10-KPeriod: FY2014

COGNIZANT TECHNOLOGY SOLUTIONS CORP Annual Report, Year Ended Dec 31, 2014

Filed February 27, 2015For Securities:CTSH

Summary

Cognizant Technology Solutions Corp. (CTSH) reported strong revenue growth for the fiscal year ended December 31, 2014, reaching $10.26 billion, a 16.1% increase year-over-year. This growth was driven by solid performance across all business segments, particularly Financial Services (41.8% of revenue) and Healthcare (26.2% of revenue), and expansion in North America and international markets. A significant event was the acquisition of TriZetto in the fourth quarter for approximately $2.63 billion, which bolstered the company's healthcare IT offerings and digital delivery capabilities. The company continues to leverage its global delivery model, combining on-site client teams with offshore delivery centers, to provide a comprehensive suite of IT, consulting, and business process services. While operating margins saw a slight decrease to 18.4% (GAAP), the company maintained a non-GAAP operating margin within its target range of 19-20%, reinvesting profits into service expansion, geographic presence, and talent development. Cognizant emphasizes client relationships, with a high percentage of revenue coming from existing clients, and continues to explore strategic acquisitions to enhance its service portfolio and market reach.

Financial Highlights

49 data points
Beta

Revenue

$10.26B

Net Income

$1.44B

14.0% Net Margin

EPS (Diluted)

$2.35

Total Assets

$11.48B

Cash & Equivalents

$2.01B

Free Cash Flow

$1.26B

Financial Statements
Beta
Revenue$10.26B
SG&A Expenses$2.04B
Operating Income$1.89B
Interest Expense$3.00M
Net Income$1.44B
EPS (Basic)$2.37
EPS (Diluted)$2.35
Shares Outstanding (Basic)608.00M
Shares Outstanding (Diluted)613.00M

Key Highlights

  • 1Reported total revenue of $10.26 billion for the year ended December 31, 2014, a 16.1% increase from the prior year.
  • 2Acquired TriZetto in Q4 2014 for approximately $2.63 billion, significantly strengthening its healthcare IT capabilities and digital delivery.
  • 3Financial Services remained the largest segment, accounting for 41.8% of total revenue, followed by Healthcare at 26.2%.
  • 4Maintained a strong global delivery model, emphasizing client-specific expertise and a blended on-site/offshore workforce.
  • 5Revenue growth was observed across all geographic markets, with North America contributing 76.8% of total revenue, followed by Europe at 19.3%.
  • 6Operating margin slightly decreased to 18.4% (GAAP) in 2014, while non-GAAP operating margin remained within the target 19-20% range.
  • 7Demonstrated a strong focus on client retention, with 97.1% of 2014 revenue coming from clients who were customers in 2013.

Frequently Asked Questions

For the fiscal year ended December 31, 2014, Cognizant reported revenues of $10,262.7 million and a net income of $1,439.3 million.

The most significant event was the acquisition of TriZetto in the fourth quarter for approximately $2.63 billion. This acquisition aimed to accelerate the company's ability to provide integrated solutions to the healthcare industry and enhance its digital delivery capabilities. Cognizant also completed three other acquisitions to strengthen its digital delivery capabilities.

The TriZetto acquisition significantly bolstered Cognizant's Healthcare segment, contributing $80.6 million in revenue in 2014. It broadened the company's solutions offerings in healthcare IT and created cross-selling opportunities for business process, infrastructure management, and consulting services.

Cognizant's strategy involves reinvesting profits (above its target non-GAAP operating margin) back into the business. This includes strengthening and expanding its service portfolio, growing its geographic presence, hiring experienced personnel, training its technical staff, and investing in emerging digital opportunities. They also pursue strategic acquisitions, joint ventures, and alliances.