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Teaneck, NJ - October 31, 2005 - Cognizant Technology Solutions Corporation (NASDAQ: CTSH), a leading provider of IT services, today announced its financial results for the third quarter ended September 30, 2005.
Highlights-Third Quarter 2005
- Quarterly revenue increased to $235.5 million, up 52% from the year-ago quarter
- Net income increased to $40.6 million, up 56% from the year-ago quarter
- Diluted quarterly EPS of $0.28 compared to $0.18 in the year-ago quarter
- Record quarter of hiring, with a net addition of over 3,100 associates, bringing total to 22,400
Revenue for the third quarter increased to $235.5 million, up 52% from $155.4 million in the third quarter of 2004. Net income for the third quarter increased to $40.6 million, or $0.28 per diluted share compared to $26.1 million or $0.18 per diluted share in the third quarter of 2004. Operating margin for the quarter was 20.0%, in line with operating margin achieved in the third quarter of 2004.
"We are pleased to report another record quarter of sustained industry-leading growth for Cognizant," commented Lakshmi Narayanan, President and CEO of Cognizant. "We again secured significant client wins during the third quarter, adding 31 new clients while expanding our relationships with existing strategic customers. Our performance is a testament to the caliber of our industry expertise and depth of service offerings, and most importantly, our ability to translate our skill set into tangible business value for our clients. We are embedding ourselves even more deeply in our key vertical domains, as particularly evidenced by 14% sequential growth in revenue from financial services and insurance customers and an 18% sequential increase in revenue from our healthcare and life sciences segment. I am confident we will continue to meet the growing demand for industry expertise and strategic solutions, and are well positioned to deliver consistent growth for the Company and significant value for our shareholders moving forward."
2005 Outlook-Fourth Quarter & Full Year
Based on current visibility, the Company is now providing the following guidance:
- Fourth quarter 2005 revenue anticipated to be at least $252 million
- Fourth quarter 2005 expected diluted EPS of $0.29
- Fiscal 2005 revenue anticipated to be at least $881 million
- Fiscal 2005 diluted EPS of $1.03
- Total headcount by end of full year 2005 expected to exceed 23,500
"Cognizant's solid revenue and EPS growth reflect the Company's consistent ability to parlay its broad-based industry expertise and service offerings into outstanding financial performance," remarked Gordon Coburn, Chief Financial Officer. "During the third quarter, we also maintained robust operating margins of 20%-at the high end of our target range-and managed our Balance Sheet to generate significant free cash. We continued to aggressively invest in our highly skilled employee base, adding over 3,100 employees in the quarter to strengthen our domain and broad-based technology expertise. Based on our third quarter performance and the strong demand for our services, we have raised our revenue and earnings expectations for full year 2005." Coburn added, "we are in the process of completing the 2006 planning process with our clients and accounts teams, and based on initial feedback, we are highly encouraged about our prospects for continued industry-leading growth in 2006."
Conference Call
Cognizant will host a conference call today, October 31st, at 10:00 a.m. (ET) to discuss the Company's quarterly results. To listen to the call please dial (888) 652-6834 domestically or (706) 679-3288 internationally. The call will also be broadcast live via the Internet at Cognizant's web site, www.cognizant.com. Please go to the web site at least fifteen minutes prior to the call to register, download and install any necessary audio software. A replay will be made available on the web site at www.cognizant.com or by calling (800) 642-1687 for domestic callers and (706) 645-9291 for international callers and entering "7896348" from two hours after the end of the call until 11:59 p.m. (ET) on November 7, 2005.
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About Cognizant
Cognizant (NASDAQ: CTSH) is a leading
provider of IT services. Focused on delivering
strategic information technology solutions
that address the complex business needs
of its clients, Cognizant provides applications
management, development, integration,
and re-engineering, infrastructure management,
business process outsourcing, and a number
of related services such as enterprise
consulting, technology architecture, program
management, and change management through
its onsite/offshore outsourcing model.
Cognizant's more than 23,000 employees
are committed to partnerships that sustain
long-term, proven value for customers
by delivering high-quality, cost-effective
solutions through its development centers
in India and onsite client teams. Cognizant
maintains P-CMM and SEI-CMM Level 5 assessments
from an independent third-party assessor,
was recently named one of Forbes' Best
Small Companies in America for the fourth
consecutive year, and ranked among the
top information technology companies in
BusinessWeek's Hot Growth Companies. Cognizant
is a member of the NASDAQ-100 Index, and
further information about Cognizant can
be found at www.cognizant.com.
