Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, welcome to the Cognizant Technology Solutions Fourth Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

I would now like to turn the conference over to Mr. Investor President, Vice Scott, Relations. Tyler sir. Please go ahead,

Tyler Scott

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

are not, and Officer. call The Ravi today's on our Steve Kumar, of Jan Directors; Rohleder, Financial Chair Chief If speakers copies website, have Officer; we Siegmund, you Chief available have Board Executive on are cognizant.com. of Cognizant's

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

will appropriate call Reconciliations GAAP our the for the reference non-GAAP our useful believe filings other or financial investors. measures SEC. we earnings be during in today, with measures measures to provide financial certain the that Additionally, company's found release information and can corresponding of non-GAAP we

Steve. like With to call over go ahead. turn the I'd to now that, Please

Steve Rohleder

Thank all and thank us joining Tyler, for you, today. you

wanted recent this to changes call myself the Given news, quarter the to we've and for explain announced. the introduce recently I join

North I Executive XX previously Operating me, as Chief served of Chair of you I an and month, Accenture, that of of Chief Steve of For Directors. as those I at Public Cognizant's of spent don't I'm became Health the March Services, where and Last Officer. Group Chief XXXX. Board know Board Executive joined Rohleder, Independent years in and I America Director

chapter. Q&A. I We'll and refreshment Jan will discuss changes then himself before detail. our Today, supporting this share want in we're Cognizant's explain Board and introduce I'd the proceed why process. quarter to our next then results thoughts for announced ongoing excited our to like recent his CEO discusses Ravi afternoon fourth briefly transition Board also to

pandemic. CEO Board CEO. our hand weeks to the various transition, ago, the leader Humphries Regarding the our a was the helped and he want as all capture position short-term Brian as a providing through steady announced company Cognizant Brian resilient for I which thank to Kumar our of contributions, few of associates, On his Ravi challenges. global Board, revenue to Brian and appointed including profitable market large management challenges, a beyond growth behalf have as to steered we fuel succeed a growing

Brian with ensure a company that appreciate March also remain to a seamless the transition. will as We adviser until special

tenures the we in growth with serve experience public to of achieve help As and Board. Independent a in a sustainable technology the proven the Branderiz, finance, appointed executive industries, Eric in brings company and strategy as has Board's the part execution, long-term today last strive been risk financial management Board directors energy growth, demonstrated its an and director Director its With experience Eric's skills corporate we program. appointment, part towards him governance M&A refreshment our of the optimizing balance independent to Board and accounting, new to The continues has as and Board. welcome appointment appointed comes four to new director Cognizant appointment. to on also and of over five as Board announced ESG the Eric supporting years. ongoing significant Cognizant,

that a more of of Board Cognizant. service her XXXX behalf On since than Meeting of at for Board to for the of member Annual a XXXX, and entire she Board, reelection also stand will guidance, Breakiron-Evans, Cognizant's exceptional leadership decade not astute her has we dedicated Maureen advised the the thank Stockholders.

appropriate perform a of an of balancing chairs qualifications key myself our aim will Committee, Governance tenure committee composition committee and and Board toward Board, Given these changes to evaluation representation skills with comprehensive and the our topics show I, of were the our had our These governance members committees. investors largest fourth the road with discussing with during on several annual the in along other pleasure our of quarter. of Board, that

little Now leadership. to turn bit our about a before let the Ravi, enthusiasm I me for his share call over

and teams our past he is C-Suite. dynamic accelerating and uncertain in financial ultimately operational goal now the into delivering mindset we're a to that returns Cognizant from a market believes years, foundation focused industry, confident the into He agenda right passion operational brings Cognizant our established and for has has This next the requires leader to Ravi this a move driven driving with the while take Over phase navigated growth its mindset. has solid of few significant a Cognizant building Board that XXXX, shareholders. growth to Heading strengthening a our needs fundamentals. toward and growth.

