10-QPeriod: Q2 FY2014

COGNIZANT TECHNOLOGY SOLUTIONS CORP Quarterly Report for Q2 Ended Jun 30, 2014

Filed August 7, 2014For Securities:CTSH

Summary

Cognizant Technology Solutions Corporation (CTSH) reported strong financial results for the second quarter and first half of 2014. For the three months ended June 30, 2014, revenue grew 16.5% year-over-year to $2.52 billion, and net income increased by 23.8% to $371.9 million, resulting in diluted EPS of $0.61. The first six months of 2014 also showed robust growth, with revenues up 18.1% to $4.94 billion and net income up 23.3% to $720.8 million, leading to diluted EPS of $1.18. The company highlighted strong performance across all its business segments and geographic markets, particularly in North America, Europe, and Asia Pacific. Key growth drivers included increased customer spending on discretionary projects, expansion of service offerings like consulting and IT infrastructure services, and continued demand for outsourcing solutions. Cognizant also noted an increase in active clients and strategic clients, reinforcing its market penetration and customer engagement. Financially, the company maintained a healthy liquidity position with $4.13 billion in cash, cash equivalents, and short-term investments as of June 30, 2014, and no third-party debt. The company also announced an expansion of its stock repurchase program, signaling confidence in its financial outlook and commitment to returning value to shareholders.

Financial Highlights

46 data points
Beta

Revenue

$2.52B

Net Income

$371.90M

14.8% Net Margin

EPS (Diluted)

$0.61

Total Assets

$8.69B

Cash & Equivalents

$1.99B

Free Cash Flow

$369.60M

Financial Statements
Beta
Revenue$2.52B
SG&A Expenses$482.90M
Operating Income$488.00M
Interest Expense$0
Net Income$371.90M
EPS (Basic)$0.61
EPS (Diluted)$0.61
Shares Outstanding (Basic)607.90M
Shares Outstanding (Diluted)612.20M

Key Highlights

  • 1Revenue increased by 16.5% to $2.52 billion for Q2 2014 compared to Q2 2013.
  • 2Net income rose by 23.8% to $371.9 million for Q2 2014.
  • 3Diluted EPS for Q2 2014 was $0.61, an increase from $0.49 in Q2 2013.
  • 4Strong revenue growth across all business segments (11.4% to 20.8%) and geographic markets (North America: 15.0%, Rest of Europe: 30.5%, Rest of World: 26.6%).
  • 5Active client count increased to 1,242 as of June 30, 2014, up from approximately 1,100 in the prior year.
  • 6The company maintained a strong liquidity position with $4.13 billion in cash, cash equivalents, and short-term investments.
  • 7Stock repurchase program authorization was increased by $500 million to $2.0 billion, with an extended term.

Frequently Asked Questions

For the three months ended June 30, 2014, Cognizant's revenue increased by 16.5% to $2.517 billion, compared to $2.161 billion for the same period in 2013. For the six months ended June 30, 2014, revenue grew 18.1% to $4.939 billion, compared to $4.182 billion in the prior year.

Net income for the three months ended June 30, 2014, increased by 23.8% to $371.9 million, up from $300.4 million in the prior year. Diluted earnings per share rose to $0.61 from $0.49 in the comparable quarter of 2013.

The company attributes its revenue growth to solid performance across all business segments, sustained strength in North America, continued penetration in European and Asia Pacific markets, increased customer spending on discretionary projects, expansion of service offerings, increased penetration at existing customers, and the growing market acceptance of offshore IT services.

As of June 30, 2014, Cognizant had $4.13 billion in cash, cash equivalents, and short-term investments, with no third-party debt, indicating a strong liquidity position. The company announced an expansion of its stock repurchase program by $500 million to $2.0 billion, extending its term to December 31, 2015, signaling confidence in its financial health and commitment to shareholder returns.