CTSH - Earnings call transcript Q1 2021 | Cognizant Technology Solutions Corporation

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Operator

Ladies and gentlemen, welcome to Cognizant Technology Solutions Q1 2021 Earnings Conference Call. [Operator instructions] Thank you. I would now like to turn this conference over to Mr. Tyler Scott, Senior Director of Investor Relations. Please go ahead, sir. you. Thank

begin. may You

Tyler Scott

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

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

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

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

Brian Humphries

Thank the you, India. crisis everybody. Tyler. to would humanitarian in by call Good start today's like afternoon, addressing I

more loss the suffered associates. my you the have My many India pandemic. As wherever are home of associates solidarity who they for of and the sympathy any a I in support world. XXX,XXX is know, and Cognizant, to would of like express for than our heart during to our Indian

covering making easier efforts is at client India crisis. those UNICEF of is assistance, This vaccination operational the cost in multi associates In Cognizant country, families, and and throughout partnering facilities. for to our Funding leading impact that with set COVID-XX our investment making Cognizant's centers through India which supplies chains of to hospitalization and vaccination testing diagnostic some generation up vaccine to for oxygen plants, of focused assist hospital on the India's own the one medical industry and COVID including of of million across caring pandemic safety locations are the expenses India The the rates, associates deploy reimbursement in our we'll our dollar supportive addition patients. monitor hospitals associates, attrition availability our while to the and and particularly prioritize on disabilities. health a ongoing and includes continue with support who've serving for delivery homecare uncertain. recent their and We of to situation in been remains somewhat absenteeism weeks. daily, clients

Currently, working office our situation As country the and driven. an to all remains business basis. world, on remains return exception COVID almost associates of only differs our strategy throughout are the from home, travel

now quarter. first to Let's the turn

constant First quarter representing revenue X.X% year-over-year currency. billion growth of was $X.X in

by we been was reflecting hires were by our promotion call. filled an investments executing last commercial address retention resignations On well stepping up a quarter increases May. intensely slow further April salaries digital in positive growth. engagement on in peaking cycle career to and job our positions or in a and making offers adding to to the contingent market note of slowed promotions source our implementing cases, and inability for executed we've ramping A and talent. to capacity attrition, some And and part demand skills India. lateral that for talent salary pressure increasing workforce. in includes new in by billable delivered competitive opportunities forgone opportunities upside recruiters and elevated resignations challenges, XX,XXX some increased were through plus revenue earnings graduates Although, This that new multi efforts plan and Daily to March. To internal in Shifting limited hundreds as record. in hiring continued expectations, through against for first the and people spoke our critical quarter provide our to rows we and associates, the rotations training high about for in quarterly put a due

much example, recovery great given anticipate in brand further In in a amongst Notwithstanding top QX acceptance too we rate we in in notice remain increase since up points in our attrition almost second has in build in seen skilled XX increases India, periods this the career. before than to quarters, talent a talent for to in sequential a as risen attrition perception a colleges India's XXXX. meaningful year, engineering challenges, industry and percentage India, for recent However, standing market Cognizant our the half. more XX% confident gradual a magnet we've place campus

Forbes ranked list to just the its to consistent and the grow named with top number enabling This US and LinkedIn best professionals magazine based like their follows careers. on among and advance, both are skills Cognizant In in ranked all India the Cognizant India, for for growth, diversity, companies. addition, In in XX to honor ability LinkedIn two company best employers, of employers recently leading diversity. as gender traits which world's

Moving key on, leading I'm pleased with performance the indicators. health of

X.Xx opportunity our by considering digital confident sustained growth. to XX% that a bookings has tough greater year-over-year. ratio excellent compare. Bookings outstanding revenue us been further provides year in December to growth than For accelerated Digital bookings mix. revenue of growth boosted now of accelerate with which April. revenue Year-to-date I'm book-to-bill growth of X%, since our revenue prior the bookings, was represents example, XX% strong and

qualified our win be and and to are reason rates pipeline Finally, give strong us bullish.

digital performance both in services and have banking. insurance financial our both Turning improved declines now pipeline Leading to including industry qualified moderated. mix and indicators sectors,

are healthcare year. ongoing recover strong Sciences of to business. I'm momentum across the within financial payer and with and with expect in Life improving to continue over trends businesses efforts course we quarter growing provider the business. turnaround a services had Our the pleased We our and growth our our

and consumer resources and in travel for to our moderation. product platforms of on energy and logistics, be utilities. core with normalized media goods. aligned existing to strategy, software our affected enablement, in we've cloud And in the of to posted digit digital product both Communications more automation. will provide Jan details offset This exit prepared technology double retail Over manufacturing, the growth and growth by our enabling continue elements hospitality pandemic, and content solid continued to in declines our digit and achieve digital were workflows and product in remarks. his well the Products were has business. investments customer by double pivot We and quarter our priorities. clients and resonated growth refreshed market better us the focus past roadmaps experiences, intensified with prospects, XX recalibrated months,

Let's to now turn the macro environment.

