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Cognizant Technology Solutions Corp. (CTSH)
Q3 2009 Earnings Call
November 3, 2009 8:00am ET
David Nelson - Vice President Investor Relations
Francisco D'Souza - President and Chief Executive Officer
Gordon Coburn - Chief Financial and Operating Officer
Bryan Keane - Credit Suisse
Rod Bourgeois - Sanford C. Bernstein & Co.
Moshe Katri – Cowen & Company
Ed Caso - Wells Fargo Securities
Jason Kupferberg – UBS
Nabil Elsheshai - Pacific Crest Securities
Glenn Greene – Oppenheimer
Joseph Foresi - Janney Montgomery Scott
George Price - Stifel Nicolaus & Company
Ashwin Shirvaikar – Citigroup
Previous Statements by CTSH
» Cognizant Technology Solutions Corporation Q2 2009 Earnings Call Transcript
» Cognizant Technology Solutions Corporation Q1 2009 Earnings Call Transcript
» Cognizant Technology Solutions Q4 2008 Earnings Call Transcript
By now you should have received a copy of the Company's third quarter 2009 earnings release. If you have not, a copy is available on our website www.cognizant.com. The speakers we have on today's call are Francisco D'Souza, President and Chief Executive Officer and Gordon Coburn, Chief Financial and Operating Officer of Cognizant Technology.
Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward looking statements. These statements are subject to the risks and uncertainties as described in the Company's earnings release and other filings with the SEC.
I would now like to turn the call over to Francisco D'Souza.
We’re extremely pleased to report one of the strongest quarters in the history of Cognizant. We delivered $853.5 million in revenue, well above our guidance, and an increase of 16% year over year and 10% over last quarter. Our revenue addition of almost $77 million over Q2 was our largest ever absolute sequential increase in revenue. As a key point, we’ve had many strong quarters in prior years in the midst of growth markets but to deliver the largest ever absolute sequential increase in revenue in the company’s history in the current economic environment is particularly gratifying.
I’ll let Gordon cover the details of the financial and operating metrics for the quarter in a few minutes which were strong across the board. Today’s results demonstrate not only that we are using this economic slowdown as an opportunity to build a stronger company but that we’ve extended our lead relative to others in the industry.
Of particular importance, our Q3 performance was very balanced with great consistency of results across our industry sectors, service offerings, and geographies. This consistency shows the value our clients see in the Cognizant business model and experience regardless of the market that we serve. Over the past several years we’ve reinvested in our model to provide not only cost savings but increased client innovation and effectiveness on one platform. In today’s economy our clients have shared with us that this model is more relevant then ever.
To put additional color around our strong results this quarter I’ll focus my comments this morning on four areas: First I’ll be discussing the Q3 industry level demand environment and our resulting over performance. However, this is only one part of the story since our strong results when contrasted with the rest of the industry are the result of more then industry level demand dynamics.
The second topic I’ll discuss today is Cognizant’s unique value proposition to the market and some take away points from our Q3 results in that respect. Third, since our value proposition is closely tied with our strategy of reinvestment I’ll quickly touch on some of the key investments and two acquisitions that we announced in recent months. Finally, I’ll provide some commentary about our outlook for the rest of the year.
Let’s start with a look at the Q3 demand picture. As we told you during last quarter’s call we entered Q3 with a strong pipeline across our full range of service offerings but we remained cautious with regard to how quickly these projects would close and convert to revenue. What surprised us this quarter was the speed at which decisions were made. As it turns out, the relative stability, if not recovery of our clients businesses, helped accelerate the sign up and launch of a number of projects.
As the pace of decision making accelerated during the quarter our strong client facing teams were ready to react and capitalize on the opportunities. At the height of the recession these teams defended our position and revenues with clients. These same teams are now playing offence as the demand environment has stabilized.
While we benefited this quarter from increased demand and faster decision making, our strong results when contrasted with the rest of the industry, are the result of our solid differentiated value proposition in the marketplace. We are deeply committed to giving our customers the best experience in the industry. To us this means progressing our client partnerships beyond operational engagements like cost take out and labor arbitrage and developing higher value relationships that encompass real business effectiveness and innovation.
Clients are increasingly turning to us because we can provide them with efficiency and innovation on one single tightly integrated global platform. Greater business effectiveness is achieved through our continual improvement of service quality and the ability to commit to improve business outcomes for clients while innovation is achieved through partnering closely with our clients to source new avenues of revenue and productivity by devising new ways of orchestrating their business operations.
Our service delivery is enabled by a Web 2.0 platform which we call Cognizant 2.0 which is proving to be a powerful differentiator for us in the industry. Cognizant 2.0 allows us to bring all our expertise from around the world to bear on each and every client engagement. In the same way that Web 2.0 social networking sites on the internet have created powerful networking effects. Cognizant 2.0 is connecting Cognizant associates, clients and other stakeholders, allowing us to pool knowledge and experience across our global operations and collaborate with clients in new and innovative ways.