Cognizant Technology Solutions Corporation, a leading provider of information technology, consulting, and business process outsourcing services, today announced its first quarter 2012 financial results.
Highlights—First Quarter 2012
Quarterly revenue rose to $1.71 bn, up 24.8% from the year-ago quarter and 2.9% sequentially.
Quarterly diluted EPS on a GAAP basis was $0.79, compared to $0.67 in the year-ago quarter.
Quarterly diluted EPS on a non-GAAP basis, which excludes stock-based compensation expense, was $0.86, compared to $0.71 in the year-ago quarter.
GAAP and non-GAAP diluted EPS includes the impact of $0.02 in net non-operating foreign currency exchange losses.
Net headcount addition for the quarter was approximately 2,800.
Revenue for the first quarter of 2012 rose to $1.71 billion, up 24.8% from $1.37 billion in the first quarter of 2011. GAAP net income was $243.7 million, or $0.79 per diluted share, compared to $208.3 million, or $0.67 per diluted share, in the first quarter of 2011. Diluted earnings per share on a non-GAAP basis was $0.86. GAAP operating margin for the quarter was 18.6%. Excluding stock-based compensation expense of $31.4 million, non-GAAP operating margin was 20.4%, slightly higher than the Company’s targeted 19-20% range. Reconciliations of non-GAAP financial measures to GAAP operating results and diluted EPS are included at the end of this release.
“Due to a slower than anticipated acceleration in demand as we entered the second quarter, we are adopting a more conservative stance for the remainder of the year and revising our guidance to at least 20% revenue growth for 2012,” said Francisco D’Souza, Chief Executive Officer of Cognizant. “We continue to believe that we have the right portfolio of services to sustain our industry leading growth and also meet the changing demands in the market as clients continue to grapple with their dual mandates of cost containment and innovation/business transformation.”
“Our solid performance this quarter validates our strategy of continually reinvesting in our business to broaden and strengthen our service offerings,” said Gordon Coburn, President. “We continue to have a healthy long-term outlook for the business. Our clients recognize that in Cognizant, they have a partner with a strong consulting oriented and industry focused front-end team combined with a best-in-class global delivery model.”
2012 Outlook—Second Quarter and Full Year
The Company is providing the following guidance:
Second quarter 2012 revenue anticipated to be at least $1.79 billion.
Second quarter 2012 diluted EPS expected to be $0.80 on a GAAP basis and $0.87 on a non-GAAP basis, which excludes estimated stock-based compensation expense.
Fiscal 2012 revenue expected to be at least $7.34 billion, up at least 20% compared to 2011.
Fiscal 2012 diluted EPS expected to be at least $3.36 on a GAAP basis, and $3.62 on a non-GAAP basis, which excludes estimated stock-based compensation expense.
EPS guidance excludes any future non-operating foreign currency exchange gain or loss.
“Similar to last year, we slightly exceeded our target operating margin during the first quarter—which positions us well to absorb our annual salary increases which will impact us during the second quarter, while maintaining operating margins within our target range for the year,” said Karen McLoughlin, Chief Financial Officer. “In addition, we repurchased $43 million of shares under our share repurchase program during the quarter and expanded the program to $1 billion, reflecting confidence in our growth opportunities, our commitment to drive shareholder value, and our ability to generate strong cash flows."
Expansion of Share Repurchase Program
Today, the Company announced that its Board of Directors has authorized the expansion of its existing share repurchase program by $400 million, bringing the total authorization under the current repurchase program to $1 billion. To date, $423 million of shares have been repurchased under this program. In addition, Cognizant's Board has extended the expiration date for the repurchase program to December 31, 2013.
Repurchases under the program may be made in the open market or through privately negotiated transactions in accordance with applicable federal securities laws, including Rule 10b-18. The timing of repurchases and the exact number of shares of common stock to be purchased will be determined by the Company's management, in its discretion, and will depend upon market conditions and other factors. The repurchases will be funded using the Company's cash on hand and cash generated from operations. The program may be extended, suspended or discontinued at any time.