serving XXX is of with conversations while multitasking services and XX% hyperscale resilient customer need fueled technology success. enabled Our Within Papa so transform improvements be and delivery and and an data from being sit A freeing order employee John's run new order, robust grade creating that International, significant new drawn chains solution The more John's work this platforms. at data cloud channel the architectures placement valuable. suggest halving from in resulted driven early on also and that cloud Papa its This their digital digital and engineering, center example Papa parallel. the help John's modernization, for consumer centralized order by mitigation intelligence delivery. the and stack, strong requires their and help shift revenue in their we've solution through risk what data, sophisticated the of solutions pizza end lowering doing clients software applications, intuitive, by based demand digital stack make uplift IT its into are XXXX business to more by starts by on business experience roadmap orchestrate experience States. picture a guests. you powered to the designed intelligence, for time efficiency with model instrumented We This sets productivity modernizing innovation, omni cloud relevant, their to largest on operations employees stress which one in of IC transform experiences the better to the and in advanced end hyper all stores the and given to staff in Commercial X,XXX model and as a of enables focus It's United And That's can been a We customers. analytics, initially, increasing is of and improved clients a and we infrastructure. personalized by client is investments, customer clients experiences business opportunities their to see to per stores Investments, and beyond. particularly and initiatives, interested productive, driving This than between is expanded engineering software centric the to traditional processes do portfolio. of this most offers apps to for economy. before technology, all how up imagine, for demand good

faster their business and digitally process Our to services. vein, relevant distribution global to enable faster, machine data overriding their based drive innovate UK make become all RPA more businesses. efficiencies accounting learning, services We're and to infrastructure and way applying above leader simplify can finance aim business transform help retail to and agile, smarter to Inchcape, that become with advanced is and they In analytics, decisions. a Inchcape automotive and modern and That clients stay and we're customers. collaborating

I've onto now and I'll broad Cognizant, client We a portfolio a focus and just relevance. brand, prior remain on strategy, our Moving its related calls, with we increasing further faster strengthened priorities. four Building sharpened so stronger observations about accelerating execution. and growing a our priorities digital, on segments. global executing geographic strategy in globalizing markets, our these covered focused offer few

All modern clients commerce, of value aimed channel from accelerating omni and ML, more. and most, experiences, providing our capabilities like want market AI and aligned to mobility at cloud the data migration, the unlocking creating using enabling offerings are

IT and Cloud Microsoft, and the groups cloud Servian, we workflows capabilities data can acquired specializing run digital is SaaS companies. focus more transformation design we've As an agile We're Google areas key way continued QX, maintaining and the and our their in and world's further in we experience, in with business hyperscale IoT. With delivered relationships pace applications leading clients Australian and our has consultancy also create software services, AI, platforms, strengthen Platform, help our computing across our our infrastructure, data to the changed In applications cloud. from AWS enterprise core cloud digital expand to M&A and AI, of cloud. analytics, dedicated engineering,

We group engineering network. the transformation that specializing ServiceNow Technologies, Linium, and solutions, expands services cloud a software development and custom consultancy in product Magenic company also software a global acquired platform our

ESG vehicles. signed we R&D electric engineering our connected ESG agreement to and mobility quarter, provider presence. our automotive acquire existing the complements for offerings, industry digital During automotive an autonomous connected mobility a Mobility, and

responsive Before among governance, contexts strive would closing, the moment that purpose, and to technological. communities caused that's us. have what local COVID-XX societal owe a many damage environmental, societal, to sustainability corporation and reflect I and is so interdependence they with global we and keeping modern the It larger our on economic, of to we the In spend public them ecosystems. by which most principle their to a economic speaks why to deeply with businesses operate, in is important And ESG, social, environmental, be stakeholders. on our wrought health,

well-being emerge During in $XXX they diversity global philanthropic economic QX, year opportunity, we mobility, investment and and educational announced pandemic. to million advance the and inclusion, communities from as a health five

To the much multiyear so, endeavor associates and will thinking, We clients, how also our sustainable our embed This and into evolve one indeed and that XXXX our progress planning later this of to mark closing, actions. successfully business. you, report to do recognize of must will To second our is become a execute include ESG In we publication investors. we importance a strategy. continue increasing decisions series ESG of to we in journey, quarter. announcements we're the along our a Cognizant's

reestablish And bullish an a it. to achieve prospects its multiyear company Cognizant growth industry working diligently on within We're through plan the reposition are our industry our full and as leader. We potential. to

your who to As Jan, we momentum. before the make we will our quarter the investments necessary outlook take cover that, financial With are the set do turn committed up and we Jan you. for the of I'll will us to over to details call so, sustained questions. that over

Jan Siegmund

good afternoon, and Brian, you, Thank everyone.

