Third quarter revenue up 2.5% sequentially and 8.4% year over year

Cognizant Technology Solutions Corporation (NASDAQ: CTSH), a leading provider of information technology, consulting, and business process services, today announced its third quarter 2016 financial results.


Highlights—Third Quarter 2016



• Third quarter revenue of $3.45 billion was up 8.4% from the year-ago period and up 2.5% sequentially.

• GAAP diluted EPS was $0.73 vs. $0.65 in the year-ago period.

• Non-GAAP diluted EPS[1] was $0.86 vs. $0.76 in the year-ago period.

• Net headcount addition for the quarter was approximately 11,500.


Revenue for the third quarter of 2016 was $3.45 billion, up 8.4% from $3.19 billion in the third quarter of 2015. GAAP net income was $444.4 million, or $0.73 per diluted share, compared to $397.2 million, or $0.65 per diluted share, in the third quarter of 2015. Non-GAAP diluted EPS1 was $0.86 compared to $0.76 in the third quarter of 2015. GAAP operating margin for the quarter was 16.9%. Non-GAAP operating margin1 for the quarter was 19.3%, within the Company’s target range of 19-20%.



“We see ongoing client demand for our services across industries and geographies,” said Francisco D’Souza, Chief Executive Officer. “As the physical and digital worlds converge, we have made it easier for clients to work with us by aligning our organizational structure and capabilities around the broader focus of assisting clients drive digital transformations. Our new President, Raj Mehta, who has been a key member of our senior leadership team for two decades, and the broader team of executives are leading our strategic initiatives. They have a proven track record of innovation, execution and an unwavering focus on client service and satisfaction.”



2016 Outlook—Fourth Quarter and Full Year



The Company is providing the following guidance:



• Fourth quarter 2016 revenue expected to be in the range of $3.45 billion to $3.51 billion.

• Fourth quarter 2016 non-GAAP diluted EPS[2] expected to be in the range of $0.85 to $0.88.

• Fiscal 2016 revenue expected to be in the range of $13.47 billion to $13.53 billion.

• Fiscal 2016 non-GAAP diluted EPS2 is expected to be in the range of $3.38 to $3.41.


“Third quarter revenue was within, and non-GAAP EPS was slightly above, our guided range, indicating that we continue to execute well on our stated strategy,” said Karen McLoughlin, Chief Financial Officer. “Our solid performance was also reflected in another strong quarter of cash flow generation as cash and investments, net of debt increased by $390 million.”
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