The Economic Times: The Margin of Cognizant’s Outperformance has Surprised Analysts

“Cognizant beat June quarter estimates by a wide margin and raised its full year revenue growth forecast, reinforcing its reputation as industry growth leader,” writes The Economic Times. “While analysts were expecting outperformance, the margin by which Cognizant did so surprised them,” writes the paper, noting that Cognizant’s addition of $141 million in sequential revenue in the second quarter was the second-highest incremental revenue addition in the company’s history.

The paper quotes Francisco D’Souza, Cognizant CEO, as saying, “Our 15-year record of revenue and earnings growth is a testament to our long-term strategy of reinvesting in our business to stay relevant to our clients' changing needs. As we look to the remainder of the year, we see a continuation of the healthy demand environment for our services, which gives us the confidence to raise guidance for the full year. It is a combination of macro trends and our competitive positioning.” Cognizant’s President, Gordon Coburn is quoted as saying, “We are seeing strong market demand for our services which is allowing us to increase our revenue guidance for the full year.”

“Cognizant’s strong numbers and guidance suggest better demand conditions compared to the recent past,” says Ankur Rudra of Ambit Capital. “Thus, this does to an extent confirm that this is a stronger year. But it cannot of course portend changes in relative growth rates between peers. Cognizant remains the industry growth leader.”