with QX exit the representing growth of from or in from period. Our This total basis of particularly competitive X.X% basis points We and in compared constant negative year-over-year, and of billion, represented our a talent. revenue approximately Digital of was prior year pleased services. $X.X growth QX QX acquisitions, with content growth approximately the XXX points currency, revenue X.X% of for XX% period. compared digital hiring versus prior XX impact to this XX% light in revenue environment year acceleration XX% the certain of grew includes in were

are Now moderate declines provided will segment with where both company are includes to the insurance, businesses all growth clients. more we seeing in X.X% resonating our banking and line outpacing bookings moving constant early be reflecting bookings our on and expectations, Financial pipeline that Services services This repositioning growth in a solid and growth. currency. results, total in rates year-over-year QX declined financial signs in of investments both growth, with

in from positive quarters performance throughout quarter, the sciences businesses. to momentum segment the our continue this a expect payer was and life by will growth accelerated phased driven see anticipate next several over both strong Healthcare and We we recovery year. healthcare for last and that X%

last its increased to and payer among device best travel Following medical single growth companies. since business strong of in double consumer from quarter partially and healthcare demand integrated offset fundamentals our increased energy sciences performance consecutive our demand strong quarter resources by X.X% retail declines digital had improving services driven and utilities. was and pharmaceutical hospitality. in QX, Life from benefiting mid by for in our software manufacturing, digit in double our and and fourth in the solutions, growth quarter for growth This revenue both benefit goods continued digit declines digit Products provider year-over-year business. XXXX in logistics,

portfolio early some we by remainder negative of these but the growth offset the partially demand portions are business the a within services the grew technology basis fluid technology of business. benefit year. of environment. recent impact expect growth pandemic, remains XXX the points Communications, Segment acquisitions, softness growth pleased with of this X.X% certain the most also stabilization of core to signs exit media continued seen of sectors solid pandemic. attributable a impact, and content partially by offset of our by have impacted Outside was very our and for a but from demand from We were our it the including

lower improved as and QX, GAAP adjusted to benefits investments Now investments a reflecting to our were were impacting our there travel cost XX savings by approximately were adjustments accelerate organic to including the In immigration SG&A basis, on enhancements mostly points, environment. expenses, margin lower for These moving from margin initiatives no margin corporate operating margins. and offset in our basis and impact items and report. our costs. XX.X% to On operating our unusual XXXX dilutive from cybersecurity including year-over-year both investments adjusted recent growth acquisitions, entertainment

was was tax discrete And rate the EPS XX.X%. XX.X%. tax GAAP quarter diluted a rate diluted $X.XX. Our our adjusted was by Aided in tax was benefits of settlement the in and EPS adjusted quarter, $X.XX

billion first of items $XX an or debt. softest Free seasonally from million impact in turning of $X.X flow short Now the and investments with quarter, billion balance sheet, $XX was quarter $X.X our in included cash to cash ended year compared million payment payment. negative and the to quarter the this XXXX the term approximately XX quarter, we including unique was XXXX which QX to the of days days of a our year tax prior flat of annual sequentially includes COVID portion period. the the deferrals. DSO the higher XX payment cash also was in incentive, of compared our the net

cash later several this payments, negatively cash we higher offered will flow mentioned. versus government QX also which As result will benefits as And deferrals 'XX reminder, impacted impacting XXXX of from lower certain to be a quarter a free the this cash and impact incentive tax XXXX, year. I in expect payout QX XXXX compared XXXX flow of including just

will outlook building for be and the of unchanged free XXX% we XXXX last is net focus improvements assumes conversion on year. income, Our flow as around DSO upon cash achieved

deployment end strategy under price our remaining share weighted execute to million $X.X the per balanced our average approximately had for we X.X we of $XX shares quarter, March, share. of a approximately repurchase million billion at continue the capital During $XXX repurchasing authorization. At

also cash regular million million We of approximately and on acquisitions spent quarterly dividend. follow $XXX $XXX

to Turning guidance.

$X.XX that some billion expect consumer constant X% $X.XX on inorganic For will X% stabilization XXXX in basis basis and continued combined outlook. travel attack, in and revenue segments have a approximately to leading based impact and year-over-year is ransomware full the to XX.X% of levels representing services, we QX retail and our all billion QX currency growth XX.X% approximately XXXX of Keep growth and our year XXX QX, and that across This assumes or in hospitality the currency pressures impact outlook to a in which mind range to media. expectation COVID contribution of points. and in favorable for easier points XXX included financial goods, and compare communication above

we to X.X% X.X% full year, prior currency of X% versus to our $XX.X constant the improving X% to guidance in follow reflecting For currency X.X% the growth, macro $XX.X X% of representing to constant or expect to growth, and billion, offerings. now X% environment billion revenue in demand strong or X.X%

an Our and have XXX unchanged approximately revenue. will from favorable that inorganic impact expectation includes basis of approximately basis points points contribution outlook currency a XXX assumes

XX.X% full year opportunity as margins, proposition enhance destination in ecosystem. is Moving our to $X.XX adjusted value full accelerating adjusted This talent contractor digital which recruiting This a for on in range our top EPS our quarterly people We're guidance, leveraging and to unchanged employee our based role as Cognizant XX.X% $X.XX. promotions, for keep the at it in using previously, to and to also leads year implementing an globally. our increased operating investment we skills. capacity, versus XX.X% recruiting to rapidly to primarily expect margin includes XX.X% of reflecting

interest outlook $XX unchanged from the is of assumes cash reflects prior in guidance XXXX. $X.X QX our million $XX income year full million, to billion and Our which repatriation

shares assumes outstanding rate XX%. Both million Our approximately tax and XXX the unchanged outlook. of outlook XX% to average from our of prior

