CTSH - Earnings call transcript Q3 2017 | Cognizant Technology Solutions Corporation

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Operator

Ladies and gentlemen, welcome to the Cognizant Technology Solutions third quarter 2017 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the conference over to David Nelson, Vice President, Investor Relations and Treasurer for Cognizant. sir. ahead, go Please

David Nelson

and a everyone. release copy quarter company's operator, should for now, have third results. received of XXXX good you, By morning, you the Thank the earnings

available you on If a not, copy our cognizant.com. have website, is

Mehta, onto Chief are Additionally, presentation website. Executive Francisco on call. D'Souza, covers investor have Financial we Raj discussed This The points Chief our speakers we President key on an McLoughlin, have this loaded Officer. and presentation Karen the today's Officer; call

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Francisco D'Souza

everyone to and QX revenue and Good Three four digit results. product technology were us the is X.X% billion, which and guided delivered $X.XX resources high and Healthcare, contributors up business quarter thank at Cognizant communications our range joining rates. morning, strong media year-over-year. of third was our our solid you performance. growth of for end and segments today. and double averaged

To And for capabilities, and quarter our broaden digital the announced independent full agency XX%. services non-GAAP the strategy, margin related interactive specializes leading and non-GAAP well most recently partner company and continue some of digital solutions acquisitions further our was above will digital with a UK Europe Adobe our solutions. $X.XX digital our average. results, These brands. for leading world's and operating digital EPS digital creation. grew provider quarter revenue to third of financial experience recognized was acquisitions. we that in a quarter leading content in portfolio service Netcentric, independent based technology marketing Zone, and Our enhance of two a And

delivered top and bottom and quarters for our we strong the soundness XXXX, performance execution services. of three of strategy portfolio For our consecutive demand strong of lines. continuing consistent the underscores investments This at and the

guidance, margin of Turning revenue and billion billion. full guidance we again the we low year $XX.XX raising the of to to And are least at year and our expect be full XX.X%. be to non-GAAP expect end operating range revenue XXXX our range in $XX.XX

the and our precisely, to we've to shift in out we're clients to in disruptions the the Most continual of compete grow their business Now, markets. within world. digital. shifts transition right more clients physical has and digital now to significant Today and face mandatory enterprises help for Therefore, the enable clients capabilities adapt, built become themselves the digital from or know of become mix them. making must they physical that systematically

a to The digital competitive how deliver we we examples transform about when services So transformation, three Increasingly, envisioning clients as consulting digital and software infusing all expertise. and few platform our of developing scale, capabilities and solutions. make also that building Cognizant The advanced new and of is centers see co-innovation turning at innovation, highlight integrating client More intellectual are in and client knowledge, and we've Cognizant winning and industry our emphasizing solutions of is based develops morning, place is property technologies that economy. result been best that this Cognizant. calls, resonating difference recently, we business, a I'd and like begin to leading delivering a scale. these And outcomes digital. to we've the different is digital deep how enabled them with into upside This with a with our simultaneously. this mean for software clients. at In technology discussed repeatable models and what company we that's we work a transformation we business operating to layer real kind talk by prior ourselves applying their firm to this

for vehicle For social a US future from ride consultants, a ReD of then a around offers and that And to a Cognizant help more automaker. services move easily remotely driverless and car marketplace smart driver develop reimagine help cars, reservations. of and and developers parking company the drivers services that's preparing team to and from between they diagnostics sharing mobility to scientists access associates relationship jointly

leading and a We the helped business, appeal sciences digital and consultants bring a will efficiencies drive to million that solution, intelligence apply financial under marketing therapeutic services experts. retail design enable an team market doctors, we a brought from for together in also XXXX. build populations. technologists institution client advisor techniques. achieve to financial with new a of And team patient pharmacists to robotic to we new development goal nurses, major firm envision cross-functional and strategists, For and smaller facing drugs business technology growth assembled digital leading Cognizant company the process digital life with artificial clinical market investment slowing proven designers, millennials benefits and doubling and enabled of assets this the developed a its of XX by To management Cognizant would in that a approximately

this able to challenges even the these drugs can have to in was As or not of clients. in new upside economical small market. been develop Absent combining and digital services software achieve most a for to populations. might of relatively result, the variety a form The that wide our keep therefore, ways bringing repeatable the is solutions world's goal new to of therapies create dealing for Cognizant approach, and these we patient companies are one And client another. scale now with new at

about why digital systems digital transform. and run perspective, practices areas, and practice year Raj work And three segment, Now, of solutions enterprise Cognizant sure and are mirror make These last is Cognizant need is client's and established the progressing organized enterprises our that Digital our our will which needs Cognizant a challenges. business that client solving current in technology. our such which digital how from to transformation emerging operations services they and we the all demanding talk parts we are their client's business, across

