10-KPeriod: FY2015

COGNIZANT TECHNOLOGY SOLUTIONS CORP Annual Report, Year Ended Dec 31, 2015

Filed February 25, 2016For Securities:CTSH

Summary

Cognizant Technology Solutions Corp. (CTSH) reported strong revenue growth for the fiscal year ended December 31, 2015, with revenues increasing by 21.0% to $12.42 billion. This growth was driven by the acquisition of TriZetto, solid performance across all business segments, particularly Healthcare (up 36.4%), and continued strength in the North American market. The company's net income rose 12.8% to $1.62 billion, leading to a diluted earnings per share of $2.65. While the overall operating margin saw a slight decrease to 17.3% from 18.4% in the prior year, this was attributed to increased compensation and benefit costs, partially offset by the depreciation of the Indian rupee. Cognizant continues to focus on reinvesting profits to strengthen its service portfolio, expand its global presence, and enhance its digital technology capabilities, demonstrating a commitment to long-term growth.

Financial Highlights

50 data points
Beta

Revenue

$12.42B

Net Income

$1.62B

13.1% Net Margin

EPS (Diluted)

$2.65

Total Assets

$13.06B

Cash & Equivalents

$2.13B

Free Cash Flow

$1.91B

Financial Statements
Beta
Revenue$12.42B
SG&A Expenses$2.51B
Operating Income$2.14B
Interest Expense$18.00M
Net Income$1.62B
EPS (Basic)$2.67
EPS (Diluted)$2.65
Shares Outstanding (Basic)609.00M
Shares Outstanding (Diluted)613.00M

Key Highlights

  • 1Revenue for the fiscal year 2015 reached $12.42 billion, a 21.0% increase year-over-year.
  • 2Net income grew by 12.8% to $1.62 billion, with diluted EPS reported at $2.65.
  • 3The acquisition of TriZetto in late 2014 significantly contributed to revenue growth, especially in the Healthcare segment.
  • 4The Financial Services and Healthcare segments remain the largest contributors to revenue, accounting for 40.3% and 29.5% respectively.
  • 5North America continues to be the dominant market, representing 78.6% of total revenue in 2015.
  • 6The company maintained a strong balance sheet with $4.95 billion in cash, cash equivalents, and short-term investments.
  • 7Cognizant continued to invest in its global delivery model and expanding service offerings, particularly in digital technologies.

Frequently Asked Questions

Cognizant's revenue growth in 2015 was driven by several factors, including the acquisition of TriZetto, strong performance across all business segments (notably Healthcare), robust growth in the North American market, and increased customer spending on discretionary projects. Expansion of service offerings, such as digital technologies, consulting, and business process services, also contributed significantly.

The acquisition of TriZetto in November 2014 had a substantial impact, contributing approximately $724.5 million to revenue in 2015. This acquisition significantly boosted the Healthcare segment's performance, which saw a 36.4% revenue increase.

Cognizant plans to continue investing profits back into the business, focusing on strengthening its service portfolio, expanding its geographic presence, enhancing digital technology capabilities, and acquiring new talent. The company also aims to increase its share of IT spending from existing customers and opportunistically pursue strategic acquisitions.

Key risks identified include intense competition, potential decline in operating margins due to cost pressures, security breaches and data privacy concerns, reliance on a few large customers, the need to keep pace with rapid technological advancements, and the impact of global economic conditions and geopolitical instability, particularly concerning its operations in India.