Cognizant Numbers Soar Again; Company Raises Full-Year Forecast

After beating profit and revenue expectations for the third straight quarter, helped mainly by its health care business, Cognizant Technology Solutions again raised its 2015 annual guidance.

Cognizant - No. 8 on CRN's Solution Provider 500 list - reported revenue of $3.19 billion during the third quarter, a boost of 23.5 percent over the third quarter of 2014 and up 3.3 percent from the second quarter of 2015.

That, coupled with an 11-percent jump in net income, from $355.6 million to $397.2 million, led the Teaneck N.J.-based solution provider to reevaluate its guidance for the year, pushing revenue expectations for 2015 up to $12.41 billion, a gain of 21 percent over 2014.

[Related: Cognizant Acquires TriZetto To Expand Health-Care Offerings]

"We experienced another quarter of strong performance, building on our solid momentum in the first half of the year," CEO Francisco D'Souza said during a conference call with analysts Wednesday morning.

Cognizant's portfolio of services is ready to take advantage of the global shift companies are making from consuming IT services that are ’keeping the lights on" toward services that drive innovation and growth in the digital space D'Souza said. "Our portfolio of services is well positioned to meet their needs and capture a disproportionate share of the market," he added.

"Our third-quarter results, and increased guidance for the full year, clearly demonstrate that clients are turning to Cognizant to help them transition into digital enterprises while optimizing their traditional investments in technology and business processes," Cognizant President Gordon Coburn said.

The company said revenue in its health care segment rose - thanks in part to its acquisition of health care technology solutions provider TriZetto in September 2014 - by 43.3 percent over the third quarter of 2014, making health care Cognizant’s largest-growing business segment.

The integration of TriZetto is on track, according to Coburn. "We could not be more pleased with how (it’s) progressing," he said.

Coburn said TriZetto’s employee retention remains high, and together, the companies have won new business, such as a recent contract Cognizant won with the New England Healthcare Exchange Network, a consortium of payers and providers in the region that has designed and implemented a health information exchange, to transform and manage its IT infrastructure.


Cognizant also added about 1,300 jobs during the quarter, bringing its global headcount to 219,300. Coburn called that payroll growth slow because of a conscious decision to improve operational excellence that will conclude at the end of the year.

D’Souza said he expects the company to keep adding jobs.

Coburn said attrition is up across the industry, but Cognizant is working to lower its own attrition by redoubling efforts to share the rewards of the growing company. Coburn said that after Wednesday’s call, management sent a note to all employees announcing the company will pay bonuses well above last year’s levels thanks to the higher level of growth.

The company also said it will continue to focus on organic growth at the core of its expansion and only use "tuck under" acquisitions to supplement it.

But as the company expands, D’Souza said, the pace of acquisitions may pick up. He added that Cognizant is looking at acquisition targets that would supplement its growth based on geography and gaps in Cognizant's portfolio.

"I wouldn’t expect to see M&A … slow down, but maybe (see) a little acceleration in the pace as we become bigger," he said. "Our pipeline is as robust as it has ever been, maybe even a little stronger."

PUBLISHED NOV. 4, 2015

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