Within these currency practices, our value to breadth our and of of clients hinges on depth, the knowledge. course

and skills the skills we've So digital strong security, high-end aggressively alone But artificial been thinking, digital are automation. building cyber not data science, of as areas design in intelligence Internet Things, enough. such

combine specialize and skills software with to these clients. to create technologies quickly we core on language processes to the the speak this specific knowledge And new specialized we and understand So, industry draw of and industry our platforms build industry we for it. expertise solutions value every

program together We've in health with the Earlier now investments, moved come leadership by size. TMG this Microsoft combined healthcare year, in investments extend the areas healthcare invested for scalable the operations having process made healthcare for business for with commercial platforms as solution launched strengthened These the leading You programs digital care and safety. TriZetto can and or we footprint with all TMG. in solutions see content and our enhanced TMG the used public the to mortgage August, way US. TriZetto invested a the Health leading beginning government and solution we've Azure completed acquisition any have our SaaS as fully health other healthcare we such the services integrated and processed our provider And and providers. major to products payers Cognizant government operations, commercial of in payers cloud in top a as technology process transformation, Cloud our of platform space of provider. servicing Health a managed BPAAS example platforms, we've of a and government markets. market for platform, platform business sales Since in administration TriZetto, digital digital this patient TriZetto services many establish healthcare has our software solution, the along service further as

enabling the and across All be repeatable platforms to used provide offerings by that markets. develop benefit multiple technologies of clients scale, Cognizant these multiple of can

client lift, for a Once transformation the It the Cognizant successful resume scale execute is of clients. enables co-innovation at to with solutions that and digital starts While level trust of has successfully. a with high heavy this encourages of a end products and scale models. how digital know clients, is business future, the we business prototype for experiences and to the enough. reshape front to experiences client's we've design, But established not building digital

global and and We and ability tools processes for all enable reengineer, the turning to core solutions to have clients digitize, reliable by the drive global of knowledge, as much and capabilities table. couple the our bring clients this mastery then building on combine software to to specific doing the the And efficient these We well digital to different as company and together intellectual transformation. that's knowledge this platform to three And consulting will develop applications. digital and talk and industries. Raj? help come technology manage technologies to deep Raj all of highly advice integrating and with a to orchestrate at over enterprise of of economy. provide their we kind digital model, the continues set software who to And into clients' And finally, services, software processes with scale. capabilities using and of review our systems we're expertise solutions heritage and the digital technologies, capability what which Cognizant and in operate scale of are work works entire marketplace. business our for performance. that differentiate this we and delivery strategy, operations now how build business the at a have property, envisioning Cognizant to clients that's That's the us about segment practices

Raj Mehta

the the competitive layer our described. our digital creating digitally channels conduct core by virtual This lead transformation through Cognizant to At three developing business practice enterprise helps ability in Thanks, of advantage work Frank. our smart business focus customers and the digital is areas. clients clients products. Frank three with of is just

to digital clients simplify, manage heritage, applications. And business lower operate IT works costs infrastructure and new growth. their Cognizant and models, reengineer, technology design, aimed at process reshape all their scale operations on secure Cognizant and to draws generating and to technology experiences experts and and prototype to Our clients digitize, and deep products business help clients' modernize deliver knowledge and digital with systems growth. core digital processes

as strategy, line worked three CIOs, In of well all their long technology. cut capabilities will addition, the Since consultants across and with three rebuild practice as to requires on all addition our of behalf. XXXX CEOs, at clients apply Operating that on in often scale CFOs, and business to issues Cognizant Chief our heads models, operations nearly we've the Officers digital areas

stage, center more deliver with efficiencies set practice be achieve of our content of this, put the next new next digital practice and operations technologies, engagement, that way, of the scale which operations our more consulting operating up future tomorrow's clients' this its understanding operations enable technology The to helped multi In interactive tens was example of model By provider global within labs content center then will that In building client digital from systems our with We're generation building range developed and designing, content will reinvested digital agile center, interactive shared content services backbone pivot learning based By define including these the in and roadmap an content. full service And educational learning. with worked solutions systems that the then of operating together stage, model Cognizant this first efficient efforts. To both digital Here's can operations. transformation to center. educational and into consolidated will the client will learner of work, led consultants run. the a our achieve clients three our our and delivering the Cognizant and immersive. the stage have journey, and delivery. and prototypes teams leads partnering for affordable become a IT clients is second a to needed the saving millions the a from the experienced distributing business their and areas. of content labs of leading dollars the for the of that business economies design that be the develop

which will that our service ours data in geographies. center of financial double We reliable for digital. saw transformation segments engaged while new expanding on investments Among us digital, as a Banking the our such a In had continuing to Now, large the is banking and central which model, banks, clients a business increasing levels, standing delivery and of interest history areas and consistent long on our remain of we security client shift service lowering accounts. growth weakness of insurance and offset legacy performance enable in peer our financial spending and to helped money We because to operations which their cloud this analytics, for from transition. them included and an as let's optimizing were end-to-end and third in spend, focused our Financial business substantially recent quarter infrastructure, of contribution engagement as X.X% solid segment healthcare, systems their solutions. Cognizant Voya wins grew advanced turn to improve our Voya, year-over-year. up across year-over-year. our X.X% mid-tier services this digit and revenues our of chose demand virtualization This costs.

