Earnings of Cognizant Technology Solutions (CTSH) rose sharply in the fourth quarter and surpassed the Wall Street forecast, supported by an 8% increase in revenues. However, the stock slipped in early trading Wednesday after the professional services provider issued weak guidance.
Earnings, on an adjusted basis, rose to $1.13 per share during the three-month period from $1.03 per share in the year-ago quarter, beating estimates. On a reported basis, the company posted a net profit of $648 million or $1.12 per share, compared to a loss of $18 million or $0.03 per share in the fourth quarter of 2017.
In the December quarter, revenues moved up 7.9% annually to $4.13 billion and came in above analysts’ forecast. The top-line growth was broad-based, with all the four business segments registering an increase. Also, the major geographical regions witnessed an improvement in performance compared to last year.
The top-line growth was broad-based, with all the four business segments registering an increase
“Cognizant executed well in 2018, diversifying our revenue base and client roster, and investing to build distinctive leadership in six advanced digital capabilities. With a disciplined plan for executing our digital strategy, we’ve set Cognizant up for the next stage of sustainable strong growth and value creation,” said CEO Francisco D’Souza.
Looking ahead, the company expects the ongoing execution of its long-term strategy to drive revenue and earnings growth in the current fiscal year. Revenues are estimated to increase between 7.5% and 8.5% in the first quarter. The growth forecast for the whole of 2019 is 7-9%. Adjusted earnings are seen rising to at least $4.40 per share in fiscal 2019.
Cognizant’s stock sinks despite Q3 earnings beat and revenue match
During the quarter, the management appointed Brian Humphries as its new CEO, to replace co-founder Francisco D’Souza who is slated to step down later this year. Humphries, who has also been appointed to the board of directors, will assume his new position on April 1, 2019.
Also see: Cognizant Technology Q4 2018 Earnings Conference Call Transcript
Cognizant shares dropped about 7% in the past twelve months. The stock closed the last trading session lower and continued to loss in the early trading hours Wednesday.