Cognizant Reports Record Fourth Quarter Results, forecasts $2 billion revenue in 2007

Industry-leading Growth Continues

Company Forecasts Revenue to Exceed $2 Billion in 2007

Teaneck, NJ - February 5, 2007 - Cognizant Technology Solutions Corporation (NASDAQ: CTSH), a leading provider of IT services, today announced its financial results for the fourth quarter and full-year ended December 31, 2006.

Highlights - Fourth Quarter 2006

• Quarterly revenue increased to $424.4 million, up 65% from the year-ago quarter.
• Quarterly diluted EPS on a GAAP basis was $0.46, compared to $0.39 in the year-ago quarter.
• Quarterly diluted EPS on a non-GAAP basis was $0.50, excluding stock-based compensation expense of $0.04, compared to $0.31 in 2005, excluding a one-time income tax benefit of $0.08 relating to the repatriation of earnings under the American Jobs Creation Act.

Revenue for the fourth quarter of 2006 increased to $424.4 million, up 12% sequentially from $377.5 million in the third quarter of 2006, and up 65% from $256.9 million in the fourth quarter of 2005. GAAP net income was $69.5 million, or $0.46 per diluted share, compared to $57.7 million, or $0.39 per diluted share, in the fourth quarter of 2005. GAAP operating margin for the quarter was 18.0%. Excluding stock based compensation expense of $8.1 million, non-GAAP operating margin was 19.9%, at the high end of the Company’s targeted 19-20% range. Reconciliations of these non-GAAP financial measures to GAAP operating results and diluted EPS are included at the end of this release.

Highlights - Full Year 2006

• Revenue increased to $1.424 billion, up 61% compared to 2005.
• Diluted EPS on a GAAP basis was $1.55, compared to $1.13 in 2005.
• Diluted EPS on a non-GAAP basis was $1.72, excluding stock-based compensation expense of $0.17, compared to $1.05 in 2005, excluding a one-time income tax benefit of $0.08 relating to the repatriation of earnings under the American Jobs Creation Act.

Revenue for 2006 increased to $1.424 billion, up 61% from $885.8 million in 2005. GAAP net income was $232.8 million, or $1.55 per diluted share, compared to $166.3 million, or $1.13 per diluted share in 2005. GAAP operating margin was 18.2%. Excluding stock based compensation expense of $29.9 million, non-GAAP operating margin was 20.3%. Reconciliations of these non-GAAP financial measures to GAAP operating results and diluted EPS are included at the end of this release.

Business Highlights

"We are very pleased with our record fourth quarter and full-year 2006 results," said Francisco D’Souza, President and CEO of Cognizant. "During the quarter, we capitalized on the escalating demand for our entire portfolio of services and leveraged our industry expertise to win many new clients. We performed impressively in several verticals where we continue to make strategic investments - including healthcare and media/information services. We continue to see strong growth in our newer customer markets, particularly Continental Europe, where business more than doubled in the last year."

D’Souza continued, "Our strong financial performance in the quarter and throughout 2006, coupled with our track record of industry-leading growth, is the result of the steadfast execution of our strategy, as we converted investments in our verticals, solutions and geographies into significant growth opportunities. This reinvestment strategy sets us apart in the marketplace, especially in the eyes of our customers and prospective clients. We continue to build cutting-edge expertise and new capabilities across our global platform, enhancing our ability to drive tangible returns on our clients’ IT investments and, ultimately, make their businesses stronger. We believe that our growth strategy and strong leadership team around the world will continue to drive strong performance in 2007."

2007 Outlook - First Quarter & Full Year

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

• First quarter 2007 revenue anticipated to be approximately $448 million, up 57% compared to the first quarter of 2006.
• First quarter 2007 diluted EPS expected to be $0.47 on a GAAP basis, and $0.52 on a non-GAAP basis, which excludes a stock-based compensation expense of $0.05.
• Fiscal 2007 revenue anticipated to be at least $2.04 billion.
• Fiscal 2007 diluted EPS expected to be at least $2.10 on a GAAP basis, and at least $2.31 on a non-GAAP basis, which excludes a stock-based compensation expense of $0.21.
• Total headcount by end of 2007 expected to reach at least 56,000.

"As demand for our services has escalated, we have maintained our long-term focus on expanding our strategic platform, enabling us to capture that demand and manage the Company’s industry-leading growth," said Gordon Coburn, Chief Financial and Operating Officer. "Investment in recruitment, retention and training are central to our strategy. We added a net total of almost 4,500 employees in the fourth quarter and more than 14,500 employees in 2006 overall. We are also making investments in our infrastructure in India and expanding into more geographies that enable us to tap new sources of talent. For example, we recently opened a development center in Kochi, our eighth city in India. We are also making steady, long-term investments in China, as we continue to expand our global delivery platform. Based on the positive demand environment and the strength of our growth platform, we believe that Cognizant will continue to outpace our overall market in 2007."

Note: This press release includes statements which may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions and the factors discussed in our most recent Form 10-K and other filings with the Securities and Exchange Commission. Cognizant undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Source : Equity Bulls

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