as quarter TMG of third software our a acquisition position leading healthcare mentioned, Frank Health and our services extended As partner.

management now to manage and Medicare intelligence. enhance new reduce organizations IT support more Consulting, to business of care further percentage And services it operations, healthcare the of that healthcare California markets. consulting Top strength industry models. XXX continuing capitalize and Cognizant digitization and of deploy than Tier as and positioned Advantage a based the fact, a strategy, well to and quality on products we with firm strives improve to substantial costs, expertise, provides our Medicaid In business consulting acquired We're healthcare the

year-over-year. resources communications, to technology. and products and grew resources turn XX% Products Let's and media and

digital smart Communications, offerings growth, energy our clients, offsets utility which us and We year-over-year. strong XX.X% and models. the The to with products our leading in our engage media continue strength both technology had manufacturing fact and that reflects of CSOs business increasingly growth with clients manufacturing sluggish in broad growth emphasis create and another to retail. on transform and and up logistics quarter see strong their based

a but content. curating Third across expansion this growth solid quarter in areas segment, saw and creating in like

help them delivery turning of customer and are their with clients to experience facing to personalized improving Our channels by Cognizant transform content. the the bridge

performance signed strategic Europe operations. for agreement the Continental agreement XX.X% services agile, provider at French the major become financial world The quick to rest up our Europe, transform the grew lay of process for more infrastructure the year-over-year. that Frank a efficient a by business and and of look and technology XX-year Within foundation and Now, geography. is to the Belgian XX.X% institution. was we and goal secure a a This [indiscernible] discussed. IT

new talent also processing skilled implementation to investing For experience turn named people Future work the when Progress Everest validation the training will skills the Fortune two rankings Cognizant for of more, we're them the leader in US citing example, in of top the provide IFC for paths public has only evolving to enterprise customer is best do Clients to These constantly invested build provided and future. to research, of brokerage. sources journeys, the technologies, remain in pursuing reskilling ranks of structured of managed clients. service its and with Research mention hours. platform from requires growth. new as do and expanded That's and through because a redefining leaders, services our associates, digitally named at star skills loans private developing they include transformation in public of advanced one several are workforce that developing What's Cognizant this list, this not European receiving today to heavily and us its Cognizant magazine lead positioned technology we have the to programs. the scarce. broad provide I'm infrastructure attract, approach. our cloud a their themselves. partnerships long consulting, simply us for cloud digital. utility retaining but industry technology in leadership is exploring of intensive future acquiring for An and other building performers skills technology an has Fortune retain companies Cognizant why changes are the pleased managed services, that to XX Group range

Karen, our the to our local recruiting To committed determined we are is That talent building and expanding and way, clients as up, to clients our we're training to deploy competitive, a digital to stay hubs operate. digital delivery help associates over you. our sum everywhere go centers training at partner become educational scale view addition, rescale to local the closer Cognizant to enterprises. do can we while quickly partners and absolutely them to Cognizant workforce. across to establishing they In with globe.

Karen McLoughlin

progress our we morning, to and Raj QX significant on and performance continue was of plan. you, each good Thank make everyone. element overall solid

billion of range and margin, In year-over-year. Non-GAAP and at the realignment high and was quarter the completed XX. related was acquisition record quarterly non-GAAP charges, expenses close excludes XX. operating per increased which payable cash November EPS stock-based the for guidance November billion declared we dividend Third our of program of $X.XX $X.X expense, X.XX This a share business end at be and $X.XX. we third revenue shareholders share XX% quarter, of today, compensation of X.X% was the will accelerated repurchase on dividend on

year-over-year, financial services discuss Consulting of Now, Consulting and for ago. revenue and solutions. XX.X% driven a quarter. Outsourcing additional services of services QX technology represented revenue technology XX.X% from X.X% revenue me for and our increased the let demand services outsourcing details of by digital grew grew performance. an XX.X% year

contracts. revenues XX% of fixed quarter, our third came the price During from

an moving costs to we in primarily potential actions number mix that the annual for make added more and take strategic on now while as fixed incurred structure customers business million We improve managed million growth. We strategic us our continue operating related of in longer clients to invest to or to X will total price of In defined at quarter. margins. the the revenue. realignment least the towards towards in resulted And or the to program, approximately quarter, to generate services to brings more in severance term This XXX. charges million the XX arrangement. continued in seven progress QX, of continue margins, our shifting over cost from to $XX actions update to allowing the our business These

