Information technology and BPO services firm Cognizant Technology Solutions Corp. (CTSH) reported Tuesday higher profit for the third quarter, driven by strong organic growth across all industry sectors, geographies and service lines. Adjusted earnings per share and revenues beat market projections. Further, the Teaneck, New Jersey-based company issued a fourth-quarter forecast and lifted fiscal 2009 guidance above Wall Street view.
Third-quarter net income was $136.57 million or $0.45 per share, compared to $112.83 million or $0.38 per share in the same quarter last year. The company noted that the results for both periods included stock-based compensation expense and income related to the repeal of the stock-based Indian fringe benefit tax.
On a non-GAAP basis, earnings for the quarter grew to $0.48 per share from $0.40 per share in the year-ago quarter. Earnings for the quarter also included the impact of $0.01 per share in net non-operating foreign currency exchange losses.
On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $0.41 per share for the quarter. Analysts' estimates typically exclude special items.
In its preceding second quarter, Cognizant had reported GAAP net income of $141.3 million or $0.47 per share, and non-GAAP earnings of $0.50 per share, both higher than previous year.
Third-quarter revenues grew 16% to $853.49 million from prior year's $734.73 million, beating 21 Wall Street analysts' consensus revenue estimate of $805.10 million for the quarter. Sequentially, quarterly revenue rose 10% from $776.6 million recorded in the second quarter.
Cognizant was projecting third-quarter GAAP earnings of $0.40 per share, non-GAAP earnings of $0.44 per share, on revenues of at least $800 million.
In the quarter, income from operations rose to $161.78 million from last year's $142.63 million, while operating margin dropped to 19% from 19.4% in the previous year.
On an adjusted basis, non-GAAP income from operations went up to $172.37 million from $152.80 million a year ago, and non-GAAP operating margin was 20.2%, above the company's targeted range of 19% to 20%, but below prior year's margin of 20.8%.
Commenting on the results, Francisco D'Souza, President and Chief Executive Officer of Cognizant, said, "We experienced strong organic growth across all industry sectors, geographies and service lines this quarter. The sequential revenue increase of $76.9 million is the largest in the history of the company. Our constant focus on customer service and reinvesting in our business continues to generate industry-leading results."
Gordon Coburn, Chief Financial and Operating Officer, commented, "We are delighted that, despite the ongoing weak global economic environment, we delivered strong, broad-based revenue growth during the quarter. During the quarter we remained, as always, focused on operational discipline - enabling us to quickly ramp up to meet the surge in demand, while maintaining healthy operating margins and high quality of service."
Among peers, Infosys Technologies Ltd (INFY), an India-based consulting and IT services provider, in early October reported a decline in profit for the second quarter from the year-ago period, on lower revenues and higher income tax rate. On the IFRS basis, the company reported net profit of $317 million or $0.56 per equity share, down from $320 million or $0.56 per equity share in the same period last year. IFRS revenues for the quarter were $1.154 billion, down 5.1% from $1.216 billion generated for the same period last year.
Last week, India-based business software and services company Wipro Ltd. (WIT) reported a 21% increase in profit for the second quarter from last year, after the company won more orders and pricing pressures eased. For the second quarter, net income attributable to equity holders of Wipro under IFRS basis was Rs 11.71 billion, or $243 million, compared to Rs 9.70 billion in the same period last year. Earnings per share were Rs 7.97 or $0.17, up from Rs 6.63 in the year-ago period. Net income on an adjusted Non-GAAP basis was Rs 11.64 billion, or $242 million, up 20% from Rs 9.73 billion in the previous year. Non-GAAP adjusted earnings per share for the quarter were Rs 7.99 or $0.17, up 20% over the same period last year. Total revenue for the quarter rose 6% to Rs 69.18 billion, or $1.44 billion.
For the nine months of fiscal 2009, Cognizant's net income grew to $390.96 million or $1.30 per share from $318.56 million or $1.06 per share in the previous year. Non-GAAP earnings rose to $1.39 per share from prior year's $1.18 per share. Nine-month revenues were $2.38 billion, higher than previous year's $2.06 billion.
Looking ahead, for the fourth quarter, Cognizant expects GAAP earnings to be $0.45 per share, and non-GAAP earnings to be $0.49 per share, which excludes $0.04 per share of estimated stock-based compensation expense. Fourth quarter 2009 revenue is anticipated to be at least $880 million. Analysts expect the company to report earnings of $0.42 per share, with estimates ranging between $0.40 and $0.44 per share, on revenues of $829.83 million for the fourth-quarter.
Further, the company raised its fiscal 2009 GAAP earnings outlook to $1.75 per share, from the prior outlook of at least $1.66 per share. The company also raised its fiscal 2009 non-GAAP earnings guidance to $1.88 per share from the previous projection of at least $1.80 per share.
Non-GAAP earnings forecast excludes $0.13 per share of estimated stock-based compensation and stock-based Indian fringe benefit tax expense, as well as any future non-operating foreign currency exchange gain or loss due to continued volatility in the currency markets.
For fiscal 2009, revenue is now expected to be at least $3.255 billion, compared to prior outlook of at least $3.14 billion. Analysts expect the company to report earnings of $1.68 per share on revenues of $3.16 billion for fiscal 2009. The revised revenue forecast represents at least 15.5% growth from last year, while analysts project a growth of 12.2%.
CTSH closed Monday's regular trading session at $38.80, up $0.15, on a volume of 5 million shares. In the past 52 weeks, shares have been trading in a broad range of $14.38 to $41.66.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.