Cognizant net up 16%

Last Updated: Fri, Feb 08, 2013 04:11 hrs

Tops estimates, surpasses Infy in revenues for CY12

Though Nasdaq-listed Cognizant Technology Solutions Corporation reported better-than-expected fourth quarter numbers, its forecast of 17 per cent for CY13, lower than the 20 per cent in CY12, disappointed many.

Analysts pointed out the guidance of 17 per cent includes anticipated acquisition revenue of $90 million. Excluding that, the company will grow around 16 per cent. It expects a full year revenue of $8.6 billion.

Cognizant reported 16 per cent growth in net profit during the quarter ended December 31 at $279 million as compared with $240 million in the corresponding quarter last year.

Meanwhile, for the first time, on a year to date basis, Cognizant surpassed Infosys in terms of revenue. For 2012, Infosys had reported total revenue of $7.25 billion, compared with $7.35 billion for the year reported by Cognizant.

In terms of growth, while Infosys reported six per cent growth, Cognizant reported 17 per cent. During the quarter ended December 2011, Infosys had reported revenue of $1.8 billion, while the Cognizant revenue was $1.7 billion.

Revenue for 2012 increased to $7.35 billion, up by 20 per cent from $6.12 billion for 2011.

It may be noted starting of 2012, Cognizant guided for 23 per cent growth, however by mid 2012 it revised it to 20 per cent. The overall revenue growth reported in 2012 was in line with company's revised expectation.

"Their guidance for CY13 is just about in line. We are neither disappointed nor too excited. I think the problem in the pharmaceutical industry is what pulling down Cognizant. And as the company suggested even 2013 seems to be a tough year for the Pharma industry," said an analyst on condition of anonymity. The Company has provided first quarter 2013 revenue anticipated to be at least $2.0 billion.

GAAP net income was $1.05 billion, or $3.44 per diluted share, compared to $883.6 million, or $2.85 per diluted share, for 2011.

“We are pleased to once again deliver industry-leading revenue growth in 2012,” said Francisco D’Souza, Chief Executive Officer of Cognizant in a statement.

He added, as the company look to 2013, it is clear that secular industry shifts, new technology architectures, virtual business models and changing demographics are forcing clients to re-examine how they operate.

Growth was across sector. Financial services grew 20 per cent on a year-on-year basis and 3.4 per cent sequentially. Healthcare, manufacturing, logistic and retail grew at 3.5 per cent and 3.1 per cent respectively sequentially. In terms of geographies, North America grew 2 per cent quarter-on-quarterand Europe grew 17.6 per cent.

“Generating broad-based, industry leading growth of 20 per cent within a tough demand environment of 2012 is a testament to the strength of our business model,” said Karen McLoughlin, Chief Financial Officer.

Furthermore, 2012 was a strong year of cash generation. Our cash and short-term investments balances grew by $430 million during the year, after covering over $480 million of share repurchases, he said.

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