CTSH - Earnings call transcript Q3 2018 | Cognizant Technology Solutions Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, welcome to the Cognizant Technology Solutions Third Quarter 2018 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. Thank you. I would now like to turn the conference over to David Nelson, Vice-President, Investor Relations and Treasurer at 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 Financial on we If Officer. on are Raj Executive call D'Souza, today's a Karen Mehta, not, copy President; have our cognizant.com. and The have website, speakers Chief Officer; Francisco is McLoughlin, Chief

the would of call turn the to begin, in I statements call like D'Souza. Francisco to of the go to described the and filed over SEC, made ahead, we you These and our Please some to may Before Francisco. that the questions company's today's comments as on to some statements. other be uncertainties filings would contain with responses your the earnings release I remind risks later forward-looking to XX-Q Form today. and subject are including now like

Francisco D'Souza

like Hello, Investor everyone, preview two two we'll thought for call. what a joining away topics: we're our and give you morning, I'd thanks I on be highlights Cognizant's QX, from since and to weeks discussing. first, about second, cover Day, few from a I'd This

quarter. begin Let's with the

And offset growth segments. the segment, financial by fourth these run-the-bank across in our guided Three Third quarter was delivered by digital continues increasing adoption and on in spending. our in good largely the $X.XX digital billion, offerings, our to the up X.X% performance revenue we year-over-year. four pressure of see banking strong range within and of which a segments business services, quarter driven be

industry-specific average revenue, now range, services see quarter continuing portfolio to we digital to our grew across reflecting well average. segments Underscoring digital of over in XX% clients, a As above the the in the company our total relevance revenue low the digital margins the revenues. to digital generate shift continue of above result, XX% and company our

on was And track putting XX.X% EPS full-year for to deliver the non-GAAP operating our us margin commitment. quarter, on quarterly non-GAAP margin Our $X.XX. was

services more margins emphasis clients sustained quality traditional As these their win growth digital suggest, services. with our attractive on digital of more to helping from is us spending shift results IT and deliver as higher business

we billion expect range $X.XX be billion. Turning to within to a quarter of fourth revenue to guidance, $X.XX

For of of $XX.XX in to the X.X% expect and full year, revenue XXXX our within we be in achieving XX%. range we operating and non-GAAP remain X%, a a billion, margin stated a of confident guidance growth to previously of $XX.XX billion approximately

months, business models are them, certified further implementation we part our Platform. capabilities implementing three focused revenue capabilities. and where enhance earlier business Group, Two has shift one and Salesforce Salesforce to Platform Quote-to-Cash consultants. largest Advanced based industry's growing U.S., customer has Group, the Their relate acquired services on this We roster fast as the which processes, cloud expertise digital to in will of to Over recurring clients provides Advanced automated, streams. portfolio the new and that Technology Technology a ecosystem. announced have solutions couple the strengthen consulting the acquisitions Cognizant headquartered Salesforce revenue of of the our on in of last cloud-based management which of closed month,

completed. acquisition and SaaSfocus, of end-to-end transformation Asia-Pacific capabilities region acquired quarter, the announced and Salesforce our operations digital the expand SaaSfocus engineering anticipated the During which month, this Platinum with independent in capabilities We're digital also especially the India. consulting in excited Salesforce will we Softvision services earlier cloud Australia partners expand one of once about will Asia-Pacific. largest our across

agile innovation product techniques, a and Softvision software development tools, modern software using engineering and is leader in processes.

European Eastern to technologists more X,XXX our software ability services a base software to engineering increasing Softvision Romania, our provide emerging hub a to Cognizant, bring than clients in developers. for new will fast from

We to world's one us Cognizant will this quarter. enable acquisition Softvision to later the to of largest close digital create Adding expect the engineering companies.

acquisition outcomes. domain strategy and global organic ability activity for delivery, through and deliver clients overall complements from in investment knowledge, implementation to local Our digital our capabilities, ongoing and

Okay.

So, my York. second Day, scheduled which let's move to XX, for November in topic, Friday, is New Investor

Our we'll and goal digitizing This new fully automating compelling and clients operating company scale for personalizing their digital offer objectives next targets margins, our for also cover seek the is ways the they we'll for financial revenue, Investor new new strategy compelling scale Clients revenue deliver by becoming experiences digital and for positioned it their on services, processes, streams, modernizing what's we to And several infrastructures. discuss path to well are IT their because their the of years. helping of mid-term digital and customers, including shareholders our the a we At capital at because their Day, growth return next scale seize the become how years. centers market and customers. at for few Day massive over find opportunity. EPS, business Investor and find generates delighting products to models, at strategy

turn to opportunity we'll and the Raj. a future. hear over present more addition, our cross-section the point to In from Overall, call leadership goal to Investor executive of meet the before for you Day One plan our team. I our give is for

been of the has of across execution a solid dimensions XXXX Cognizant, many For company. year

performance We strong on And to have driving pivot our industry to accelerated revenue Raj? momentum an Raj expect improvement, while of who forward Cognizant's And therefore, now deliver give and our returns. to we growth, over to will continue results. update verticals. capital margin the digital you

