Strong Q3 helps Cognizant raise guidance again

Company beats Street estimates with 15 % rise in net profit

November 05, 2013 09:59 pm | Updated June 08, 2016 07:39 am IST - CHENNAI:

Gordon Coburn. Photo: Bijoy Ghosh

Gordon Coburn. Photo: Bijoy Ghosh

Cognizant Technology Solutions, on Tuesday, rounded off a string of better-than-expected September quarter performances by rival Indian software exporters when it raised its full-year forecast yet again and continued its healthy pace of growth with a 15 per cent rise in net profit.

Increased demand

The strong show was mainly on the back of increased demand for outsourcing services and a revival of discretionary spending, according to Gordon Coburn, President.

The New Jersey-based IT services company, which has a majority of its employees in India, now expects full-year revenue to grow 20.3 per cent to $8.84 billion, up from its August forecast of $8.74 billion.

The company, which announced its results for the third quarter ending September 30, 2013, reported a net profit of $319.6 million, a 15.4 per cent increase compared with the $276.9 million it reported a year ago.

Higher than others

The company’s revenue jumped 6.7 per cent on a sequential basis, which is the highest among its Indian peers, and 22 per cent on a year-on-year basis to $2.31 billion in a quarter which is traditionally known for being strong as clients finalise more business before the end of the year. Cognizant follows a January-December reporting period. Analysts were expecting a net profit of $308.4 million on revenue of $2.26 billion, according to industry estimates.

“Our performance during the quarter was stronger than anticipated due to a faster ramp up in demand for outsourcing services and strong discretionary spend on consulting and technology services,” said Mr. Coburn, in a statement.

“Our continuous reinvestment in our business continues to help us strengthen our capabilities to address our clients’ dual mandate of driving greater performance in their current businesses, while positioning them better for future success,” Mr. Coburn added. The company’s operating margin for the quarter stood at 20.4 per cent, and its total cash and short-term investments increased by $460 million to about $3.4 billion.

“The sheer velocity of change in the industries we serve is driving the C-suite to challenge the status quo and rethink their business models to be relevant for the future,” said Francisco D’Souza, Chief Executive Officer.

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