Maintaining its lead over Infosys for the second quarter in a row, Cognizant today posted 18.2 per cent growth in revenue to USD 1.892 billion in the July-September 2012 quarter.
Maintaining its lead over Infosys for the second quarter in a row, Cognizant today posted 18.2 per cent growth in revenue to USD 1.892 billion in the July-September 2012 quarter. The Nasdaq-listed firm's net profit jumped 22 per cent at USD 276.9 million for the same quarter from USD 227.1 million in the corresponding period last year. In the April-June quarter this year, Cognizant had registered higher revenues (USD 1.79 billion) than Infosys (USD 1.75 billion).
Country's second largest software exporter Infosys has reported revenues of USD 1.79 billion in the July-September 2012 quarter, while net profit stood at USD 431 million. TCS with a revenue of about USD 2.9 billion in the July-September period is the No 1 player in the segment.
"We are pleased that our growth was broad-based across services and geographies," Cognizant President Gordon Coburn said in a statement. Newer service offerings of consulting, BPO and IT infrastructure services have been growing materially faster than company average and comprised nearly 20 per cent of total revenue this quarter, he added.
"They will continue to be important drivers of our long-term growth as each represents a large addressable market with low penetration of the global delivery model," Coburn said. Cognizant, which met its guidance of at least USD 1.875 billion revenues in July-September 2012 quarter, expects its October-December quarter revenue to be at least USD 1.94 billion.
It has maintained its outlook for FY12 revenue to be at least USD 7.34 billion (up at least 20 per cent compared to 2011). Unlike Indian IT firms, Cognizant follows a January-December financial year. Though Cognizant is not listed in India, three-fourth of its over 1.50 lakh employees are based in India and is often referred to as an Indian entity.
Given the strong performance by Cognizant and the bullish annual revenue outlook, it may remain ahead of Infosys, which has given a muted guidance of 5 per cent growth for the financial year, citing uncertain global environment. Infosys, which has stopped it practice of giving quarterly guidance, expects its dollar revenue in FY13 to be at least USD 7.34 billion.
"Cognizant's strong results reaffirm the acceptance of our value proposition that helps clients address the dual mandate of driving efficiency and effectiveness in their core business while investing in innovation and business transformation for long-term growth," Cognizant Chief Executive Officer Francisco D'Souza said.
The consulting-led approach, intimate client relationships, deep domain knowledge and robust execution gives Cognizant the confidence to deliver revenue growth of at least 20 per cent in 2012, he added. The company added about 5,100 people (net) in the quarter, taking its headcount to about 1,50,400.
"Approximately 35 per cent of gross additions for the quarter were direct college hires, the remaining were lateral hires of experienced professionals," Cognizant Chief Financial Officer Karen McLoughlin said. Annualised attrition in the third quarter was 13 per cent, slightly higher than the Q2 attrition rate of 12.1 per cent. Cognizant said despite the recent appreciation of the rupee, it remains confident of maintaining its non-GAAP operating margin within the stated 19-20 per cent range.
"Our extensive India Rupee hedge programme, which now totals approximately USD 3.7 billion, helps mitigate the impact of such volatility on our operating margins," McLoughlin said. In addition, strong cash flows during the quarter allowed cash and investment balances to increase by almost USD 300 million to over USD 2.6 billion, McLoughlin added. "We spent approximately USD 70 million for capital expenditures during the quarter. For the full year, we continue to expect our capital expenditures to total approximately USD 370 million," McLoughlin said.
Financial services contributed 41.7 per cent of the company's revenues in the quarter; while healthcare and manufacturing/retail/logistics accounted for 25.5 per cent and 21 per cent, respectively. North America accounted for 79.5 per cent of the reported revenues, while 16 per cent of Cognizant's revenues came from Europe and 4.5 per cent from Rest of the World (RoW).