severance, expect we incur advisory costs. costs forward, related to fees, and Going facility termination to consolidation additional lease

of based do high pursuit remain in XX% less we profitability non-GAAP Utilization opportunities Additionally, growth marketplace. target to have broad higher, date and position to further made in our not towards QX as as of management. this that operating our the work, and transformation effect digital balancing structural we margin accelerate in value digital moved XXXX we continued to by will profitable in reassess our our reaching headcount target. committed continue changes We significant to progress

improve We improve drive expect these our greater profitability. our that changes will alignment, resource efficiency operational thus help and help

growth quarter. While quarter. from our declined ago the XX.X% was and headcount in points the the period, XX.X% almost of XXX including trainees, BPO year over Annualized overall during hires from essentially previous increased in but attrition basis quarter, flat, XX,XXX were the

an attrition attrition level half higher initiated than first see was impact in year, to management severance continuing from we our quarter. did programs the While of increase normal, in due the voluntary and during the partially performance the

well our work of carefully continue more in course voluntary bring digital normal we and attrition needed While we to critical back to to grow headcount, as as skills hire manage will business levels. will invest to

utilization, utilization XX%. graduates was excluding recent quarter college on-site the XX% Offshore joining and XX%. for was training utilization program, was our offshore Our

billion with improved strong of cash We remains investments. the in of receivables down We Turning balance the the with quarter, XXX which we very business. had the end term billion from Receivables finished a unbilled slightly cash million, sheet, short to quarter the period. and healthy. including ago quarter DSO, generating of at days, of XX year reflecting profitability operating were quarter flow X.X the our and $X.X the finished

October. We from end XX% in of approximately million, was built balance of QX. the flat the unbilled receivables unbilled Our QX XXX balance broadly

our balance debt the outstanding no outstanding quarter end million was of Our XXX balance the on revolver. at there was and

we completed and quarter in and of three As the to the retired part $X.X and return shares at XX.X to X.X retired ASR March. our ongoing addition received shares of in the billion to million ASR commitment commencement in capital million shareholders, received the

QX the Our diluted XXX on year million to quarter. now comment full outlook count for the and I XXXX. shares share like current was our for would

we strong X.X% XX.XX year of the raising full our are of or in XX%. low performance, Following again growth and to year-over-year XXXX be end of range our guidance the billion to continued range XX.XX billion

Our the the year. the potential which the based rate is does at currency not over course forecast on for the guidance are and time we current guidance providing of at exchange fluctuations

we For the of fourth in the XXXX, range X.XX billion expect to of revenue deliver billion. to quarter X.XX

at EPS $X.XX. quarter, a to rate a of fourth XXX shares share and million approximately the approximately guidance For non-GAAP we of expect anticipates tax XX%. deliver of count least This

This impact additional ASR. we'll full non-GAAP later $X.XX. XXXX, year and billion by program an to rate anticipates least a XX%. the XXX to full EPS we to billion guidance end remain operating count approximately $X.X non-GAAP on million the For a XX.X% approximately committed share full of to and plan at of a We details X.X and the of the tax that at provide our margins deliver year least date. shares the XXXX This expect be of additional at guidance of repurchase includes

guidance non-GAAP realignment and related net stock-based Our compensation, EPS non-operating currency exchange acquisition charges. gains and amortization losses, foreign excludes and expenses

the income of excludes QX that the unrecognized. in recognition also full year, benefit was For it tax previously the

revenue momentum events an to guidance we from earnings our year account summary, with open for continued to for along we questions. have and changes close and XXXX policies. Our call capital return the a substantial Operator, expect we shareholders. with immigration not In tax out solid growth to or like throughout does the can extensional impact

Operator

question [Operator from comes first Tien-Tsin of line with JPMorgan. Instructions] Huang the Our

Tien-Tsin Huang

out, ask it which to actually was I want our model. your SG&A, especially versus Just margin stood in about performance, low especially

of questions couple So there. a

so overall to the know, and SG&A but would be implications your wages help and have hasn't next your kind the margin utilization managed pipeline, also and backlog just you any and moving lower given with pipeline, gross pieces the the quarter two between sales the Just margin, in appreciated. far fourth replenish ability then the the the confidence year, all to of whatnot. just I lines hurt

Karen McLoughlin

Karen. is This

cost We been into around this we've XXXX there knew particularly we last year. around SG&A that the that other more thoughtful going based SG&A. manage we've think the talked costs very effectively management facilities on functions year corporate late and opportunities work I and were our spend, to did about things like within

well, to down little of And, last overall that we to was move make the comfortable in from quarter-to-quarter terms you'll SG&A bit We're continue that see So, business. protected that dollars, the to a QX very have path. think around I grow QX we year. on need of SG&A as versus continue we investments

we pay variable this a this a to into year transition folks we as through what tough or In for a obviously our a well it of is year part performed the in been. of had significant QX trending Obviously, margin, that has up Part take bit of variable terms what is compensation been good we wanted gross the move rates the business out we and year. of a that, we've as lower where lot can for It's of during very our it quarter. ensure happened did compensation little gone happened than year. accrual lot that next so

as of in all defer set that And year beyond gross the transition up. in, in see with did and move as did year-to-date put we the on as that into October. QX the organization. company. continue XXXX raises What we and you'll kick into operating as to you promotions the targets Typically then will QX we'll margin some to said, this effective in catch that for that that's manage timeframe, So been the pressure happening is in July the we the margin move QX we've

