Cognizant Technology Solutions has managed to beat by a whisker its Indian peer Infosys to remain the number two software company behind Tata Consultancy Services.

The Nasdaq-listed Cognizant reported revenue of $1.95 billion in the December quarter, which was slightly higher than $1.91 billion reported by Infosys.

In fact, this is the third consecutive quarter that Cognizant has managed to beat Infosys in revenues.

Cognizant also managed to beat both TCS and Infosys in terms of revenue growth during the quarter. The Indian players reported a solid performance in the December quarter due to increased client addition and higher spending by existing clients.

When confronting their business challenges, clients not only look to Cognizant to help them run their operations better, but increasingly turn to the company to help differentiate themselves in the market and drive top line growth, said Gordon Coburn, President, Cognizant.

Net rises 16%

Cognizant, which has large development centres in India, reported a 16 per cent increase in net profit at $279 million for the fourth quarter ended December 2012 compared with $240 million in the same quarter of 2011. The net employee addition for the quarter exceeded 6,300 to end the year at around 1,56,700, says a company press release.

“We are pleased to once again deliver industry-leading revenue growth in 2012,” said Francisco D’Souza, Chief Executive Officer, Cognizant.

Given the company’s client relationships and consulting and domain expertise, Cognizant is well positioned to address clients’ dual mandate of ‘running better’ and ‘running different’ from one global platform,” he said.

Erin Hichman, Analyst, Professional Services Practice, Technology Business Research, Inc, a US-based research firm, had earlier told Business Line that Cognizant would continue to outpace India-centric peers in revenue growth in the December quarter.

Outlook

Cognizant said that its first quarter 2013 revenue would be at least $2 billion. The full year 2013 revenue is expected to be at least $8.60 billion, up at least 17 per cent compared with 2012. This guidance includes anticipated acquisition revenue of $90 million, says the release.

According to R. Chandrasekaran, Group Chief Executive, Technology and Operations, Cognizant, in the fourth quarter all key industry segments – financial services, healthcare, retail and manufacturing - grew at a healthy pace.

While North America came in where anticipated, Europe had a good quarter with a 7.8 per cent sequential growth.

“It appears that the worst of the economic instability in Europe appears to be over, but long-term structural challenges remain in the business environment. We believe that these long-term challenges will serve a catalyst for existing and new clients to look to Cognizant to help them transform their operations and technology to run better and run different,” he said.

Karen McLoughlin, Chief Financial Officer, Cognizant, while discussing with analysts, said that the company closed the quarter with 821 active customers.

Cash and Capex

Cognizant finished the quarter with around $2.9 billion of cash and short-term investments.

“We spent approximately $126 million for capital expenditures during the quarter. During 2013, we expect our capital expenditures to total approximately $400 million, said McLoughlin.

raja.simhan@thehindu.co.in

(This article was published on February 7, 2013)
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