Summary
Cognizant Technology Solutions Corporation's (CTSH) Q2 2017 results show continued revenue growth, driven by demand for digital services and expansion across various business segments and geographies. The company reported a revenue increase of 8.9% year-over-year for the quarter and 9.8% for the first six months. While overall revenue is trending positively, operating margins saw a slight decrease year-over-year due to increased compensation and benefits costs, foreign currency impacts, and realignment charges. Significant attention is being paid to the ongoing internal investigation regarding potential FCPA violations in India, which has led to increased legal expenses and has been identified as a material weakness in internal controls. The company is implementing remediation measures and cooperating with regulatory bodies. Despite these challenges, Cognizant continues to focus on its digital transformation strategy, investing in talent and service offerings, and returning capital to shareholders through share repurchases and dividends.
Financial Highlights
49 data points| Revenue | $3.67B |
| SG&A Expenses | $709.00M |
| Operating Income | $606.00M |
| Interest Expense | $6.00M |
| Net Income | $470.00M |
| EPS (Basic) | $0.80 |
| EPS (Diluted) | $0.80 |
| Shares Outstanding (Basic) | 589.00M |
| Shares Outstanding (Diluted) | 591.00M |
Key Highlights
- 1Total revenues increased by 8.9% to $3,670 million for the three months ended June 30, 2017, compared to the prior year period.
- 2Net income saw a significant increase of 86.5% to $470 million for the three months ended June 30, 2017, largely due to a lower provision for income taxes compared to the prior year.
- 3The company incurred $39 million in pre-tax realignment charges during the quarter related to a voluntary separation program and other advisory fees, impacting the GAAP operating margin.
- 4An ongoing internal investigation into potential FCPA violations in India continues, with associated legal expenses and a identified material weakness in internal controls over financial reporting.
- 5Cognizant repurchased approximately 21.5 million shares under accelerated share repurchase agreements for $1.5 billion in March 2017 and declared a $0.15 per share dividend in May 2017.
- 6Operating margin decreased slightly to 16.5% from 17.5% year-over-year, impacted by higher costs and realignment charges, though non-GAAP operating margin remained strong at 20.0%.