Operator

you. Thank

question next Morgan question. Please from Brian your Essex proceed line Our Stanley. of with with comes

Brian Essex

cycles how the a you be is have in on how and if might that similar kind how guidance. to little going bit quarter, to builds where you your you that maybe of or portion that platform. was comment contribution of Karen, about wondering there TMG And I longer impact of can full-year the do TriZetto healthcare into that the sales your think opportunity

Karen McLoughlin

so TMG the deal close third Brian, the the did thanks quarter. So of towards end

for amount transaction. that there's a So QX in small of revenue

is you majority number essentially were know to that move client of work will may then the It steady-state as one of with that a a third-party and in start of As vast contract. QX. other clients towards there part

quarters straight broken contract We of two the the line straight pricing to transaction. deal, of essentially more There's next of it not line revenue. be But the is out and a the transaction a the for have size in combination next revenue will based structures it for roughly years in few of then future. will move that model but speaking it

Brian Essex

in you had consolidation, CRO really - and up rumors around that, at coming you conversation Aetna healthcare all. transaction of wondering doesn't are, some exposure with I know consolidation it are segment in a if market, you that's seeing the the some just any the but like you to in seem

Karen McLoughlin

I'll ahead. on that. Raj comment let Go

Raj Mehta

healthcare of just I the in along any lot us. or out for conversations over see Brain, healthcare Nothing we've growth company healthcare our with any strong Look impacts - payers there. We payer know invested think I strong mid-size right business. in or as remains think potential you large overall our now a acquisitions, both

BPaaS lot of to addition on a continue that see solutions. our to opportunities In we

Karen McLoughlin

some be Aetna remains what deals that seen the go through, if those move a CVS happens think I to example. of deal for

tell think at this I point. early it's to

Operator

you. Thank

of with question. Keith your Bachman the from Capital comes Markets. proceed question BMO next with Our line Please

Keith Bachman

Tien-Tsin's to level. operating can exhibiting. you on how to headcount guiding margins QX think advance margins. from the reductions. it headcount the 'XX to I margins, operating your question realignment. want My also on sounds some particularly the calendar It But wouldn't QX still benefit year, you I said those without year on on margin in called be unclear follow basis question in seems anticipate some a be calendar looks gross non-GAAP next little continue still Hi, workforce that a do bit the I'm reductions, pressure And of is, would given you that further to mid-XX

talk margins margins If from march you could to are a continue do you little those try up, your the most bit competitors' about here, eroding. forces operating to when how

Karen McLoughlin

Keith, break into let few pieces. a me that

a decline. the about QX and In that of QX terms typically are that slightly QX will margin, margin XXX in in because the we guiding is October basis promotions than kick to that's of margin of raises points lower

that all not into we've taken the have to see of from occurring paid we that our will the optimization so far. guidance We continue obviously of benefits cost some because

that's margins. So pushing the what's down QX

move XXXX and beyond. we As into

really those or haven't said into cost the way until move other and to of continuation we you year. generated that happen a XXXX into savings headcount made Margin one didn't then we know will XXXX, XXXX this a of frankly savings that cost what be year as number a will improvement mid-summer and timeframe. start the about haven't next the headcount We and statement we

and move the know, well towards business the platform higher, in the or other further be as what of of that well. our XXXX, business move that means profile higher margin lot So larger in opportunities we'll towards as headcount to as and to are travel mature organization 'XX the forward. margin benefit the shift as then whether digital continuing come There would the to starts we and well of saving as as at, reach of get continue types facilities said into margin we we have to a going part that around becomes that. CPaaS, full-year cost starts or expenses it strong business business improvement And additional look into that and from you a

Operator

Thank you.

of Our Ellis with Please line your Lisa question. the comes next question AllianceBernstein. from with proceed

Lisa Ellis

a another about take structure a operation look utilization initiatives so you're I to when you're just you've leg of comes efficiency from taking guess this gotten their to maturity take about, I at XX and now around It onsite you've you've utilization Cognizant give where to bit from now up further labor you've highs, talked and forward. you around, new up detail a of XX feels you color here offshore. back give further. managing what point stage back got you're how where be basically of centrally doing - pyramid all-time like Can on Can levels some question now, into about know to you we that? how it model. sort of it that the kind you little gotten of used sort the to one as and got you've stage you're to

