Cognizant Q1 net income up 62%

Nasdaq listed Cognizant Technology Solutions Corporation a provider of IT services, On Wednesday reported record first quarter results for the quarter ended March 31, 2005.

Riding on the strong Q1 performance the company has raised its annual guidance to $870 million from $845 million given at the beginning of the calendar 2005, implying a 48 per cent revenue growth over the calendar year 2004.

Highlights: First quarter 2005

• Quarterly revenue increased to $181.7 million, up 52 per cent from the year-ago quarter
• Net income increased to $32.0 million, up 62 per cent from the year-ago quarter
• Diluted quarterly EPS of $0.22 compared to $0.14 in the year-ago quarter (on a split-adjusted basis).
• Revenue for the first quarter increased to $181.7 million, up 52 per cent from $119.7 million in the first quarter of 2004.
• Net income for the first quarter increased to $32.0 million, or $0.22 per diluted share compared to $19.8 million or $0.14 per diluted share (on a split-adjusted basis) in the first quarter of 2004.
• Operating margin for the quarter increased to 20.5 per cent, compared to 19.8 per cent in the first quarter of 2004.

"We are pleased to report that Cognizant has delivered another quarter of strong financial results, driven by continued demand for premium IT solutions from our onsite/offshore model," said Lakshmi Narayanan, president and CEO of Cognizant.

"Our ability to offer comprehensive business-aligned IT solutions, coupled with our vertical industry expertise, resulted in Cognizant not only expanding upon existing client relationships, but also winning new strategic clients across a range of industries including financial services, healthcare and retail/manufacturing/logistics. Cognizant will continue to invest in the development of additional best-of-breed service offerings, enhancing our ability to meet existing and potential clients' growing demand for a strategic partner that can manage a broad range of increasingly complex projects," Narayanan said.

Cognizant added over 1,700 associates in the first quarter, ending the quarter with approximately 17,000 employees. The company also completed its acquisition of Fathom in mid-April, strengthening its telecommunications vertical practice.

Outlook: Second quarter and full year

Based on current visibility, the Company is now providing the following guidance:

• Second quarter 2005 revenue anticipated to be at least $206 million, including an expected contribution from Fathom of approximately $6 million
• Second quarter 2005 expected diluted EPS of $0.23
• Fiscal 2005 revenue anticipated to be at least $870 million, including an expected contribution from Fathom of approximately $20 million
• Fiscal 2005 diluted EPS of approximately $0.99
• Total headcount by end of Fiscal 2005 expected to reach 23,000

"Demand for Cognizant's services remains strong, as we experience healthy interest for a broad range of offerings across all of our key verticals," said Gordon Coburn, chief financial officer of Cognizant.

"Our ongoing investment in physical and intellectual infrastructure continues to result in industry-leading performance. Based on our continued success in winning new strategic clients and penetrating our existing relationships, combined with the positive demand environment, we have increased our revenue, earnings, and headcount expectations for Fiscal 2005."