also brings a Cognizant leadership record and to best-in-class XX-year scale transformation a Ravi expertise operations, from at of global track emphasis. stellar

strategist led global He digital deals. oversaw During the Japan significant organization company's U.S., who pools and in Australia. is India, the across pioneered his Ravi services segments. industry the and international China, operations tenure, in Latin proven IT America, of services he creation its talent and growth secured he a global business and drove Europe

Infosys, Importantly, a a to reputation as during at commitment rooted Ravi people-focused and teams a deep associates. earned his leader time with

Ravi internally leadership. warmly about ago, associates. Since and Ravi are will have his that a retention help our confident engagement to further joined Cognizant high-performing into We're he proven and us and team trust as drive welcomed leaders few and us our amongst support out has associates reputation the efforts enthusiastic deeply weeks this

under leadership, have will As Cognizant we look sharp key focus two forward a on Ravi's priorities.

of First, revenue we'll on focused acceleration be meaningful growth.

with Cognizant will our to achieve priority right the Board leader that Ravi partnering in is of the this key vision, looks forward him. and to employer ensuring second industry. Our is choice be the

himself additional now I'll call turn over Ravi some share to introduce the to perspective. and to

Ravi Kumar

to very of I'm opportunity competed lead as this company introduction. appointment of proudest one as Good is against. warm a well long humbled Thank watched Cognizant, you, excited closely for moments everyone. my afternoon, and Steve, by I've that CEO the My life. as admired,

has very efforts groundwork the experienced, a and diverse, I'm for As and the trust me Board. fully a and for lay flourish. Cognizant grateful Board's skilled the to highly for company I've to and support grateful engaged Brian their refreshed evolution implementation portfolio also to broadened strategy, more the He systems and the and who I'm and predecessor, the drove rigorous Humphries, of company's of led business. Cognizant's extended the processes. my

to our will on Instead, strong I'm With exists, annual client-facing the to going came in was calibrating world kickoff, sales Cognizant's board. together X,XXX not we in a very refining already foundation move drawing take summit, thinking and forward plan held place, in to to the what around growth what stock by At and the back a have which to a to mindset. all include need Dhabi. I associates which building of installed of we Abu whether by I my offer few us we growth. targeted from what clients enthusiasm of or investor solutions, acquired of deeply a industry-specific organically moved the and our growth. A of after so see will I developed want believe participated goal and acquisitions through full pivot was set the was be appointment, warmth We days an for a I large base breadth to choice, accelerate greeted employer with. I growth. a be which the to of ourselves

trust and to and months line weeks with plan with how highly so mind, be clients, listen global in Because our as and visible unlock spend to and whether associates, much and is at clients, I carefully meeting about this associates visit to many days XXX plan teams many and over for my drive next several more will or best as several value. Later clients visiting India like I open partners virtually accelerating of meet the the I with person many learn associates, long-term build spending an can value country. in as locations make can. as of top shareholders can. to progress with I'm all to across I growth XXX clients I I with quarter, our in shareholder

operating so identified with strengthening and that large my choice pulse in time a our Having we value ability to of first, client to skills the our second, experience The clients on experience an and areas discipline. quick cycle. the deals; on employee the of have of joined services scale employer my the industry, Cognizant just associates. tightly on Because important quality, the opportunity I on to operating tied A hinges knowledge create Cognizant with – in talk choice. already while I'm said, each Spent hands several ago, weeks curve realize word need the our success enhancing making of the dedication third, in That our about learning are linked, we of get self-reinforcing immediately. business. talent. the starting that quickly look create three from I sustained win and of focus three a its industry; employer Today, of comes the and are and to growth to mindset those to IT for will areas: time early you

is define believe a professional client keeping aimed providing with people, of Cognizant growth for management success specific of for leadership Highly associates associates why I in That's is which the the become ability absolute best the the – entire heavily deliver investing be development, employer with engaged will and passion all of our creating one foundation, continuous on faster. attract choice clients focus to These industry-leading learning, turning I'm especially that the for the the our attract our to one the upscaling number my that all conditions is else in in turn, and the must consistently at factor increasing excel. important a clients. to goals mindset committed roles clients talent as to the of industry. based growth, CEO one best of and more team. Everything relevance. flywheel

