Cognizant Technology Solutions Corp outstripped the growth of its peers in the offshore IT services sector during its second quarter.
In the three months ending June 30, 2004, the Teaneck, New Jersey-based company grew net profit 76% to $23.8m on revenue that grew 59% to $138.7m.
The figures beat the company’s previous expectations, and shares in Cognizant shot up more than 13% to $25.95 in morning trading on Nasdaq, taking its valuation up to $3.36bn. This is more than nine times its full-year 2003 revenue of $368.2m.
Cognizant also raised its revenue forecast for full-year 2004, which is now expected to grow at least 53% to $565m, with diluted earnings per share expected to reach a minimum of $0.66.
The company’s 76% sales growth outstripped the 44% growth of Satyam Computer Services which reached sales of $175m in its latest quarter, and the 42% growth of Wipro Technologies to $287m in the same period.
Cognizant president and CEO Lakshmi Narayanan said the company is spending more money on sales and marketing than its rivals, which is helping it to win larger deals with bigger clients. Cognizant’s selling, general and administrative expenses grew 55% to $31.5m in the second quarter, representing 23% of total sales. In comparison, Satyam’s SG&A expenses represented 18% of revenue in its last quarter.
The fastest-growing part of Cognizant’s business is applications development services, where revenue grew 77% during the quarter. Narayanan added that 90% of the company’s overall business during the quarter came from clients with which it had worked for more than 12 months.