CTSH - Earnings call transcript Q4 2021 | Cognizant Technology Solutions Corporation

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Operator

Ladies and gentlemen, welcome to the Cognizant Technology Solutions’ Fourth Quarter 2021 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn this conference over to Mr. Tyler Scott, Vice President, Investor Relations. Please go ahead, sir.

begin. may You

Tyler Scott

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

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

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

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

Brian Humphries

year-over-year adjusted am IT our XX% digital, was currency, transformation the Throughout accelerating you, was on XX.X% grew that clients to this, of solid of Good margin year year-over-year. challenges by you, up spend revenue pleased with adjusted cost and have and the full fulfillment $X.X our margin constant key we to operating shareholders. which was Fourth and delivering therefore above XX.X% digital I skills quarter execution, was of led attrition that our quarter XX.X% guidance. commitments line in guidance. Fourth Elevated billion, operating be Thank our pressure meaningfully need a Tyler. high end demand Growth to accelerated against clients in XXXX, direct consequence in everybody. afternoon, had carefully for another digital services. however initiatives, is creating quarter navigated. revenue

the globalizing we and also against our with be progressed digital initiatives, brand. repositioning capabilities, company, key solutions the our insights leading Cognizant quarter, the clients strategic our and industry by During helping greater including scaling successful

with Turning recovery of the to This now benefit X of in Samlink. percentage growth Services related year-over-year XX% includes continued to segments, from currency. quarter the constant an in charge fourth Financial prior our approximate industry point year impact

As our rebuilding on strengthening solutions sharpening and you our strength services teams, Financial segments, and industry have our market know, been shifting portfolio by to engagement, priority leadership focus in partner Services clients. in attractive refreshing our of client-facing we our more

expect progress We to XXXX. in build further this on

is have of a partner, momentum As where we great we digital clients, this engagement in in larger as have we our this. sustained their banking reposition Cognizant primary regional as banks. complemented provider renewed transformation KeyBank, digital just example with a

development transformation in grew engagement reimagine to currency. customer-centric now modernization their core We investment cloud. pursue by seamless firm, than a of principles. their And us solutions and we active constant transformation will to digital leader and Unum, customer enabled their customer global processes, life, and half largest see client, digital partnership Unum. with Royal front-to-back extending pensions driving our the including analytics. revenue their UK’s for services enable than X.X% analytics. and and In enhance customers their is our and customer In benefits, insurance journeys a personalized connected on These to automating their by further by XX%, digitally approximately digital digitizing products remote by more migrating to by and growth are with self-service more increase by focus mutual associated XX%, and long-time cloud, through we relationship year-over-year data to for disability demand digital and application insurance, the healthcare, group portfolio experiences agent transformation, London, maintenance partnering continued application cloud in existing

competitiveness by increased digital have core in domain solutions, healthcare our our investing substantially and expertise in platforms. We by and modernizing partnerships,

in in TriZetto seen XXXX. product which our continuing grew XX% business, We momentum have

We new the our supported business. approximately solid increased footprints number see XXXX, and million. payer commercial across by add in of continue to members momentum healthcare and our We XXX to overall platforms provider

moving initiatives improve partner is reduce For cost, instance, customer national to and payer for and Humana’s as clinical a of employee chosen the agency, personalized their members. Humana, the These cloud experiences ecosystem to large marketing a integrated Cognizant will and modernizing help their has and and satisfaction, enhance delivery legacy transformation.

has which innovation. product also patients healthcare insurance which providers, their Through management, firm, improve advance can understand by leverage Reliq patient and providers. fit-for-purpose to solutions a rapidly will design management life patient and digital augmented AbbVie on their digital help with chose their transformation partnered implement finance safety in us significantly in and digital-native utilities. is digital tasks, global feedback care and strength expand and Reliq in growth engineering, line automation products. support Cognizant intelligent to AbbVie across patients Volvo capabilities. and needs the continue our harmonize services in example process help care XXXX resources, help will companies experience support and consulting accounting fueled and better a automakers continued gain energy design hospitality These and of providers our and client share. we the to to support in journey, is In success the Within to streamlined momentum their growing AbbVie, in that procurement momentum intelligent hospital processes human-centered We we across health growth to incorporate and and networks automation our improvements company, like manufacturing, therapeutic a by biopharma digital extensive Cars services industry been of operational outcomes. This for operations, portfolio. transformation. risk and will the care their excellent products with momentum capabilities ongoing broad and platform care travel care turned and to great of us telemedicine digital in Technologies, support in deliver and our health BPO client process management of which Health and outpaced care helping to deployment managed organizations, business across areas Top have set next-generation growing leading range Drawing care global to a sciences, logistics, their

respond manufacturer, leader to real-time this our success, to we sensors water by since pump Grundfos, leakages. at selected SAP on perform and illustrates to a gather data establish the to largest from intelligent been analytics Based perfectly caused and work digital system global world’s credentials. predict the issues platform growing pump Grundfos Our Cognizant initially in to enterprise build have IoT-based on selected a S/XHANA. based an prevent, technology and modern

Finally, we in where communications, past have the and over in media particular, strong saw double-digit technology, three growth we strength in sustained continued technology, quarters.

