Cognizant Technology Solutions Corporation (Nasdaq: CTSH), a provider of information technology, consulting and business process outsourcing services, has announced its financial results for the quarter and year ended December 31, 2008.
Highlights - Fourth Quarter 2008
- Quarterly revenue rose to $753.0 million, up 26% from the year-ago quarter.
- Quarterly diluted EPS on a GAAP basis was $0.38, compared to $0.32 in the year-ago quarter.
- Quarterly diluted EPS on a non-GAAP basis, which excludes stock-based compensation and stock-based Indian fringe benefit tax expenses, was $0.41, compared to $0.36 in the year-ago quarter.
- Fourth quarter 2008 GAAP and non-GAAP diluted EPS includes the negative impact of $0.03 in non-operating foreign currency exchange losses.
Revenue for the fourth quarter of 2008 rose to $753.0 million, up 2.5% from $734.7 million in the third quarter of 2008, and up 26% from $600.0 million in the fourth quarter of 2007. GAAP net income was $112.3 million or $0.38 per diluted share compared to $96.3 million, or $0.32 per diluted share, in the fourth quarter of 2007. Diluted earnings per share on a non-GAAP basis were $0.41. GAAP operating margin for the quarter was 18.9%. Excluding stock based compensation expense of $10.9 million and stock-based Indian fringe benefit taxes of $0.7 million, non-GAAP operating margin was 20.5%, above the Company's targeted 19-20% range.
Earnings for the quarter include $11.4 million, or $0.03 per share, of non-operating foreign currency exchange losses primarily resulting from the weakness in the British Pound during the period. Reconciliations of non-GAAP financial measures to GAAP operating results and diluted EPS are included at the end of this release.
"We are pleased with our fourth quarter and full year 2008 financial performance. We exceeded our most recent revenue guidance and continued to generate industry-leading growth," said Francisco D'Souza, President and CEO of Cognizant. "The Cognizant value proposition stems from our deep understanding of the industry-specific and cyclical issues our clients confront. Our 2008 results demonstrate that even in the face of significant economic headwinds, clients turn to Cognizant as a trusted advisor to help them improve business performance and tap into new growth opportunities in an evolving economy."
Mr. D'Souza continued: "As we look forward to 2009, we will continue to reinvest in our business in order to capitalize on opportunities for continued growth and increased market share. We are committed to maintaining our culture of openness and transparency and our tradition of the highest standards of ethics and corporate governance in our dealings with customers, employees, shareholders and other stakeholders."
Highlights - Full Year 2008
- Revenue increased to $2.816 billion, up 32% from the previous year.
- Diluted EPS on a GAAP basis was $1.44, compared to $1.15 in the previous year.
- Diluted EPS on a non-GAAP basis, which excludes stock-based compensation and stock-based Indian fringe benefit tax expenses, was $1.59, compared to $1.27 in the previous year.
Revenue for 2008 increased to $2.816 billion, up 32% from $2.136 billion for 2007. GAAP net income was $430.8 million, or $1.44 per diluted share, compared to $350.1 million, or $1.15 per diluted share, for 2007. Diluted earnings per share on a non-GAAP basis were $1.59. GAAP operating margin was 18.3%. Excluding stock-based compensation expense of $43.9 million and stock-based Indian fringe benefit taxes of $8.1 million, non-GAAP operating margin was 20.2%. Reconciliations of these non-GAAP financial measures to GAAP operating results and diluted EPS are included in the table at the end of this release.
2009 Outlook - First Quarter & Full Year
Based on current global economic weakness and recent customer feedback, the Company is now providing the following guidance:
- First quarter 2009 revenue anticipated to be at least $735 million.
- First quarter 2009 diluted EPS is expected to be $0.37 to $0.38 on a GAAP basis and $0.41 to $0.42 on a non-GAAP basis, which excludes $0.04 of estimated stock-based compensation and stock-based Indian fringe benefit tax expense.
- Fiscal 2009 revenue expected to be at least $3.1 billion, up at least 10% compared to 2008.
- Fiscal 2009 diluted EPS expected to be at least $1.54 on a GAAP basis, and at least $1.72 on a non-GAAP basis, which excludes $0.18 of estimated stock-based compensation and stock-based Indian fringe benefit tax expense.
- Due to current volatility in the currency markets, EPS guidance excludes any non-operating foreign currency exchange gain or loss.
"During 2008 we managed prudently, expanded selectively, and reinvested succinctly to maintain our industry-leading growth and distinct competitive differentiation," concluded Gordon Coburn, Chief Financial and Operating Officer. "In addition, we finished the year with the strongest balance sheet in our history, including over $924 million in cash and short-term/long-term investments. We believe that Cognizant is well-positioned to face the global economic challenges of the coming year and to continue to deliver value to our customers and, thereby, our shareholders."