Cognizant Reports Strong First Quarter Results, Raises Outlook for Full Year 2007

Teaneck, NJ-May 2, 2007-Cognizant Technology Solutions Corporation (NASDAQ: CTSH), a leading provider of global IT and business process outsourcing services, today announced its financial results for the first quarter ended March 31, 2007.

Highlights - First Quarter 2007

• Quarterly revenue increased to $460.3 million, up 61% from the year-ago quarter.
• Quarterly diluted EPS on a GAAP basis was $0.50, compared to $0.32 in the year-ago quarter.
• Quarterly diluted EPS on a non-GAAP basis was $0.54, excluding stock-based compensation expense of $0.04, compared to $0.36 in the year-ago quarter.

Revenue for the first quarter increased to $460.3 million, up 8% from $424.4 million in the fourth quarter of 2006, and up 61% from $285.5 million in the first quarter of 2006. GAAP net income was $75.4 million, or $0.50 per diluted share, compared to $47.2 million, or $0.32 per diluted share, in the first quarter of 2006. GAAP operating margin for the quarter was 18.2%. Excluding stock based compensation expense of $7.4 million, non-GAAP operating margin was 19.8%, in-line with the Company’s targeted 19 to 20% range. Reconciliations of these non-GAAP financial measures to GAAP operating results and diluted EPS are included at the end of this release.

"We are very pleased with our first quarter performance and our strong start to 2007," said Francisco D’Souza, President and CEO of Cognizant. "During the quarter, we experienced diversified demand for our services from both new and existing customers across key vertical and geographic markets. Revenue in Europe, which now represents approximately 14% of Cognizant’s total revenue on an annualized basis, grew 84% from the first quarter of 2006, continuing to outpace the Company average. We also expanded our global delivery platform to South America, opening Cognizant’s first development center in Buenos Aires."

D’Souza continued, "As a result of our strategic investments, we generated particularly strong momentum in our newer verticals, especially in retail, manufacturing and logistics, and continued to leverage our leadership position in banking, financial services, insurance, healthcare and life sciences. We also experienced escalating demand across our solution offerings, particularly ERP, Testing and Business Process Outsourcing. Moving forward, we are excited about the opportunity ahead for Cognizant as we continue to execute on our long-term strategy of investing ahead-of-the curve in talent and resources to meet the steadfast demand for IT solutions focused on strengthening our customers’ businesses."

2007 Outlook - Second Quarter & Full Year

Based on current visibility, the Company is now providing the following guidance:

• Second quarter 2007 revenue anticipated to be at least $500 million.
• Second quarter 2007 diluted EPS expected to be $0.51 on a GAAP basis, and $0.56 on a non-GAAP basis, which excludes the impact of stock-based compensation expense of $0.05.
• Fiscal 2007 revenue now anticipated to be at least $2.07 billion.
• Fiscal 2007 diluted EPS expected to be at least $2.13 on a GAAP basis, and at least $2.34 on a non-GAAP basis, which excludes the impact of stock-based compensation expense of $0.21.
• Total headcount by end of 2007 expected to be approximately 55,000, reflecting the Company’s plan to increase utilization throughout the remainder of the year.

"Our strategic reinvestment in the business continues to fuel our growth by enabling us to deploy the right resources and deliver best of breed solutions that meet our clients’ unique business needs across industries, service-areas and geographies," said Gordon Coburn, Chief Financial and Operating Officer. "In response to the appreciation of the Indian Rupee during the first part of 2007, we continue to focus on managing our business for long-term growth while delivering value for our shareholders through financial performance within our target operating margin range. Based on our strong financial performance in the first quarter and the positive demand environment, we are pleased to raise our guidance for full-year 2007."

Source : Equity Bulls

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