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Cognizant (CTSH) Q4 Earnings Beat Estimates, Revenues Up Y/Y
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Cognizant Technology Solutions (CTSH - Free Report) reported fourth-quarter 2021 non-GAAP earnings of $1.10 per share, which beat the Zacks Consensus Estimate by 5.77% and improved 64.2% year over year.
Revenues of $4.777 million missed the consensus mark by 0.13%. However, the top line increased 14.2% year over year. At constant currency (cc), revenues grew 11%. The reported figure stayed between management’s revenue guidance of $4.75-$4.79 billion.
Digital revenues accounted for 44% of revenues and increased 19% year over year.
Cognizant Technology Solutions Corporation Price, Consensus and EPS Surprise
Financial services revenues (32.4% of revenues) increased 18.8% year over year at cc to $1.547 million. An increase in digital revenues and strong contribution from acquisitions drove growth.
Healthcare revenues (28.7% of revenues) increased 8.2% year over year at cc to $1.370 million, 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 contributed to the top-line growth.
Products and Resources revenues (23.4% of revenues) increased 18% year over year at cc to $1,116 million owing to strong demand from retail, consumer goods, travel and hospitality clients, and a solid contribution from acquisitions.
Communications, Media and Technology revenues (15.6% of revenues) were $744 million, up 13.1% from the year-ago quarter at cc. Acquisitions and increased demand from technology clients drove growth.
Region-wise, revenues from North America increased 9% year over year at cc and accounted for 73.2% of total revenues.
Revenues from Europe increased 35.5% from the year-ago quarter at cc and made up 19.6% of total revenues. Revenues from the U.K. and Continental Europe increased 28.4% and 42.2% year over year, at cc, respectively.
Rest of the World revenues surged 25.7% at cc and represented 7.2% of total revenues.
Operating Details
Selling, general & administrative (SG&A) expenses, as a percentage of revenues, decreased 270 bps year over year to 18.2%.
Net headcount increased 31% year over year. Quarterly annualized attrition was 35%, down from 37% reported in the previous quarter.
Cognizant reported a non-GAAP operating margin of 15.3%, which increased 300 bps year over year.
Balance Sheet
Cognizant had cash and cash equivalents of $1.79 billion as of Dec 31, 2021, compared with $2.41 billion as of Sep 30, 2021.
The company has no significant debt maturities until 2023. As of Dec 31, 2021, Cognizant had a total debt of $664 million, down from $674 million as of Sep 30, 2021.
It generated $825 million in cash from operations compared with $948 million reported in the previous quarter.
Free cash flow was $760 million compared with $897 million reported in the previous quarter.
In fourth-quarter 2021, Cognizant returned $66 million through share repurchases and $127 million in dividends to shareholders.
As of Dec 31, 2021, Cognizant had $2.1 billion remaining under the current share repurchase program.
Guidance
First-quarter 2022 revenues are expected between $4.80 billion and $4.84 billion, indicating growth of 10.2-11.2% on a cc basis.
2022 revenues are now expected to be $20.0-$20.5 billion, indicating an improvement of 8.5%- 11.5% on a cc basis.
The company expects the adjusted operating margin to expand 20 basis points to 30 basis points to 15.6% to 15.7%.
Adjusted earnings for 2022 are expected to be $4.46-$4.60 per share (raised from $4.02-4.06 per share).
Zacks Rank & Other Stocks to Consider
Cognizant currently carries a Zacks Rank #2 (Buy).
Cognizant’s shares have returned 11.3% compared with the Zacks Computer and Technology sector’s return of 7.2% in the past year.
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Cognizant (CTSH) Q4 Earnings Beat Estimates, Revenues Up Y/Y
Cognizant Technology Solutions (CTSH - Free Report) reported fourth-quarter 2021 non-GAAP earnings of $1.10 per share, which beat the Zacks Consensus Estimate by 5.77% and improved 64.2% year over year.