industries XX% digital, our XX% to fourth year, the We has and across been a plus was XXXX Full bookings, been which quarter growth. the has in healthy geographies. now Throughout bookings strength, Turning the year-over-year year consecutive growth mid-teens. quarter of grew by ratio in bookings of XXXX fueled broad-based our which X.X. second entered book-to-bill with

hyper more it continue and demand secure, employees QX. our customers heart mix I of and to to at efficient, company Continuing expectations XXXX. digital in responding digital is automated, represented our XX% whilst strategy. to their of the and robust Moving capabilities experiences. expect also Clients macro indeed, throughout innovative, of demand the remains agile, to environment, to the embracing for personalized operating our are Digital industry revenue scalable, become models scale

the quarter, leadership. and briefing, industry of of a an partnerships, investor XX% we in leader in become engagement it we as during strategic industry double-digit and were scalability, also levels to we client revenue named in capabilities our higher reports. greater our transformation years. the digital believe leverage digital credentials, skills. As in intimacy not as Accelerating partner our that during strength factors advanced coming and digital only XX of recent margins employee expertise we client new revenue the on driver They company’s XX% improved noted highlighted is can analyst Reflecting digital fourth projects growth fosters recognizing

unprecedented to or key XX% the skills. reflective attrition basis. industry demand/supply in digital moderated on annualized are trailing industry-wide Moving talent, imbalance now of a basis about, on you voluntary the quarter accustomed to XX-month an phenomenon Fourth an for competition on little hearing a XX% to

As a trainees reminder, when including entire corporate we and measure BPO. attrition, we services company, count the IT across and

and We whilst our focus on rewards. mitigate attrition have intensifying and professional promotion efforts total employee training, development cycles, aggressively been working to levels,

upskilling. promotion XX,XXX in cycle heavily we to employees India, XX recruitment measures than and invested in and XXXX, moves to our a new compensation establish also retain job more countries, revised program campus continue During revitalize across facilitated

hours completed associates learning XXXX. courses in our fact, In consumed XX million and of XXX,XXX

learning in by progress increase significantly we I college meaningful hires on XXXX, Brandon plan delivery college India, Given our in to add proud hiring we India. brought our HCM from India. XXXX development won our awards by acquisitions recent XX,XXX number are headcount also XX%. in to us approximately excellence considered graduate have We pyramid In we skills, that XX,XXX have we attrition in hires often added onboarded we accelerating company graduate Digital more firm. in to years increasing XX,XXX incredible from XX research Hall correcting than and independent a Group, the in leading to compete elevated offset the analyst Cognizant. in levels record that up made In the XXXX. am in say XXXX, have and talent of knowledge for by allowing pleased to

of and am engineering and our completed and of global firm our extension the the global This we software more digital X XXXX. in Lithuania, designers our United acquisition by fourth XXXX, our Australia, in the delivery Kingdom, managers Canada. complements product XXX acquisitions In in proud expands recent engineers, I and against announcements adding During of footprint closing, This and strategy than development consultancy software North our recent product product quarter most extend indeed, Poland, that America. execution delivery UK being Devbridge. capabilities leadership, our network

commercial a reestablished healthy book-to-bill ratio. and have We momentum have

against our executed teams commitments market delivery challenging despite labor conditions. Our

Our our meaningfully and industries, international Services such Healthcare, UK as has two key accelerated. the Growth largest Financial strengthened. in markets performance has in

digitization agenda, extended has in and portfolio never strategy, been and have brand indeed, our repositioning. people we been internal digital significant has made our progress Our our stronger and

For several sessions not exciting also from learned future. come, as virtual to from building. have company I we intimate What small how is our a virtual as large path but the employee quarters an see Employees have long far townhall have is in sessions groups been that of with our I employees. pride only these now, open-ended well holding meetings clear

values. and This execution Our and focused has momentum prolonged employees of despite the a of agenda kept commercial recognize commitment us purpose ESG also vision our our distress strategy, our to executing pandemic. consistent our on a COVID-XX purpose,

the India, belonging our around Our evident to briefing. drive ability the well-being to our Cognizant to efforts intensified new world areas and in the ESG-focused summary, culture and our we allows in with November approach advance In in in philanthropic Cognizant, outlook with communities many is broad-based commitment fiscal execute along in to against throughout report. our our investor financial ESG in and initiative our $XXX XXXX in initiative other inclusion, year at multiyear equity COVID-XX us in presented covered million progress diversity, confidence a our health of Combat

before quarter the and that, with cover to Jan, take will our will your we who details questions. the call over the So I outlook of financial turn

Jan Siegmund

momentum, good by projects bookings Thank and you, with with and customer and XXXX We strong solid finished driven Brian everyone. demand. the year entered digital afternoon momentum

constant this basis $XX.X related XXX increase at This For representing was to our engagement to an the Samlink the will XX% remainder charge billion, of points of for my the the our basis proposed includes the contributed of I currency. Samlink of acquisitions. QX XXXX XX% The XX as impact growth. full revenue contribution points exit year, remarks. in from customer from or subsidiary refer

and XX% approximately year, year-over-year of also representing or and XX% revenue. XX% grew points constant revenue year-over-year impact represented digital XX.X% recent XX% basis Samlink approximately from billion, of in growth increase revenue. revenue represented QX, was the full Year-over-year basis points XX% total of grew growth over $X.X our of acquisitions. of XXX currency. In total an For includes QX XXX revenue and digital over the

begun found with bookings be Brian the and which full mentioned, pleased we in our we have quarter In were the XX-month performance the As bookings, for year. trailing in QX, providing can unintegrated renewals presentation acquired from the entities. bookings early supplemental on modifying Investor We and posted our our overlap exclude bookings enhance opportunity website. it to took include Relations to from definition, to

based were QX book-to-bill XXXX, approximately billion, trailing of our a definition, representing of on XX-month X.X. As bookings revised $XX.X

