This summary is based on the first quarter fiscal 2008 earnings call conducted by Cognizant Technology Solutions Corp. (CTSH: chart) on May 7, 2008.

Management:

- Financial Dynamics, IR: Hannah Sloane
- President and CEO: Francisco D''Souza
- COO and CFO: Gordon Coburn

Key Investors Issues

- Revenue rose 40% to $643.1 million from $460.3 million in the prior year.
- Income increased 35% to $101.9 million or 34 cents, from $75.4 million or 25 cents a share in 2007.
- The firm had a growth addition of 56 new customers, with strategic accounts increasing by 6 to 113.

First Quarter Highlights

Revenue rose 40% to $643.1 million from $460.3 million in the prior year as the firm continues to see demand for its services across a range of industries, geographic markets and solution offerings.

- The firm experienced strong performance in the health care sector which grew 45% year-over-year, while manufacturing, retail and logistics grew 40% year-over-year.
– Despite the turmoil in the financial markets, the financial services sector showed growth of 37% year-over-year.
- Europe grew 87% as a result of the focused efforts to increase presence in this geography.

On the client front, the firm had a growth addition of 56 new customers, with strategic accounts increasing by 6 to 113.

- Customer satisfaction at Cognizant remains extremely high with 89.3% of respondents indicating that they were either satisfied or extremely satisfied, an increase of 9% from the prior year.
- Fully two-thirds of these clients said that the firm rated either better or much better than competitors, with high scores on relationship management and project management and quality.
- The firm increased headcount with the net addition of 2,600 employees around the world to 58,000 employees.

Application management represented 52% of revenues and application development was 48%, both services continue to grow significantly.

- The strength in application management was driven by client seeking to optimize efficiency and non-discretionary spending due to budget concerns.
- Due to a weak stock price, the number of options exercised was unusually low resulting in a lower than anticipated fringe benefit tax expense in the quarter.
- The increase in cost of revenues is primarily due to additional technical staff both onsite and offshore required to support the revenue growth offset slightly by the impact of utilization and several other factors.

SG&A, depreciation and amortization expenses were $165.1 million, up from $121.8 million in the prior year.

- Income increased 35% to $101.9 million or 34 cents, from $75.4 million or 25 cents a share in 2007 on revenue growth.
- Sequential interest income decreased primarily due to a lower average, local cash balance resulting primarily from the impact of the fourth share repurchase and acquisition of marketRx, and decline in short-term interest rates from the United States.
- The firm finished the quarter with just over $645 million of cash, short term and long term investments and $170.4 million of auction rate securities were reclassified as long term investments.

The firm spent $53 million on capital expenditures, and $9 million towards the book value purchase of T-Systems India operations.

- Due to the very large intake of college graduates during the latter part of the fourth quarter of last year, the average offshore utilization including these trainees declined to 53%.
- Onsite, utilization remains at 88% and throughout the remainder of the year, the firm will be increasing utilization rates to take advantage of scaled economies and to leverage the historically heavy over investment and bench resources.

Growth Opportunities:

- The pipeline of new business with existing and new customers continues to be strong, the general trend towards spending more with offshore providers still remains intact as clients under pressure seek additional ways to do more with fewer dollars.
- The firm is currently tracking 50 large opportunities at various stages in the pipeline each having a revenue potential of many million dollars over several years.
- The company recently won a number of large deals that are expected to begin, to ramp up during June and beyond.
- The recently announced alliance with T-Systems provides the firm with additional access to the German market.

Cognizant began work on the agreement with AstraZeneca to help drive greater R&D efficiencies and clinical data management through improved process standardization, consistency of delivery economies of scale and cost savings.

- This agreement is one the largest such contracts within the pharmaceutical industry and deliver economies scale and cost savings that will have AstraZeneca R&D deliver its commitments to improving effectiveness.
- Similarly banking and financial services, healthcare payors, communications companies, media and entertainment all face periods of rapid structural change in their respective industries.
- The firm recently worked with the North American Tier-1 ILEC or incumbent local exchange carrier to rapidly add new features and functionality in order to differentiate their services to compete effectively with other ILECs and cable providers.
- In addition to focusing on growth opportunities, the firm will continue to examine its own internal cost efficiencies, and maintain a focus on higher utilization to optimize efficiencies.

Fiscal 2008 Outlook: