10-QPeriod: Q1 FY2010

COGNIZANT TECHNOLOGY SOLUTIONS CORP Quarterly Report for Q1 Ended Mar 31, 2010

Filed May 7, 2010For Securities:CTSH

Summary

Cognizant Technology Solutions Corporation (CTSH) reported strong financial results for the three months ended March 31, 2010. Revenue increased significantly by 28.7% year-over-year to $959.7 million, driven by broad-based growth across all business segments and continued penetration in the European market, particularly the UK. Net income saw a substantial rise of 33.9% to $151.5 million, with diluted earnings per share improving to $0.49 from $0.38 in the prior year period. The company highlighted strong performance in its Financial Services and Healthcare segments, alongside robust growth in Manufacturing/Retail/Logistics. Operating margin improved to 19.1% from 18.5%, reflecting operational efficiencies. Cognizant also reported an increase in active clients to 597 and maintained a healthy balance sheet with $1.43 billion in cash and short-term investments, indicating a stable liquidity position.

Financial Highlights

45 data points
Beta

Revenue

$959.72M

Net Income

$151.50M

15.8% Net Margin

EPS (Diluted)

$0.24

Total Assets

$3.51B

Cash & Equivalents

$1.08B

Free Cash Flow

-$21.89M

Financial Statements
Beta
Revenue$959.72M
SG&A Expenses$194.99M
Operating Income$183.02M
Net Income$151.50M
EPS (Basic)$0.26
EPS (Diluted)$0.24
Shares Outstanding (Basic)595.77M
Shares Outstanding (Diluted)613.33M

Key Highlights

  • 1Revenue grew 28.7% year-over-year to $959.7 million in Q1 2010.
  • 2Net income increased by 33.9% to $151.5 million.
  • 3Diluted EPS rose to $0.49 from $0.39 in the prior year's quarter.
  • 4Operating margin improved to 19.1% from 18.5%.
  • 5The company added 37 new clients, bringing the total to 597.
  • 6Strong growth was observed across all business segments, especially Manufacturing/Retail/Logistics (+40.7%) and Healthcare (+33.3%).
  • 7Cash and cash equivalents plus short-term investments stood at $1.43 billion, indicating strong liquidity.

Frequently Asked Questions

For the three months ended March 31, 2010, Cognizant reported a significant increase in revenue, up 28.7% to $959.7 million compared to $745.9 million in the same period of 2009. Net income also rose by 33.9% to $151.5 million, translating to diluted earnings per share of $0.49, an increase from $0.38 in the prior year.

All business segments showed strong performance. Financial Services revenue grew 20.3%, Healthcare revenue grew 33.3%, Manufacturing/Retail/Logistics revenue surged by 40.7%, and the Other segment saw a 32.7% increase. The company also highlighted strong growth in the European market, particularly the UK.

Cognizant maintained a strong liquidity position. As of March 31, 2010, the company had cash and cash equivalents and short-term investments totaling approximately $1.43 billion. Working capital was approximately $1.89 billion, indicating no anticipated near-term liquidity issues.

The key drivers included strong performance across all business segments, continued penetration in the European market (especially the UK), expansion of service offerings allowing for cross-selling, increased penetration at existing customers, and the growing market acceptance of global delivery for IT services and business process outsourcing.