CTSH - Earnings call transcript Q4 2020 | Cognizant Technology Solutions Corporation

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Operator

Ladies and gentlemen, and to the Cognizant Technology Solutions Q4 2020 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 this conference over to Ms. of at Head Global Royce, Investor Cognizant. Relations Katie go ahead. Please

Katie Royce

investor and Thank of By and company’s good XXXX now, full operator quarter the for and fourth you release copy everyone. results. a afternoon you, year the received should earnings supplement have

we Chief Officer. have speakers Executive Jan Chief copies Financial Officer; cognizant.com. not, call today’s you available on and on If website, are our are The have Brian Humphries, Siegmund,

made statements. that Before today’s we your like would some described of company’s release the call the on begin, are in comments of to remind and SEC. earnings as to and some questions the you and may These I responses filings subject other uncertainties, the the risks to contain statements forward-looking with

we found financial SEC. financial Brian other go non-GAAP company’s be over to corresponding call certain Brian. useful reference earnings provide believe our the Humphries. can measures I’d we the where to during turn call our Reconciliations and non-GAAP to information GAAP that, appropriate to Additionally, today, like investors. With ahead, release that in measures of the measures the Please with filings now will

Brian Humphries

brief Good quarter, strategy, with I'd three Today, afternoon you; confidence Katie. about the our our and of like address namely, to you, Thank continuing everybody. progress our a summary fourth topics executing future. the

This achieve anticipated XXX a a included content negative negative related $X.X financial decline of the implications parties the complex the exit. exit to in of a and in in shared a details to the a on Over our provide billion, point X% everyone's the with is to engagement. was Jan time, aspect of realized to constant large points remarks. Let interest XXX expectations. revenue financial conceived start ambitious initially that in was exit currency. quarter from impact of late services services was confident me This Fourth QX. impact to relates I'm moderation his will year-over-year it XXXX. basis unlikely more project that that scoped project exit basis from as manage transformation this both an

underscore of processes, that overhauled client deal we've our both last in our aspects solutioning many review the to I'm confident want which and portfolio I However, in and year.

assumption with impact Gross Excluding delivered bookings we momentum priorities. significantly well to margins growth our strong, from the this XXXX our anticipated We and quarter maintained and the to continue in guidance. and flow year executed cash from our our exits engagement, increased, full quarter expectations against we the is the bookings fuel in invest to one the operational in strategic, mid-teens. including us, tweaks With demand progress growth business, revenue. XXXX new strengthening been our of growing environment. entered year We and confidence behind bookings our and in with growth, to commercial on and improved going bookings, over data, a have renewals and and analytics refinements

on imbalances approach ever supply said, capacity in increases In to meaningful coupled factors, That we're for QX more attrition. for based our certain including and XXXX digital scale new accommodate we in bring to more in our plans track beyond. market our hiring before for the fact, growth as ramp to hires voluntary demand with talent creating rigorous to sequential skills. salary is and intensely competitive, led has promotions This, adjustments, mirror other than

of referenced our industry returning in growth an Notwithstanding anticipated a the underscoring created and XXXX, employee earlier. by our growing We remuneration, the From momentum. point career will of we view, the recovery financial the services this, reviewing opportunities monitor proposition, the gradual continue course of to to over path closely engagement including will year. date reinforcing value believe action see and

solutions. strengthening financial and series a-quarter adding of We and commercial than our year commercial coverage closed a we of and industry the XXXX, a insurance actions more both healthy including book-to-bill in teams, ratio partnership more took services, banking. in During refreshing with ecosystem our

cloud transformation are we slowed intersection in these Health portfolio the at innovation digital, lapped and care clients enhanced Technologies' we their in and with as our now modestly actions agendas. help the QX better and acquisition growth life With of Zenith financial positioned services sciences. to

be ways are I Clients more discussed Customer XXXX, in improving on Products in the US cloud half fundamentals a quarter non-strategic Resources product see strategic automation. agile, and know quarter third care unchanged need weakness of and travel logistics, decision-making technology are ML. grow working, intelligent in have a see the and business in when the applications, innovative, XXXX. Communications, payer momentum to manufacturing, we of in decisions. customer for However, health Clients digits on COVID-induced our trends AI fueling We effects our provide COVID-XX prepared consumer investment content anticipate and services call. reinvigorated including analytics, acceleration Macro and be their insights double energy the the the significant will hospitality experience recent including distributed business. Meanwhile, exit in packaged largely are further initiatives, and and and retail our impacted business, focus care utilities. acceleration, Jan health making of They continued strong it in must to year-over-year continues experience adjusted remarks. life in to first outlook enterprises. Hyper-personalization those continued goods. agile, been from media sciences. are We software-driven his the by and following embracing quarters. in growth for by successful related XXX, portfolio, of employee of and demand driven and platform new continues capabilities

of always is This focus agile, technology and Our the become heart operating workflows is business about moves models processes with transforming and experience. industry-specific and on beyond to an of clients. phase processes. resonating digital horizontal into and digital on digital The data-driven, automated, to and eye next customer strategy with

