Q2 results indicate strength in IT spending.
By R. Chandrasekaran
CHENNAI: The US–based Cognizant Technology Solutions, which employs large number of people in India, delivered stronger than expected second quarter numbers, signaling a robust quarter for India-based IT companies. The company also lifted the full year expectations.
Cognizant Technology’s second quarter results were ably supported by Europe, excluding Britain, besides the strength in spending in the U.S. The company’s net earnings increased 19.3 percent to $300.4 million from $251.9 million in the last year’s second quarter. Revenues too advanced 20.4 percent to $2.16 billion beating its own projection of at least $2.13 billion. Both net earnings and revenues came in above Wall Street expectations.
Considering that Tata Consultancy Services (TCS), Infosys, HCL Technologies and Wipro have delivered strong results, the quarterly numbers of Cognizant Technology is not surprising since it has never failed to miss its projection in the recent past, braving recessionary pressures very well.
While North America, from where it generates 77.7 percent of its total revenue, witnessed 16.9 percent year-over-year revenue growth, United Kingdom recorded an increase of 27.8 percent in revenue and rest of Europe advanced 53.8 percent of revenue.
Significantly, the company’s sequential revenue growth is higher than any other Indian IT company. Cognizant Technology’s revenue growth was 7 percent, whereas TCS, HCL Tech and Infosys witnessed 4.1 percent, 3.1 percent and 2.7 percent growth, respectively.
This apart, Cognizant is seeing higher revenue growth of at least 19 percent at $8.74 billion for the fiscal year 2013. This is significantly higher than National Association of Software Service Companies’ (NASSCOM) forecast of 12 – 14 percent.
Commenting on the results and the outlook, the company’s president Gordon Coburn said, “Clients are increasingly turning to Cognizant to address their dual mandate of running better, or enhancing performance in their current businesses, and running different, or helping improve the positioning of their businesses for future success. As a result of Cognizant’s ability to address this dual mandate from one integrated platform, we are seeing strong market demand for our services which is allowing us to increase our revenue guidance for the full year.”
For the third quarter too, the company has guided profit and revenues above the Wall Street expectations.
Cognizant, which has over 150K employees in India, has narrowed the gap with Infosys by its consistent growth pace, whereas Infosys is struggling to find its old rhythm as it struggles to top industry body projection of revenue growth.
To contact the author, email to rchandrasekaran@americanbazaaronline.com