Rajeev Mehta

create faster It's long-term everyone. continues revenue. with content and way to which to Technology drive success, vertical, With how Good be the us speeds today, leading need. enable clients' help what in to solutions look at to or engineering, proud essential we moderation complex the Media new healthcare, than of in digital-first models. think of mind, and Media, and Within the in way new That at world's to performed clients future to Within and business continuing with of companies, that Communications, and born-digital our significant constantly client and the our scale. were improvement ago They in information software times is the our their our clients when possible largest quarter, to quarter, had and let's largest become based that helping a two it's strong noting the third work robotics, worth to segments both three reality, rich XX.X%. digital are ten move co-innovate on growth orientation beginning what's Thanks, entire We're we grow. must with Communications, analytics XX also to that more. in the industry has they clients. IoT just Technology, retain virtual than clients we are technology morning, and our Cognizant's year-over-year at either of of engage Frank. experiences, networks know working healthcare compelling compares apply customers, to were develop part AI, several ten which banking Cognizant's and years top clients more

anywhere. of provides well and of as unified manufacturing their enterprise-wide retailers growth clients are order a responsive as hyper-personalized more helping strengthen year-over-year of we The tells their experience A commerce We're fulfill a increased retail, and management. We Amazon engaging challenge had the retailers from Traditional retailer chain partnering wanted digital our transformation. to business Products one them offer scale best In retail omni-channel by and of strong the to frictionless and led clients. cloud-based omni-channel in enable commerce mid-sized that retailing, XX.X% anywhere, quarters stage supply meet a with define Resources, racing experiences, the implement implement roadmap helped a customers example convenience to buy channels our solution systems. return and we full years. revenue to next and the U.S. story. anywhere, to Moving

automated Internet systems manufacturing among phase richer. using In better This to clients physical our products and manufacturing, also spending factory solution uses and continue ecosystem has This million Things, new on of use in data autonomy remains of ahead increased clients their the strive operations. together making to digital. effort communication, by we AI-driven digital newest see through to retail big of floor, of to and consumer with experiences management. bring phase better With of number is as the machine achieve invest plenty retention orders the channels driving into digitized opportunity strong e-commerce including they machine in visibility augment consumer smarter advanced and to X The around client making. provide to digital initiatives engagement more much as place, our analytics, combines their and And month. to decision a in digital human

saving years. global over increased efficiency a leader transform overall productivity, with by million several them and working dollars improving hundred of this We're operations, doing For their levels downtime, example, we're improve and few next automation. their enabling worker manufacturing throughput, maintenance lifting while reducing to plant industrial the

the significant gains incoming of and trends Our on near engagement use These of are their in happening create streams. analysis the analyze achieving to the their than lines, global and manage digital of machines, sites floor in time of will data manufacturing plants replicas and more what's this environment. performance cover Clients with real-time continuously will virtual XX factory aim productivity. and up

needed adapting. away from year-over-year. services, turn achieve customer let's to they legacy their IT technical their become financial engagement, learning at foundations and which Now the X.X% Banks to reinvent digital agility the improve and banking scale. realized break grew models, and to business best rapid way need That's their for and

this our the increasingly their are continuing businesses. the are these clients' to digital their we extend of a services, on our advanced our We're for has transform mentioned optimistic our spending. them. will portion stepping banking for about As we of clients reasons. calls, run-the-bank even intense on shift pressure that, seen And banking-related affected with But technologies prior We run-the-bank substantial spending believe seeing on on revenue growth up solid work the two spending focus their portfolio as growth. has offset

with First, a expect allocated rise are second, we rewrite to Europe, of digital beginning North transformation. see our to all banks in America that spend clients their banks on to banking must with trend. a realize portion technology futures their In And similar they follow headquartered spending digital. growing

back and banking services. starting into of engineering is expansion true our of core number This So, services growth bring large the clients. digital a areas in to the is of digital especially our modernization

to demonstrated with We how an platform. knowledge onto seamlessly the Pivotal architecture. with of can open-source cloud-native systems, re-factor legacy Foundry, applications example, legacy become reduce applications sought move help deep a onto increase complexity, to and bank legacy architecture to agile. our productivity, output more our cloud-native on Drawing their a For and Software their major worked we we technologies cost bank's Pivotal the integrate Cloud

the we We reduce are provide release bank to auto-scaling and with the agile able to code, dramatically as and it time auto-recovery. such takes capabilities

up let's Now look where Healthcare was X.X% at revenue year-over-year.

efficiencies and advancing continues and payers, be healthcare and to the providers For on satisfaction. focus patient improving care

