Cognizant Q2 revenues at USD 4.01 billion

GAAP operating margin was 16.7% and non-GAAP operating margin2 was 22.0% for the second quarter of 2018. GAAP net income was $456 million, or $0.78 per diluted share, compared to $470 million, or $0.80 per diluted share, in the second quarter of 2017. The decrease in GAAP net income was primarily due to net non-operating foreign exchange losses driven by the depreciation of the Indian rupee versus the prior year period and the initial funding of the Cognizant US Foundation. Non-GAAP diluted EPS was $1.19, compared to $0.93 in the second quarter of 2017.

“As our second-quarter results confirm, we’re making solid progress on our plan to accelerate our shift to digital services and solutions,” said Francisco D’Souza, CEO-VC of the Board. “We’ve been methodical in developing, aligning, and applying our portfolio of skills, services, and solutions to clients’ needs, so they can become fully digital organisations. And we remain confident in our ability to invest for growth and achieve our financial targets.”  

“Year-over-year non-GAAP operating margin expansion reflects strong operational execution and positions us well to absorb planned investments in the second half of the year,” said Karen McLoughlin, CFO. “As a result of this solid performance we are pleased to raise our full year non-GAAP EPS guidance. Our strong balance sheet and cash flows continue to support both our capital return program and our investments in the business designed to create long term value.”

Return of Capital Programme

The company has declared a quarterly cash dividend of $0.20 per share on Cognizant Class A common stock for shareholders of record at the close of business on August 22, 2018. This dividend will be payable on August 31, 2018.

In Feb 2017, it announced a plan to return $3.4 billion to stockholders by end of 2018 through a combination of $2.7 billion in stock repurchases and $0.7 billion in dividends. With the anticipated settlement of the accelerated share repurchase programme during the Q3 of 2018, the company will have completed its committed stock repurchases.

QUARTERLY HIGHLIGHTS

• Revenue rose to $4.01 billion, up 9.2% from the year-ago quarter
• GAAP diluted EPS was $0.78, compared to $0.80 in the year-ago quarter
• Non-GAAP diluted EPS2 was $1.19, compared to $0.93 in the year-ago quarter

Revenue guidance:

• Q3 2018 revenue expected to be between $4.06 bn and $4.10 billion
• Q3 2018 Non-GAAP diluted EPS3 expected to be at least $1.13
• Full year 2018 revenue expected to be in the range of $16.05 billion to $16.30 billion
• Full year 2018 non-GAAP diluted EPS expected to be at least $4.50

Headcount update:

• Added 7,500 employees net in Q2 2018
• 8,900 employees net added in 1H 2018/YTD
• Headcount increased by 12,100 Y/Y
• Total company headcount as of June 30, 2018 is 268,900

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