Cognizant Widen Its Revenue Over Infosys In Q4

Cognizant Technology Solutions said net profit increased to $362.9 million Cognizantin the fourth quarter and forecast revenue growth of at least 19% in 2015, helping it to regain the title of the fastest-growing Indian IT company and widen its revenue lead over Infosys.

Nasdaq-listed Cognizant, which is headquartered in Teaneck, New Jersey , and has most of its workforce in India, beat revenue growth estimates for 2014. The company recovered from a stumble earlier in the year, when it had cut its growth target in the second quarter and third-quarter revenue growth lagged that of TCS and Infosys.

Cognizant’s 19% growth estimate for 2015 includes a bump from its TriZetto acquisition. Excluding TriZetto, growth is expected to be about 15%, similar to 2014 levels, helped by better demand.

“It was better than we had expected and granular details reflect what we see on the ground in terms of what lies ahead,” said Francisco D’Souza, CEO of Cognizant. “We see clients following a dual mandate of squeezing their investments to free up dollars for investing in new technologies.”

The company reported a 6.2% sequential jump in fourth-quarter revenue to $2.74 billion. Excluding the TriZetto acquisition, revenue rose 3.1% sequentially, faster than that of TCS, Infosys and Wipro.Net profit, on a GAAP basis, was $362.9 million for the quarter.

“The overall demand environment remains strong, as reflect in our strong order pipeline and in the pick-up of deal activity over the past couple of quarters, and reflects clients’ growing demand for achieving both efficiency and innovation on one platform,” Gordon Coburn, President at Cognizant, said on a post-earnings conference call with analysts.

Coburn added that the company has built in appropriate risk adjustments into its forecast to avoid having to cut its guidance as it did in the second quarter of 2014. Cognizant revised its guidance from 16.1% to 14% in the second quarter due to weakness at certain clients and longer sales cycles and then raised it to 15% in the third quarter.

The pace of growth is helping the company widen its revenue lead over Infosys. Cognizant overtook Infosys as the second-largest Indian IT company in the middle of 2012 and has been charging forward since then.

In 2012, Infosys had revenue of $7.22 billion compared with Cognizant’s revenue of $7.35 billion.The following year, Infosys posted revenue of $8.08 billion versus Cognizant’s $8.84 billion. In 2014, Infosys had revenue of $8.64 billion, much lower than Cognizant’s $10.26 billion, which includes revenue from TriZetto.

Cognizant beat its revenue growth target of 15% for 2014, posting a 16.1% expansion. Excluding TriZetto, the company posted growth of 15.1%.

The company added seven strategic accounts, which it defines as clients with the potential to generate $5 million-$50 million or more in annual revenue. The company ended the quarter with 271 strategic clients.

The TriZetto acquisition helped propel the company’s headcount past the 200,000 mark. Net headcount addition for the quarter was about 11,800, including TriZetto, and Cognizant ended the year with about 211,500 employees.

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