will where points revenue growth segment to includes XXX in which a Samlink rates the be impact. on of results approximately Moving positive fourth Services provided year-over-year all XX%, constant for increased Financial currency. quarter, basis

in digital and revenue we recovery expect we revenue During are In positive the insurance. within increased and business, life our driving client driven our capabilities, base internationally continue. while invest where XXXX, banking sciences. our saw on our quarter, profitable we North Healthcare focusing banking broadening and growth Across trends grew and approximately to by double-digit single-digits organic in continuing American growth. into insurance, high to X%, talent improved

driven integrated the business in Our healthcare solutions. by provider mid payer single-digits, and grew our software

by client provider and healthcare consecutive surpassed briefing us life investor $X payer, growth. travel utilities, revenue growth and capabilities in we As energy which that was and continued, levels. basis during now provides goods again grew in consecutive third our of years technology. healthcare quarterly and Retail across and points the banking, annual resources in growth also sciences utilities recent double-digit manufacturing, and in and acquisitions XX media of above technology strong Revenue by QX, double and approximately performance we X% see points points quarter again the November, work in core with from for in grew believe also drive digital-native XXX of Products space which XX%, currency, America completed Growth America billion XXXX. sustainable and Growth technology back approximately acquisitions. perspective was technology sciences, year-over-year, opportunity market including year-over-year, our the strong growth portfolio. American the our included growth driven grew products industry North resources, revenue revenue seventh included increasing the was logistics, we attributable perspective, strong quarter ample and and in Communications, and outside energy impact. pre-pandemic Organic revenue Revenue led large where discussed Samlink within momentum and by of was growth grew business, recent revenue XXX From communications, Revenue saw North by across revenue unique and manufacturing, financial basis intimacy double-digits in UK, our in recently clients we a digits logistics, grew life geographic a growth has consumer hospitality continued the and double-digit segments. year-over-year also acquisitions. with to North growing benefit support of to provide in ahead. a XX%, of opportunity led and our services, XX% constant where to segments. our driven with media

experience in Mobility, to growth part We ESG also driven acquisitions and Servian in continued and of strong Germany, our respectively. by Australia

basis approximately year the driven as points, In improved QX, Now, operating quarter. in in no adjusted to prior margins. moving there our on On period. margins the Samlink XXX margin the year-over-year non-GAAP by charge charges adjusted by basis, were and GAAP XX.X% operating a were primarily

of and last discussed majority X, quarter. recruiting we margin impacted which October merit margin. for elevated, our increases elevated attrition subcontractor, were Supply the employees our quarter, negatively has also costs while chain in delivery and have As recently impacted acquisitions other completed effective negatively our kept constraints the

non-strategic spend, pressure. revenue SG&A to which moderated we also partially labor have offset we While in helped invest drive organic and cost growth, to the support continue has

expect both the GAAP and do in Our the $X.XX. end adjusted EPS to guidance full future. XX%, we from GAAP benefiting QX below items low diluted in which range, and were quarter year discrete repeat the adjusted of tax rate was not

guidance. short-term million, in the $X.X full cash $X.X net approximately resulted investments or over balance income. with $X.X of This of flow DSO sheet. DSO cash free sequentially of declined net support of quarter with a Free flow to represented day $XXX turning billion. our and ended was will days cash cash a the billion cash and days of net flow billion XXX% X by QX cash Now conversion the free prior X year of and in We conversion line was to strong XXX% which key in representing a flow lever remain income, medium-term. of by year-over-year. XX over

XXX,XXX for spent program billion framework returned acquisitions. $XXX approximately million on and $X.X and we of deployment QX in XXXX. cash deployment annual spent fourth In share the million consecutive share a capital framework, our increase announced dividend shareholders regular cash we dividends also through increase our with During our shareholders third repurchased repurchase under quarter, consistent and at support of the in on returned since dividend, today, acquisitions. $XX $XXX and November and shares In our dividend we’ve in our XXXX was to capital XX% billion our to million $X briefing. we repurchases and investor XXXX, through introduced our This quarterly have reiterated initiated

in least to at expect million also other return share We through XXXX, to market and $XXX factors. conditions subject repurchases

to Turning guidance.

revenue $X.XX XX% of XX.X% we year-over-year to currency. billion, to expect XX.X% QX, billion in of range representing the X% $X.X to in constant For growth or

negative currency assumes inorganic basis impact approximately guidance points. will of Our XXX XXX a point and basis have contribution an

medium-term high year, expect full our the of briefing. financial XXXX framework, consistent be investor our expectations growth November at to towards is which with the the we For revenue end

to XX.X% currency. growth constant XX.X% $XX year expect We X.X% full or billion to – representing X.X% revenue X in I to billion, X.X% apologize, of $XX.X point representing to

subsidiary, February contribution XXX Full inorganic Our from includes which was includes also inorganic points impact outlook impact the acquisitions. on XX approximately have points This assumption points Samlink XXX sale negative future and from currency X. basis guidance from of basis basis year will assumes revenue. a negative our completed the includes

with end XXXX the be of briefing, expect framework. financial investor November adjusted margin. the Consistent our towards to at our lower on medium-term we operating XXXX Moving to outlook

