Cognizant FY07 revenue crosses $2 bn

Q4 net profit grows 39% to $96.3 mn.

Cognizant Technology Solutions announced that fourth quarter profit rose 39 per cent, even as revenues in 2007 surpassed the $2 billion mark in line with its guidance for the last year.

The computer services provider registered a net profit of $96.3 million for the October-December 2007 period, against $69.5 million in the corresponding period of the previous year, driven by robust operating margins (non-GAAP) growth of 20.3 per cent.

Taking the cue, while the markets were down 62 points, the IT index was up 3.73 per cent.

This is well beyond the 19-20 per cent the company expected in the quarter. However, it excludes a stock-based compensation expense of $9.8 million and a $5.9 million non-cash operating charge resulting from the nine-month impact of the recently-enacted fringe benefit tax.

Marching ahead
Total revenues in the fourth quarter increased 41 per cent to $600 million (about Rs 2,370 crore) against $424.4 million (about Rs 1,675 crore) in the corresponding quarter of the previous year.

Sequentially, revenue increased seven per cent from $558.8 million in July-September quarter.

Seventy per cent of the company's revenue comes from financial services and healthcare sectors that are expected to be hit by the economic slowdown in the US, which is why Cognizant's results are important to analysts.

Full year revenues increased to $2.136 billion, up 50 per cent from $1.424 billion in the previous year. Net profit was up 50 per cent to $350.1 million for the year as compared with $232.8 million in the year ago.

Revenue pie
North America contributed 81 per cent to the revenue pie, Europe 18 per cent, and Asia just one per cent.

In Europe, the company's revenue grew 89 per cent year-on-year. The BFSI and healthcare verticals grew 42 per cent and 35 per cent year-on-year, while manufacturing and retail grew over 50 per cent.

During the December quarter the company closed the acquisition of marketRx, which it expects will enable it to enhance "our strong market position in data analytics and the life sciences industry".

Outlook for 2008
Cognizant has targeted a 38 per cent growth in revenues to at least $2.95 billion in fiscal 2008.

Total headcount by end-2008 is expected to be between 72,000 and 75,000, reflecting the company's plan to further increase utilisation rates throughout the year.

GOOD SHOW

Cognizant hired 6,500 professionals in Oct-Dec 2007, taking its global headcount to 55,400

Employee attrition was down at 12.4%, as compared with 16.9% in the year ago period

North America contributed 81% to the revenue, Europe 18%, and Asia just 1%