Cognizant Q2 topline up 21%, races past Infy
Staying true to market and industry speculation in the last few quarters that it would cross long-time rival Infosys Technologies in revenues, New Jersey, USA-based Cognizant Technologies delivered a topline in line with its guidance for the first quarter of calendar 2012.
Cognizant posted revenues of $1.80 billion during the first quarter of calendar 2012 ended June 30, 2012, up 20.9 per cent from $1.48 billion in the year-ago quarter. Sequential revenues rose 4.9 per cent, moving past Infosys which had posted $1.75 billion in its quarter ended June 30, 2012. The company posted net profit after tax of $251.9 million during the quarter, rising 21 per cent from $208 million profit in the same quarter last year. The rise was propelled mainly by good sales growth and stable margins which the company has become renowned for in an industry where margins are the first casualty of client dithering and slowing project pipelines.
“Clients continue to turn to Cognizant to help reinvent their business models in the face of secular industry changes, evolving demographics, and a new stack of social, mobile, analytics and cloud technologies,” Chief Executive Officer Francisco D’Souza said.
When contacted, a company spokesman said that Cognizant had long sacrificed the race for higher operating margins in favour of maximizing revenues and shareholder returns.
“Even during the present slowdown as it has been called, we have strived to keep margins in the 19-20 per cent range, while simultaneously reinvesting our profits in technology upgradation and revenue maximisation. In the last ten years our margins have been stable and this is what counts for our shareholders as well,” the spokesman said.
The company also reaffirmed its full-year revenue expectation of at least $7.34 billion. “We are pleased to maintain our full-year revenue guidance as we continue to execute as expected,” said CFO Karen McLoughlin. Cognizant had last provided a revenue guidance in early May this year. In addition, Cognizant repurchased over $358 million worth of shares during the quarter.
Utilization rates during the first quarter were 78 per cent. Online utilisation rate (excluding trainees) was 93 per cent.
Cognizant guided for third quarter revenues of about $1.875 billion. Net headcount increased by over 4,700 people during the first quarter. About 35 per cent of gross additions were direct college hires, while around 65 per cent were lateral hires. Headcount stood at 1.45 lakh employees globally.