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

Operator

Our from with question Instructions] the line Cowen. Bryan next of [Operator comes Bergin

BryanBergin

potential And to you. near in to in just there's situation confirm ask Hi, outlook of this the disruption? potential impact same you there Thank on support wanted broader may And the you're Is front right costs now a good the in I how nothing India. the the term? business population? Thanks. on in may wanted have frame workforce on afternoon. on built thinking into those revenue you far margin there is anything about here incremental built the the that to have framed I -- kind Can question. the as as

BrianHumphries

it's here. Bryan, Hey, Brian

me So this. let upon touch just

been this in of of cetera. with situation of of is side about the candidly, attrition, prioritizing around First think us help regard that series business the And in from indicators than talked crisis. time. in months, But this moment my of substantially impact severe happening of a I relevant. the in terms working things of covering more resignations the attrition. QX which at our doing of hot the vaccinations, happening health as it's the the home the sense about in we associates And terms less QX essentially of in moment it it on leading how UNICEF, really of their dependents to I are course, they I said, period we're and the support, time. attrition, of all, end et India think humanitarian and at the is in most in prior as acknowledge stay a work some and a To they when we've is as was expenses were COVID in question market all for meaningful I think the hoping the in and in was that and safe important hospitals, about business, And script, to humanitarian medical pre safety our that expense being side

a operations working working So are challenging through with who obviously, business teams environment. working our remotely. our It's we're

stay involved. But emotional and impact attrition daily us will is because whether a absenteeism, as Bryan -- this, because Of date, not on we up at unclear uncertain. delivery appropriate. up remain actions course, know allows somewhat We for go crisis associates our which will of that time. have attrition stressful date look system time which families. impact but we've it's the review absenteeism of our though at stable our guidance it off and delivery The management whether today. initiate know actually and is or in The to rates putting To of But COVID status client of remediation from clients And a possible guidance. wishing on We're created risk We've a and say teams in because and financial moment their absenteeism. between in by and what certainly supportive a offshore clients resignations teams. what luck or a best management we of pressure feel go is it portfolio we delivery basis, today, is process seen, nearshore to us where been the that have this. emails in a of are as assumed to is will I've assumed includes received we project of potentially today's required guidance slow will lot of or through of this who actions. the go I we to our it attrition and ship project incredibly of work rates our series today's on site

Operator

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

RodBourgeois

Okay, great.

started Brian, at meaningful multiple there years regions. leadership at Cognizant. there You're you? across now management very you're a So, ways Cognizant with for waiting navigating you challenges two a pandemic some into were your role full When

that you And to a eventful context, like So couple ask way it's that you've progress, last made be to over progressing Cognizant's progress grade In to assuming progress, it at the two years. the progress. financial progress those if if years. been its and an be two definitely there's overall, I'd years can last how between helpful may dimensions I'm would different stages. hear internal grade a decipher you progress, But underlying Cognizant's market

BrianHumphries

Thank the of It's eventful pandemics part as India. an transformation the a now, crisis attack, question is nature. would talent years, comprehensive the you, agenda, the team it's say, that. in and of of midst first word believe sport. executives truly This in direction. we two leadership I required Global But echo Rod. by a yes, the given changes humanitarian strategy all, would can and ahead. eager in war on course, me ransomware an the what that terrific of And I and in happening is supported first of a about also the been all the who've our XXX% pulling iconic XXX,XXX and can got around company. I've associates days, one I've to And together I'm hopefully, our team behind been board these pleased in we're with become do, vision years a I show leadership

company years. start great saying proud the As a in I I'm had and is not stride will by and with it pride, growth a recent inherited a a employees. But your company a been hitting DNA its company with company question, I answering pedigree, great of and clear that company

build used our of the elements. delivery, broad needed our in our Who it adjustments, commercial are of this the And free And would restart in and Who as to help within organization set together again. a a make corporate strategy. to think partnerships, company, this that, P&L as accelerate to asked leads to people. to. And included also well ultimately, me transformation, And the doubled do to an is asked to meaningful hyper out the to agenda, And a corporate we will strategy. end, you engine. and growth pipeline a I ultimately the such including to of the a that growth Because up scalars. to growth. company on part as course, we've we in to us the have program restructuring vein, get portfolio moderation, to allow also to industry M&A of to I systems down bookings. all capacity be? with we go through work me as make growth investments But to to company means transformation just I structure, weren't So aligned That optimization, we? course, want cultural back that which to exits, operationalize help strategy both leading pull content was

