Cognizant Technology Solutions Corporation’s (CTSH) shares fell over 3.5% in early trading hours on Tuesday, despite the company surpassing earnings expectations and matching revenue estimates for the third quarter of 2018.
Total revenues grew 8.3% to $4.08 billion versus the same period last year, helped by the adoption of a new revenue recognition standard, and in line with estimates of $4.08 billion.
Net income dropped to $477 million, or $0.82 per share, from $495 million, or $0.84 per share, in the prior-year period, impacted primarily by higher net non-operating foreign exchange losses in 2018, driven by the depreciation of the Indian rupee versus the prior-year period. Adjusted EPS was $1.19, ahead of analysts’ estimates of $1.13.
Cognizant delivered revenue increases across all its segments and geographies during the quarter. The company made progress in its shift to digital by building new capabilities and helping clients perform better with digital solutions. Cognizant believes its performance positions it well for making growth investments and achieving financial targets going forward.
For the fourth quarter of 2018, Cognizant expects revenues of $4.09 billion to $4.13 billion and adjusted EPS of at least $1.05. For the full year of 2018, revenues are expected to be in the range of $16.09 billion to $16.13 billion while adjusted EPS is expected to be at least $4.50.
The company declared a quarterly cash dividend of $0.20 per share on its Class A common stock, payable on November 30, to shareholders of record on November 20, 2018.
Last week, Cognizant’s peer Microsoft Corp. (MSFT) reported first-quarter 2019 results that topped Wall Street estimates. Another rival Alphabet Inc. (GOOGL) reported third quarter 2018 results in which earnings topped estimates but revenues missed the mark.