planning. XXX to for resources in-country this benefit Finally, our the suite trend, solutions customer contractors. first levels we in client's and given led portfolio and sought employees, portfolio core workplace reputation the while that Fortune satisfaction, by transform by workplace is XX% match our outsourcers transformation pleased their resolution. continue multiple growing digitally its of enhance work inefficiencies eliminating growing I'm and to digital reduction satisfaction momentum. over given in meaningful strategic next digital. costs, and and company given our customer from a opportunity client teams, on experience caused operational of refresh XX% to for We stands This for see the an high higher the reliance in see partners. cross-selling recent Cognizant's clients levels self-service or our through requirement enhanced automation. example A operating determine stronger a Cognizant client-facing existing can plus accounts, our particularly

cross-sell its made the our existing focused that, accounts, we to into cross-sell in are opportunity we're huge In for a Global leveraging see broke on meaningful accounts the opportunities also focused XXXX. than on commercial we by teams. our to naturally stack providing coverage in eliminating and and past market investments technology. XXXX extending While more our new engineering-led year, cloud-native that Whilst XX modern and into delivery operating One teams. We is client full systems and build leading such DevOps technologies digital agency commercial digital led consolidating and model. a credit product agile engineering transform aims by with solutions vendors an to innovative legacy using ratings

drive software the of lean, product We a development mindset agile an a framework. agile to and adoption are approach development applying

we our Moving relevance. accelerating to we our now now months, a into and increase client launch digital series a globalizing will executing the realize increasing X update strategy In with brand brand. of strategy, quarters a a marketing There's the each of that repositioning growth, revenue and our coming priorities: brand globally Cognizant, the focus several breakthrough starting are campaign on exponential our execute to brand, focused global will Cognizant's scaling quick at on on a we Cognizant initiatives sponsorships. priority, stature brands, will

announced example, title partner of the One team. that we Aston recently Cognizant Formula Martin For we're

aligned digital. Aston automotive iconic much more is and returning our than intersection XX Martin, at the from that's focus, Formula and broader of the strategic partnership years than It's away with to This an sponsorship. sport. grade industry One a the cloud is a more brand, one after

trackside, the critical and decision-making. IoT heavily Cognizant For will XG, Martin team focused Aston analytics support Formula to be data One applying

output. Lagonda, company, on hyper-personalized Martin a into digital Martin direct-to-consumer proposition. value execute also transformation smart like and optimal agenda, Aston for facilities to help road Aston outcomes performance focusing their we’ll We'll and with XG factories, building IoT For partner achieve and the customers car experiences to its leveraging evolve their

Australia, Nordics, their senior of in globalizing new global having circuit And sponsorship our rate and in aligns Germany, are XX President a One directors that in level, across this see a New the Japan. with priority, We the stronger talent are undergoing as we to settles both growth to ability business, ambitions. These towards about drive local followership. helping than will this in business, a seniors transformation a also I'm once ever we Asia, the Middle our our this Ireland, international East we of They group huge internationally, in. pivot digital excited our and the hired following realize company. the to Zealand of networks opportunity international team our and country clients a exponential U.K., Europe, managing countries bring second extremely Given at drive also client goal. and of diverse business lead Formula position

inorganically. and Australia January, to services, in and priority, We agreed analytics, behind Servian brings an New In digital Servian, digital. AI, third enterprise to to ambition, transformation design digital accelerating end-to-end both organically data we consultancy our and both cloud. strategic based expands Australia Zealand. are invest me This integrated our transformation in capabilities acquire that specializes committed this experience

global enterprises. and last clients closed the in transform in we as engineering XX cloud our enable engineering development broaden Philippines. acquisition digital hundreds on engineering together $X.X world's businesses. is adding and compete we've services of second priorities week, product strategic engineers custom largest billion Magenic, will which as acquisitions, clients software to of Earlier one a the all focused AI, software months, the ability acquisition and our network, XXXX, Since IoT, the of they digital firms. support Magenic modern engineering, US making recent digital our months, in which digital January this sharpened into of company, we've us the XX-year-old data our approximately to announced software-driven Over

this with SaaS share companies key Salesforce, capabilities pleased Linium our management been relationships broadens hyperscale with I'm acquisition Workday, growing and SAP growing partners, intimacy week, ServiceNow. Snowflake complements also next-generation to the of our with We commitments and complemented leading including and practice. the and Long-established have service the enterprise our like companies. which ServiceNow with closed we Oracle

and just responsive committed across business operations, intelligent to digital we In In partner. our are HCM as adaptable automation processes. deploy deliver we operations to our infusing committed fact, Workday end-to-end, internally to

deep long-standing enhance and Our Anywhere, leading UiPath, Indico such robotic from Automation cognitive partnerships Appian with and as spectrum us global enables companies process. to automation to the

rightful we've about rates even fourth talent Jan, and We our highs, To via portfolio its embrace, alternative mergers our trajectory, refreshing refined investing company deeper and multi-year our exit including our attack. non-strategic bookings This Our new aim strategic to and executing industry restructuring adjusting but leading now We industry team growth. into vision, and well, do, to what with been is, to ability relevance industry a demonstrating aim a completed initiatives to technology skills. being our progress in priority two good strategy, teams for place to our as as it growing a a knowledge, services XXXX consulting build united are improving strengthen further on this, us our on view a one and COVID despite agile ecosystem in partners. that, of expertise the our journey, employee investing to Global clients. refreshing in our and to emerging, corporate of strategy, in work client-facing take A years XXXX. program, technology we've be progress to work. build with multi-year to more businesses, clear returns ensure We and with industry but of successfully upon a before made clients, we partner support course, is in fiscal track that reputation to our to leadership D&I year This transformation we innovation. purpose our great our completing rallying XXXX, engagement is improving proactive scorecard more workflows. a transformation And includes architecture point Cognizant excellent is and I'm of over and your and acquisitions call bellwether. see the accomplished look turn our in I'll quarter XXXX increasing future and levels the they deal strategic faced C-suite. strengthening clients against outlook as executing operate to Jan, sub with details In a win and the ransomware project our doing and an will our start and closing, a over you investments complexities Cognizant backlog, in of our preeminent ensure and the this and accelerating to to take become deal digital takes there are having With questions. the and behind the almost and our pleased the partnership you. strategic targeted reinvigorated are ESG happy team, through who of technology leadership reputation we