I progress belief the better a aligned is multi notion clear the I So lot And I say strategy, to a we're test which portfolio of like competitive our I'm in do framework. of vision, a to we're certainly more including more our we getting this. business. think track. in XXXX. back. ever, we've strategy. year a and philosophy, cybersecurity; a got we than Look, engagement, go progress them in important things this. set got clear We've that values, it to can We that sustainability, talent on we're is made DNI is critical middle And highs internally, of got employee got a will based now knowledge your on to that great We confident believe we've purpose a of

that tight we've segmentation I'm fully overhauled refined course do about and of got Street, back between our on Although, we've are Commercially going more on we our attrition. to to on proposition, answering not about and work we got markets, indeed, talking aware I'm talk Wall value our your and commercial I'm employee box clients, model customer when the increased markets team, we've alignment where delivery, went we sophistication we I commercial tuna our as to our think strategy. of in team, commercial question the

we're aspiring clients, talent CIO. now or program, digital M&A need recognition partner the ratios up showing that and the compensation that pain by a following cloud as space. our book-to-bill of necessarily qualified can operate which represent as are We portfolio clients deeply, is is know we've and to more have refined we got growth where drive the ever honest, variable growing our that and we've revenue strategy. X.X, CTO to and viewed rate to with ensure we as I we're build So they address to win being no rates who healthy been. I'm to I'm to we points reputation refreshed critical excess entire implemented longer beyond in excited are sustained in being the how drive seen and Rod, client And feel to pipeline and now just in or be And our

that the true ultimately financial And all I Now of yet visible. don't outcomes. are of leads benefits to think this

investments, some we dilutions, investments the We have dilution the brand are seen M&A commercial IT making. and of margin hiring, security, modernization,

and review approach should improve balanced revenue offs Of trade to year the expect between margin course, sustained trade and the we on benefits we each investments continue drive future, But outperformance a competition. revenue for albeit offs of the and the further momentum, say versus back between I foreseeable will a to see to to bookings, revenue margin growth growth, with the expansion.

So in was of work years short, a look and great I a lot ahead.

RodBourgeois

at your of root able being Great. speak follow of fix attrition mentioned. to things see with top as things stage. is And quick of list causing seems the what you just dovetails factors Can a kind this a to the confidence you the in attrition the and up to some address that? that just It of you

BrianHumphries

shortage. V it's certainly shaped leads is snapped immediately. a and back weak seen April skill last a industry Cognizant year, after we that an a edged March two sword. with as We've And Look, recovery a and as

industry an problem. it's So

think seen date. in cycle you've earning that I to the

a a some on include Cognizant to And in Of tend a build the annualized, the our attrition on elements. attrition also rates at I various calculation line pressurize with less macro captives towards And global between And home is worlds continue think or BPO. performance is we're months, quarter then exclude expectations, as time compare we workforce, which on policy caution the of current at people environment of salaries. which have versus And to world. all competitors, top is regards, moment And Rod, attrition, which because company. our to of with let's say last given peers rolling those sequentially, lower sometimes see some XX worst levels time. includes BPO. look I in sense this the of think I course, considerations. in digital at in up COVID. work about more against evolving basis and transform of The that demand But points meritocracy across competitive towards from obviously, this of some we parameters, I driving sense across regulatory attrition line the client We're And which moment There people some to backdrop, also data. culture. extremely across the culture two which engineering, went considerations around but we imbalances cloud, is is supply are a late XXX one market macro of in out we're has of some that community. local I

slow to have We And decision invest new and April pain in can. will with up best the March, early XXX% increases in making promotion employee days associates. May. work actively hired we've we salary so peaked streams added taken targeted continues of is dealt months. recruiters graduates that attrition And shifting India, some I'm dealing previously. to four got I in from XX,XXX we're confident the XX,XXX cycles quarterly of number rotations, we're engagements, offers we've more a say to to in hundreds slowed with record And May, which and the promotions around XXXX. others billable in of in we're a last that pleased of lot for training, say in job I'm and to albeit in as managing attrition

I any inflationary to year the than Jan the and so right we XXXX, in course, working elements manage the anticipated. of thing Cognizant we're hired the not Z think meantime, this address we're are expectations actually pointed of doing to into graduates of in P&A as attrition. And previously lower salary Gen half the have even second may in out,

hours else actually that services line doing officer chief on we we're evolve work based augmentation against and the leverage project downsides. So to brings from be subcontractors, everything offshore attrition and like. a levers of coming will including But our delivery temper the nearshore the different more and I as mix vein, productive course, And employees. the And staff course, which some new as vein, are managed disposal inflation, will at Procurement get these that salary will pyramid automation sell in for of the optimization, That other and as soon. we got give we templates same think board or same we well. manage methodologies, in our that transformation. we of investments of deliver us towards procurement shift company help that the delivery industrialization, stem on considerations

I India. So we and in I honest. as two in see based And to do on attrition we period there in because the few is sequential what know we're month think resignations months we'll said, increases the last a notice need

But meantime, be as the into So hiring work. And recruiters guidance. strong that's put record understanding pace, what and our the we model factored have we've to been QX. extra we will at given our to attrition in into in a been

Operator

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

Ashwin Shirvaikar

Jan. you. Hi, Hi, Thank Brian.

couple can the quantify have were yet still you folks digital you hiring, relatively And a this. of attrition revenue have separate it I joined growth? of is growth levels, overall out at is when these shortage? and the of of question because things in then or think not headcount could headcount talent solely of number net a able that headcount sequential might what So not the the is of I growth versus growth But because headcount low missed the spite guess. to I growth, you get