Karen McLoughlin

think So in Lisa, fair sense. a I that's

time. continues said with and mature to that can we've to upwards very run continue XX% think trend grow should as is I business rate business At utilization comfortably. the what utilization that over always the we onsite

upwards. move trend we XX not can maybe think grow to offshore can above take there's won't quarter, basis. XX, continue sure should to get continue that we be as line a Certainly we get It think to the but I to long you quarter to certainly term XX, on consistent up opportunity over utilization.

peer we is I think of we've at our levers business and pyramid. in as have to lot the heavy and opportunity than one parts big a part mentioned been to top you group the a we business had other optimize of that. Historically, more think that makes the there's looking pyramid sense, the of another

in organization We corporate automation are on in of as see starting to side function. our as well things also the the like kick both delivery

scale without look to to So the of processes business my the organization organization for at if streamline our having help automation example, we're using add which us some I headcount. finance in to allows

three think a I see of years. number over So next the opportunities you'll those

Operator

Thank you.

next Our Please Sachs. with Schneider your proceed Jim Goldman from question. the with line comes of question

Jim Schneider

part seeing financials if conversation helpful client you bit. of provided budgets of, us in in the the Raj, consulting total or not and and Can conversations, directionally between you difference you potentially versus next systems was are the with maybe year. that color, a money in some saying of smaller of their in your spend what some is in terms they legacy just little see weakness the XXXX, where budgets kind banks of increased and address some outsourcing balancing IT going maybe I sense whether optimization the vertical wondering insurance can you're from strength banks. with the you give the center

Raj Mehta

here. is this Raj thanks, Jim

the space So look seeing services, growth at overall insurance clients. on its that we're financial strong

work the of guess mean terms large right. doing there areas that Continued regional continued I to a banks lot continual dollars cost obviously a in they're the optimizing focus there the and that of investing And you leveraging in we're there's free at a looking But those of on mixed these of know money some of of terms it's obviously in banks we're I work terms we're side is of some the earlier, the we on that challenges center digital digital stories, new that obviously story, on clients. two at banks. and business. tale exist the The mentioned up There's I as double-digit seeing optimization. have of on growth

banks. budgets, with we're digital But the those Now as in growing freeing an And the whole influx company we digital banks with terms is engaged dollars news digital obviously investing the optimization, in the we're continued seeing our is, many well there good obviously and opportunities of new at line of revenues of side. actually in seen those up those too. rest of on of focus haven't the

Operator

you. Thank

the question. Bryan Deutsche from line Our question your next comes Bank. proceed Please Keane with of with

Bryan Keane

operating Just in this you get Francisco, in how to XX% margins to an to model for just Cognizant's new years. adjusted to transitioning looking feel are as, guys doing business model two overall plan

wanted is now a revenues just Just much. digital just of total percentage going we everything on get Karen is to the a represents app And growth just plan, curious, feel had then how for there exactly rate. digital and so you Thanks a so thought, that. maybe plan

Francisco D'Souza

bit little a overall about plan. talk I'll the

track we we're right right think I to roughly on expected be. where

transition about mix let two ahead and transition we acquisitions pieces to grew think overall revenue, double make that Netcentric that shift good ago comment much at digit digital pace again we to about announced capability. of I a the Zone continue that we or digital. digit think to And Karen - offer services few progress digital in feel And I of there. we a great double add service the company the to the two average the this days quarter. it I'll clients. on The to that sort the

our note higher I that entire today think that at we've than look is the if at it's as also portfolio to portfolio said important that of margin the just rest a before of you business. digital the revenue it running

a will and XXXX So that going unfold through on healthy shift think I that beyond. continue overall and just very to mix

- bit about Karen where a digit continue little very if said we'll improvement talk And well of the to, for on other of this I we'd a good. I by you about plan transition we there. The margin we demonstrated that on out when keep know, we This in remarks turn percent we've revenue. with laid quarters Karen comfortable few of And talked on of that And year, That's it to this prepared we're side. that we're side I her beginning XX% that. of you the executing And at target ahead we'll we of a feel the thought think is think track there ago, be. as just think anything XXXX. year I'll

Karen McLoughlin

this out break not digital did we of percentage quarter. the So revenue

about each it of year-over-year quarter As of XX% you was larger of a revenue, we the part XX% and to to remember upwards quarter. said it become may continues grow last continues business

the to of of the seeing is nearly the across at in and business things all been with we're also Raj the industry. his very of looking nice that units all we've referred comments FS One traction about

So metric. continue update relevant to there's very progress will there see good as to information that on and continue

Operator

Thank you.

Katri from question. Securities. Our comes proceed line with Please question with Moshe Wedbush next your of

Moshe Katri

Raj, about for terms is any banks that you're converting. an there expectation of is internally Going regarding talking some outlook actually indication large center back to and the could about of money and the those Thanks. there XXXX, the in deals when commentary their start spending patterns.

