Tuesday, 4 August 2009

Cognizant flying high (relatively speaking)

(By Anthony Miller – Tuesday 4th August 2009 6:45pm). Yet again Cognizant showed peers a clean pair of heels on top line growth last quarter, with revenues up 13% yoy (3% seq) to $777m. OK, the heady days of 50%+ yoy growth are long gone, but most peers went backwards so it’s still a great result. Margins also expanded (much like peers) to 19.5% nudging the top end of its target 18-20% range (don’t forget, Cognizant trades margin for growth, which is why they keep the margin range-bound). Management forecast 3% seq growth in Q3 too, and raised FY revenue guidance, albeit just a tad, from $3.10b to $3.14. This is more symbolic than significant, but sends a message that they think the worst has passed. Indeed, the tone of the concall was markedly more upbeat than many others and management seemed very confident it would make the numbers. I’ll be talking to the company in the next few days and will also be meeting up with UK CEO Sanjiv Gossain again towards the end of the month, so there’ll be more comment to come.

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