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Revenues of $4.59 billion beat the consensus mark by 0.3% and increased 11.8% year over year. At constant currency (cc), revenues grew 11%. The top line comfortably surpassed management’s revenue guidance range of $4.69-$4.74 billion.
Digital revenues accounted for 44% of revenues and increased 18% year over year.
Top-Line Details
Financial services revenues (32.5% of revenues) increased 4.3% year over year at cc to $1.54 billion. Increase in digital revenues and strong contribution from acquisitions drove growth.
Healthcare revenues (28.5% of revenues) increased 9.8% year over year at cc to $1.35 billion, driven by growth in life sciences businesses and increased demand for its services among pharmaceutical companies. Strong demand for the company’s integrated software solutions from healthcare clients drove top-line growth.
Cognizant Technology Solutions Corporation Price, Consensus and EPS Surprise
Products and Resources revenues (23.3% of revenues) increased 18.1% year over year at cc to $1.11 billion due to strong demand from retail, consumer goods, travel and hospitality clients, as well as solid contribution from acquisitions.
Communications, Media and Technology revenues (15.6% of revenues) were $739 million, up 19.1% from the year-ago quarter at cc. Acquisitions and increased demand from technology clients drove growth.
Region-wise, revenues from North America increased 9.5% year over year at cc and represented 73.5% of total revenues.
Revenues from Europe increased 13.7% from the year-ago quarter at cc and accounted for 19.3% of total revenues. Revenues from the United Kingdom and Continental Europe increased 18.8% and 9.6% year over year, at cc, respectively.
Rest of the World revenues rose 21% at cc and represented 7.3% of total revenues.
Operating Details
Selling, general & administrative (SG&A) expenses, as a percentage of revenues, increased 50 bps year over year to 19.5%.
Net headcount increased 12.5% year over year. Quarterly annualized attrition was 37%, up from 31% reported in the previous quarter.
Cognizant reported non-GAAP operating margin of 15.8%, which contracted 10 bps year over year.
Balance Sheet
Cognizant had cash and cash equivalents (and short-term investments) of $2.41 billion as of Sep 30, 2021, compared with $1.85 billion as of Jun 30, 2021.
The company has no significant debt maturities until 2023. As of Sep 30, 2021, Cognizant had a total debt of $674 million, down from $683 million as of Jun 30, 2021.
Cognizant generated $948 million in cash from operations compared with $541 million reported in the previous quarter.
Free cash flow was $897 million compared with $466 million reported in the previous quarter.
In third-quarter 2021, Cognizant returned $129 million through share repurchases and $127 million in dividends to shareholders.
As of Sep 30, 2021, Cognizant had $2.2 billion remaining under the current share-repurchase program.
Guidance
Fourth-quarter 2021 revenues are expected between $4.75 billion and $4.79 billion, indicating growth of 13.3%-14.3% on a cc basis.
2021 revenues are now expected to be $18.5 billion, indicating growth of 9.8% on a cc basis.
The company expects adjusted operating margin to be 15.4% in 2021 compared with 14.4% reported in 2020.
2021 adjusted earnings are expected to be in the range of $4.02-4.06 per share (raised from $4-4.06 per share).
Zacks Rank & Stocks to Consider
Cognizant currently carries a Zacks Rank #3 (Hold).
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Cognizant's (CTSH) Q3 Earnings Beat, Revenues Increase Y/Y
Cognizant Technology Solutions (CTSH - Free Report) reported third-quarter 2021 non-GAAP earnings of $1.06 per share that beat the Zacks Consensus Estimate by 1% and increased 9.3% year over year.
Revenues of $4.59 billion beat the consensus mark by 0.3% and increased 11.8% year over year. At constant currency (cc), revenues grew 11%. The top line comfortably surpassed management’s revenue guidance range of $4.69-$4.74 billion.
Digital revenues accounted for 44% of revenues and increased 18% year over year.
Top-Line Details
Financial services revenues (32.5% of revenues) increased 4.3% year over year at cc to $1.54 billion. Increase in digital revenues and strong contribution from acquisitions drove growth.
Healthcare revenues (28.5% of revenues) increased 9.8% year over year at cc to $1.35 billion, driven by growth in life sciences businesses and increased demand for its services among pharmaceutical companies. Strong demand for the company’s integrated software solutions from healthcare clients drove top-line growth.
Cognizant Technology Solutions Corporation Price, Consensus and EPS Surprise
Cognizant Technology Solutions Corporation price-consensus-eps-surprise-chart | Cognizant Technology Solutions Corporation Quote
Products and Resources revenues (23.3% of revenues) increased 18.1% year over year at cc to $1.11 billion due to strong demand from retail, consumer goods, travel and hospitality clients, as well as solid contribution from acquisitions.
Communications, Media and Technology revenues (15.6% of revenues) were $739 million, up 19.1% from the year-ago quarter at cc. Acquisitions and increased demand from technology clients drove growth.
Region-wise, revenues from North America increased 9.5% year over year at cc and represented 73.5% of total revenues.
Revenues from Europe increased 13.7% from the year-ago quarter at cc and accounted for 19.3% of total revenues. Revenues from the United Kingdom and Continental Europe increased 18.8% and 9.6% year over year, at cc, respectively.
Rest of the World revenues rose 21% at cc and represented 7.3% of total revenues.
Operating Details
Selling, general & administrative (SG&A) expenses, as a percentage of revenues, increased 50 bps year over year to 19.5%.
Net headcount increased 12.5% year over year. Quarterly annualized attrition was 37%, up from 31% reported in the previous quarter.
Cognizant reported non-GAAP operating margin of 15.8%, which contracted 10 bps year over year.
Balance Sheet
Cognizant had cash and cash equivalents (and short-term investments) of $2.41 billion as of Sep 30, 2021, compared with $1.85 billion as of Jun 30, 2021.
The company has no significant debt maturities until 2023. As of Sep 30, 2021, Cognizant had a total debt of $674 million, down from $683 million as of Jun 30, 2021.
Cognizant generated $948 million in cash from operations compared with $541 million reported in the previous quarter.
Free cash flow was $897 million compared with $466 million reported in the previous quarter.
In third-quarter 2021, Cognizant returned $129 million through share repurchases and $127 million in dividends to shareholders.
As of Sep 30, 2021, Cognizant had $2.2 billion remaining under the current share-repurchase program.
Guidance
Fourth-quarter 2021 revenues are expected between $4.75 billion and $4.79 billion, indicating growth of 13.3%-14.3% on a cc basis.
2021 revenues are now expected to be $18.5 billion, indicating growth of 9.8% on a cc basis.
The company expects adjusted operating margin to be 15.4% in 2021 compared with 14.4% reported in 2020.
2021 adjusted earnings are expected to be in the range of $4.02-4.06 per share (raised from $4-4.06 per share).
Zacks Rank & Stocks to Consider
Cognizant currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include Apple (AAPL - Free Report) , Trimble (TRMB - Free Report) and Cognex (CGNX - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Apple, Trimble and Cognex are set to report their quarterly earnings on Oct 28, Nov 3 and Nov 4.