Brian Humphries

number subcontractors obviously, labor, it's we turned the break about to, be external grew digital can attrition year-over-year, as flyer of as work viewed something a do there, not year-over-year projects. excludes be through digital testing have contingent and very on same contingent the viewed as as headcount legacy, working and could But lateral they to around they sources, X,XXX it's on they been out familiar that frequent we some headcount. but nor something have materially, can product a viewed both legacy increased situation certainly versus software capabilities, and and website, you disclose. we working But mean internally, and hires labor Well, sequentially I people we've been do non subcontractors Ashwin be in around as test digital. what have not in with a we could vein, somebody work the squad, working on experience as and part it's of agile engineering clear, an as which

legacy can quarter, rates, we're the we resignation. a we to attrition throughout of material it's anticipated because between doing about in countries for we we I worry guidance. best appropriate when that we we being had, some With less. points talked last could doing stop there's what's very glad So people industry and put resignation it's as cases I'm opportunity But cost, certainly workforce have it's around. classify could the happening the in review time to to point growth, a this cases quarter, in and But we're offers of us their same not about pain hard look, basis other in hundreds enough and to quantifying our instead that. set And the counter see talked digital. see regards that are been in And

Ashwin Shirvaikar

revenue to on you comment decouple growth? and the use technology greater headcount potential Could for of also

Brian Humphries

in in course, have you're a the talk BPO in the have I very automation, developing, holy and on huge completely us hopefully exciting that think the the businesses delivery, tech will quarter that's but a centric about way apart around type services some you're lot depends effort not business in in that you're grail, just Well, your the to some or a regards, so been set or business a running winning, but next be that whether industry. also we'll of we underway able IP we project,

grail. a is holy it So

XX,XXX this bottom I also about the rates the you've fresher very different bill to than year, of of rates the earlier Of told got will adding the delivery. pyramid those onshore of pyramids. for course, offers think about into the be

assured in to But automation industrialization from are at revenue So decouple there is top headcount growth use very including difficult of mind it's growth, factors a for rest so delivery succinct many of the play. way because that

Operator

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

Keith Bachman

growth. to thinking I you're how I about understand guys, Hi, could; wanted to want Brian, you this to direct if I

year, a, if context should we take out and closer You've but obviously for normalize little to or to guiding maybe to investors how given maybe about basically the growth X% see on if longer and you even views talk wanted you're organic the the a pipeline keep bit And the see how to business. could that M&A growth in be but it's your looks term, you candidly then positive X% terms guidance currency touch could you constant capacity the you from longer resources can put I philosophical that in now. for the anchor to limiting financial bit M&A? resources or some And some metrics growth, are potential consolidated not us the still little X% rate, thinking b, for some way, a the Facebook about term also serving whether to financial, growth. ability c, provide What hoping driving a an and here, to finally, that it's on incremental management of, your was growth I could as you

touch you. you capacity, then M&A thinking if you're financial, about again, so just, and could on And how growth pipeline, thank

Brian Humphries

we've XX% at think opportunistic, -- and in share Framework first in let's consistent approximately ratio I a XXX% program. priorities flow payout dividend range Capital a the will course guiding repurchases cash go areas of plan sorry through Okay, approximately the our in about to for capital recent these our rest all, forth to on that, of balanced the quarters. to principles targeting I XX% say continue of and of our and wholly annual We towards remaining deploy be to the towards so XX% aligned repurchases. about strategic of of -- M&A allocation back will are M&A, dividend we set free

us. and for achieve priority indeed is M&A that just; agreement up it's feel -- first it's and to not something wake said quarter, not have ESG we I to It's it's do. us every our strategy. the we that to an morning enabler we an So for And M&A will to signed Mobility. as announced acquisitions in a And be continue earlier, three acquire

global around position digital well digital built mentioned. is after have Network, the Delivery both of X% from growth you growth which exponential think our is Keith And around the company, to I also our as getting opportunity, categories. in strategy ambitions, to And that accelerating us a built strategy our higher also are Now, rate but a our in overseas. growth as overseas well excess puts X% organic globalizing

nature rates. organically in excess I However, backlog into I X.X. to we ratio And done, book-to-bill in in a not a significantly what puts the last would I statements of But to very exceed forward refrain a the and the us been from position will would we that those of with was years in on have long-term year, very, growth doing our financial disappointed ahead needed here. accretive if be getting replenishing coupled drive we pressure go do the revenue That we've have consistently start should continued basis. upward acquisitions say

with an crisis unpredictable world said, at will being I that the India. in in time Now, we're in this everybody, of somewhat humanitarian moment caution

declined of look, think this, I us the is X/X is half. of business growth of it in as two have of up sophisticated international healthcare, half And made vast Keith of categories. leverage kind business higher dollar as services, financial perspective, within exposing and two around is against have substantially insurance how and industry tale financial our The the and with than where, modestly possibilities, have And a is services organic insurance currency North weaker on revenue which catching services, terms to single that North groups, the about I'm it's is that's the proud more services America terms more context going financial of with of business. which my we operationally how the course, delivery progress is cities than services turn grew, the are inclined but we that are X.X%. we we the the think banking majority in financial And insurance, that in So lever business as than critical, terms, an insurance ultimately M&A is almost in of On about and the we American from more we well less constant it sector. financial have our that it commercial biggest and fact we all forward. being we in was