XXXX, year full assumes expansion XX.X% For XX midpoint of guidance XXXX. basis at approximately to margin of adjusted our points the XX.X% operating from

margin seasonality we QX our In typical be below QX modest to expected in QX, XXXX, performance which includes driven and are seasonal while guidance. QX by pressure costs margin not are While factors. expect year and in we and expect QX compensation full providing guidance, quarterly some sequential stronger we

opportunities supply assumes career increases, This that in approximately and will use side subcontractors. to Our into to invest elevated margin guidance, industry to SG&A our through will Similar full response, outlook which continue the hires non-strategic college In we targeted $X.XX. in XX,XXX and continued attrition development merit including training. talent, help year XXXX. to for EPS constraints we $X.XX hiring is include term. the will recent adjusted continue and to of of remains graduates, this some near XXXX, spend pressure to lateral the our This leads continue moderate of offset promotions,

Our of $XX assumes income year outlook full million. interest

outlook assumes tax Our approximately average and rate also of XX%. XX% share of a million to outstanding XXX

cash for free net expect flow we full income approximately open represent the With we that, year. will your Finally, of for questions. will XXX% the call

Operator

comes Thank line you. Essex Brian with of from [Operator Our Goldman first Sachs. the question Instructions]

proceed question. You may your with

Brian Essex

good resonating a attrition question. peak the at taking first maybe on Maybe share here, No supply over with the Brian. few in we share question, we demand environment. the the you well point? But of month to most and what in for as level into the confidence of with start side the this guess, have Hi, that exposed attrition we trends quarter, employees? thoughts you this initiatives right be may on And I side, seem And afternoon. thank be sit you could on a to seem you

Brian Humphries

the in statement I demand lots that is and is competition me. a That’s to There etcetera. a add basis. are are honest, I’d to course but robust for this in year. year talent. there expects that. be to it’s circling Hi, January in there my to unprecedented slight up of Brian. a coming early a will an of on annualized see But Yes, expecting – is that what in line the call We’ve coming trends been very too one seen support we not moderation an undoubtedly, am for that in, mix the year perspective continue sequentially natural with environment. to periods, for trend the concern we seasonality bonus has

of as as in implications we’ve implications team been and add to recruit what impact to we’re as of the financial, too employees, and out, And able through the effort it across to core competency and try compensation try of we pointed elevated is because the around this terms attrition as as compliments the regard. against of and work – employee Jan think that efforts my we’re lot a recruit attrition hard a well But naturally course pretty out, And a to So There as I’m our in around on obviously, to hearts of net that headcount can. levers a the is implications. minimize quarter is people is script, our to pointed XX many in of going business, we’re measures, to mitigate Jan we’re as very XX,XXX I delighted expecting course, year. commercial in did using year-over-year, doing Cognizant minds. try I the critical. of lot which and

continue back and of giving our we on in confidence double-digit just is and get such top and cycles career celebrating them optimism course, strong path degree I of about to by a And things swagger think success us up essential potential, continue of other growth, into helping it’s does. think and we’ve for the year. company employees the growth promotion that, course show which, and and which the to way of to post revised support the

elevated But task is as through we months, of really very be we’ve In added that attrition of seen may, this as the a the our a course with run peers, been retention to of you’ve last place in and leadership X, it more will and engagement assume stay year. force. it’s the elevated many we for hands-on recruiters, put a down me team. We’ve entire lot early. spotted the through X So efforts

Brian Essex

out you scenarios any maybe to Great. that. for that is versus Jan, track And margins year? forward maybe appreciation rupee the with the the margins the and as might we thumb see helpful, going how impact upside That’s follow-up frame of you for might And dollar FX? you thank of rule could to where super for there

Jan Siegmund

Yes. for call, I might my question as margin the imagine, to in first guidance cut The – you so have up my don’t the to our we work achieve guidance want out that we that you We are but compensation But we are other talked in about give. confident feel as it. our know, portfolio measures, impacting factors positive they about factors. a negative as

I point help the drivers some a that of So accelerated the so revenue obviously is that us, margin are to out want itself helping helps. on

Our our continues profitable business traditional business. be slightly more digital than to

– digital college on structure progress accelerated built delivery into make into of the And our graduates, which will overall over built our is digital we improve with structure cost our continue So is time. plan. in solid bringing growth to cost

underperformance And guidance. on of number any to over negative factors So order or achieve positive yield our in we offsetting obviously, rely could outcomes. a or

good balanced, say about to we our So XX I feel XX-point outlook.

Brian Essex

it. you much. Got very Thank

Operator

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

question. with may You proceed your

Lisa Ellis

stuff question had Cognizant. this to I a the how follow-up guys. attrition, retain the a been you Thanks, running driving steps been the few what top organization the attrition to key taking have give leaders levels more are sense in your that of you’ve of Can of the time and Thanks. senior transformation? some levels Terrific. Good but related levels here. for on

Brian Humphries

Hi, Lisa, it’s Brian.

deemed about be The much some I’m moment return very me essentially results junior the normal majority on concerned And with of is let our all of at usual. retirements, this say the leadership of size, some other honest, the what of levels that. based business attrition Promotions, our address talent, and and refreshing not at if at To company as we’re senior organization levels financial a So at etcetera. our very certain would skills. attributes, is I in time, necessarily, that. in

very stage. about the we performance but at business collectively. So sometimes operations feel We based as the this good more intervene of this on motivation usual classic team is

in that strengthened run analytical and teams. of in the together has all than teams, team feel I we work instrumentation page. been We’re in here certainly I I better on have in their their terms to internally, teams The that forward all where rigor HR in brought this you in is feel since right as terms leaders same I tremendous team the how have refreshed his tell place. certainly we’re now, etcetera. The I’ve that will I there, done say put company terms Jan any the we at some time of of and stand have

feel we lot top we’re our feel a more so or not we are that I So a how certainly things on just comfortable going, of and game know concern.

