Cognizant completes CY14 on strong notes

Revenue growth exceeds guidance; gives healthy revenue guidance for CY15 at 19%

Information technology (IT) services company Cognizant on Wednesday posted better-than-expected numbers in the fourth quarter as well as the accounting year ended December 31. It gave a robust growth forecast for the next year.

The Nasdaq-listed IT services company, which follows an offshore delivery model like Indian players’, reported 16 per cent growth in revenues for the year, ahead of the upper end of its forecast of 14.7-14.9. It projected its FY15 revenue to grow 19 per cent to touch $12.21 billion.

For CY14, Cognizant had initially given a forecast of 16.5 per cent, which it revised downwards, citing “weakness in certain clients and elongated sales cycles in the case of large deals”.

For the quarter ended December (its fourth quarter), Cognizant reported 11.6 per cent growth in its net profit to $363 million year-on-year. Sequentially, it grew two per cent. The revenues at $2.74 billion grew 16.4 per cent from the year-ago quarter while sequentially it increased 6.2 per cent.

On a full year basis, Cognizant’s net profit grew 17 per cent to $1.44 billion, compared with the same quarter in the year-ago period. The revenues grew 16.1 per cent to $10.26 billion. However, excluding the revenues of TriZetto, the US-based healthcare solutions provider, acquired in September last year, Cognizant’s net profit grew 15.1 per cent.

Francisco D’Souza, chief executive, said, “Despite unfavorable European currency movements during the fourth quarter, we finished 2014 with a 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.”

The growth in the October-December was primarily driven by the health care segment, which accounts for 28 per cent of Cognizant’s overall revenues and has been further strengthened with the acquisition of TriZetto.

The health care segment grew close to 18 per cent sequentially followed by the financial services one, which grew 3.6 per cent.

North America, which accounts for close to 78 per cent of its revenues, grew 7.7 per cent over the previous quarter.

In the October-December period, Cognizant added 11,800 people on net basis (including those joined from TriZetto) which took its overall headcount to 211,500 at the end of the year. “2014 was a significant year, marking 20 years of innovation and growth for Cognizant,” said Gordon Coburn, President. Coburn said that the integration of the TriZetto is underway and the company is excited with the healthcare opportunities.

“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,” he added.

Employee attrition during the quarter (including the BPO operations) declined by 110 basis points to 14.5 per cent.