A strong end to 2014 for Cognizant, with the disruption of Q2 results (due to client specific issues) now a fading memory.

Q4 2014 revenues were up 16.4% y/y, up 13% y/y excluding Trizetto. And non-GAAP operating margin of 19.4% was within its targeted range.

Q4 2014 revenue breakdown by vertical (and actual revenue growth) was:

• Financial services: $1,121m (+12.4%), with strong growth in insurance, where Cognizant is seeing growing interest in end-to-end managed services
• Healthcare (incl. payer, pharmaceutical, biotech and medical devices): $773m (+26.0%), up 17.9% sequentially, and up 5.6% sequentially excluding Trizetto
• Manufacturing, retail, logistics: £534m (+19.5%)
• Other (incl. hi-tech, comms and information, media & entertainment): $314m (+23.3%).

Revenue guidance for full year 2015 is at least $12.21bn, a growth of at least 19% after a 2% currency headwind. After adjusting for the impact of TriZetto, this means constant scope/constant currency growth in the region of 14% - 15%, roughly in line with 2014 organic growth of nearly 15% (16.1% as reported). Just to be clear, this is market-leading growth.

The HealthNet contract is expected to receive regulatory clearance mid-year and should thus be contributing revenues from H2.

For full results see here.

Management reminded investors that the expected $1.5bn in revenue synergies from Trizetto over the next five years will be back-ended. Opportunities in the short run are around services and BPO.

The Trizetto acquisition and the win at HealthNet, which took three years to shape, are two of several indicators of Cognizant’s increasing competitiveness for large integrated outsourcing deals that include BPO, applications and IT infrastructure services. Cognizant’s ambition includes winning some deals through which it can develop industry-specific BPO utilities. 

With several large deals ramping up in 2015, growth from outsourcing services should really begin to accelerate from the 7% y/y growth seen in Q4.

Talent: Cognizant now has over 200k employees globally. Attrition trended downwards this quarter. Management highlights the 2014 acquisitions in particular the smaller ones of itaas, Cadient and Odecee, have brought in talent in newer areas such as mobility, digital marketing and video engineering. The acquisition of Cadient, for example, is helping drive the digital agenda with pharmaceutical clients. As well as developing talent internally, there is likely to be further inorganic growth to bring in additional digital and data analytics talent capabilities.