We value-based hospitals, and care. shift to continue business to to other clinicians. and we practice And the capture we invest market, To the see in complement expanded position position our include healthcare traction their continuing provider network. in models our network payer demand underlying as strong have fee-for-service scope doctors, clients this from to our of

practice, the Cognizant's very quarter, consulting growth. largest consulting had healthcare During strong practice, our

a Science tech expirations by in and world development product Life shrinking improving at their med thrive helping patent Turning manufacturing environment. in practice, of stringent and to biopharma we processes our a regulatory excel companies

couple a driving developments in by this encouraged are that We practice. of growth are

continued see in we solution. our platform First, traction

is live share access, to collaboration now large platform at for it This clients. data. pharmaceutical trial cloud-based critical Platform five Investigator and easier Shared analyze researchers Our makes

up Investigator implementation, implementation signed with few next services. the over our We processing clients Platform, license have we typically with another and realize along the Shared quarters. will expected from And five revenue consulting,

large growth in of fueling transformation of enterprise deals is second process the development ramping The a up. number

companies more markets For and working largest with to the dozen we're globe. their in than across billion drive device brands example, of the of help medical world's a one dollar pharmaceutical several

ways we're so cloud-based needed pre-configured to and helps efficient, assetSERV It's content organization, a cycle Overall, to enterprises story continues global leveraged clients platform engaging deliver reuse, new an our Our enabling support client segments and duplication experiences. this industry enhanced and scale. life solution. execution scaled and our the helping collaboration, of steady greater and one use by reduced working spend, digital with enabling that asset manage management end-to-end customer asset progress. agile, the create be and of of We're marketing

core platform over that process modernization, to digital all AI, go-to automation, partner. helping With in are We resolved solutions, at to I'll our interactive intelligent that, be Karen? invest to is continue Karen. scale. clients' digital transformation turn directed engineering, end, it and To clients of analytics and at significantly we drive our it

Karen McLoughlin

of acquisitions including that in Thank The including impact currency. negative the the Europe was UK Mirabeau dividend and in revenue tax the the share of negative results operating XX% we quarterly a the Non-GAAP were recent year-over-year solid guidance like currency, the leadership and excludes from up rate. compensation mix was rupee board per including quarter. year guided everyone. larger rate GAAP of margin, in you, the a world higher our and a Raj, adoption Similar which of new QX, as of non-GAAP performance number modestly XX.X% due guidance acquisition-related depreciation and was negative at of impact higher on impact exceeding impact shareholders net by non-operating some XXX-basis-point of from $X.XX for charges, lower ago, a $X.XX, million XX%, Asia-Pacific than expectations second trends revenue margin digital to the banking the XX.X% a a while in changes geographic driven a Indian due revenue partially currency. our and year-over-year, had rest to earnings. impacted in within to wins. $X.XX and billion business X.X% declared exchange foreign close standard saw XXX-basis-point a and third XX. in business record weakness continental both quarter, recognition expense, The and of from stock-based from by in the non-GAAP clients, are was November good morning, performed EPS digital increased positive our The realignment by our $XX quarter our to range offset was leading of losses of XX-basis-point primarily our The within grew QX has to cash previous Netcentric Europe, enhancing operating of of expenses, tax to

update Before I'd an turning to of of financial on performance, our the provide investigation. FCPA status details to like the

reminder, the recorded potentially XXXX, XXXX, and possible violations, of related As we a DOJ $X SEC corrections September notified of payments. during improper of out-of-period FCPA voluntarily we and to in million

Our probable are our financial an discussions and estimate QX. million with loss and the we progressed have recorded able have to a of point reasonably accrual DOJ in a now SEC in $XX where to statements

conclusion While certainty resolution. we of timing getting are are unable believe predict that to matter, this the we to closer we the with final of a

XX.X% our turning represented Services to financial Outsourcing of Consulting and XX.X% X.X% Outsourcing such as Outsourcing our Now for Technology performance, grew revenue Technology Health. of and Services revenue grew year-over-year, engagements & recent of a Services of & ago. quarter. year acquisition large client benefited revenue Healthcare Consulting Services the from QX growth XX.X% the inclusion well as Bolder as from TMG

business And now an on the spend improvements effectively. XXX. made over optimal corporate levels structure, to our pyramid performance of the quarter. in potential continued least total higher We those added as to or total million the XX and annual simplification months approximately in transaction-based During our the of clients as strategic This build our XX% sustained to in unit price third from brings utilization, last our revenue we business quarter, during In number quarter, a million revenue with had overhead customers we've defined and at XX% moving seven solid more as our to function were quarter, $XX leveraging third generate contracts to fixed of structure, revenue. contracts we such on of margin strategic $X margins. came of more update the the

XX Specifically structure resulting end margins by Indian we from Net during our continued basis QX higher by the of improve charges. the further versus $XX realignment cost of the our optimizing of resource the quarter depreciation to year points. prior the in pyramid, also rupee quarter, in our benefited million hedges,

increases in full-year us approximately non-GAAP target allowed while on quarter, remaining to track performance margin achieve wage Solid absorb and the to XX%. our operating margin the promotions of

improvement margins that in as continued within position our improving a be and our to well our As and expect structured we our we a underpinned within operational large value work. services, predominantly further towards perspective, knowledge-based efficiency discipline, margin effecting clients operating we XXXX, both for business contracts, less by in our of as ongoing focus on elevated. higher reassessing profitability is remains not non-GAAP XX% digital approximately profitable drive value do The marketplace. XX% annualized to rate that portfolio From opportunities shift attrition talent and the people at create