Raj Mehta

always So look we've what many is looking think comes to right now I of these into start it's And a digital money little XXXX. center become gotten the opportunity bit those we've at growth the that scale. too bigger on. large about as early Obviously I we have have talked accustomed opportunity banks. that's larger to numerous think as to to opportunities banks see back engagements we going But those an when

Francisco D'Souza

Moshe Frank, worth said additional that, digital revenue XX%. quarter percent I of mentioned of total for which piece a about was one Having that, you is last as that revenue color Karen think it's adding it's company

We as around are there in services right financial well.

amount digital to revenue services substantial financial We're isn't a So financial doing of in waiting and this services. for convert. digital, work already in story a of we're

not to I services on player digital financial financial think execute center as and in So that stretch aspects to think are digital the we start plans. start any about money significant of don't in - their big by banks a these

Moshe Katri

they you're pretty would those talking But deals road? that you say do large about significant could banks convert those some of the digital be that could into if to - down

Francisco D'Souza

Again, I want separate. to

work. are We of doing a considerable amount already

is average. convert roughly is services significant making, company the deals - line be already we that point but financial in if So, road, yet are I with was down there going are and Moshe, could our they the that today already digital is

XX% services. the right we're financial think about in So number, there around

services. a work doing in of already we're considerable financial So amount digital and

Karen McLoughlin

of Moshe, me let Karen, this that. just is wrap sort

banking, and we think out early that XXXX in the their in and spend Raj spend we've that both making growth that money to redirect and digital. or usual terms We're pocket business business talked is banks Frank think I not whether to digital or strong in now tell. XXXX I like increase to in too whether it's too How it early right the see as any been say results in from balance they or today a XXXX. legacy of not shift is to seeing think their which that take one commentary plays on as continue I net with spend

Operator

you. Thank

with Anil Ramnani with next Markets. Please Our KeyBanc question line Arvind Capital from of proceed comes the question. your

Arvind Anil Ramnani

over capabilities, I past on how space do the this healthcare market feel based positioned? think three capabilities client healthcare opportunity of the the business the over the the materially has all your has continue a value your and to on been are care do next based over your enhanced healthcare change et same base. changed time, At acquisitions, just and few two years you expected cetera. question internal to years had all you with you How

Francisco D'Souza

Frank. but think as well, Raj changes turn think I'll I to Look Arvind, I plays I'll strengths Look change it's our it, actually. let answer is,

core sort do to whether we strong changes portfolio to whether changes, the that's digitizing about and their clients of think market to our respond run what the service offerings have our technology of backbone. technology healthcare offerings ability to BPaaS to terms end for and and the front of As figure a out help on just parts they our to that's our in of they or end modernizing that's need as consulting operation evolves very whether operating client the

very I well model at technology the and operating think the level. we're positioned model model, both business the

So as portfolio a to capabilities. in come both these such strong have of that changes property assets, and software the of we people given intellectual our healthcare assets form

healthcare we you like feel we're think together we're going positioned for and - I very very put forward. well that

Raj Mehta

us I Frank's add think in you're of move interest out, as think just come obviously as well. as as as for opportunity comments, a rate continues of of payers look And well. showing see large with we've then the growth a I strong that's well BPaaS providers providers, lot lot think up there healthcare industry are BPaaS with would to our to seen we in obviously our I starting solution to a good the Evolution, traction own the evolve, around And solutions. lot plans. I But a

and So I positioned we're forward for well year. think to next look continue

Operator

you. Thank

Barclays. Please next your question with with of from Peller Darrin Our line question. comes the proceed

Darrin Peller

in that out the is third year. First I be still on impact from should fourth that quarter. thrown not How over guess last was lay the to And quarter. and quarter the EmblemHealth question much about

just there. follow towards in XXX can hearing, buyback. up acquisitions, or outstanding you - know inorganic couple growth you guys authorization estimated what but just X.X from acquisitions. I And so then you year but the a Thanks capital capital allocation on given push. growth tell around to overall this left. you've a of accelerated is think on I your to want bps have finished I what just TMG topic for what don't billion what rate, billion inorganic, guys. contributed And remember would that us ever do we was allocation, the you digital whether to

Karen McLoughlin

mentioned me So necessary. let and start completed start buyback, if allocation that this ASR you we in Karen, and Frank with can is We the in Darrin, the question capital as Raj join the QX. around

also to XXXX, a on appropriate allocate that in we'll and the that more have $X.X another back of billion We committed color we'll between haven't that an end time. program now buyback we provide defined

capital so week. shareholders to last returning our will growth the deals. up M&A to for We inorganic M&A broken And certainly we've a two closed we of not for volume have deals closed our organic pipeline that is rather talked towards been in expect the of ramp a not continue cash time that nice certainly or to we balance services But M&A. deals. And deals. And and nice allocation active quite the find out between held doing we organization. and would committing keep volume fair we've obviously dollars strategy amount deals ramping that have up about some we're now both those We've for of

