Gordon Coburn, Chief Financial and Operating Officer. "During the quarter we remained, as always, focused on operational discipline - enabling us to quickly ramp up to meet the surge in demand, while maintaining healthy operating margins and high quality of service. In addition, we continued to strengthen our balance sheet with our cash, short- and long-term investments increasing by over $195 million during the quarter to a total of approximately $1.34 billion."
Over Cognizant
Cognizant (Nasdaq: CTSH) is een vooraanstaande dienstverlener in IT-consultancy, technologie en Business Process Outsourcing (BPO). Cognizant werkt samen met klanten om hun bedrijfspositie sterker te maken. Zij doen dit met hun wereldwijde kennis van technologie, innovatie en de industrie. Met meer dan 50 locaties wereldwijd en ruim 68.000 medewerkers (30 september, 2009) combineert de organisatie een uniek onsite/offshore leveringsmodel met een cultuur gericht op klanttevredenheid. Cognizant is opgenomen in de NASDAQ-100 Index en de S&P 500 Index. Verder is Cognizant een Forbes Global 2000-organisatie, lid van de Fortune 1000 en wordt het bedrijf genoemd als top IT-dienstverlener in BusinessWeek’s Hot Growth en Top 50 Performers. Meer informatie:
www.cognizant.com Forward-Looking Statements
This press release includes statements which may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions and the factors discussed in our most recent Form 10-K and other filings with the Securities and Exchange Commission. Cognizant undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.
About Non-GAAP Financial Measures
To supplement the consolidated financial statements presented in accordance with GAAP, this press release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: non-GAAP operating margin and non-GAAP diluted earnings per share. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures, the financial statements prepared in accordance with GAAP and reconciliations of Cognizant's GAAP financial statements to such non-GAAP measures should be carefully evaluated.
We seek to manage the company to a targeted operating margin, excluding stock-based compensation costs and applicable stock-based Indian fringe benefit tax of 19% to 20% of revenues. Accordingly, we believe that non-GAAP operating margin and non-GAAP diluted earnings per share, excluding stock-based compensation costs and applicable stock-based Indian fringe benefit tax are meaningful measures for investors to evaluate our financial performance. For our internal management reporting and budgeting purposes, we use financial statements that do not include stock-based compensation expense and applicable stock-based Indian fringe benefit tax for financial and operational decision making, to evaluate period-to-period comparisons and for making comparisons of our operating results to those of our competitors. Moreover, because of varying available valuation methodologies and the variety of award types that companies can use under FAS 123R, we believe that providing non-GAAP financial measures that exclude stock-based compensation allows investors to make additional comparisons between our operating results to those of other companies. Accordingly, we believe that the presentation of non-GAAP operating margin and non-GAAP diluted earnings per share, when read in conjunction with our reported GAAP results, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations.
A limitation of using non-GAAP operating margin and non-GAAP diluted earnings per share versus operating margin and diluted earnings per share calculated in accordance with GAAP is that non-GAAP operating margin and non-GAAP diluted earnings per share exclude costs, namely, stock-based compensation that is recurring and applicable stock-based Indian fringe benefit tax, that has been abolished during the third quarter of 2009. Stock-based compensation will continue to be for the foreseeable future a significant recurring expense in our business. In addition, other companies may calculate non-GAAP financial measures differently than us, thereby limiting the usefulness of these non-GAAP financial measures as a comparative tool. We compensate for this limitation by providing specific information regarding the GAAP amounts excluded from non-GAAP operating margin and non-GAAP diluted earnings per share and evaluating such non-GAAP financial measures with financial measures calculated in accordance with GAAP.
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