Lisa Ellis

about your trying from going demand different as follow-up talk business as environment do Okay, well, pandemic looking clients back the of are bit the you sort good. with for can anticipate And Brian, get to bit emerging a maybe is to feel the XXXX, forward what on then a you clients demand just you environment, into you and just as usual? a little or as engaging little you’re

Brian Humphries

passed, think now, COVID that portfolio we and stronger for were beyond are organization, well certainly hesitancy to by days. good from driving as journeys digital it really focused, we our they Yes. before, it’s well initial approximately us send models, or at of where a are extremely been some honest, this indecision, and CEO the And X work ago high-impact mean, Look, I of course, clients it People very innovation their really be enemy because allows for of transformation a for is us don’t for in moved stage. is on clients are the these I sales big work is have than to have ever evolving agendas, business which the indecision people have. a driving on anybody far years

are if that client see world, Now clients, obviously, terms in consumer-centric, cloud and to surprising migrations. with as deal built on on clients leads AI I it’s class engineering, you enterprise throughout will, analytics, user experiences migrations. always how of are the course, around where they to And discussions different of applications, cybersecurity, digital

is to ahead. or it’s to pricing and and continues interest expect of towards classic I think find, very huge honest, be course, more And lot innovation scale, times, very the skills non-digital what evolved the really, analytics, is, more seen like them. of in that therefore, and And to industry data, that And what towards They push providers. see accelerated consistent muscle to hyperscaler a strength, traditional digital strength cloud, really just clouds, and vertical recent hyperscalers, one before, client certainly strategic a certainly modernization I willing engineering. the that and initiatives of in allow from to the with are terms work. see in clients Financial to Services we of But Lisa, efficiencies I dynamics, our but for throwing financial more years areas muscle the spend accommodate intentions in shortening course, and certainly we’ve innovation go also from perspective, a towards more not of certainly vendors, growing SaaS Healthcare workflows, ensure major my integrated cycles, thing migrations. in but are, cloud Cognizant which they strength cloud commercial

Lisa Ellis

you. Thank Terrific.

Operator

from with comes question of the next Wolfe Darrin Our Peller Research. line

question. your with proceed may You

Darrin Peller

the pricing conviction level power When us guys. around right confidence it have we for really growth, your than you ahead. little the looking does year modeled more is Thanks, had that wage revenue obviously, the inflation. outlook, in at give a able offset margins to coupled mean, but with your I initially direction, your more

just of pass as is – way on linearity if have color love environment point hear model need don’t I’d not of the a side. whether in in And in quarters? – that, advances decoupling terms maybe any this the through to to you into there then more follow-up a you’re you’re to to really greater like there you past are on and the other the been able on or whatever quarter couple business all next in the at So price mind, that, there over

Brian Humphries

at stage. I’ll By start, Jan. in all jump means, any

Clients will the pay frankly, for digital and Lisa, first somewhat resources on to for mentioned And digital. So between side. as her and, innovation pricing work just question, stable. Darrin, of in up and we differences skills availability remains I’ve based the see all, non-digital

tend be that been to in Of advance. industry where and MSAs have an agreed happens cards rate course, that people in to have

on those other companies more for lagged pricing, and year. our pits we the fact a opportunity digital the big pricing have then rate as have long Cognizant increases into with to put us pits deal, business as provides trends right that as XX% of different the us it So that drive a we last desire factors intelligence, as thing naturally and power, pricing the And given I’ve pricing, their to us strategic workforce scaled to of see, by client but card, ultimately gross type our deliver. price portfolio well, certain We guidance for competitors clients also the interrupt course, of cards, as some us helped The and margin the well and is lot projects, certainly and approximately be own vendors, inherent coming can the versus of requires course, talent-related against work get because the solution question, like both skills in margins classic that’s our pricing, earlier can of margin a of around in skills. see. inherent But I’ll effort one just cost non-digital say said it’s as we digital we question, it’s sell it rate your around arguably a in increases. labor

margins outcomes. us allows shift the delivery headcount pyramid. more as as that of well, optimize offshore as year, In growth and to growth of the as terms about and delivery, per in for around there to our about margin, own we decoupling revenue more the year-over-year, and a revenue our of last dollar and automation So sequentially, leverage on so-called growth our has are focus towards That can at you your the mix to hurt to well dollar services continue increased course per us versus employee, point company or rate points can offshore help client growth. X change to pyramid, industrialize many selling average evolving it it from delivering course, including delivery. decouple headcount company, there question to guess, in can employee. Holy factors also well of Grail I other the X but Look, the to play revenue of, as Specific our better

here. are multiple there at things So play

services company. a are We

being to a committed services company. We’re

you templatization, of than certainly scale that more industrialize can, scale We we our But leveraging optimize in familiar will model. end at we where will automation, with the and cetera. try our delivery are the headcount, we are And to guys et we revenue AI, the day, as and headcount business.

Jan Siegmund

really the taken factor. covered Yes. color about sources view the Maybe, expansion think, not a Brian, expansion the I bit but but little pricing of factor balanced the of a is margin we And on pricing because have it’s here. dominating on the a thing, it, margin you

the elements higher business natural of towards have We like shift margin other business. the

We now revenue of meaningful saw scaling contributing a We quarter. at and SG&A margin have growth actually this rate. in – of a the to you slower the growth fourth than in way, it’s a slowed

to He we see to We initiative our success have permit year Brian – impact is drive had bringing we the and And cost that of this help variety of to about graduates permit, this expect that of refresh that that college college so contribute next as from to factors and – we XX,XXX planning we’re talked will our on. also to delivery well. our year graduates a onboard there hope delivery streamline mentioned that it. is and

but among factor only pricing a one is so And many.