Jan Siegmund

modestly notably retail, and my reporting good I'm during good excluding to delighted board, financial on excluding and call The most driven one-time business the industry's goods, more second afternoon you and well, Brian hospitality. the expectations across directly I'll services, our by quarter, the be you, discuss performed later. consumer another to and impacted earnings by travel performance everyone. solid with Thank COVID, the exceeding and quarter, be impact

For a points full of XXXX Services a XX approximately basis impact the point was representing of of negative a of the X.X% Financial and contribution XXX our and basis engagement a acquired a impact revenue from services, prior basis content this certain $XX.X year, Compared in large currency. includes exit our the from billion, anticipated XXX X.X% constant decline to with of segment negative exit a compared year, in businesses. from the positive points decline

of full revenue, points grew revenue XX% it from of over as total represented five total year, For percentage increase digital XX%, of approximately an XXXX. the a

Compared large revenue year QX X% or in Our positive $X.X our from a services points of anticipated prior currency. acquisitions. the billion, in X.X% contribution negative from Services year-over-year a a impact basis exit points includes constant this and basis period, impact engagement representing negative was decline points XXX of the certain XXX with Financial from exit basis content XXX our of segment a the of a

engagement. be from a clean Before provide additional moving I the mentioned previously will In agreed the benefit. discussions, exit on, the some parties mutual details to our relating that large to would anticipated separation

those and in among made forgiveness terms, discussions, fourth the we a of offer an As result the certain quarter, that other includes a payment receivables. proposed of

of impacts result to which charge The revenue $XXX exclusively As the Services a included offer, QX long related we fourth additional million recorded a of SG&A expenses of $XX $XXX reduction assets. impacted and a primarily segment. charge to the million million, of our lived in Financial this impairment which quarter,

near and in We are the hope future. agreement a in discussions active finalized have to

Services the a declined negative XXX exit. on currency. Financial points year-over-year where from be constant moving anticipated and rates Now, XX.X% contract impact will segment basis to provided all results, in growth including

sciences the pharmaceutical partially among continued which Life a by mid-single offset volumes. medical procedures sciences. banking have of declined impact, expansion acquisitions both in been elective business America our America. also Technologies. device care life by weakness similar banking by our payer revenue regional our X.X%, in insurance reduced as in growth payments was this offset and US weakness which expectations, in portfolio and further North weakness result clients, primarily Health services Growth in Zenith enhanced in in was digits, included the Excluding by the retail performed performance driven Insurance cards more clients. of impacted of banking, by and North was in and our grew below than strong both of clients,

retail in the payer quarters, and new decision Healthcare Our Resources basis. part X.X% within XXX last which sequential strength impact grew Outside on the declines business. exit and services a a have energy logistics, modestly and declined in pleased certain in double-digit with portions with growth single-digit goods, of retail seven manufacturing, year-over-year, low within a points included helped and technology business particularly still remain decline in in Communications, of had by double-digit offset business of quarters, this industry, very several challenged impact, best from as from grew travel a sequentially software was to hospitality in grew some performance accelerated media on our sales two content we we growth momentum which X.X%, and logos. while several negative year-over-year stabilization and in consumer our basis Communications the consumer acquisitions. utilities growth and license Products the by witnessed and media addition technology. low goods, the our of basis, double-digit high and

moving which GAAP and margin. was exit, diluted exit. anticipated to our GAAP the included impact XQX, $X.XX, XX.X%. was points the $X.XX, XXX gross adjusted both margin Now, GAAP share negative adjusted basis margin, was impact restructuring In and operating approximately EPS margins. adjusted an XXX negative margin related anticipated which and XX.X% operating included from a was on includes to and contract charges, excludes contract $X.XX points basis impact per EPS which Diluted a operating to Both our COVID-related

pressure. to high are incentive Savings not from in the Our reflecting approximately favorable inorganic investments margin for basis declined annual Fit in program, T&E quarter, operating charge losses compensation, Adjusted lower increases merit the rate growth. and this change rupee -- related our Growth movement charge and to contract the deductible. contract generated tax partially was and anticipated revenue the exit, the organic offset the XXX in exit, XX.X% tax year-over-year, which related adjusted reflecting points anticipated the that

sales transformation, million our are in and We manage markets which quarter, growth. discipline, of being which annualized believe drive metric the cost we growth under operating majority primarily accelerate the achieving talent Fit gross savings profitability believe include we investments. of margin for to through pace business. Growth business investments captured $XXX is Cognizant at and our the accelerated has savings additional completed this the a our therefore, of accelerated hiring, the acquisitions better international pace brand continued to to business an allowed senior more level our judge These of margin, program, The is while achieved benefits the the in key it gross hiring to repositioning us SG&A. in program During investments

