Summary
Cognizant Technology Solutions Corporation (CTSH) reported strong revenue growth for the nine months ended September 30, 2015, driven by broad segment performance and the acquisition of TriZetto. While net income also increased, the company's operating margin saw a slight decrease due to higher compensation and benefit costs, and increased depreciation from acquisitions. Despite these pressures, Cognizant continues to invest heavily in talent, new service offerings, and geographic expansion, aiming to capture a larger share of its clients' IT spend and adapt to digital transformation trends.
Financial Highlights
47 data pointsBeta
Financial Statements
Beta
| Revenue | $3.19B |
| SG&A Expenses | $627.00M |
| Operating Income | $543.00M |
| Interest Expense | $4.30M |
| Net Income | $397.00M |
| EPS (Basic) | $0.65 |
| EPS (Diluted) | $0.65 |
| Shares Outstanding (Basic) | 608.80M |
| Shares Outstanding (Diluted) | 612.70M |
Key Highlights
- 1Revenue increased by 23.5% to $3,187.0 million for the three months ended September 30, 2015, and by 22.1% to $9,183.5 million for the nine months ended September 30, 2015, compared to the prior year periods.
- 2The acquisition of TriZetto significantly contributed to revenue growth, particularly in the Healthcare segment which saw a 43.3% increase.
- 3Net income rose to $397.2 million ($0.65/share diluted) for the third quarter and $1,200.2 million ($1.96/share diluted) for the nine months, up from $355.6 million ($0.58/share diluted) and $1,076.4 million ($1.76/share diluted) respectively.
- 4Operating margin slightly decreased to 17.0% for the quarter and 17.3% for the nine months, attributed to rising compensation costs and increased depreciation from acquisitions.
- 5The company maintained a strong liquidity position with $4,050.7 million in cash, cash equivalents, and short-term investments as of September 30, 2015.
- 6Cognizant continued its share repurchase program, buying back $156.0 million of its Class A common stock in the third quarter.
Frequently Asked Questions
The primary driver of Cognizant's revenue growth in the third quarter of 2015 was the acquisition of TriZetto in November 2014, which contributed approximately $190.9 million in revenue. Additionally, strong performance across all business segments, increased customer spending on discretionary projects, and geographic market penetration also contributed significantly.
The decrease in operating margin was primarily due to increases in compensation and benefit costs, including higher incentive-based compensation accrual rates, and increased depreciation and amortization expenses resulting from recent acquisitions. These factors were partially offset by the impact of the depreciation of the Indian rupee against the U.S. dollar and decreases in certain operating expenses like travel and professional services.
Cognizant manages its foreign currency exposure through a combination of strategies. A significant portion of its revenue comes from North America, reducing overall currency risk. For costs denominated in Indian rupees, the company uses foreign exchange forward contracts designated as cash flow hedges. Additionally, it uses undesignated foreign exchange forward contracts to hedge balance sheet exposure to certain monetary assets and liabilities.
Cognizant anticipates continued customer focus on cost containment projects, a demand for solutions balancing cost savings with transformation and innovation, and secular changes driven by digital technologies and regulations. They expect volatility in foreign currency rates and the global economy. The integration of the TriZetto business is also a key factor influencing their business.