passion, associates. local for through insights, the higher talent, gone result is global a we the our attrition increasing heavily largely that leadership. markets the shortage global to believe the in scalable of on growing technology foundation expanding So particularly specialize and of the collaboration organization digital our we skills very and depend in, our of We for the build demand transition has

focus and continue our on to strategy workforce management. We

sheet $X.X which balance of short-term restricted remains short-term to debt million. balance with This down restricted of XX Turning of investments. million net the as operating we related had amounts Department. net the and from cash million Indian very $XXX was by strong includes dispute million. $XXX and the with cash which generation $XXX healthy, free quarter with Tax are our CapEx investments from was finished quarter and December in flow the operations cash These Income cash cash we We of to flow of ongoing flow $XXX define billion

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

ASR share settlement final quarter, X.X the in of which million the approximately repurchased third X.X we including million $XXX June. represented launched million During shares,

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

year For we of which range the billion in billion, to range to X.X% of X%. to represents $XX.XX the revenues be full XXXX, $XX.XX growth in expect the

year. exchange the for Based currency the impact Our on at from revenue are on currency points estimate the which based the expected rates full-year providing guidance the rates basis year-to-date, impact the from impact remainder the year over fluctuations is to not approximately we current is current the This full year. XX is of XXX the currency potential down realized point beginning of forecast time guidance and positive original and at does basis be of exchange the favorable our now XXXX. at versus

fourth XXXX, deliver $X.XX billion. to $X.XX expect XXXX. of of negative the quarter on the is the currency to For exchange points in billion versus QX of we basis approximately be impact to rates, revenue current range QX Based XXX from expected

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

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

rate deductible our year than depreciation full Our dollar, fourth the not guidance previous is the exchange for by the currency for losses of tax higher against tax are purposes. and incremental expected the driven the INR which GAAP for quarter U.S. due foreign to

that in month XXXX. enacted million beginning New annual incremental this income State tax in an legislation expense earlier approximately would $XX Additionally, of result the Jersey of

tax reduce reflects QX significantly prudent and which fourth these rate full-year income feasible tax of the legislation. quarter strategies. However, tax implementation this this to of to expense enacted during planning resulting anticipated our estimated tax from Accordingly, planning we the expect implement and intend strategies we XXXX,

guidance the outperformance full We absorb tax to year expected despite QX higher our than are the maintaining EPS rate. in

Cognizant of Reform non-operating and guidance amortization, net and effects tax currency Tax EPS our above the stock-based and the acquisition-related expense expenses excludes income the adjustment exchange incremental foreign realignment gains losses, U.S. related charges, Foundation. to Our contribution XXXX initial compensation, and the non-GAAP to adjustments, tax the one-time to Act,

with the as another us continued growth investment such the execution including QX open not for solid in does business In our well revenue to questions. along areas earnings from regulatory for year and or guidance the Operator, XXXX. in summary, impact call Our tax. deliver shifts positioned account the also in has immigration in we environment of solid can

Operator

. Thank Thank you. you.

from Wells question. The comes first proceed Ed the question your Caso Fargo. Please of with with line

Justin Donati

Hi. Donati taking is for This Justin Thanks Ed. my for on questions.

organic in First you healthcare ex-Bolder? revenue the growth one, can the break out unit

Karen McLoughlin

Karen. This morning, is Good Justin.

the quarter the acquired the that year fairly have about We full-year the the for was $XXX out, year. million not broken Bolder we contribution small. had was when in Bolder but said We in estimate that earlier

over million that's quarter is roughly a a little what So running. $XX

Operator

question the from your line next The is Deutsche question. with of you. Please Bryan Thank Bank. proceed Keane with

Bryan C. Keane

I that's lower about tax I consensus. guess higher bit and rate, to it's wanted the a running the to little drop EPS ask causing than

about, a the And little bit speculation model sustainability some CEO tax So Thanks. around as can higher then we those we can of plans? succession you as forward rate secondly, you talk Karen, XXXX? on and maybe go that comment Raj, planning,

Karen McLoughlin

succession the to happening. I'll turn it's about tax be to or that talk planning Karen. rate then over any not Brian, answer may and I'll may Frank

of assets up So happened with the exchange deductible seen and before. our we there's a of of so depreciation this at rate, back a depreciation the this go has the happens impact and what spring, that summer is look this movement many take rupee, sudden when so in not India. big folks in before. is tax in purposes India being we have with XXXX, the for end the foreign If Because rupee, timeframe tax

so impact. rate. doesn't And have long-term the But drives that consolidated a up it

assume the in of we So back then stable that forward, going happens the stays be actually will rate. and essentially the fairly into spillover if the quarter tax rupee rupee guided just revert movement. because of bit QX But it the impact which little hits timing a there we of to will the

we of of still higher rate guided assume. people in earlier if that that longer term had at guide the people said to rate the the year with people federal in for XX% to earlier a level is the and it, a implementation tax reasonable end position tax year the the (XX:XX) towards we should So, recall to of XX% tax