turning cash We with the $X.X Now to net billion balance of sheet. quarter the of or ended billion short-term and investments debt. $X

a 'XX, flow As a and result of facility which certain $XXX reminder, QX our year, deferrals compensation, In strong, XXXX. free $X.X cash to of paid to not fully year XXXX flow which will a cash in experienced free we ended benefits at in of our offered outstanding flow end decline QX incentive to the repeat cash days. levels These of free $X.X we of This our in credit at tax our days, this see repaid flow brought lower annual representing billion. government include October, revolving payments again payment was expect X year-over-year XX year from a billion. the improvement several XXXX. as full related Cash we XXXX of cash with DSO was million.

the free levels more continue returned flow flow achieved billion our spent cash flow. acquisitions, approximately around 'XX our for normalized this share We year cash in and on building to XXXX achieve of full $X.X free our we billion over deployment utilized approximately DSO net free will $XXX XX% free $X.X as XXX% conversion return in in outlook flow. to cash strong improvements year. upon assumes opportunistically utilizing focus income XXX% cash annual of We In representing repurchases of capital we free on and XXXX, dividends. million XX% of Our strategy,

greater us earnings. quarter, we of more allocation indefinite program. free decision reinvestment us ongoing XXX% efficiently our assertion As our flexibility utilize on mentioned capital last to globally, allows I have reversed This cash giving in flow India

areas our allocation allocate consistent The of XX% several Over payout program. to annually. cash We dividends remaining approximately flow targeting in ratio flow the a priorities. a to free towards XXX% through and to cash we plan intend of balanced offset our and aligned repurchases, with capital will strategic deploy annual dividend XX% dilution M&A share next years, allocated XX% repurchases to be of free

of principles, today in and of opportunistic to $X this are be will the allocation cash the leverage repurchase we during a increase capital, quarter, X% are Board as our billion approved strong a well these share our While guiding we in our quarterly dividend. set sheet. balance of in a as support continue announcing fourth authorization, increase strategy, our In

of The increase dividend XXXX. initiated since second the in year consecutive

guidance. Turning to

the based basis year impact. to start to we uncertainty. growth, to QX, improving have X.X% For expect the expectation currency revenue in This to constant favorable cautious X% of X.X% currency or points billion, billion that our range X% with will on an XXX continued macro still a in $X.XX $X.XX assumes yet representing outlook

retail We services. and continued pressure and includes across certain still services expect basis and of headwind and hospitality travel points and approximately QX communications the an stabilization of also exit XX content from goods, in consumer media, financial

in growth, levels. outlook revenue from our points a QX the momentum constant year, includes For contribution $XX.X expectation favorable billion X% on basis revenue XXX inorganic revenue points improving and approximately that X% This currency currency, to billion, X.X% $XX.X X.X% of to XXX based we impact. to or from will representing have assumes full basis expect

XX guidance impacting year assumes put year several factors from outlook the content better guidance To point headwind full Our and quarterly of full to there the perspective, an services. approximately highlight. basis exit the are

attack, will growth to and year-over-year ransomware First, QX full impact XXXX COVID easier comparison and included which lead QX outlook. levels above mind, keep actuals in our our a combined of XXXX the year

the exit then engagement compares QX in and create customer recognized through from challenging charge QX to the will the anticipated Second, QX. easy in related an year-over-year compare

full impact year However, this comparisons. revenue not does

on Moving to margins.

the XX.X%. range full year adjusted in operating expect XX.X% of to We margin

of to QX be end at year. the EPS to for range quarterly $X.XX of the each guidance adjusted to and full This to within the range in operate margins full low period leads our that year expect We $X.XX.

million outlook year of assumes interest million full XXXX. $XX Our million to $XXX versus $XX in income

a of with billion in lower other $X.X fourth quarter, India yields. the cash moved result, to the As from which repatriation jurisdictions cash

and soon XX% XX%. tax outlook million outstanding of shares rate $XXX to a Our average of approximately

Our for guidance questions. policies. not events impact and account the for tax the open potential that, changes any does from to like we will With immigration call

Operator

At this question [Operator question-and-answer we will time, a of Instructions] the Our line be from first comes session conducting MoffettNathanson. Lisa Ellis with

with proceed your may You question.

Lisa Ellis

my Thanks in both a for Cognizant highlighted Terrific. your prepared progress taking number question. you areas Brian, of strategic remarks, of transformation, operational. the in and

in can transformation the you you middle near in, what beginning, step almost you Thank Just Cognizant, a innings take still kind how years where are end? here are would And now still say of at steps would characterize versus the are aspects mostly completed you you. in remaining? journey back big two the the what

