Business Services Industry
Cognizant Technology Solutions Reports Record Revenue and Profitability in First Quarter; Revenue Rises 60% and Operating Margin Expands
Business Wire, April 17, 2001
Business Editors
TEANECK, N.J.--(BUSINESS WIRE)--April 17, 2001
Cognizant Technology Solutions Corp. (Nasdaq: CTSH), a leading e-business and application management solutions provider, today announced financial results for the first quarter ended March 31, 2001.
Revenue for the first quarter increased to $43.4 million, up 60 percent from $27.1 million in the first quarter of 2000. Net income for the quarter ended March 31, 2001 increased 61 percent to $5.6 million, as compared to $3.5 million in the 2000 first quarter. Diluted earnings per share increased 65 percent to $0.28 from $0.17 in the year ago period.
"Cognizant continued to achieve strong financial results despite a harsh environment for IT services," said Kumar Mahadeva, Chairman and Chief Executive Officer. "Our ability to prosper in this market is a direct result of Cognizant's proven onsite/offshore solutions delivery model. As large enterprises seek realizable ROI on their technology spending, they are more frequently exploring offshore solutions. Additionally, as cost containment moves to the forefront, we've seen increased interest in application management services. As a result of this shift in demand, application management revenue increased to 50% of revenue, and now accounts for a large portion of our opportunity pipeline."
Mahadeva added, "We entered 2001 with a record number of new blue chip clients and continue to build upon these relationships. With our track record of expanding existing client relationships, and our continual investment in R&D spending and sales and marketing, we remain confident in our ability to navigate through the IT slowdown and continue our strong financial performance."
"Strong execution has been a hallmark of Cognizant in meeting both client and Wall Street expectations, as evidenced by these results -- our 18th consecutive quarter of sequential revenue growth," stated Gordon Coburn, Chief Financial Officer. "We are especially pleased by our continued high level of recurring revenue with approximately 80 percent of first quarter revenue coming from customers who had been with us for more than a year."
"Despite an environment that is driving many to closely monitor their cash outflows, our clients continue to highly rate our performance and delivery as measured by our continuously strong DSO. At approximately 50 days we remain among the best in the industry," added Coburn.
Conference Call
Cognizant Technology Solutions will host a conference call today at 10:00 a.m. (eastern) to discuss the Company's quarterly results. To listen to the call please dial 212-346-7484. The call will also be broadcast live via the Internet at Cognizant's web site, www.Cognizant.com. Please go to the web site at least fifteen minutes prior to the call to register, download and install any necessary audio software. A replay will be made available on the web site at www.cognizant.com or by calling 858-812-6440 and entering "18460940" from two hours after the end of the call until 11:59 p.m. (EST) on April 20, 2001.
About Cognizant Technology Solutions
Cognizant delivers high-quality, cost-effective, full life-cycle solutions to complex software development and management problems. Cognizant employs more than 3,000 computer science and engineering professionals globally at its client sites and nine development centers in India. The company specializes in e-business and application management. Cognizant has been assessed at SEI/CMM Level 5 and is ISO 9001 certified. For more information, visit Cognizant on the Web at www.Cognizant.com.
Certain statements contained herein, including statements regarding the development of the Company's services, markets and future demand for the Company's services, projections on future growth potential, and other statements regarding matters that are not historical facts, are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements include risks and uncertainties; consequently, actual results may differ materially from those expressed or implied thereby. Factors that could cause actual results to differ materially include, but are not limited to, variability of quarterly operating results, reliance on large projects, concentration of revenue, ability to attract and retain professional staff, dependence on key personnel, ability to manage growth effectively, risks associated with rapid technological advances, risks associated with possible acquisitions, risks associated with the Company's strategic partnerships, various project-associated risks, substantial competition, general economic conditions, risks associated with intellectual property rights, risks associated with international operations and other risk factors listed from time to time in the Company's filings and reports with the Securities and Exchange Commission.
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
Three Months Ended
March 31,
---------------------
2001 2000
--------- ---------
Revenues $ 39,986 $ 23,564
Revenues - related party 3,418 3,506
--------- ---------
Total revenues 43,404 27,070
Cost of revenues 22,369 13,939
--------- ---------
Gross profit 21,035 13,131
Selling, general and administrative expenses 11,208 7,037
Depreciation and amortization expense 1,438 971
--------- ---------
Income from operations 8,389 5,123
Other income:
Interest income 746 505
Other, net (245) (99)
--------- ---------
Total other income 501 406
--------- ---------
Income before provision for income taxes 8,890 5,529
Provision for income taxes (3,325) (2,068)
--------- ---------
Net income $ 5,565 $ 3,461
========= =========
--------- ---------
Basic earnings per share (a) $ 0.30 $ 0.19
========= =========
--------- ---------
Diluted earnings per share (a) $ 0.28 $ 0.17
========= =========
Weighted average number of common --------- ---------
shares outstanding (a) 18,698 18,500
========= =========
Weighted average number of common --------- ---------
and dilutive shares outstanding (a) 20,232 20,187
========= =========
(a) Reflects a 2-for-1 stock split paid on March 16, 2000.
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)
(In thousands)
March 31, December 31,
--------- -----------
2001 2000
--------- -----------
Assets
Current Assets
Cash and cash equivalents $ 60,966 $ 61,976
Trade accounts receivable, net of allowances
of $1,069 and $516, respectively 18,430 19,187
Trade accounts receivable - related party 1,514 1,361
Unbilled accounts receivable 3,726 1,941
Unbilled accounts receivable - related party - -
Other current assets 4,137 3,758
--------- ---------
Total Current Assets 88,773 88,223
--------- ---------
Property and equipment - net 17,641 15,937
Goodwill - net 1,116 1,195
Investments 1,955 1,955
Other assets 2,310 2,230
--------- ---------
Total Assets $ 111,795 $ 109,540
========= =========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 2,222 $ 2,849
Accounts payable - related party 8 8
Accrued and other current liabilities 18,306 23,865
--------- ---------
Total Current Liabilities 20,536 26,722
--------- ---------
Deferred income taxes 18,415 16,702
--------- ---------
Total Liabilities 38,951 43,424
--------- ---------
--------- ---------
Stockholders' Equity 72,844 66,116
--------- ---------
--------- ---------
Total Liabilities and Stockholders' Equity $ 111,795 $ 109,540
========= =========
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