For the second consecutive quarter Cognizant Technology Solutions Corporation has overtaken Infosys in quarterly revenues. In addition, it even beat the leader Tata Consultancy Services (TCS) in quarterly revenue growth.
The Nasdaq-listed Cognizant, which has a large presence in India, remained as the second largest software company in the country after TCS during the quarter ended September 30, wresting the position from Infosys, which held the slot for almost two decades, in the June quarter.
Cognizant reported a 22 per cent increase in net income to $276.9 million for the third quarter ended September 30, 2012 compared with $227.1 million in the third quarter of 2011.
Revenue for the third quarter rose to $1.892 billion, up 18.2 per cent from $1.601 billion in the third quarter of 2011, and up 5.4 per cent sequentially.
The fourth quarter 2012 revenue is anticipated to be at least $1.94 billion.
Fiscal 2012 revenue is expected to be at least $7.34 billion, up at least 20 per cent compared to 2011, the company said in a statement.
“Our consulting-led approach, intimate client relationships, deep domain knowledge and robust execution give us the confidence to deliver revenue growth of at least 20 per cent in 2012,” said Francisco D'Souza, Chief Executive Officer, Cognizant, in a release.
Despite the recent appreciation of the Indian Rupee, Cognizant remains confident it will maintain its non-GAAP operating margin in the 19-20 range, said Karen McLoughlin, Chief Financial Officer, Cognizant.
Cognizant’s extensive India Rupee hedge programme, which now totals approximately $3.7 billion, helps mitigate the impact of such volatility on the company’s operating margins. In addition, strong cash flows during the quarter allowed the company to increase its cash and investment balances by almost $300 million to over $2.6 billion, she said in the release.
Application Development represented 51.2 per cent of revenue while application management represented 48.8 per cent of revenue for the quarter. Development grew 18.4 per cent year-over-year and 4.6 per cent sequentially. Application Management grew 17.9 per cent year-over-year and 6.2 per cent sequentially.
Customers
Cognizant closed the quarter with 821 active customers. The number of accounts the company considers to be strategic increased by six. This brings the total number of strategic clients to 208, McLoughlin told analysts while discussing the company’s financial results.
The company, which finished the quarter with over $2.6 billion of cash and short-term investments, spent about $70 million on capital expenditures during the quarter. For the full year, it expects its capital expenditures to total approximately $370 million.
Headcount
Net headcount increased by over 5,100 people during the quarter. Approximately 35 per cent of gross additions for the quarter were direct college hires, while 65 per cent were lateral hires of experienced professionals. It ended the quarter with approximately 150,400 employees globally, she said.