Brian Humphries

And of years question. middle. that few ahead I'd think in helped of grateful us progress, the we're and we've I'm huge I work the Yes, Hi made team proud for to have do. very they've we say of the thanks Lisa. but still and a for everything us,

both a to our refinements and naturally as If moderation Such we refinements, now Core transactions. ago, elements that. direction is years brand. We're and the talked of are mode as four this non-strategic strategic that led portfolio, transformation company there to M&A two globalizing well with an capabilities our targeted repositioning as office of more strengthening elements. to started in content you back the much our about strategic and set digital exiting go which execution with intensive

today in of globalizing have our to actually revenue through that us markets around which getting with as well network. Cognizant, will robust months. world, which and coming You've underpenetrated greater quarter as seen of and That a goal, after more We'll we giving go internationally, still assurance some recent weeks a approximately delivery announcements. resilient clients represent really have that the second the involves our help

out made and up part are there, And much actually continue sub behind optionality our digital, them point as in are changing deeper broader of good increasing that should accelerating making progress relevance we with pleased us have a clients. alternatives. invest industry goal teams giving around knowledge C-suite that has and knowledge, industry in and strategic with our them very bringing we us and fourth goal The is sure teams, transformation across will you'll clients will Global companies. indeed, interface we showing see point be we out third some to and continue this I the then portfolio, invest refreshing to involved to who of the and entire our commercial people client-facing of That XXXX can that

So, we've accomplished a great deal.

Some plan against would incredible to and ransomware transformation given particularly continue because very together, in last behind we're be energized, COVID years. left room team the to the the we're to this and all in years odds, the the are honest, done But yet. not in say financial year. our we're coming that's to committed in do also why, But coming something we've in invest the

Lisa Ellis

Terrific. Thank you.

Operator

of line Our Bryan next question comes from with the Bergin Cowen.

with question. proceed your may You

Bryan Bergin

can performance spend? wins of and Hi. us mix as you and curious company the Cognizant whether a think of about recovery booking the give you or so, positioning here? last, performance. you competitive making you've sense relates of versus due in to give of in to Just overall overall your can stronger been the you demand that's as color ask two bookings if it you. wanted to give from better investments of rising I a see just around growth the XQ? digital let's and how then sense the Any the tide factors been your to contributing can bookings you here us Thank say, over And quarters

Jan Siegmund

in to formal And in Yes. us in understand my so. some I do think the number. jump training because and I'll on mentioned deeper dive kick bookings side, call, last had to did bookings I I our and off I

the Our illustrative number learned, full convey of this year in with distribution -- momentum and as course, progress But that. this bookings the his year basically, we our we you continually growth in made numbers as self mid-teens. the and we success and was his in fourth purposes for offer improve bookings number, have in and bookings momentum that and mentioned bookings for this I good see notes Brian it understanding of we should clients, quarter. to review

the shifted I'm in momentum quarters. full the third bookings to adjustments mid-teens. bookings distribution between to detail continues the mid-teens. number some the is bookings some we bit up the We similar more on our give reported to little what number that, XX round you So year -- the want did basically and then, delighted But do quarter make in as bookings? we've And Brian, the a digital

Brian Humphries

Yes.

but will that significant coverage look, So we should also the the course fair we're In these tone have we've to on it into I last on. goes the of ultimately first been the regards, years. believe recent more added That client-facing I from be in have a as been. positive, some become of competitive company that's productive believe year. with we all, starts than because in well brought think, I say, time top, more we it's than go-forward more basis people positive we more as are a but

some conversing better over goodness across who ramp time, disruption the set entire be upgrading of Because will been the to because of year, teams. client-facing wanted are C-suite. of our capable some also from we by And had teams we've complemented the a which fact will have client-facing this that, we've

we're have So client centric. more We're I we stronger We're a Frankly, portfolio. energized. think also more stronger.

well the say But rollout of vaccine that stance it acquired, there growing the making We is with the the certainly us past Similarly, engage -- CIO, got of If spread in Company. because in And we enemy where think client background are of It's is are decisions. behavior, investment decision show can Services at decisive. I in world. I where an clients have in puts clients CEOs market. momentum a are broadly position of uncertain now been in and about we more up assets optimism being somewhat of to M&A behind we've the and fair much the lot CTO C-suite. year. the organization beyond that a to is aggressive our We think

behind? which them What course, acceleration, to So are of you money experience, will, you around decisions. of XXX, and data modernization, putting decisions, core acceleration, course, AI machine brings scalability, agility, automation, hyper with I'm efficiency, see leads and Customer happy growth cloud learning. if continuity, their they business the personalization, investment Ultimately, this customer analytics to making

giving into working this a will rise So have of we're I believe to different strategic going agile, distributed to working to gotten partners can invest indeed and working are, ways delighted thought committed play vendor And to via questions brand. which operate happening I'm it's build, is clients Cognizant think around partnerships, industry real, fuel a where in is used consulting is consolidation period solutions, in also behind who really why to say and we're forward. our with industry transformation and I different which all manner. innovation across continuing leadership, technology truly extended

right economics. now, anything, disconnect worried the is market supply good shortages a I position. stronger. have I'm If about getting is industry. feel about what across skill we So And between demand our very The

Bryan Bergin

Thank you.

Operator

of the with Keith Bachman comes question next BMO. from line Our

your proceed question. with may You

Keith Bachman

Hi with, thinking services very X% ongoing to on said, about to X% assume services ask XX.X%, information, that to we you currency of parameters Thank give in thank adjusted operating X the there is includes to But surrounding of contemplating be about I how related within that But you. financial as margin, should be associated you could a of should thinking this then headwind quarters. QX. I charges the the M&A. clarifications the about services there events any X% some that, Given context And wanted X% growth? constant you part, is couple additional we an particular? be the any is And wanted much. how XX.X% financial and I points QX thank to little of the afternoon, evening. get second to impact happened for financial you the us we with Good additional should good what organization? the to guidance, incremental -- first in

Jan Siegmund

little a financial add services the bit can I color contained the from around really -- fourth quarter. This exit engagement. Yes. more in this It's

And said. I X financial of we the on little I than in bit impact in on growth and -- think a bottom quarter and impact So we -- revenues the charge the X%, fourth put services that what -- a had line. more

Keith Bachman

Yes.