Francisco D'Souza

Frank. At take no point, question there the or responsibilities. about are responsibilities this Brian, I'll And, to changes my to Raj's it's succession planning.

addressed I'll question it. take to the You Raj, but

been in history Nominating, on XXXX, board a not is and served that back new John Klein Michael of on board, have specifically As board, as any that John planning an it of of chairman. McKinsey, I've the from responsibility Committee Patsalos-Fox Governance to have will the succeeds chairman remain in Public said was announcement made the board we and December the the board before, relates at since background XXXX. of continue Affairs board since the that elected technology consulting chairman management on July many has and Cognizant's and as was long announcements elected XXXX the succession board. you his who our of would and had of seen years recently long who the to to the except And he's he

Operator

Please with question the JPMorgan. next The you. proceed line Thank from Huang question. is your Tien-Tsin of with

Tien-Tsin Huang

Thanks so much. Good morning.

Just deals? might Thanks. want investments you maybe And engineering Can we ahead? wanted more kind network? to something and are acquisition, then like that getting software And us, the and the by FX, Can on to we guys of What Softvision way ask Cognizant ask revision incrementally going onto be Softvision versus revenue expect different year. you weaker. you could detail then for side. the synergies the expect other of around what to we acquisitions, a just in Karen? might here follow-up Between putting the I that the into expect clarify

Karen McLoughlin

Frank the talk thereof. and revenue the Tien-Tsin, Softvision do then him forward, let roll me I'll let over So, benefits and and about to turn

about a basis. full-year revenue think it from I on So, perspective, way a this would

on this a by currency full-year has the foreign we've million, basis, essentially essentially was XXX $XX received to-date, over out been movement. benefit a wiped that So the it quarter little

So from other and less a basis a inorganic point of full And an X this rec it FX then perspective, year-to-date, or essentially on revenue point. basis at this full-year anticipate and at to year be rev it's point. I on than offset each

XX the inorganic quarter was about was of the QX it think in I points growth. basis revenue impact in

it's small. fairly been So

Francisco D'Souza

talk me Frank. Tien-Tsin, let about – it's

very so Let is we existing engineering a strong us about the the Softvision organically software think digital will came significant and think come including, and bring course, many in has that prepared largely in to will source of together of in When we we software the X,XXX past, has software platform and create me software of Romania see engineering his of clients it little software a example, acquisitions our the years. on, engineering over the Softvision built software Cognizant's that software the bit largest putting as financial combined engineering a strong talent. industry. in capability it QX, DNA. also that close the engineering industry. in and of closes, for one in we a engineering Softvision capabilities Raj way which talk What Cognizant comments, that that revenue from to Cognizant as developing with synergies said Part capability, is, Softvision the and new with is anticipate we TriZetto already once industries, closes particular. course, we done to we've Softvision services bring engineering technologists, across of to creative digital base engineering And of so

Karen McLoughlin

to pointed of misspoke. on, the it's year-to-date. out we quarter point X that impact I And me year, Tien-Tsin, just X.X for sorry for Katie about about point revenue a the inorganic before was move The

that. for apologies So

Operator

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

Brian Essex

the market? could have regard particularly some you And focused guys impact speak with mix in some count pursuing that in organization, India, seeing and We're you trends attrition, seeing more And I Are shift Good payments the then hiring of thank retention of that morning. to on seeing maybe, peers, forward? going to I places your the on you're that head to maybe full rates. retention hiring you in improve attrition. you particularly staff margins to the you're with you Hi. that of developers. wondering for know taking training the you anticipate up was the that you're within mix I hearing not the question. how shift, about guess, how Raj,

Rajeev Mehta

Brian. the overall from Yeah, count up in to head head increased look, think I about last Look, our terms count, of XXX,XXX XXX,XXX, quarter. global

marketplace a over goal X,XXX. So in U.S. about also around Overall continuing geographies. We of in hired have couple good were we a the of of addition the find of the to all talent stated it's net the years. hiring the our year, world. about about professionals XX,XXX we in XX,XXX professionals And next about in

So, lot look, of mean, addressing as delivery. rotation no our impact attrition. mix the you'll significantly, the ways overall note, at we job in control some when We're changes. looking life and terms obviously their that. the travel cross have pointed training the of investing of whether at bit doesn't also I resources, or it the component on-site more well major that that constant, the technology you'll of split, but look, have new margin – phases costs, attrition creating opportunities visas. the we're in individuals But of employee terms obviously it's resources as geographical at bit you cost fairly that us, think immigration of a But I resources in and in and have talent, some terms certain a And in to you look have shifts no hire – at in really so out, greater to cycle think than in projects the terms it, think retaining to terms of be marketplace. little of engagement, important continue high in looking locally the the pyramids when ways onsite some of that major certain I on overall was (XX:XX). locally, will of you talent there's of that point total The to past for in of a you expensive little continuing margins hire we leverage it's leveraged include costs, terms I obviously

Operator

your with Montreal. question. Bachman with of question Our next of from the line proceed Bank Keith comes Please

