Cognizant posts 16.4% rise in sales - Livemint

Cognizant, which has most of its employees in India, said revenue rose to $2.74 billion from $2.36 billion. Photo: Mint

Mumbai: Cognizant Technology Solutions Corp. beat analysts’ sales forecasts in the three months ended 31 December, following strong services demand and a boost in revenue from its recent acquisition of US-based healthcare services provider TriZetto Corp.

December quarter sales of the Nasdaq-listed software services firm grew 16.4% to $2.74 billion in the seasonally weak quarter for information technology (IT) firms. It rose 6.2% from $2.58 billion in the September quarter.

Net income rose to $362.9 million from $324.3 million a year earlier, Cognizant said while declaring its December quarter and full-year earnings on Wednesday, but the figure was below market expectations.

A consensus of 22 analysts surveyed by Bloomberg had expected Cognizant to report revenue of $2.665 billion, while 12 analysts had expected the company to report net income of $384.08 million in the December quarter.

Cognizant expects revenue for the three months ended March to be at least $2.88 billion.

The company, which follows a calendar year in its financial reporting, said it expects full-year 2015 revenue to touch at least $12.21 billion, up 19% from a year ago.

Revenue for full-year 2014 increased to $10.26 billion, up 16.1% from $8.84 billion for 2013. In the September quarter, Cognizant had forecast full-year revenue for 2014 between $10.13 billion and $10.16 billion.

An increase in sales was helped by $80.6 million revenue from TriZetto, whose acquisition was completed on 20 November.

The company, which got 77.8% of its December quarter revenue from North America, saw sales rise 7.7% sequentially and 17.4% from a year ago in this region.

“Despite unfavourable European currency movements during the fourth quarter, we finished 2014 with strong revenue performance and believe we are well positioned to continue that momentum into 2015 on the strength of our integrated consulting, technology, digital and business services capabilities,” said Francisco D’Souza , chief executive officer of Cognizant, in a statement.

On 12 November, Cognizant bought Australian digital firm, Odecee for an undisclosed sum—its fourth acquisition in 2014, after healthcare acquisitions of Cadient Group and TriZetto, and Itaas Inc. , a digital video company.

“(The year) 2014 was a significant year, marking 20 years of innovation and growth for Cognizant,” said Gordon Coburn , president of Cognizant, in a statement.

“Integration of our $2.8 billion acquisition of TriZetto, completed in the fourth quarter, is well underway and we’re excited by the healthcare opportunities we see. As we crossed the 200,000 employee mark, we’ve been able to recruit top talent from around the world, and believe we are in a unique position in the market to address a wide range of opportunities fuelled by digital transformations across all of our industry segments, service lines and geographies,” Coburn added.

The company said it added 11,800 employees in the quarter, including those from the TriZetto acquisition, taking the total headcount to 211,500 at the end of 31 December.

In the December quarter, Tata Consultancy Services Ltd (TCS ), India’s largest software services company, reported a 5.1% rise in net income rose to Rs.5,440 crore on revenue of Rs.21,294 crore.

Infosys Ltd , India’s second largest software services exporter, posted a 13% increase in third-quarter net profit at Rs.3,250 crore on revenue of Rs.13,796 crore.

Wipro Ltd , India’s third largest software services exporter, reported 8.8% rise in the net profit to Rs.2,192.8 crore on revenue of Rs.12,085 crore.

HCL Technologies Ltd posted a 28% rise in net profit to Rs.1,915 crore on revenue of Rs.9,283 crore.

Tech Mahindra Ltd , India’s fifth largest software services firm, reported a 20% fall in net profit to Rs.805 crore on revenue of Rs.5,752 crore.

Cognizant’s results were declared before US market hours.

Cognizant shares were up 5.19% at $57.91 on Nasdaq at 9.30pm India time on Wednesday, while the benchmark index, Nasdaq Composite Index, was down 0.5% at 4,704.13 points.

In the last one year, Cognizant has gained 15.8% and the Nasdaq Composite has gained 18.3%.