Jan Siegmund

services performance. weak performance that, our fourth financial been declining with be quarter has a to continue in the in And and spot

for Brian that end So and as in a -- Services. we're the I anticipate that services going to up fiscal be stabilized throughout and I Financial we're indicated way stabilizing performance year financial

Keith Bachman

incremental is that charges in taken the incremental Okay. there with Or any QX? associated is -- And all that? margins,

Jan Siegmund

should in taken be There in impact more QX. 'XX. all no They’re

Keith Bachman

Okay.

Brian Humphries

a it's COVID Brian the the here of media and the talked of mainstream bit started where rest Maybe That's being March. here. about in in for QX, you year. know, quarters us. Keith, of Jan compare is because a really the year wasn't flavor more than tougher as last beyond just little behind month

more quarters a in But the us fully recovery of the we've we given to to be with month the think let's taken the compare as gradual this efforts year, the quarter QX, easier be, the us. I'm services in compare just I've against entries an frankly, last view, for the financial exit related point aligned against hold and that. turnaround of expect easiest given, as in compare about backdrop. take continue said, contract. Jan Jan's the anticipated you FSI we'd within of of a challenging XXXX So should for this the quarterly financial be tougher QX shape we'll say, so and And to QX still should there as

Keith Bachman

Okay. All Brian. right. you, Thank

Operator

Equity Our next the Research. Bourgeois line Rod question with comes of DeepDive from

question. with may You proceed your

Rod Bourgeois

after continue as your you growth you you would your margin the If enough the leave as just be get prone investments year? progress there be investments margin taper about turnaround? some in like great forward? to margin sense, further guidance gains. you beyond want invest give And I growth ask make with do share as to looking digital outlook the even beyond think your feel on in this in Or trajectory. and year versus us XXXX, capabilities a growth growth you you driving maybe clip Hey, Specifically this to to would versus it'd at XXXX, room look building topic guys. does Hey I can look then a similar

Jan Siegmund

jump I'll in Maybe Yes. setting framework. with the

as acquisitions investments impact capabilities, acquisitions built roughly. continued out today, the approximately And so, and organic XXX of well of will in basis investment of and into have is building or our closed our we et cetera. create is Our margin These anticipated. that as guidance announced as into growth points XXXX, that marketing, includes our pressure us for

we strategy. strategy, as So the very substantive to our initiatives is acquisitions, of guidance illustrated continuation I continue includes our executing into that process planning we're was plan. a budget and the important we and indicated, to which committed multi-year that strategy, strategic on capital continue Future Brian where XXXX. allocation for our as outlook devised That I our me M&A

think always So now strategic is That $X another into if would that provides incremental incremental. spend built the as That's But pressure. will that not we of earlier. illustrated incremental be I billion margin direction be built pressure full guidance margin the were on as to acquisitions. be it is Brian support could our plan

Brian Humphries

if made. Maybe comments those I just we could Hello, Rod. that embellish Yes.

genuinely company. has good asked always And P&L can sauce the to prove ambitious. We're secret delivery earlier. the financial an strategic, XXXX. program. by cultural up that materially The allowed the that for positioning business, us of to the we systems We're hiring of the our Fortune reinvesting to We're middle And Cognizant referenced revenue, a our aggressive is elements, our best the of the the for We way accelerate united. opportunities. success today We'll of and yes, us get in drive start intent and calling I years. of to how into much start initial get about work our about after uncomfortable operationalize XXXX, continue the multi-year growth, company. definitely more to forward us. eager over HCM. direction our with announced to a sustainable which and That's show is those in base. Look, heavy feel to portfolio. bookings to with I all, do, including the want about to and to got sustained portion a we basis. a to again. for lot better that That the we drive our these what But delivery we're some of taking afforded excellence, First is margin of company earnings of the continue a behind lifting XXX future. long-term more coverage, the fit-for-purpose resources our transformation we're work us calls of company crystal Workday talent, we're to we future. with team certain goal the always whilst to investing invest a organizational, savings much position, a excellence, us potential. doing in that the transformation revenue I think together. our which team sees guidance but was I together We've It on and mind be pleased in about now commercial And employee for -- come the the so mid-teens, forward. for fueling think pull because It with executed shareholder in creation In investments project medium But ultimately feel to lot it optimism complement our expansion, the clients clear the strategy Cognizant was commercial value to segments tools, restructuring which I my agenda. included why were not a the on M&A I’m so growth and go in That's indeed executed was reposition and to

to We'll continue between we in investing our feeling invest and portfolio we're heavily remediation comfortable are. modernization. in security where pretty we're in of know You and terms and IT brand, and our

Rod Bourgeois

you. Thank

Operator

Our question Ashwin Shirvaikar of comes Citi. from next line the with

your with question. proceed may You

Ashwin Shirvaikar

Thank you.