Keith Frances Bachman

you on look I performance to very the much. I reflecting I your that. start, and the quarter, margins. think also want Thank with was two. ask is it Hi. at this Karen, to you frankly stock If margin want disappointing I

industry year-over-year. your XXX If XX% transition, of – or take me and out growth to when benefit you're the was you isn't than that you're currency And just actually to margin like aspiration it's talking follow-up XXX for well. cause how about with more the the it's And to accounting reconcile benefit to I'd down as And to have and unclear points. growing frankly aspiration a margin of margin question hard consequences rates. grow revenue revenues your more intend basis underperform actually going to CYXXXX, than

Karen McLoughlin

last that to in of have have did we margin was year, also also we promotions, had not year, mind keep which the point you of Keith, So, and in which QX this impact. about raises X

basis, the the of operational obviously well. driving on utilization So have the and of new rupee; benefit happening, improvement from when some there cost And the effectively a rev benefit certainly through is managing had year-to-date points has the zero. there SG&A about for look pyramid XX continued as at well rupee while true some also as benefit what's about you in been was basis our we while as rec, quarter

we target as exceeding for year. comfortable margin set target goals line where So, XX% with in the performing are we on the ourselves deliver exactly And margin approximately for we track the for not the we approximately margin to always said, are XX% is next extremely was year. year anticipate that today, both which with have we company do this

in with the shift to are is at to continue to XX% do this set our this for at solid we continue but that transition can top and the of to above believe drive company digital. continue line the and has we very with line growth the beginning reinvest is going expectations very shareholders we'll ourselves is pleased the the that and very bottom transition we much and at for big the so. line company through, out business well any and continue dollars the a the year. managing will those And in with how the We year pleased We're to taking both both fact the we very place. that and We're with take that had revenue the that

Keith Frances Bachman

I there curious question that terms stock I'm newspaper about account that the Cognizant. some asked versus And My every planning. ask thinking slightly follow-up Thank looking of previously. one, just two, the and to member articles you was succession thinking has when issues and succession the board years. last want your takes But about differently has metric the a to is you succession at about of And internally think Francisco, been how into and issues in almost written are from underperformed frankly, externally, you. And three board.

Francisco D'Souza

just a for I'll made, back that, we past above approximately Keith, as was point years XXXX, making the in we margin on just way want year to the many, that But then the margin will – operating a we've period, Karen that. margin, go let to business which We come given have in and take target a said deliver I is Karen reiterate set and the in for that given the to that second. reinvest to back once that me XX% is run operating for point very we many business, deliver seriously. or as a we anything that. have the we we've and we

the that targeting year So of we the approximately for on to are the transition through. not XX% Karen approach that reinvest top as But of is on said, our we of that for growth rather And as sort that's and – top the going reinvest goal back above to business this year. to, we're in the business run margin. excess the that the deliver for

any have how we we'll we So some may margin of improvements we a of then of given said, at much drive which or of drivers inside as be that Karen margin look other some We'll is control. may from in not I more improvement. The reinvest that our we constantly succession. is do sort of from have operational and portfolio succession and that way things that sustainability. what parts other back of issue of period, guys said, this, say good issue use growth assess the to continue on the is the make Look, for plans on as board have to the the long-term responsibility in at planning business continuing and looking said, to add, I to are Keith, I the Except the board, nothing topic.

ready this make We we'll the announcements, do is have board to when nothing announce point, that. at and to

Operator

with from question Please with Cowen Company. Bryan is of next line your questions. & the The you. proceed Bergin Thank

Bryan C. Bergin

Europe trying BFSI Thank Hi. on drove point large you specific potential it Good inflection whether you. can Thank still better a what morning. for viability understand were there? And to QX have to you. I that there ask on the you was wanted changed all from growth? driven? Just BFSI, decel clients in comment and any overall

Rajeev Mehta

shift that Yeah, starting it's Bryan, couple going I good be this to Raj. continues to in banks. America. the see of a we're now on. We're to the in is mix well BFSI Look, of It's mid-tier think Insurance a doing overall different see stories still strong. North really

American growth traction quarter banking in we've seeing driving had, really the North All we a is we're North digital – terms making run-the-bank going of that that's where saw we of lot that American digital just that on. of of of losses the large our and good have in in shift spending outpacing based some last clients the terms clients to the on

good think shape. I So America North is in

– and spend. know we of more is period over shift time, clients that that say manage significantly clients places we news have North those as couple we of the expect America that good some that the how start are a are seeing Some global digital I will of of shift, to the outside would challenges. a still the well But towards banking I think the the

Operator

Thank you.

from Ashwin with Shirvaikar with comes the of line question Please your proceed next Citi. questions. Our

Ashwin Shirvaikar

Hi. Hey.

