Cognizant Technology Solutions Corp Earnings Cheat Sheet: Five Straight Quarters of Double-Digit Growth

S&P 500 (NYSE:SPY) component Cognizant Technology Solutions Corporation (NASDAQ:CTSH) reported net income above Wall Street’s expectations for the third quarter. Cognizant Technology Solutions provides custom IT consulting and technology services as well as outsourcing services for companies in North America, Europe, and Asia.

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Cognizant Technology Solutions Earnings Cheat Sheet for the Third Quarter

Results: Net income for Cognizant Technology Solutions Corporation rose to $227.1 million (73 cents per share) vs. $203.7 million (66 cents per share) in the same quarter a year earlier. This marks a rise of 11.5% from the year earlier quarter.

Revenue: Rose 31.6% to $1.6 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: CTSH reported adjusted net income of 80 cents per share. By that measure, the company beat the mean estimate of 71 cents per share. Analysts were expecting revenue of $1.57 billion.

Quoting Management: “Cognizant has delivered another strong quarter of industry leading revenue growth with non-GAAP operating margins within our target range. Growth during the quarter was again broad-based across our portfolio of industries, services and geographies,” said Francisco D’Souza, President and CEO. “In spite of persistent macro-economic uncertainties, clients throughout the world continue to invest thoughtfully and strategically in their businesses and are directing investments toward building agility to drive the dual mandates of operational efficiency and business transformation. Cognizant’s continued investments across multiple service horizons help address these dual mandates and drive superior business value regardless of the economic environment.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 39.3%, with the biggest boost coming in the fourth quarter of the last fiscal year when revenue rose 45.2% from the year earlier quarter.

The company has now seen net income rise in three straight quarters. In the second quarter, net income rose 20.8% and in the first quarter, the figure rose 37.5%.

The company has now topped analyst estimates for the last four quarters. It beat the mark by one cent in the second quarter, by 3 cents in the first quarter, and by one cent in the fourth quarter of the last fiscal year.

Gross margin shrank 0.3 percentage point to 42.2%. The contraction appeared to be driven by increased costs, which rose 32.2% from the year earlier quarter while revenue rose 31.6%.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from 74 cents a share to 75 cents over the last ninety days. The average estimate hasn’t changed from $2.79 per share for the fiscal year.

Competitors to Watch: Intl. Business Machines Corp. (NYSE:IBM), iGATE Corporation (NASDAQ:IGTE), Syntel, Inc. (NASDAQ:SYNT), Computer Sciences Corp. (NYSE:CSC), Infosys Tech. Ltd. (NASDAQ:INFY), Wipro Limited (NYSE:WIT), CIBER, Inc. (NYSE:CBR), Edgewater Technology Inc. (NASDAQ:EDGW), Virtusa Corporation (NASDAQ:VRTU), and Patni Computer Systems Ltd. (NYSE:PTI).

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(Source: Xignite Financials)