Cognizant Technology Solutions’ (NASDAQ: CTSH) earnings and revenue for the third quarter 2019 surpassed the market’s estimates. The IT solutions provider reported adjusted EPS of $1.08 on revenue of $4.25 billion. Wall Street had expected the company to report earnings of $1.05 per share on revenue of $4.21 billion. Cognizant shares were trading up about 4% immediately after the earnings announcement during the extended trading hours.
Third quarter 2019 GAAP EPS increased to $0.90 from $0.82 in the prior-year quarter. Revenue growth of 4.2% in the recently ended quarter was due to the strong performance in Products and Resources segment as well as Communications, Media and Technology segment, which registered revenue growth of 12% and 9%, respectively.
Financial Servicesrevenue grew modestly by 2%, while Healthcare revenue decreased 1% versus the year-ago quarter.
The Teaneck, New Jersey-firm had guided fourth quarter revenue to grow in the range of 2.1-3.1% in constant currency.
For the full-year 2019, the company expects adjusted EPS to be in the range of $3.95-3.98 and revenue to grow in the range of 2.1-3.1% in constant currency.
“Today we are announcing a simplification of our operating model and a cost reduction program, which will allow us to fund investments in growth,” said CEO Brian Humphries. Cognizant announced 2020 Fit for Growth Plan, which will focus on four core areas; Data, Digital Engineering, Cloud, and IoT.
Cognizant plans to optimize its cost structure and expects to complete this program by the end of 2020. This plan will result in total charges of approximately $150-200 million primarily related to severance and facility exit costs. The company expects annualized gross savings run rate of approximately $500-550 million in year 2021.
CTSH stock had declined 6% so far in this year and 10% from this time last year.
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