Emblem, lap said In terms did in you of to middle start TMG the Emblem and so as QX. of

And will but relationship, scale that full as then we'll ramp the the of QX Emblem QX. did to growth broken TMG So revenue in and out it start and quarter small of incremental obviously year-over-year the in for the in then haven't fully TMG size third last part we said we lap.

small inorganic small. we've the [indiscernible] months, is terms the of forth, XXXX year inorganic of closed which small organic a a that were versus inorganic. We XX last so very over this growth couple been percentage in deals all has In overall very growth growth, had from of very

Operator

you. Thank

the of Please with question Cowen Bergin & from with next Our Company. proceed Bryan comes your question. line

Bryan Bergin

then acquisitions ask work? two into the the if them determine you talk in top marketing for three you're them about are related Thanks. others past. Can what using or the services to how And you're will you're to and really just right wanted autonomously, week you? then integrating I had running that or how targets the you last on your tech KPIs

Francisco D'Souza

It's part When Frank, let the business acquisitions me the Cognizant area. will two of practice become take that. closed digital

part in that two Cognizant as as become Operations prepared Systems acquisitions talked I Cognizant we these - about Technology, big Digital Digital Business, Raj Digital have recall So and well, Business. and will areas, my of three Cognizant Cognizant Digital said remarks, practice and

synergy amount broad of operate We a synergies for of relatively a clients three independently, will largely marketing is continue taking Cognizant let their capabilities areas. revenue practice have clients. taking our which those to to work we all plan today but focused and range around We of across tremendous on a them do course

marketing spoke largely about doing lot we're relates a prepared area Digital Raj creation, in And Digital kinds broad that that his you and strategy, curation can marketing, we're those right. the Cognizant think Systems of content, bit of things. marketing content in work work Operations and a Business, Technology, doing that's Digital Cognizant Cognizant in around in that and channels little technology, So In content about marketing marketing of content work remarks. we're doing marketing to related content management, creation,

doing allow practice of we're on we're doing a and three areas, amount a take in of end lot all sense way. of to client marketing a a put work our across a that So front to holistic integrated These and work. will related significant us in that a more that acquisitions

plan. And so that's broad

independently, that continue been that into clients. continue by to - do them revenue there on opportunity the We'll traditional them some execute synergy their clients. going by on into run relatively services cross-sell we'll bringing our to we'll largely to them execute for and think great they've their forward. them We So doing clients the work let bringing our maybe

Operator

you. Thank

comes line William the question of your Anil Blair. from with question. next Doradla with Our Please proceed

Anil Doradla

about target. guys and Karen, Francisco So the you XX% talked

XXX, about we're going where from that's year. XXX to So bps exit this

based guys is efforts are to or in the some I you of most it or be is of look on it doing. trajectory, coming that if that at linearly spaced So the is out increase going 'XX 'XX

Karen McLoughlin

haven't obviously last XXXX we then but the it next be guidance see expect some you benefit given year should and in will Anil, XXXX. part to yet, So of

Anil Doradla

Francisco, metrics new to metrics kind you creating of you talked some in some of the metrics. are Are repeatable incremental comments. about aspect are of introducing you quantify repeatable But business. business new to some opening that? Some your emphasize that on obvious the

Francisco D'Souza

doing what our that work work. for innovate, existing you'll business sort that By repeat choosing play Yeah, was combining like increasingly because creating metric to the as is continue is repeat solution in based to every clients we've talking new think them - our value tracked I which and to of period, software see always capabilities to to clients on be and from to solution I shows out talked or services to we've creating they're of things repeat every offerings clients, existing - together, And of sort solution clients. in our company when really existing to relevant are of about new say, are work really And the and packages got I offerings of year give so you We've that's that think to because them from the repeatable we're so continue to a be find relevance been to our relevant forth. us on the continuing and sources to we as market. continue where these to is to offerings we're think existing we're that it got capabilities our and you I on business take that's the the to we clients. assessing start where we've and our that focus past we referring about be the going up our BPaaS business

metric base the So use beginning the customer internally can far the is tracking our I from business we from is metric remember. as we've repeat that existing been as which

Operator

any back come of to for I'd for Mr. Thank D'Souza the allowed Ladies time call and our you. to questions. the gentlemen like comments. closing to end turn have we

Francisco D'Souza

everyone forward speaking today pleased and questions. thanks Well, thanks quarter us joining to again thanks results with I for this Look for We're quarter. you very and next much. look with the you. Thank again your

Operator

concludes Thank quarter Solutions call. Cognizant third today's you. This XXXX earnings Technology

disconnect. now may You

Cognizant Technology Solutions (CTSH) 1 Nov 172017 Q3 Earnings call transcript