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Over its management processes. the last program business with project capabilities year its Cognizant has and so, along solutioning advanced or

efforts. instill weekly a can partners response a I build become I drive to In our and pride better encourage foundation large solution client deals large to delivery I of and and over deals which empowerment line. needs. faster, to and help to everything to to teams agile our deals client teams sense have finish particular, to want standing meeting these do have among have our reenergize a during I We the more to XX this manage review and greater planned on equipped

renewal billion confidence $X we pleased client, place with were capabilities contract the signing week, of XX-year in and Last announce our our the demonstrating a to clients long-standing a CoreLogic, us.

The and third to excellence of approach deals including general. operational the focus fulfillment in ensuring across is area company, our large

structure We market are and life such led to delivery and cycle out together takeout as of more. organizational building designed management, a with an bring competitive initiatives, risk contract activities cost high productivity rates, industrialized deals continuum consortium

As team, working Cognizant simplification on team. also are a we one as internal

help the forward carry to will We full company's achieve potential.

signs rejuvenate showing improvement, With entrepreneur the fulfillment are working existing and our early growth some spirit the market mindset. for of to optimize tech engagements, talent unleash we of

to Switching I like for a gears offer moment, perspectives. few would a

business technology services every long-term and that we golden alchemy technology in environment is are new the believe for and a the industry. demand software of for era On I

a post-pandemic prepares the their and lives, the more our technologies. we live organizations As accelerating of for see of digital embrace work reset we way world

lower up are stepping tech and care, at sciences intensity. their of digital life health like is levels Industry manufacturing maturity

financial retail While those that are staying landscapes. invested the like are in communications mature services, and digitizing more digitally

workplaces continuously also We workplaces. technologies see comfortable hybrid interestingly get rapidly as and employees toggling between digital adapt physical with

decades, be tech era a industry enterprises deeply industry. and will for businesses the product has services deep use every companies Therefore, their Cognizant. the is enable software big embedded to of globalize. an of tech engineering transform in every globalization of capabilities business, to the every In and service. a several Technology of Today, every core like to services firms tech spanned to player turned scale that businesses be have will core

from born-digital outsource So operations. too will the comes that be technology core opportunity the that companies and market

will a have technology continue The in decades, to migration, market seen modernization, remain the significant will services general to Cloud biggest cloud, as in purpose embedded every deeply be we say, needless pillar business. create and momentum. digital continue to application

deep well as us be believe of turn as those Growth best-in-class by to continue our to exchanges, cloud, new partners. ability and will security driven will data alliances orchestrate help our new to truly services on these aware are cloud new companies also services We SaaS services. hyperscalers SaaS Clients cloud capabilities. co-innovate and the data to like with with cloud clients the

engineering and IoT devices XG and embedded and also The cases shift connectivity that's cloud home proliferating IoT Mobica better capabilities use our an to with week, software accelerated Mobica, our of software is our have engineering to associates. in IoT Last our with bolstered core. also near-shoring to agreement acquire which strengthens the adoption Eastern X,XXX Europe, capabilities grow we as nearly provider. further

see the reengineer as three enterprises strong expectation business now software push as into We a enterprise bring with AI completely that will to decades AI did landscape ago.

achieve now underwrite how them transformation cost they fund by and clients macro cost for environment as need digital their These in clients asking digital agendas. are navigate executing their a challenging savings efficiency can ambitions now, we investments course, Of help and to reduction their same initiatives.