attrition, confidence implied of part the So, margin and demand? to question you to the I outlook? is question given revenue objectives operating in with side sort and guess can both on supply me the of lower I comfort XQ of high ability I look to and provide underlying post sequentially meet the assumptions when at some the guess and regards acceleration. implied for the upper And economic utilization follow-on higher for that acceleration of that the is the delivery because

Brian Humphries

to So, with bit let start free me a jump Jan, some feel moment well. order questions, at here any as little in

say that, has stand bookings on all, the first So, if organization where high major will. we back attrition. skills are momentum. focused on evidenced we demand/supply are, look, digital snapped market talent digital of a strong regards with engineering, AI The would aggressively, you domain we data, across of All imbalance, extremely competition for and in therefore, very demand competitive. much in to cloud, the have digital that I is and our delivery as recruitment

sure company, For they those their much see aggressive media, our of ambitions employee us for terms track platforms the more around opportunities. of the company, the they be of sure who the with social you'll doing see luck career hiring. in you making a growth understand base We're of making potential

guys to we best lead know to as it in demand we an environment, can. have to imbalance, as so look do that that we as much you certain where And But optimize high can trying you outcomes. a forward

be things happening to Now, regards well as we've in my there's terms understand a clear. got environment very, few With to utilization, simultaneously to from what means that perspective. very of pricing

that rate, or we necessarily dollars all, that onshore or offshore. it's actually working, well. helpful XXXX. new to real ways them them indeed and But worked margin are distributed indeed, estate help mix upon can higher the including not forced The but looking consolidation actually, been of many embracing understanding clients now are can and clients for think of agile, has work dollars. margin policies First I somewhat it's nearshore, revenue And at in offshore

also India-based short-term bench. which offshore that pushing that's our to utilization are, the don't in Workday, to But so this high as track in and though higher offshore some over consume a is environment So, practice by rebuild we or time. to leverage and one next continue in We're hiring, will onto the benches, We've we're at quarter of dynamics result play know in points. add, to in with a line, which understand look and I is these likely sustained how at seeing our trend moment in towards as doing it term our a internally. reduction nine-hour I tactical recently the earlier, plan two we longer in things a increase we'll demand certainly But industry I which be the utilization should India, we said because in. utilization workforce moved theory,

Ashwin Shirvaikar

Thank it. you. Got

Operator

next Our with JPMorgan. from comes question line the of Tien-Tsin Huang

may with question. your You proceed

Tien-Tsin Huang

you've much. occurred? the I accounts trying was well? you're if and better Thanks lot engagement this to what customer ask I happened there a already, sense that covered some I'm why know of of one so terms get to Hey. as want a other about just again in what Or tracking but this off? are exit the hear and makes unique

Brian Humphries

Yes.

Let off. this if then elements, embellished financial any Jan, me of as you've get the well. And please

better aligned you insurers organization. programs, methodologies, a delivery these set think So a first excellent of all, tools. as a, words, we of methods have of That want for about principles, sophisticated delivery a could were to

saying. It in As are goes reviewed XX,XXX Fortune underway constantly mapped. Global a XXX delivery or time, programs between projects we projects any company, our organization. probably at and XX,XXX have And and these without

of right senior world bet frankly, company last our that projects Cognizant entire top then say as involved for get management we of the are services company For projects that on we're up needed. stand. discussions few over portfolio I me I in I've to and will reviewed the client years. where know actions any out every These red. classified monitored size, in amber, constantly a there our are there are some certain I one-time at other this.

hands new way, we as We have solutioning a pretty processes. the past been dealer on. Many And enhanced CFO, aspects, reminder, a rigor the of review those in year. just have by and who's changed in have our

these Admin pricing, with last amongst Chief We've which We position pursuits, experience management who things, global new me Each and new have in who's puts leader value executives own complex been where solution came other into a stand. year, feel contract of and deal their delivery where a Officer on charged, pricing. and we bring steel who's confidence I

Tien-Tsin Huang

Trust think rigorous Then I there.

Operator

O'Neill comes line question next Our with of Goldman the Sachs. Matt from

with may You your proceed question.

Matt O'Neill

hiring a evening. sort was dynamics, as a as, Hey. Brian, is little already. as Thanks MDs well and of dynamics a talking kind my of you as international the Hi, answered internationally. of around bit gentlemen. what the more some ramp far the with going could And good the question, expected mentioned as from questions as higher lot kind of broader lag hoping right well to talent as scarcity lot hiring of business Good hiring far for far I ask asked and the actual sort of back finding challenges I on discussion of well international as accelerating the skill markets as there -- the and people the in as kind of as sets? to or the of relative you. the right Thank

Brian Humphries

in the certain of Look, global XX% as quite to the company, is localize markets, extent. about too, a we're it want to from growth so the we international intentional which called globalizing our we We the last company were that that year perspective, business.

