10-KPeriod: FY2009

COGNIZANT TECHNOLOGY SOLUTIONS CORP Annual Report, Year Ended Dec 31, 2009

Filed February 25, 2010For Securities:CTSH

Summary

Cognizant Technology Solutions Corporation's (CTSH) 2009 Form 10-K filing highlights a year of significant revenue growth, reaching $3.28 billion, a 16.4% increase year-over-year. This growth was driven by strong performance across its key business segments, particularly Healthcare and Manufacturing/Retail/Logistics, and expansion in North America and Europe. The company also saw robust growth in emerging Asian markets. Despite economic uncertainties, CTSH demonstrated resilience with an improved operating margin of 18.9%, benefiting from favorable foreign currency exchange rates and operating efficiencies. Key to their strategy is the continued focus on expanding service offerings, deepening long-term customer relationships, and leveraging their integrated global sourcing model. The company also strategically pursued acquisitions to enhance capabilities and geographic presence. With a strong balance sheet, ample liquidity, and a clear focus on investing in talent and service innovation, Cognizant appears well-positioned to navigate the evolving IT services landscape.

Financial Highlights

46 data points
Beta

Revenue

$3.28B

Net Income

$534.96M

16.3% Net Margin

EPS (Diluted)

$0.89

Total Assets

$3.34B

Cash & Equivalents

$1.10B

Free Cash Flow

$595.69M

Financial Statements
Beta
Revenue$3.28B
SG&A Expenses$721.36M
Operating Income$618.49M
Net Income$534.96M
EPS (Basic)$0.91
EPS (Diluted)$0.89
Shares Outstanding (Basic)586.61M
Shares Outstanding (Diluted)602.23M

Key Highlights

  • 1Revenue grew by 16.4% to $3.28 billion in 2009, driven by strong demand across all business segments.
  • 2Operating margin improved to 18.9% from 18.3% in 2008, aided by favorable currency movements and operational efficiencies.
  • 3Healthcare and Manufacturing/Retail/Logistics segments showed robust growth exceeding 25%.
  • 4The company expanded its presence in Europe and experienced significant growth in Asian markets.
  • 5Cognizant continued to focus on strategic client relationships, with 97% of 2009 revenue from customers also clients in 2008.
  • 6Despite economic headwinds, the company maintained a strong liquidity position with $1.4 billion in cash, cash equivalents, and short-term investments.
  • 7Four strategic acquisitions were completed in 2009 to strengthen specific service offerings and delivery capabilities.

Frequently Asked Questions

Cognizant's revenue growth in 2009 was driven by strong performance in its Healthcare and Manufacturing/Retail/Logistics segments, significant growth in North America and Europe, expansion into Asian markets, the broadening of its service offerings, and increased penetration at existing customers.

The company's operating margin improved to 18.9% in 2009, up from 18.3% in 2008. This improvement was primarily due to the favorable impact of the depreciation of the Indian Rupee against the U.S. Dollar and achieving operating efficiencies as revenue growth outpaced headcount growth. Investments in talent and service expansion also contributed.

Cognizant's strategy includes continued investment in its talent base and new service offerings, deepening partnerships with existing customers to increase IT spend share, expanding its presence in Europe and Asia Pacific, growing its Infrastructure Management and BPO practices, aggressively increasing its customer base, and pursuing opportunistic acquisitions.

Key risks include the complexities and uncertainties of global operations, particularly in India; fluctuations in foreign currency exchange rates; potential anti-outsourcing legislation; intense competition; dependence on a few large customers; reliance on client satisfaction; and the challenges of rapid growth and technological change.