Darrin Peller

of mean, other back time, alright. but I’ll I in guys queue turn the and Okay, let in thank interest just questions, I have you. you

Brian Humphries

you. Thank

Operator

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

question. with may You proceed your

Keith Bachman

could ‘XX a had could. and about growth during two, I if I beyond. Brian, for you the and little you. healthcare if talk thank potential Hi, bit

XX%. are healthcare of to if just was to would consolidated drivers. getting factors growth? the growth of able a some would think on TriZetto of not, organic presumably mentioned key one You the being be contributing healthcare what break XX% continuing, I basis, But the lead Cognizant kind to And to that improving rate its

just could you If then after? talk ask about margin question and I a a little that bit have about

Brian Humphries

continues healthcare certainly U.S. is our of majority then of double business Yes. provider, those and global the the nature ambition growth. as our client of growth. has payer through well. which feel business, and Look, of momentum being intimacy, clients that, of nature that we then XX% of about outstanding about market was less In life grow capabilities, Analyst than and healthcare the both our very within year the sciences QX our have of payer is Meeting, talked vertical, healthcare our within life business, in the coupled sciences November digits. which But the in to the the accelerate great the our course, bookings frankly, a and it’s really the I nature course, business, vast product we to our healthcare course strong been,

So life bit all opportunity, And year, about candidly, as momentum to scale we this little a then continuing as sciences accelerated well. have device we medical on are it’s getting biopharma. the after in there

In TQS track. Zenith We some the TriZetto lot well on of as have sciences as in getting the targeted is U.S. back last a also the recently. business seen the in including it more about business, life acquisitions healthcare vertical years, few do

in twice in relevance, briefing, November that of or the growth in and growth stickiness in terms of And again have doubled of in pull-through XXXX rate XXXX. was XXXX client opportunity that’s margins those the in terms mentioned over good I rate the approximately of Cognizant we accounts. XXXX. intimacy our think I And and

motivated into trajectory, product-driven to I the and then have we are that provider TriZetto. where us. is be So, And pretty side got scales getting well to essential with sure higher but back I very as making honest, growth am of about a that payer

company. think a gem fantastic I it’s within the

can Now the different we U.S., different in business terms we select in terms can that franchise, and to in our ecosystem healthcare terms scale into as both of market of we explore control a the possibilities how international within continue points as healthcare got within well growth the indeed we back, markets. into applications or of scale exploring Canada where

focused do if more will right, the we we if think on. I drive is what growth, than that and market that’s not team all market of growth,

Keith Bachman

Okay. Perfect.

you. for Thank you, Jan, Brian. Now

the net just do On think positively said models? suggest flow else to you or flow will cash income. in I perhaps for out taxes, the other forces anything But work think year, at ‘XX If you again which flow be cash are should do this aware that call free negatively of capital, either kind divided free margins, to some Xx want margin, that whether the free flow cash by there impact be is free cash that our want you not flow working for of meaningfully. I revenue, cash back-of-the-envelope, down I you ‘XX, free would we think, CapEx, in might that

Jan Siegmund

which good I can did be no, think around in little had I to thinking better a a mentioned in flow bit We give year, the the this little – quarter of free very The our free. you around a background my XXX%. conversion, cash I script bit

we could all now capital more think see with nothing say year it’s a next the But basically strategic investments internally. increase slight major. these, to in that let’s maybe that I expenditures some in is related

on our our cash We sources focused of laser from be continue to clients.

DSO blank progress year So, I we will honest, remain. quite am drawing cash. on this focus be good and on to that a made And

taxes. – think cash on I to going is be

tax is major on tax year, I to be no similar so fairly think going this the side. to variation

evolve flow So, that’s kind cash us. to how of I for expect situation the

specific that it. maybe drive So, nothing slight to a on capital expenditures comes mind, increase could

Keith Bachman

Thanks Alright. Okay. much. very

Operator

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

proceed may with You your question.

Tien-tsin Huang

Thanks. is to a we standpoint can cyclical that seeing from some been headwinds from of the to the company. banking been I me just think side. a how the behind competitive there seeing are services, have there, Hope pressure lot curious – and you have ask spend Great. that know financial a far center you money bank guys? safe Hi. both hear I on to you I wanted in amongst say general of are standpoint? feeling But

Brian Humphries

as, of the we a team series doing, on leadership parcel results top and a the delivery constant company. in both last sharpening I we There question some perspective, from benefit the we clients, my some is the exclude back course by for a in recovery running from pace of from that’s year, compare to QX part has the a accounting commercial as we of points I team, a has time. of in of this year’s have the focus been a few Look, the currency business. recovering back on been ultimately probably of quite but highest working charge the refreshing financial And in level things on growth the XX% in years. earlier, the the if as growth, have been well had way, quite had of year-over-year of And got have as our been well constant the world-class currency candidly X through our services

to you the if refresh leaders Sometimes, you you have results are getting not want.

am now at We started level And have executive their ecosystem. growing a there. client-facing to and with the a hyperscalers added engagement that partner competitiveness lot our cautiously committed industry of to the all financial with optimistic cloud while focus bear cloud around or of fruit. on a has I talent course, of collaboration a

We are leading with more digital.