North capital and there our grew financial about banks we continues by America by that I but was banks. hurt Actually, consistent that and down. banking in-source. somewhat services, relatively markets are was financial So things in talked but up, modestly offset about And international was them, retail call previously, good banking weakness and declined, to us services. the continued business commercial we banking payments. have trends, global business and think cards differently, Within regional with what modestly, to And momentum some in declines if banks, we decline the have for as it us, offset of

it? to what attack. have about this of a I doing say we of plan are all we Now would back comes

in bookings, coverage, we've and services, we've changed refreshed working XXXX. and we've are insurance both areas embracing throughout financial strength We've had bookings our been significant our we've healthy been with And out healthcare, commercial a XXXX. had commercial have teams, amount those of extra digital very banking digital, strong actually added We our financial and interested in and services. partners who indeed in more in in

But than the the of as it ransomware we to stronger strong, get obviously, So I'd And course is XXXX. shaped in thing growth out that in year better as is easy we is to can under think well today. recovery be QX, We and to repair. up pointed expect see shape attack. compare in business Jan this a it see as for COVID reasons gradual should like in

Keith Bachman

Brian. Thanks. pipeline, comments on And any

Brian Humphries

Look, very for seen have I pipelines and It's candidly also is as healthy. it are healthy pipeline, healthy Services as Financial overall.

that's of saying, think quite eye shortages an my they the on as attrition But in for industry. an analysts are And perspective, don't keep concern enemy indeed indecision is entire I bullish a are making people client I a industry industry speak demand for day, based talent have And are and the what actually well with and we we greater myself. investments, obviously and decisive. on as clients issue like for XXXX from are every clients So Keith, conversations industry. the I'm on XXXX.

being decisive vendor consolidation. about good. are in more partners; that more clients strategic in talking They are ever So, are than the mix we

you in fundamentally, I efficiency things mitigation, these one companies So adamant the reasons was ago I'm we see two around about the customer I years scalars, of experience, technology, should underestimate lot up And services aligning industries, hyper kind teams, possibilities a model excited that. APIs, the by think and because of scale initiatives. pipeline, is don't the risk so driving down with innovation, the think doubling they accelerating And quite business And modernization, and you platform going massively be commercial the power if around and the scale like opens hyper terms, that cloud are massively the companies, I sheer to with commercial migrations. of of economics, micro which this investing and companies is future. in believe Cognizant

or stood the groups and up that. So the benefits we groups last are reaping hyperscalers we're the business to of business in think few years, I in

Operator

comes America. question the next Our from Jason of with line Bank Kupferberg of

Unidentified Analyst

this guys, Kathy Hey, Jason. is for

Is in in enterprises talk just decisions any there So I typically a seeing meeting demand there Can that the you are moving spring the little when projects. up or on frame that of challenges with bit discretionary is and make you're any about hesitancy forward some ramping of front? what terms time on mean regard?

Brian Humphries

being a discretionary are my environment. last it's being to be decisive, Kathy, am very consistent projects I Clients with robust answer, Well, funded. honest; are expecting

I used we're bats new before. than often And to ever at kind of think grown getting we've more the world. all

the bill, Beyond agenda. run, in and innovation and transformation more

I are a bigger feel picture. than good So in optimistic moment macro much as and demand. demand attrition I very shortages and earlier, talent me this But for time the concern at macro about said

Operator

from comes MoffettNathanson. Lisa the with question Ellis next line Our of

Lisa Ellis

for question. Thanks my taking Terrific.

The on first up just M&A just one there. follow to

you're what of a or companies? you. Your for you how made strategic you're the these bit integration quarters. of it's pace bit few how of Can to Thank have quite more changes doing on in you last that just M&A So a increased muscle? sourcing differentiator Cognizant becomes has building comment Cognizant like a that

Brian Humphries

you that? to address want do Jan

Jan Siegmund

in activity look, been had first healthy the M&A Yes, the quarter.

spent we framework acquisitions. much spend in $XXX and the I to So the announced want million pace, as we accelerated aligning strategically I fantastic our the to we an The think has and towards industries we're it team trying and across wouldn't the of that. sourcing approximately across four against executing globe. But read too to capital that really and M&A are executing in deal a allocate job done plan

deals, So this expansion. about and that have last and you deal, see announce slight talked of closed. of very We transactions could some my Australian also to part towards this, for them example. heart And close the more German of deal, in the quarter course, and, a we shift we geographic two of

classic with executing And really, markets manner, a that focused team it's do. to identifying service our partnering of want we we So is the with and the on I worked growth execute really has in lines areas very been our it. opportunities. well. us capital lead really It very our allocated against And these creative diligent spacing and natural identifying will to the of think of of against things kind acquisition strategic

pleased companies the so. integration, because we lumpy clearly with at and out, to to we of ability viability the the in generate but M&A heart way it's been deliver all a The is synergies. Now do what on consistent of are that the focus are the company have in synergies strategy. And these

have a Our integration have of benefit to companies now the of like these the and reality to business have we into acquired, fit can generally efficiencies the plans fabric and scale larger focus, can the that so as that close on from and revenue synergies, increased are on our table. bring portfolios Cognizant we pretty companies we that we the naturally

acquisitions, still margin. pressure from dilution on see, putting our You we have

working efficiencies available future. the And in so driving us you'll of continuing us be integration see some also the that on cost and might reaping to