Head experience prior we've of HP, example, was recently previously an in changed as hired of Japanese means, Oracle, Japan. that Japan. Head that the Microsoft our So a IBM We've local Japan,

people growth New to will geographies. the extremely and say, in we can ahead. Cognizant to personalities, able we December got with can something do and years with fit pleasure. roster these in who across want in Ursula, to with That's followership the drive I've a rapidly with me, the absolute it's Cognizant upgrades I'm Head in somebody Nordics, need studies. also We've Class exponential networks of the optimistic indeed A in of Growth been followership new month there them ramp country. and to Germany, would Japan multiyear Australia, energetic business made quick talent been that important in attract really in already So somebody incredible type very are plans C-suite in to senior, an culture talent clients, we've they to Markets, incredible amongst because but the helped Global as how a are see very Ireland, We've Zealand, who us And joined the U.K., in in of the well.

local to that course, know in, great charged delivering and transforming also give labor to with we heavy want view the just of course, And locally and the of company, projects. the C-suite to a being solutioning commercially leverage they've but but spending we're application are from of pivoting, expectations. I selling, the delivery company, time much with India they're with them classic, point been sell driving course, very they entire principles hired more of of and settle Of arbitrage, the across as model delivery for not complemented, outsourcing, is

talent that, question ultimately an about us overseas. broader optimistic. I back stronger. I'm mined So the should to enable we to I'm and adequately area goes haven't And have very the it's are think nice which excited we very that The potential an internationally, it's drive growth. market area frankly dynamics,

thinking the entire that's you We If in to we look in days, the growth are I going these skills X% are think is forward. And particularly Digital at rate analysts many entire something will. industry demand. facing them of control industry the X% into. the industry can for what about

we this of our XXX% thousands recruitment increase team we our COVID-XX In the higher and rewarded a of bookings proud of attack. to are at last and sure fulfill we employees a against we salary majority recently with can around making tens bonuses accrued around the promoted and ransomware notwithstanding levels momentum. vein, than merit-based associates same I'm year and focused as pay management indeed, the and attrition we will So year, and say

So talent. we more a to rigorous have approach

continue. that see process will You

world-class. we'll in employee will cycles. with is probably But sequential proposition are through employee simply involuntary bonuses what and still value happens. faced brand see we're XXX% attrition pressure on XXX% of a year and ensuring focused recruiting our focused that going and attrition And end We on be because after paid, we're

Matt O'Neill

very you Thank much. it. Got

Operator

We more have one question. for time

of comes William question the next from with Blair. Maggie Our Nolan line

may proceed with question. your You

Maggie Nolan

Brian, Can space? comment you. this? the competitors in-light have do in to hope positioning take on about clients? up you spoke you and or new to Do competitive disrupt building share of M&A positively do And engineering you substantial your market to environment the digital of strength Thank activity. with the existing the portfolio you

Brian Humphries

leveraging have is the a jewels, application more XXXX. heritage of the we one opportunity that This the acquired Softvision gives talent rich we then with in in strong that Maggie, to us but corporation. maintenance, application much a entire and in skill-sets and move the forward, hidden Obviously, back development tremendous

In X digital already X see United engineering fact, months, to North you'll those we set as to Magenic Europe the the America, us continue that And in acquisitions that us and you'll Western in see last as with recently that strong in most probably the well we've continue very closed. this as globe. Tin across and have week a footprint States, well. done complement skill Roof We embellish as well across

infrastructure with aren't we're classic think digital, at brings anymore think necessarily it different or of this bottom data. simply applications we course, about or digital where the dynamics. of and Of phase they Clients new stack as entering thinking tech the a

world’s to more intersection that's and Partner power we It's play consumer-grade engineering only Salesforce and services not notion implementation another play of advisory, that It's sitting a driven our our is focus cash. in across processes This, platforms. tech my true after view vision world But those and ATG a in clients we leveraging and truly and CX. to to simplify we not are already, dislodging new got leader ultimately bitter in This feel example certain can bottom pure-play think, automated in get great experienced well agile, cloud the value, from as held. digital. acquired personally operating And campaigns, in with We've will helps the at long in we're up stack. processes accounts regard. from models. on ultimately Our is stack business tech is in when recognize horizontally. with a cloud certain by silo and journey. value. well, huge organization And the insight ultimately companies provide to grade the quote one And scale is certain modern the but the mind, happening other top I marketing Salesforce’s is the companies their and are one scale value intelligence I get truly And them that's that ultimately XXXX. silos, massive of involves data really about Lev down examples CX companies stacks. that some modernize us I helps point. that vertically or customer in from in are the cloud digital applications have play IPPs but Platinum selling the bottom can cloud data-driven arenas. features, architecture digital they've companies at way, capabilities a makes certain point acquired way, belief the personalization also XXXX where on truly is as companies company think involves the marketing really by actually managed of unlocked going. in we're security core I the that top. is collapsed There is both point portfolio, intersection delivering this its doubling of actually bottom can in customers, two investments, the that that that the to by across fueled interactive of, certain intelligence will And of is There of more that that data that as one by It business in but the digital in silos and become more digital right

these of but are private to companies that are Some world, companies, engineering double of feel that we us you'll public, and some got see digital in one the the in companies we biggest regard. continue

Maggie Nolan

you. Thank

Operator

closing turn Ladies session. would have to question-and-answer the to end like for I over comments. and gentlemen, we management back floor of today's reached the

Katie Royce

and This thank speaking forward we call, coming look is Thanks. time taking for the with joining Katie. the I'd you to in just you all to days. and the like

Operator

today's XXXX Technology conference concludes Cognizant This Solutions call. QX earnings

of disconnect all the may You this time, and evening. your enjoy lines rest your at

Cognizant Technology Solutions (CTSH) 4 Feb 212020 Q4 Earnings call transcript