No surprises that New Jersey headquartered but India-centric IT/BP services player, Cognizant, beat its Q3 guidance and raised FY outlook. But some surprise that headline growth in Europe eased to a ‘mere’ 27% yoy (5% qoq), the first time in a few quarters that Cognizant’s growth in our region grew slower than its North American operations – or indeed slower than TCS in Europe (see TCS surges in Europe).
Nonetheless, Cognizant topped peers’ worldwide growth in the quarter ended 30th Sept., with headline revenues up 32% yoy (7.8% qoq) to $1.6b. Operating margins, at 18.3%, were 10bps up on the quarter and 50bps down yoy, as ever well within management’s target range. Management raised FY revenue guidance to at least $6.11b, 33% higher than in 2010. This actually represents a slowing of quarterly growth in Q4 (+27% yoy), which if so, would be the first time since Q4 2008, so I can only assume 27% growth is Cognizant’s view of ‘cautious’!
Cognizant is now the true Number Three India-based offshore services player both on a quarterly basis and a now on trailing 12 month (TTM) basis (see Cognizant the new Number Three!), relegating Wipro to 4th spot. Cognizant trails second-ranked Infosys by just 13% on TTM revenues, which rather suggests that the bet is when rather than whether Cognizant will become the new Number Two.
Cognizant’s success is in no small part to its consulting services, and I met up with Cognizant’s new European consulting head, Mike Hunter, just the other day, and will be explaining more in a future edition of OffshoreViews.