Cognizant Technology Solutions Corporation (NASDAQ: CTSH), a leading provider of IT and business process outsourcing services, today announced its financial results for the first quarter ended March 31, 2008.
Highlights - First Quarter 2008
- Quarterly revenue increased to $643.1 million, up 40% from the year-ago quarter.
- Quarterly diluted EPS on a GAAP basis was $0.34, compared to $0.25 in the year-ago quarter.
- Quarterly diluted EPS on a non-GAAP basis was $0.38, excluding $0.04 of stock-based compensation and stock-based Indian fringe benefit tax expenses, compared to $0.27, excluding stock-based compensation expense of $0.02, in the year ago quarter.
Revenue for the first quarter increased to $643.1 million, up 7.2% from $600.0 million in the fourth quarter of 2007, and up 40% from $460.3 million in the first quarter of 2007. GAAP net income was $101.9 million, or $0.34 per diluted share, compared to $75.4 million, or $0.25 per diluted share, in the first quarter of 2007. GAAP operating margin for the quarter was 17.4%. Excluding stock based compensation expense of $13.0 million and stock-based Indian fringe benefit tax expense of $0.9 million, non-GAAP operating margin was 19.5%, in line with the Company's targeted 19 to 20% range. Reconciliations of these non-GAAP financial measures to GAAP operating results and diluted EPS are included at the end of this release.
"We are pleased with this quarter, during which we have surpassed our growth targets. The quarter's results, achieved despite the increased economic uncertainty and challenges in the financial services industry, testify to the resilience of our business model which is diversified across business segments, service offerings and geographic regions," said Francisco D'Souza, President and CEO of Cognizant. "Our Healthcare, Retail/Manufacturing/Logistics and Other segments all demonstrated sequential growth of approximately 10% or greater and Europe continued to grow well in excess of company average, growing 12% sequentially during the quarter."
Mr. D'Souza continued, "We have adopted a more cautious view for the remainder of the year to reflect the heightened economic challeallenges over the past two months. However, we believe that the current environment also presents us with opportunities to help clients in industries such as financial services, healthcare and media adapt to the structural changes that are transforming their industries. In addition, our clients are also seeking cost rationalization solutions in order to compensate for the pressures on their businesses. The investments we've made in broadening our service offerings, building deep domain expertise and advanced consulting and analytics capabilities position us well to capitalize on these needs."
2008 Outlook - Second Quarter & Full Year
Based on current visibility, the Company is now providing the following guidance:
- Second quarter 2008 revenue anticipated to be at least $680 million.
- Second quarter 2008 diluted EPS expected to be $0.34 to $0.35 on a GAAP basis, and $0.38 to $0.39 on a non-GAAP basis, which excludes $0.04 of estimated stock-based compensation and stock-based Indian fringe benefit tax expense.
- Fiscal 2008 revenue is anticipated to be approximately $2.95 billion, up approximately 38% compared to 2007.
- Fiscal 2008 diluted EPS expected to be approximately $1.50 on a GAAP basis, and $1.67 on a non-GAAP basis, which excludes $0.17 of estimated stock-based compensation and stock-based Indian fringe benefit tax expense.
"We continue to invest across our industries, service-areas and geographies in order to address client needs, enhance our market position, continue to grow and deliver value for shareholders," said Gordon Coburn, Chief Financial and Operating Officer. "While keeping these goals in mind, we plan to increase resource utilization throughout 2008 in order to optimize efficiency and quality and help us remain flexible within the current environment. As we look ahead, we remain confident that despite near-term challenges in the economy, our strategy and execution excellence will ensure that Cognizant's growth continues to outpace the industry."
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