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Cognizant reports 6.2% revenue growth, sees 2015 up 19%

Cognizant Technology Solutions Corporation (NASDAQ: CTSH), a leading provider of information technology, consulting, and business process outsourcing services, said Q4 revenue rose to $2.74 billion, up 16.4% from the year-ago quarter and 6.2% sequentially.

In comparison, Infosys and TCS have reported sequential growth in the range of 1% for the same quarter. Adjusted for acquisitions, Cognizant’s revenue was up 3.1% quarter on quarter.

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Full year 2015 revenue expected to be at least $12.21 billion, up at least 19% compared to 2014, the IT services provider said. Full year 2015 diluted EPS on a non-GAAP basis expected to be at least $2.91.

The outlook is stronger than what other Indian outsourcing companies have provided. TCS CEO Chandrasekaran refused to say whether next financial year would be better than the current one, when asked for his outlook recently.

“We closed 2014 on a strong note. Revenue growth, excluding the TriZetto acquisition, exceeded the guided range for the quarter, reflecting the strong demand for our services,” said Karen McLoughlin, Chief Financial Officer. “Despite current exchange rates which will negatively impact 2015 revenue growth by approximately 2%, compared to average 2014 exchange rates, we are pleased to provide 2015 guidance of at least 19% compared to 2014.”

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Excluding the fourth quarter revenue from the acquisition of TriZetto, quarterly revenue was up 13.0% from the year-ago quarter and 3.1% sequentially.

Quarterly diluted EPS on a GAAP basis was $0.59, compared to $0.53 in the year-ago quarter.

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Net headcount addition for the quarter was approximately 11,800, including TriZetto, and year-end headcount was approximately 211,500.

Revenue for the fourth quarter of 2014 rose to $2.74 billion, up 16.4% from $2.36 billion in the fourth quarter of 2013. Excluding fourth quarter revenue of $80.6 million from TriZetto, quarterly revenue was up 13.0% from the year-ago quarter.

GAAP net income was $362.9 million, or $0.59 per diluted share, compared to $324.3 million, or $0.53 per diluted share, in the fourth quarter of 2013.

Diluted EPS on a non-GAAP basis was $0.67, compared to $0.59 in the fourth quarter of 2013. GAAP operating margin was 17.5% and non-GAAP operating margin was 19.4% for the fourth quarter.

“Despite unfavorable European currency movements during the fourth quarter, we finished 2014 with strong revenue performance and believe we are well positioned to continue that momentum into 2015 on the strength of our integrated consulting, technology, digital and business services capabilities,” said Francisco D’Souza, Chief Executive Officer of Cognizant. 

“Business leaders globally are facing dramatically compressed innovation cycles and are challenged with the dual mandate of simultaneously achieving efficiency and innovation. They are turning to us as a partner that can help them re-imagine their businesses for the digital era.”

“2014 was a significant year, marking 20 years of innovation and growth for Cognizant,” said Gordon Coburn, President. “Integration of our $2.8 billion acquisition of TriZetto, completed in the fourth quarter, is well underway and we’re excited by the healthcare opportunities we see.  As we crossed the 200,000 employee mark, we’ve been able to recruit top talent from around the world, and believe we are in a unique position in the market to address a wide range of opportunities fueled by digital transformations across all of our industry segments, service lines and geographies.”

Revenue for 2014 increased to $10.26 billion, up 16.1% from $8.84 billion for 2013. Excluding revenue of $80.6 million from TriZetto, revenue was up 15.1% from 2013. GAAP net income for 2014 was $1.44 billion, or $2.35 per diluted share, compared to $1.23 billion, or $2.02 per diluted share, for 2013. Diluted EPS on a non-GAAP basis was $2.60. GAAP operating margin was 18.4% and non-GAAP operating margin was 20.2% for 2014. Reconciliations of these non-GAAP financial measures to GAAP operating results and diluted EPS are included in the table at the end of this release.

First quarter 2015 revenue expected to be at least $2.88 billion, the company said. First quarter 2015 diluted EPS on a non-GAAP basis is expected to be at least $0.69.

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