Revenues of $4.777 million missed the consensus mark by 0.13%. However, the top line increased 14.2% year over year. At constant currency (cc), revenues grew 11%. The reported figure stayed between management’s revenue guidance of $4.75-$4.79 billion.
Digital revenues accounted for 44% of revenues and increased 19% year over year.
Cognizant Technology Solutions Corporation Price, Consensus and EPS Surprise
Cognizant Technology Solutions Corporation price-consensus-eps-surprise-chart | Cognizant Technology Solutions Corporation Quote
Top-Line Details
Financial services revenues (32.4% of revenues) increased 18.8% year over year at cc to $1.547 million. An increase in digital revenues and strong contribution from acquisitions drove growth.
Healthcare revenues (28.7% of revenues) increased 8.2% year over year at cc to $1.370 million, 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 contributed to the top-line growth.
Products and Resources revenues (23.4% of revenues) increased 18% year over year at cc to $1,116 million owing to strong demand from retail, consumer goods, travel and hospitality clients, and a solid contribution from acquisitions.
Communications, Media and Technology revenues (15.6% of revenues) were $744 million, up 13.1% from the year-ago quarter at cc. Acquisitions and increased demand from technology clients drove growth.
Region-wise, revenues from North America increased 9% year over year at cc and accounted for 73.2% of total revenues.
Revenues from Europe increased 35.5% from the year-ago quarter at cc and made up 19.6% of total revenues. Revenues from the U.K. and Continental Europe increased 28.4% and 42.2% year over year, at cc, respectively.
Rest of the World revenues surged 25.7% at cc and represented 7.2% of total revenues.
Operating Details
Selling, general & administrative (SG&A) expenses, as a percentage of revenues, decreased 270 bps year over year to 18.2%.
Net headcount increased 31% year over year. Quarterly annualized attrition was 35%, down from 37% reported in the previous quarter.
Cognizant reported a non-GAAP operating margin of 15.3%, which increased 300 bps year over year.
Balance Sheet
Cognizant had cash and cash equivalents of $1.79 billion as of Dec 31, 2021, compared with $2.41 billion as of Sep 30, 2021.
The company has no significant debt maturities until 2023. As of Dec 31, 2021, Cognizant had a total debt of $664 million, down from $674 million as of Sep 30, 2021.
It generated $825 million in cash from operations compared with $948 million reported in the previous quarter.
Free cash flow was $760 million compared with $897 million reported in the previous quarter.
In fourth-quarter 2021, Cognizant returned $66 million through share repurchases and $127 million in dividends to shareholders.
As of Dec 31, 2021, Cognizant had $2.1 billion remaining under the current share repurchase program.
Guidance
First-quarter 2022 revenues are expected between $4.80 billion and $4.84 billion, indicating growth of 10.2-11.2% on a cc basis.
2022 revenues are now expected to be $20.0-$20.5 billion, indicating an improvement of 8.5%-
11.5% on a cc basis.
The company expects the adjusted operating margin to expand 20 basis points to 30 basis points to 15.6% to
15.7%.
Adjusted earnings for 2022 are expected to be $4.46-$4.60 per share (raised from $4.02-4.06 per share).
Zacks Rank & Other Stocks to Consider
Cognizant currently carries a Zacks Rank #2 (Buy).
Cognizant’s shares have returned 11.3% compared with the Zacks Computer and Technology sector’s return of 7.2% in the past year.
Some other top-ranked stocks in the same sector include Mandiant , Photronics (PLAB - Free Report) and Vocera Communications , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Mandiant shares have fallen 25.6% underperforming the Zacks Computer and Technology sector in the past year.
The company is slated to report fourth-quarter 2021 results on Feb 8, 2022.
Photronic’s shares have rallied 54.9% in the past year.
The company is scheduled to report first-quarter 2022 results on Feb 23, 2022.
Vocera Communications’ shares have returned 81.8% in the past year.
The company is scheduled to report fourth-quarter 2021 results on Feb 10, 2022.