Cognizant income jumps 48%

IT and BPO services provider Cognizant Technology Solutions' third quarter revenues for the period ended September 30 increased by 48 per cent to $558.8 million, compared with $377.5 million in the corresponding quarter a year ago.

On a sequential basis, the company's revenues rose 8 per cent from $516.5 million in the previous quarter.

The net income in the third quarter was $96.2 million, up 58 per cent from $61 million in the corresponding period last year. The operating margins, under GAAP, were 18.1 per cent.

Excluding a stock-based compensation expense of $9.2 million, the non-GAAP operating margin was 19.7 per cent. This is at upper end of the company's targeted 19-20 per cent range.

The results include a one-time tax benefit of $2.8 million and a pre-tax foreign exchange gain of $2.6 million.

Francisco D'Souza, president and chief executive officer, said that third quarterly revenues were driven by strong organic revenue growth across verticals and geographies, and acceleration in the European business.

The revenues from big European banks and others grew over 90 per cent year-on-year and 24 per cent sequentially, accounting for 17 per cent of total revenues in the third quarter.

Gordon Coburn, chief financial and operating officer, said that the company focussed on optimising its business model during the quarter to meet the changing market conditions and delivered sequential margin expansion.

The company ended the quarter with more than $800 million in cash and short-term investments, and made efforts to increase its utilization rates by recruiting actively. Over 50,000 employees were on the rolls at end of the third quarter.

The company has given a revenue guidance of $590-$595 million for the fourth quarter of 2007. The total income in FY07 would be between $2.12 billion and $2.13 billion, up over 49 per cent compared with 2006. The total headcount by end-2007 is expected to be approximately 55,000, the company said.

The results reflect the 2:1 stock-split carried out by the company, effective from October 16. The quarterly diluted EPS on a GAAP basis was $0.32 compared with $0.20 a year earlier.

Revenues for the nine months ended September 30 increased to $1.54 billion, up 54 per cent from $999.8 million in the same period of 2006.