Cognizant Technology Solutions Corp (CTSH) has reported an 11.88 percent rise in profit for the quarter ended Sep. 30, 2016. The company has earned $444.40 million, or $0.73 a share in the quarter, compared with $397.20 million, or $0.65 a share for the same period last year. On an adjusted basis, earnings per share were at $0.86 for the quarter compared with $0.76 in the same period last year.
Revenue during the quarter grew 8.35 percent to $3,453.20 million from $3,187 million in the previous year period. Gross margin for the quarter expanded 54 basis points over the previous year period to 39.84 percent. Total expenses were 83.11 percent of quarterly revenues, up from 82.97 percent for the same period last year. That has resulted in a contraction of 14 basis points in operating margin to 16.89 percent.
Operating income for the quarter was $583.40 million, compared with $542.80 million in the previous year period.
However, the adjusted operating income for the quarter stood at $667.20 million compared to $617.80 million in the prior year period. At the same time, adjusted operating margin contracted 6 basis points in the quarter to 19.32 percent from 19.39 percent in the last year period.
"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."
For financial year 2016, Cognizant Technology Solutions Corp projects revenue to be in the range of $13,470 million to $13,530 million. It forecasts diluted earnings per share to be in the range of $3.38 to $3.41 on adjusted basis for the same period.
For the fourth-quarter, Cognizant Technology Solutions Corp projects revenue to be in the range of $3,450 million to $3,510 million. It forecasts diluted earnings per share to be in the range of $0.85 to $0.88 on an adjusted basis for the same period.
Working capital increases
Cognizant Technology Solutions Corp has recorded an increase in the working capital over the last year. It stood at $5,899.10 million as at Sep. 30, 2016, up 15.45 percent or $789.60 million from $5,109.50 million on Sep. 30, 2015. Current ratio was at 3.56 as on Sep. 30, 2016, up from 3.40 on Sep. 30, 2015.
Days sales outstanding went down to 67 days for the quarter compared with 74 days for the same period last year.
At the same time, days payable outstanding was almost stable at 8 days for the quarter, when compared with the previous year period.
Debt comes down
Cognizant Technology Solutions Corp has recorded a decline in total debt over the last one year. It stood at $896.60 million as on Sep. 30, 2016, down 5.62 percent or $53.40 million from $950 million on Sep. 30, 2015. Total debt was 6.54 percent of total assets as on Sep. 30, 2016, compared with 7.74 percent on Sep. 30, 2015. Debt to equity ratio was at 0.09 as on Sep. 30, 2016, down from 0.11 as on Sep. 30, 2015. Interest coverage ratio deteriorated to 119.06 for the quarter from 126.23 for the same period last year.
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