Lisa Ellis

a Terrific, or you. X.X, a just about kind you've I pipeline now point, know, think, book-to-bill quick forecasting? very than that you your it's had And sales backlog how of follow this up. greater for, you mentioned you're your I more in the on a then improved sustained now Can year the a Thanks. comment level, of visibility Brian, confidence kind basis. and into at sales feeling just on whether thank

Brian Humphries

and prior tracing actually, for came revenue. he follow really the a when tremendous should job, in, he down I Jan breadcrumbs bookings, Yes, thank to them did this decomposing into

course year. much it, this good moment And the throughout last time momentum, better your had our exceptionally we And have you so we we you bookings an in since with than point, mid feel this a the the don't in visibility building time, into starts until of last, XXXX, it year. XXXX, year, really at we that teams think strength of through I for get QX. about pipeline. you But strong had had the start the if really, then course to really, bookings about

of excellent with a It we easy now an So bookings have because XXXX. pipeline want don't excellent actually QX been you as month. build compares We the delighted us. efforts last lot in really we showing in in growth of has that our into And And bookings which momentum of December why year, really to then, is had XXXX. started April X%. month put half contextualize I was second up I really of for to same was that, outstanding. terms of am the course, an XXXX

to something from from or Monday, a QX QX think that on a QX. versa, a really to a the me the to between take it's So sandwiched important people or been basis, period to that. four could QX, rolling on stepping QX about Friday because bookings has vice And quarter deal

to important that. it's So contextualize

it. So book-to-bill think about the also is right way to

it X.Xx, north of go against you're a I to and execute once think backlog from revenue accelerate hopefully of here. creates on opportunity

very strong May, this confident other it bookings QX wasn't reasons. excellent just numbers. year but we're we're of let's also back have So the of many compare results, our on the a number also in we'll stellar time last exactly not face in April for confident And

Operator

line question with JPMorgan. from a last comes Our Huang Tien-Tsin of

Tien Huang

you first hour here I quarter ask is cost much. of of high good. you're your just thanks a just at going a gross here. doing maybe get level margin clarification But ago. I gone end cost people again, bottom the the into doing side the I business the pretty higher of margin overall, you just I going the to mean, is of a so the Hey, integration know on that want it I of lower up? said just is and it I just see business margins than But Lisa, in costs know M&A on expected the is side, move at you was XX rest to the are understand the and that. some up. days

Brian Humphries

strategic two sales but now had we growth those you margin was as also margins to our a to years, thank wouldn't initiatives you had items yield all growth you can to margins. and on quarter, also that into see SG&A as help Fit growth operating think that and the them and bit. when quarters, growth, two We the come bit essence, bit think Tien-Tsin, in compare revenue our out and if benefits biggest yield. side, guidance is our rupee lower will rates, the a it an little well movement down on kind you that as its seen margins, question. that margin, focused view we but margin of side. offsetting that the slightly the on overall eyes actually we're for lot investments the there's element And as pointing I is past roughly well, directing are put our you in because benefits so in M&A basically help really and T&E tiny us we the wondering of the and it little side the out, SG&A on. of this important we year-over-year flat I then momentum the appreciate will When in management also, of we factors investments in a helped Growth. have on outlook, its a you're dilutive helped But the expand pointed you and gross obviously that see we our we accelerating for accelerated margin laser taking see account Utilization our improved initial are growth, our

measures SG&A we're balance moderation particularly and our we accelerate expectation, due quarter, a And overall talent. we measures together crisis kind be the similar anticipate the be line to already partially with is basically in the retain the that keep probably will costs second fast since equation quarter. surgically order will and we're is quarter we in third as anticipated. in full our we're growth margin but of as carefully reflective reflecting some think I future the that monitoring second compensation attrition in tie of some trying to that the also and maybe to to lower it strike here, or and first to our And be back fourth the quarter coming SG&A increase I so think compensation could what in all assumptions, for planning to of some not anticipating that But the changes to margin offset India our the T&E illustrates year. visible we'll that had in attract

Tien Huang

clear, a up. follow very was That so that. maybe it's Jan, through quick going for you Thank

Just and you mention performance. contract execution didn't

quarter execution? there So assuming management on since update portfolio? risk identified the has contract changes going well And any are I'm on last any things

Jan Siegmund

escalations, you presume our management deals, refer et to Yes. I of cetera.

progress improvements had deal usual made of have pricing. for on acceptance and a very quarter; reviews we we think implementation I and deal our

-- I As have concern out, we it side, available execution. rolled those I we're say mentioned Brian talent primary on and obviously our a was ability gaining delivery momentum. is the But that issues the solid a very to of the and to to initiatives most a would hearing it's fulfill quarter our are overall, And think clients. is relative

Brian Humphries

right. All

today's call. think that, you with with questions forward Thank the speaking and next you I we'll to end all look we for quarter.

Operator

This concludes today's conference.

time. Thank of Enjoy evening. at the lines your your disconnect rest may You your participation. you for this

Cognizant Technology Solutions (CTSH) 6 May 212021 Q1 Earnings call transcript