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| This press release
includes statements which may constitute
forward-looking statements made pursuant
to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995,
the accuracy of which are necessarily subject
to risks, uncertainties, and assumptions
as to future events that may not prove to
be accurate. Factors that could cause actual
results to differ materially from those
expressed or implied include general economic
conditions and the factors discussed in
our most recent Form 10-K and other filings
with the Securities and Exchange Commission.
Cognizant undertakes no obligation to update
or revise any forward-looking statements,
whether as a result of new information,
future events, or otherwise. |
| COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
| (In thousands, except per share data) |
| |
Three Months Ended |
Nine Months Ended |
| September 30, |
September 30, |
| 2005 |
2004 |
2005 |
2004 |
| Revenues |
$235,536 |
$155,429 |
$628,928 |
$413,892 |
| Cost of revenues |
128,175 |
84,585 |
343,937 |
225,153 |
| Gross profit |
107,361 |
70,844 |
284,991 |
188,739 |
| Selling, general and administrative expenses |
54,759 |
35,889 |
142,295 |
94,614 |
| Depreciation and amortization expense |
5,581 |
4,083 |
16,120 |
11,776 |
| Income from operations |
47,021 |
30,872 |
126,576 |
82,349 |
| Other income/(expense): |
| Interest income |
2,221 |
1,267 |
6,122 |
2,922 |
| Other income/(expense), net |
130 |
(252) |
(589) |
(31) |
| Total other income/(expense) |
2,351 |
1,015 |
5,533 |
2,891 |
| Income before provision for income taxes |
49,372 |
31,887 |
132,109 |
85,240 |
| Provision for income taxes |
8,789 |
5,835 |
23,516 |
15,599 |
| Net income |
$40,583 |
$26,052 |
$108,593 |
$69,641 |
| Basic earnings per share |
$0.30 |
$0.20 |
$0.80 |
$0.53 |
| Diluted earnings per share |
$0.28 |
$0.18 |
$0.74 |
$0.49 |
| Weighted average number of common shares outstanding |
137,186 |
131,747 |
135,786 |
130,248 |
| Weighted average number of common and dilutive shares outstanding |
147,281 |
142,721 |
146,552 |
141,845 |
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| COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION |
| CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
(Unaudited) |
| (In thousands) |
| |
September
30, 2005 |
December
31, 2004 |
| Assets |
| Current Assets |
|
|
| Cash and cash equivalents* |
$214,909 |
$199,296 |
| Short-term investments* |
153,587 |
115,465 |
| Trade accounts receivable, net
of allowances of $1,924 and $1,560
respectively |
146,865 |
96,363 |
| Unbilled Accounts Receivable |
24,723 |
14,154 |
| Deferred income tax assets |
30,043 |
16,815 |
| Other current assets |
21,733 |
11,904 |
| Total Current Assets |
591,860 |
453,997 |
| Property and equipment - net |
126,515 |
90,705 |
| Goodwill |
18,289 |
9,701 |
| Other Intangible assets - net |
16,877 |
12,126 |
| Deferred income tax assets |
10,806 |
- |
| Other assets |
7,389 |
6,216 |
| Total Assets |
$771,736 |
$572,745 |
| Liabilities
and Stockholders' Equity |
| Current Liabilities |
|
|
| Accounts payable |
$15,004 |
$11,190 |
| Accrued expenses and other liabilities |
115,085 |
103,870 |
| Total Current Liabilities |
130,089 |
115,060 |
| Deferred income tax liabilities |
- |
4,156 |
| Total Liabilities |
130,089 |
119,216 |
| Stockholders' Equity |
641,647 |
453,529 |
| Total Liabilities
and Stockholders' Equity |
$771,736 |
$572,745 |
| *In
the first quarter, the Company began
to classify its investment in auction-rate
securities as short-term investments.
These investments were included
in cash and equivalents in previous
periods ($94.15) million as of December
31, 2004), and such amounts have
been reclassified in the accompanying
financial statements to conform
to the current period classification.
This change in classification had
no effect on the amounts of total
current assets, total assets, net
income or cash flow from operations
of the Company. |
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| Contact |
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Gordon Coburn
Chief Financial Officer
201-678-2712 |
Investors:
Gordon McCoun/Peter Schmidt |
Press:
Brian Maddox/Scot Hoffman
Financial Dynamics
212-850-5600
shoffman@fd-us.com |
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