Quarterly revenue rose to $4.01 billion, up 9.2% from the year-ago quarter.
Quarterly GAAP diluted EPS was $0.78, compared to $0.80 in the year-ago quarter.
Quarterly non-GAAP diluted EPS2 was $1.19, compared to $0.93 in the year-ago quarter.
Revenue for the second quarter of 2018 rose to $4.01 billion, up 9.2% from $3.67 billion in the second quarter of 2017. GAAP operating margin was 16.7% and non-GAAP operating margin2 was 22.0% for the second quarter of 2018. GAAP net income was $456 million, or $0.78 per diluted share, compared to $470 million, or $0.80 per diluted share, in the second quarter of 2017. The decrease in GAAP net income was primarily due to net non-operating foreign exchange losses driven by the depreciation of the Indian rupee versus the prior year period and the initial funding of the Cognizant U.S. Foundation. Non-GAAP diluted EPS was $1.19, compared to $0.93 in the second quarter of 2017.
"As our second-quarter results confirm, were making solid progress on our plan to accelerate our shift to digital services and solutions," said Francisco D'Souza, Chief Executive Officer and Vice Chairman of the Board. "We've been methodical in developing, aligning, and applying our portfolio of skills, services, and solutions to clients' needs, so they can become fully digital organizations. And we remain confident in our ability to invest for growth and achieve our financial targets."
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1On January 1, 2018, we adopted ASC Topic 606, "Revenue from Contracts with Customers," or the New Revenue Standard, using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under the New Revenue Standard, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting. For the three months ended June 30, 2018, adoption of the New Revenue Standard had a positive impact on revenue of $31 million, income from operations of $38 million and diluted earnings per share of $0.05 per share.
2Non-GAAP diluted EPS and non-GAAP operating margin exclude stock-based compensation costs and acquisition-related charges, realignment charges (for the three months ended June 30, 2017 only), the initial funding of Cognizant U.S. Foundation (for the three months ended June 30, 2018 only) and, in the case of non-GAAP diluted EPS, net non-operating foreign currency exchange gains or losses and the tax effect of the above adjustments. Reconciliations of non-GAAP diluted EPS and non-GAAP operating margin to the corresponding GAAP measures are included at the end of this release.
Third Quarter & Full Year 2018 Outlook
The Company is providing the following guidance:
Third quarter 2018 revenue expected to be in the range of $4.06 billion to $4.10 billion.
Third quarter 2018 non-GAAP diluted EPS3 expected to be at least $1.13.
Full year 2018 revenue expected to be in the range of $16.05 billion to $16.30 billion.
Full year 2018 non-GAAP diluted EPS expected to be at least $4.50.
"Year-over-year non-GAAP operating margin expansion reflects strong operational execution and positions us well to absorb planned investments in the second half of the year," said Karen McLoughlin, Chief Financial Officer. "As a result of this solid performance we are pleased to raise our full year non-GAAP EPS guidance. Our strong balance sheet and cash flows continue to support both our capital return program and our investments in the business designed to create long term value."
Return of Capital Program
The Company has declared a quarterly cash dividend of $0.20 per share on Cognizant Class A common stock for shareholders of record at the close of business on August 22, 2018. This dividend will be payable on August 31, 2018.
In February 2017, the Company announced a plan to return $3.4 billion to stockholders by the end of 2018 through a combination of $2.7 billion in stock repurchases and $0.7 billion in dividends. With the anticipated settlement of the accelerated share repurchase program during the third quarter of 2018, the Company will have completed its committed stock repurchases.
