Cognizant reports fourth quarter and full year 2010 results

by CXOtoday Staff    Feb 08, 2011

financial reportsCognizant Technology Solutions (NASDAQ: CTSH), provider of information technology, consulting, and business process outsourcing services, recently announced its fourth quarter and full year 2010 financial results.

“As our clients continue to recover from the recent economic turmoil, it’s clear that our industry stands at yet another inflection point. Clients increasingly turn to us as they look to outsource a broader range of services and simultaneously address the secular and technological shifts impacting their industries. We believe that these trends, and our resilience in meeting them, should provide strong support for growth as we enter 2011,” said Francisco D’Souza, president and CEO, Cognizant.

Revenue for the fourth quarter of 2010 rose to $1.31 billion, up 45.2 percent from $902.7 million in the fourth quarter of 2009. GAAP net income was $206.2 million, or $0.66 per diluted share, compared to $144.0 million, or $0.47 per diluted share, in the fourth quarter of 2009. Diluted earnings per share on a non-GAAP basis were $0.70. GAAP operating margin for the quarter was 18.7 percent. Excluding stock-based compensation expense of $14.9 million, non-GAAP operating margin was 19.8 percent, in line with the company’s targeted 19-20 percent range. Reconciliations of non-GAAP financial measures to GAAP operating results and diluted EPS are included at the end of this release.

“Strong investments in our people, processes and infrastructure have allowed us to provide increasing value to our clients, while generating industry-leading growth,” remarked Gordon Coburn, CFO and COO. “Our intense focus on operational excellence continues to pay off. We crossed the 100,000 employee mark in the fourth quarter, while at the same time driving attrition levels down. In addition, strong cash collections helped drive an increase in cash and short-term investments of almost $300 million during the quarter to a total of over $2.2 billion.”

Revenue for 2010 increased to $4.59 billion, up 40.1 percent from $3.28 billion for 2009. GAAP net income was $733.5 million, or $2.37 per diluted share, compared to $535.0 million, or $1.78 per diluted share, for 2009. Diluted earnings per share on a non-GAAP basis was $2.51. GAAP operating margin was 18.8 percent. Excluding stock-based compensation expense of $57.0 million, non-GAAP operating margin was 20.0 percent. 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.

The company has provided guidance for the First Quarter and Full Year 2011 Outlook.Cognizant anticipates first quarter of 2011 revenue to be at least $1.36 billion, while diluted EPS is expected to be $0.63 on a GAAP basis and $0.67 on a non-GAAP basis, which excludes $0.04 of estimated stock-based compensation expense.

Similarly, fiscal 2011 revenue is estimated at least $5.79 billion, up at least 26 percent compared to 2010, whereas, fiscal 2011 diluted EPS expected to be at least $2.68 on a GAAP basis, and $2.85 on a non-GAAP basis, which excludes $0.17 of estimated stock-based compensation expense. Due to continued volatility in the currency markets, stated Cognizant EPS guidance excludes any non-operating foreign currency exchange gain or loss.