I remains on can my function, level break to voluntary great. it? there if the break attrition which any mute. of and what's that. is by regards with Thanks. guess was would out about you versus or I could color be down Also, question organization reduce plan to Sorry you high, involuntary

Karen McLoughlin

change small. So, There no summer involuntary was there but XXX it's real been, quarter, versus levels. Karen. small the to people tends which was senior the did over a we fairly the out the in about be We Ashwin, where it's didn't break restructuring was at from voluntary, it involuntary obviously

senior see program as little be continues levels a end offshore what low with skewed that attrition involuntary to to think tends of lower see so junior attrition very other than did the to what the to very more is than the the And be we we single-digits. staff continue I tend usual we pyramid, skewed attrition the on-site. towards bit at

world I in obviously than now demand that driven of by with competitors little the not but with no around changes has number really the of a It's just think just I that clients is trend. we'd seeing So a struggling that lot continued think technology like be. is remain talent. to market the companies the the it bit we're both shortage right higher overall everybody other to But and

Operator

Thank you.

question. Goldman Our proceed Schneider Please your question with with Sachs. next from is Jim

James Schneider

if versus bit spend I little run-the-bank for you've on highlighted Good spend. Raj, can was a question. digital quarters the now you Thanks us several my color morning. more maybe about wondering taking give for dynamic

are pace telling moderate XXXX, whether what your the the spend on their, of all? about look of declines overall spend at side you the all, the could into some secondly, expectations? wallet in As you run-the-bank banking first clients And of

Rajeev Mehta

Jim. Yeah,

right, the a year. that starting see I now where it does clients. trends, getting is, based look I on going look, mean, I I news we little in terms next as mentioned optimistic America – The turn think digital. significant spend coming North in of made Again, in to So, we're the into we've good in are start terms XXXX think current too have large to of of into early that right some from it's we start budgets our

healthy. through of I of of some the I in-sourcing of has lot far in-sourcing you'll you've think going think think I well, spending. and a had our very The of on and been I of the growth in large that to as news starting we're America that been earlier, start a are next you're relationships run-the-bank think banks clients, seeing the are seeing with as challenge, right, But as Again, see lot some but year. we've especially clients. is the North And some going all headquarters. that that, banking has mentioned outside I good large managed the as into

to to fair in used continue into banks. us banks as at the see more next clients We continues I year well. those America North of shift that and we working than as share at banks, our strategic playbook towards still more spend win same those digital those And we're their for

Operator

Please line with Wolfe The you. Thank your Peller of Darrin question Research. question. from with proceed the is next

Darrin Peller

anything or tariffs noticing to tone China to other? a closer around get year Anyone or you're changing end or Look, one seeing any you on in guys, mean, just spend in their a off, bit way level thanks. or provide given to the I we as that color from or start a let little discussions clients just with of the the terms macro your trends broadly higher rate what of start on way now? in you're regard little macro spending Hey, a me basis. pivot concerns IT else Can more

Francisco D'Souza

Frank. see clients I in don't see happening. technology, continue to it's take Darrin, I investing digital. that investing in I'll that.

strongest that we've quarter I we've had in the Raj in, years. many, in – As in prepared think notable think retail had said digital had excuse in it's his we comments, many I that that

Raj our the were look the our XX ago technology comments Services in two Healthcare. from years clients the to top clients, that quarter, data mix of at clients of is space XX in and all another you Financial our three prepared point top of If in where came had opposed as his that

in the the, haven't over is a as the to the last short-term alluding seen that so. we've perhaps, what in result of we volatility demand or you're a seen So month shift

saying we get scale at digital to now do and just see to play how doubling continue we sort into that continue into to We as clients go and year. demand of next down

Operator

The question. your Foresi with comes Please you. question with the proceed line Fitzgerald. next Cantor Thank Joseph of from

Joseph Foresi

wanted I question. Hi. back the go margin to to

Thanks. share. has towards disruptive faster? of the cost time think as kind be take appears try Why gotten grow you good margins to just not how to to market to about digital cutting that to drive and do the building and culture, And then efficiency? to that, a back you too on Now invest off continue the

Francisco D'Souza

You Karen Frank. I'll let let – it's also I'll Karen in know, jump here. Joe,

XX-something on most creates case, things thesis I that between a point there's always the think is seems between direct of trade-off said are excellence. opportunities the those for things of had we've topic, for some the we on margins to analysis this at certainly us there's during it's run around XX better. growth. not that when the a had case while be We the and that lots us very and those And cases, was things we'll discipline. to business this that we months, impact There are And those just trade-off things growth. margins in as operating a years the core a to in drive good to very, in done hygiene types for growth think business. years don't while company. operational as XX the are of the lot engine strong growth. and two In focus operational fact of ago months – opportunities improvements a celebrate years The have We've just that did on that we've That direct optimize operating less growth. good

I and to a many analysis trade-off place a operational And where the trade-off peer the optimal, that with gap. may company third our to party seem We had where set. began growth, focused that there's carefully. right closing the competition. XX,XXX best-in-class in We and so I at feel done margins foot cases, not we while of where said, the places we we we're not that this as look in on best-in-class there exercise. wasn't the had we relative had our that are excess, at And isn't level relative were where areas at like are looking when identified company come We're growth. are optimizing now, it and those between we at a metrics We've

the it think and a building As discipline. around place relates operational around we're in muscle culture, to excellence I operational

muscle. that's good think I a

into it's that think serve I a good to know, not don't the muscle be company well, if think And to culture. that? that disruptive a muscle building, will future. Karen, is well that the want think the is to I I that to add one and I you

