Cognizant Technology Solutions Corp. (
CTSH)
Q3 2008 Earnings Call Transcript
November 5, 2008 9:00 a.m. ET
Executives
David Nelson - Vice President of Investor Relations
Francisco D''Souza - President and Chief Executive Officer
Gordon Coburn – Chief Operating Officer and Chief Financial Officer
Analysts
Adam Frisch – UBS
Tan Sheng Wong - JPMorgan
Bryan Keane - Credit Suisse
Mark Marostica - Piper Jaffray
Gregory Smith - Merrill Lynch & Co., Inc.
Joseph Foresi - Janney Montgomery Scott
Joseph Vafi - Jefferies & Company
Arvind Ramnani - Banc of America Securities
Rod Bourgeois – Sanford C. Bernstein
Presentation
Operator
Ladies and gentlemen, thank you for standing by and welcome to the Cognizant Technology Solutions third quarter 2008 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers'' remarks there will be a question-and-answer session. If you would like to ask a question during this time simply press “*” then the number “1” on your telephone keypad. If you’ve already done so, please press the “#” key now, then press “*1” again to ensure your question has registered. Thank you.
I would now like to turn the conference over to David Nelson, Vice President of Investor Relations at Cognizant. Please go ahead.
David Nelson
Thank you and good morning everyone. By now you should have received a copy of the company''s third quarter 2008 earnings release. If you have not, the release is available on our website, www.cognizant.com, or by calling our office at 212-850-5600.
The speakers on today''s call are Francisco D''Souza, President and Chief Executive Officer and Gordon Coburn, Chief Financial and Operating Officer of Cognizant Technology Solutions.
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 to begin the call.
Francisco D''Souza
Thank you Dave and good morning everyone. Thank you all for joining Gordon and me today for Cognizant''s third quarter 2008 earnings call. We''re pleased to report solid results for the third quarter 2008, which exceeded guidance and demonstrated continued industry leading growth, despite an economic environment which deteriorated substantially over the quarter.
Our performance this quarter and year-to-date demonstrates that despite the limited short-term visibility and turbulence caused by the economy, the fundamentals of our industry remain strong and Cognizant is well positioned to capture that opportunity.
I''ll cover four topics in my comments today. First, I''ll provide some highlights on our third quarter results. Second, I''d like to discuss the state of the economy and the implications that this has for our sector. Third, what I''d like to do is talk about Cognizant''s performance, our opportunities for growth and the investments that we are continuing to make to maintain that growth. And finally, I''ll provide our thoughts on the outlook for the rest of the year.
So, starting with our financial and operating results for the quarter, we generated $734.7 million in revenue, versus our previous guidance of at least $723 million. This is an increase of 31% over the third quarter of 2007 and 7% versus the second quarter of 2008.
During the quarter, our non-GAAP operating margin was 20.8%, which is above the company''s targeted 19% to 20% range. Non-GAAP operating margin, as you know, excludes stock based compensation expense and stock based India fringe benefit tax expenses.