We augmentation are or type work. I leading interviews staff less what with would more call

will course to of competitiveness in the margins for increase I getting the think better continue that. And We year. are our

quarter Of I closed the ultimately we and calls. anomaly first I that have work. team we the can we But year, believe generally, in talk the the we that have was which last a great decision will took which sale, feel and an that have around in subsequent sequentially course, Samlink yesterday, to with beyond, compare done year-over-year

the of both XXXX, also am of refreshed We a regional if full those, working expect back able some global up of larger And not with that will that the are team to banks. as in making I recovery. some but course, across the show around we leadership I numbers the are in crack well. progress banks, suggesting be the to our continued we will strength yet. are But are paced am improvements optimistic we well

I hard the as team So deserve are track the in we feel worked business. have generally, and momentum on and though right growing

Tien-tsin Huang

Understood. Thank that. you for

Operator

question UBS. with next of Kumar line comes the Rayna from Our

your question. You may proceed with

Rayna Kumar

Jan. Thanks my and question. Brian evening taking Good for

sustainability that have quarters bookings two talk above had now XX%-plus you the you about one? growth. as of consecutive of So, book-to-bill Could as well

Jan Siegmund

obviously, Yes. strong that growth, the investments made supported We by in the and It’s that bookings by market. it’s see that mid-teens XX% we for year, the demand driven, had the we full organization our is broadening M&A we sales are market with developing set this. solution aided contributing that capabilities. incremental a that by it’s And our well into and as ourselves solution to as capabilities

very units, split, are which path. and are ups is good business continue smaller been, ratio optimistic lean by downs it that we that a a back, broad-based, assume and but as geographically we we seen we are has has bookings similar our on has is to to book-to-bill really you going consistent about general, has are in maintaining momentum fairly been saw when of where broad-based, have development. execution, it So, mindset, course, that good basically and consistent very been And been, we itself there pipeline the all news to

Rayna Kumar

Great. Thank you.

Operator

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

proceed question. your with may You

Jason Kupferberg

results Nice here. guys. Thanks

renewals wanted can work Just tell of that on ask to mix XX-month a about $XX start, bookings us you new to trailing in the anything versus follow-up bookings? of billion

Jan Siegmund

of but number it. a is bookings really are Yes. stable, is and stable, really It don’t components number. the the the stayed mix we basically overall not mix has of one details other been disclose the to not of it the We bookings contributing way composition or but disclosing

Jason Kupferberg

Okay.

are or yet XXXX that, on drive haven’t guess $XXX you would talk basis Just as revenue you Can to line that of of that for enough in points a guide follow-up, announced. you deals including revenue of to contribution I just you inorganic so executing the about million I the deals sight XXX know need?

Brian Humphries

for size capable the goals acquisitions, small to team M&A team, strategic and us of we these Yes, stream proven very of see to medium steady course, have a a we continue to our with that. And great in years execute align opportunities strategic X development last over nature. and

we guidance bringing Devbridge you into are some momentum. acquisition are from our of bringing with the first quarter, in approximately, already the can we see momentum the So, already, as

executing we this to be basis yes, So year. feel confident about points XXX the within

Jason Kupferberg

Okay. Thanks lot. a

Operator

David with Our Togut line next question of from ISI. comes the Evercore

your You proceed question. with may

David Togut

Thank much. you very

onsite just XXXX it XX, are in level expectations Can they lowest to the like you years, utilization to tied fell history dynamics? to both in utilization Looking And and Clearly, you. low. chart, attrition numbers. six looks really which Slide the quarter guidance? talk utilization for the are Thank utilization offshore your what through on-site this a at of fell is about and the employee employee X offshore your

Jan Siegmund

Yes.

that week their have the to There some are largely there. in impact few utilization the our has the new in is lowered is bill overall that But the of the of dynamic nine-hour You by right quarters observation. switch in in utilization, tenure. so chart in some our associates last is that lack driven the on-boarding beginning acceleration a by

So, biggest a utilization of downtick was the that are we seeing basically. that driver in really

And have happy a so needs. to bench we kind little of bit are client fulfill bigger to

utilization the see us, are for levels we want at desired So really level of to where it.

David Togut

Understood.

if quick you you offset What a clients upon work? Just price the they are for? Brian, follow-up, are as efficiency comment you price in that you through are legacy – that could looking much And will, your to able costs? efficiency, for seeing lower more ask expand how

Brian Humphries

Yes. Look, embraced obviously automation. we have

than quite portfolio, scaling that we as others mitigating the of our of seen because successful thing from our thousands assumed people contracts continue in the other have taken and non-digital to more out I the arguably as say, will much double-digit mix have our fixed We previously in the have scaled years, few automate digital last price hasn’t downside. been agenda. we is we part you our so successful

time for So, up it’s a street single renewal. are coming you combat every

quality areas and I to and I to delivery. our or of we You have to delivery, effort evolve an to where help a the our said of want have will of area well to as earlier, in industrialize continue try you to lot underway, But able to we margins sure handled which a and try plus regard are company feel indeed, classic the up-sell be in clever ultimately better an modernization well renewal expansion. we the ourselves try and though some as to get as make beyond that to

that good we I are pretty about So, regard. where in feel

in naturally we is we digits. grow focus and gave while the low we that mid-single protect scale guidance the biggest Our to non-digital digital, assume will the And mitigate for business to November, downside.

company, momentum minus. our our growing a core as plus in strategy, XX% focus that’s is and digital, real is which or to Our

David Togut

much. Thank very you

Brian Humphries

Yes.