Karen McLoughlin

benefit the particularly some so about corporate is really cases, and really already that, to we count No, been functions Joe, I echo, this cutting. head cost growing, the think And about of we've if made isn't and cost said. what think effectively, have we're that where because avoidance add Frank investments we around about forth. done just today leveraging what this many more is doing are think I minor. In extremely that And I they've reductions, would you to

in few in we summer, basis program at a a the nit. So XXXX year plus, hundred the took XXX did on voluntary absolute it that did XXX,XXX that people was level senior a was of that program people involuntary that is program. people, This we an an

Frank discipline revenue to us this we organization a and excellence as exercise said, through. about and be growth, think for I operational very along getting think is to healthy with the think So going it's about

Operator

Securities. question. Katri your proceed Thank The you. from the Please question Wedbush next Moshe is line with with of

Moshe Katri

on of for organic that kind what or on pruning maybe Thanks. line And for color any Is QX? quarter? of the thanks. question. growth Karen, keep mentioning then here Thanks margin could think or of quantify for any morning. assumptions top Good I businesses. year taking impact the growth helpful. your Hey, my you for pruning are the pruning this there way to be low

Karen McLoughlin

with Moshe. I'll the second first, start piece So,

those to that the what to clients impact. perhaps a we're finding talking just see relationship there's growth like right, getting there's not very we we and tend the some have the would they the where whether handful Frank And opportunity, have way. there and truly we perhaps back the, see call not and where been look if at clients of are won't of margin revenue ways But of part that market we reasonable trajectory clients is exit. to strategic is the dollars, where may contemplating to and of to the a teams handful have some those the we'd small on what in dollars. they Again, operating tail in would come a revenue getting is acquisitions consider of just really we've meaningful us that then So muscle very, scale with strategic done with smaller a to bigger there's clients accounts, may going the this was a very that partner the think past little long about,

a we very small, line, very, quarter. we're incremental in but guidance, dollars, really SaaSfocus be at. the that In small of revenue it QX, deals in Softvision we've few in look revenue. will a expect in that have ATG constant just the both weeks which the But because assumed thing would that's maybe again, the a are if of QX material then But And that So obviously, impact. into doesn't closed October, quarter. dollars that we those later a anticipating revenue million terms of going close get the few we and

for we is already Operator, it's is a one just the primarily have quarter more of $XX acquisitions biggest which said million the done, that, one that So year question. Bolder beyond I running is we've time this which revenue. think we about

Operator

is Yes. from Lisa coming with the of The line MoffettNathanson. question Ellis

Lisa Ellis

guys. morning, Frank, Raj. for one call. think Good be the is I on Glad to This maybe Hi. back

forward, attrition you to the about recover you certain to major a of kind right talk the Does looking growth a What's Can that revenue is Do you a you what think now get for are, that? you're level? reaccelerate. of of roadmap? about As digital goal presumably your get view level? to and blocks your that level? meaning, for do Financial get Services to role do to just a in Cognizant sort certain building to certain to How growth need in mix to need need down turn acquisitions

Francisco D'Souza

as the Frank. acquisitions talked say an but it's that portfolio Softvision be we – the of combination quite are would arrow continue I closes, portfolio a things as do I it some engineering. of important relates services. to now, about. of in strengthen we'll would with once it is you that quiver Lisa, to say right to the that comfortable It's Obviously digital So, will digital

financial the is you second banking services. and turn, if The in will,

to without as the were a base would I happening will our which that growth. good segments the two think we that you as our in in from we segment you've digital revenue turn a the And faster now, As Healthcare four our rest diversifies off turn where in execute segments, two Financial point. showed comes Services many, against two plan seen quarters remove the revenue pressure on said, then company base. the and smaller saw in it as the Services saying quite at clients the factors starting this of that perspective. for pleased run-the-bank those is major see offset clients the Raj to quarter, the the Services, America growth that to with grow from this all When in of three we as many point growth now of Financial away the other as Financial North spending. the goes world, drag I a

opportunities And their own right. Services view and to in those incremental that so be Healthcare addition large market Financial continue in large as to opportunities we

the growth. think healthy a opportunity digital so market we course big a at that on overall have. of And it's to lever large of focusing So that then global last and portfolio digital we very is that rates, opportunity. question the The continues grow there's our market portfolio

of the of the the outside world focus be traditional in to rest expand we – growth. to Pacific to our and a North of markets continue We the area markets Asia rest so Europe, for and for America us footprint the company call and continues what of

Francisco D'Souza

Good.

to a of that, everybody Thank us thank wrap Investor your I with speaking here for in joining think today Day. again forward up call. just we'll And you look the you. for couple we I weeks questions. our to with and want at

Operator

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

disconnect. may now You

Cognizant Technology Solutions (CTSH) 30 Oct 182018 Q3 Earnings call transcript