Cognizant Q2 net up nearly 13% at $420.1 million

IT service provider Cognizant Technology Solutions Corporation has reported a net income of $420.1 million, or $0.68 per diluted share, for the second quarter of the current year - a 12.96 per cent increase from the $371.9 million ($0.61 per diluted share), reported in April-June 2014.

Revenue for the second quarter of 2015 rose to $3.09 billion, up 22.6 per cent from $2.52 billion in the second quarter of 2014.

Cognizant, which competes with tech majors like TCS and Infosys, said it operating margin for the quarter stood at 17.7 per cent.

"Our second quarter sequential revenue increase in dollar terms was the strongest in our history," said Francisco D'Souza, chief executive of Cognizant.

"These results validate that our business strategy and our investments position us well to capture the emerging opportunities as clients look to transform into digital businesses. We increasingly work with our clients to help them re-imagine their businesses and build new capabilities to succeed in the digital era."

"We are pleased that the significant investments we have made in our workforce over the past year are enabling us to meet the strong demand from our clients to support their innovation initiatives," says Gordon Coburn, president. 

Cognizant said it expected third quarter 2015 revenue to be at least $3.14 billion with EPS of at least $0.75. The company also raised its full-year revenue and adjusted profit forecasts for the second time this year.

Fiscal 2015 revenue is expected to be at least $12.33 billion, up at least 20.1 per cent compared to 2014. EPS for fiscal 2015 (non-GAAP) is expected to be at least $3.00.

"Our strong performance has allowed us to raise our full year revenue and EPS guidance for the second time this year, despite the impact to our full year revenues from the announcement that Health Net would be acquired by Centene Corporation," said Karen McLoughlin, chief financial officer.

During the quarter, the company repurchased $153 million of shares, under an existing stock repurchase programme, reflecting strong cash flows and confidence in the strength of its business.

Cognizant, which gets the largest chunk of its revenue from financial services clients, had in May said it expected its healthcare business to drive growth this year, helped by its acquisition of healthcare IT services provider TriZetto Corp and the implementation of the US Affordable Care Act, or Obamacare.

Revenue from the company's healthcare business surged 39 per cent to $897.3 million in the second quarter ended June 30.

Cognizant bought TriZetto Corp for $2.7 billion last year.

Revenue from the company's financial services business rose 18.1 per cent to $1.25 billion in the quarter.