Operator

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

your You with question. may proceed

Bryan Bergin

Good afternoon. you. Hi. Thank

can across XXXX you some mindful you year? the your Within outlook, about anything expectations industry And plan? be this segments of talk about to growth growth cadence built the the around of as the

Jan Siegmund

question. broke in of you repeat Can You beginning that? the up your

Bryan Bergin

sure. Yes,

the across the then And expectations be within aware segments the of. consolidated year industry growth just around anything context we for plan. the cadence this So, should of

Jan Siegmund

services that Relative of for cadence gave Samlink moderate from industry have you, the the other group, in with the financial I momentum. impact, financial one-time really we typical our – basically have quarter. the nothing the one-time we in I the cadence. first all a think, continue services growth, But that on revenue It’s specify On would sector. just out think had impact over revenue we growth, should quarterly outlook number more, the we I a point to the that I despite continued to growth grow expect we and groups

it’s think to good a if forecast. case So, four you big momentum industry I our a groups for fairest thing build get just a

Bryan Bergin

international your excited investments are Which expectations of outside about to talk the to markets for you most I been this that initiatives a there. just U.S. growth continue has big then focus you for some and drive XXXX? And know traction drive? opportunity, in you, the Okay. about Can in but the more of ones you

Brian Humphries

Yes.

Cognizant’s something naturally and is our in so in look, areas, industries we So brand America passionate much as in North place the particularly wasn’t as coordinated about. this offshore to effort key internationally reposition known am I in a certainly brand. put

country of that labor Middle and across right a the the refreshed our We And lot are think I seeing now. fruits Europe have East. we of leaders

growth saw the this in XX% a UK quarter. You

the of the like also Zealand. It’s relative as of vis-à-vis New us terms countries. nicely and lot we profitability has UK in other year. in for a well of European Our profitable Australia And momentum momentum areas have building through course been

that’s to Australia So, the the to us as That’s are of confidence built in growth and seniority support capability have we their deploy M&A ambitions have to doing what we in the we well. and allows Germany. what team did

last ESG You acquisition year. the have the did we seen in

So our very strong bookings. where generally, I about It year is we a feel optimistic potential had there.

would am We – build have think to success ahead, ultimately, years like in from just have years a this now, that years, to story but I X I looking we the on here will are been to X continue really if for back, big us.

it’s revenue area announced than that not network. and capturing levels to opportunity digital we the that’s I more type fueled work the Australia But well the also across as Scotia. revenue England had. only which where global in most will UK, roles And few historical local also extra more as of Now opportunity, pleased about more see and a be Ireland. Northern Adelaide we momentum requires with an Canada am in delivery recently and the and build-out Northern months, last in the have announced Nova thousands We

very needed after XX% is which UK, grew in talent, to in internationally. opportunity doing largest get this partnership, is our capabilities delivery what terms we the fruits So, visible the in And of quarter. country are market second the

Bryan Bergin

good. sounds Thank very you. It

Tyler Scott

one have time Hi Laura, question. more for we I think

Operator

Stanley. Faucette comes from James question Morgan line last of Our the with

You may proceed your question. with

James Faucette

Thank your I you of looking provided. hiring are headcount number appropriate you of investment? or am as detail the pace able environment? you are of about that of additions, to guess And appreciate you that how in kind that infrastructure feeling very much. etcetera, or address as to side, And an that you guess the And and of level place think in capacity we is color I more forward. the potential Back how for be hiring on all area I of net current about feeling maybe importantly, have have going that, should I part the what

Brian Humphries

year-over-year be engine And since recruitment months, out XX,XXX of course year of behind others investing expansion and we a in been perhaps have front have to months seen have the another headcount problem, We nine prior in six moved net our a you XX,XXX and likely sequentially. period we spotted industry we of fast. got the as last QX attrition

course, given an done has core country-by-country. college our is we you that The an onboard when in Of am we see graduates team more year, engine competency. to confident job than a and a them, subject I have within different for bring will us. outstanding that But peaks

We have processes, tools, capabilities in place.

just stronger well is India, standing have brand the work done, that given in externally some brand internal as and us ambassadors Our increasingly have more happen. not that the more we brand as to company confidence but in overseas branding and make both our of we has

we of mode do headcount meantime, can. accelerating lifting. as in the absolutely we the are have most we The lower productive course, of in is done way we out, attrition, best that. can the So, heavy keep to the And Jan as pointed

in year, And we and if period this will delivery XX,XXX beyond pyramid, XX,XXX, year, progress around XX,XXX. We year the that. made next we from scale try assuming prior and significant have up the are needed,

right me, on have industry, the and getting bullish for position it’s industry, within about am bullish I our headcount balance I Cognizant. the recruitment about like in those. So But between it’s certainly would retention and and to on the more

know if you way. send people, So, them our

Jan Siegmund

capacity, a we in the on to pandemic, make decisions I future. the obviously, will the Regarding model hybrid a largely environment and settle are operating of the virtual said I as think But development we are depending still you know, in we working model. going in

reigniting we in is will cost unusual. the pressures that our So, some of shouldn’t anything equipped and I the margin relative of in component non-virtual bricks-and-mortar, The that be very handle bring to the feel in guidance. reflected to but sense it, think growth capacity well

James Faucette

Brian. That’s Jan. great. Thanks Thanks

Tyler Scott

Great. James, for catching Cognizant you. to Thanks, you, forward in and quarter. up interest thank everyone next We and joining. appreciate look your Thank

Operator

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

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

Cognizant Technology Solutions (CTSH) 3 Feb 222021 Q4 Earnings call transcript