capabilities, whether of drive gains, they an clients, end-to-end efficiency to business. broad need the innovation our help can or we Given transformation

capitalize IT India And the India's NASSCOM professionals to as next to decade. as has continue want the three India's to to recruit home be efforts population We'll X two talent pool India million the technology on we unmatched hub over profile by Cognizant's IT any demographic other forecasts well. moment from the quickly is a be next a for some country. to talent Tier to pool India's in three talent for I digital quarters and in world's talent workforce. to years. surge about cities turn India, intensify this added will likely of

ongoing Our an large one of and strength source associate will for Cognizant which we in India and to continue is base differentiation in invest.

to work to of off and we time prospects, opportunities. with Please year I'm commitments our business As one, Cognizant's our confident of into of guidance. associates need and know talking the will we the stand hold thought more aware, have I fully that after ahead pipeline and great as rebuild decision spend to as deal time making a But behind, I in full for have clients. lot larger into us. providing It am before put we guidance quarter QX, to can a I signaled go really on for digging take

Keep that in mind building foundation. on a are strong we

network, robust international and client resilient a We most long-standing industry-specific team. and broad solutions, important, have and a motivated global opportunity a relationships, significant a reenergized highly portfolio of for delivery expansion a

our of I to of intend happen. energized I and have ambitions, put bold being super culture and to catalyze and that teamwork. adaptable entrepreneur into Cognizant's emphasizes our everything I'll making lead agile spirit heritage into era the fast, camaraderie and this of Cognizant next I'm course, growth,

growth our back now As mantra all of our with I've and right to the be associates, shared bring choice. is employer

questions. of Jan, to turn through Now call take who we it's to over pleasure before you will to over financial my the details the take Jan, quarter the you. over

Jan Siegmund

above third were revised in year in quarter call provided XX. January range revenue on provided XXXX the our we high Thank quarter Fourth you, and November full earnings evening, the everyone. And the line we of with good guidance Ravi. on and expectations end

the charge Operating goals cover disclosed continued Indian commercial later. pleased the the margin was of this by discipline, SG&A margin which previously [Indiscernible] operating I depreciation in and the of in our more will negatively the driven impacted detail charge, quarter, towards progress leverage. we with by were noncash rupee

driving has fulfillment, meaningful quarter. During reduction voluntary we driven on last annualized made further which declined remains in quarters from and said, uncertain, momentum the verticals. across to a key us to in XX% see the decrease the attrition, we several in to quarterly basis improving to a quarter, weakness subcontracted ahead. pockets of greater environment allowed progress focus usage commercial enable put macro part us XX% This continue improved That by on and will

basis of includes for impact a details the quarter of year-over-year quarter, Year-over-year X.X% billion, to the from an currency. in on approximately revenue at moving representing of and sale XXXX. growth increase Samlink negative was the basis constant XX beginning Now growth from our completed the XX X.X% acquisitions fourth of or points points $X.X

an acquisitions was negative includes revenue and points of points basis XX the XXXX currency. $XX.X billion, of or XXX approximately basis growth Samlink. constant sale from a year impact of X% Year-over-year from X.X% in year-over-year Full representing increase growth

up In the or year X% full XX% QX, in constant period. in prior resulted digital This currency. at XXXX currency. year-over-year revenue year from revenue two from X% grew Digital growth was quarter of XX% mix in constant XX%, digital last unchanged points or

modest increased some renewal large work during a opportunity years bookings year-over-year, in last XX% contract. including QX existing scope agreement announced that This primarily with the increase CoreLogic of latter the the with is week. of we

year, book-to-bill the times, unchanged bookings of For of recorded quarter. last XX-month from approximately trailing book-to-bill a full we reported and $XX.X the billion we X.X

bookings muted has cover the renewal, shortly. this year. momentum on remains outlook, Outside pressure put which This exiting large will QX our I

insurance Moving quarter, X% Services, on constant to in subsidiary. our sale negative the now be the disclosed to among Samlink previously Within public by where a all basis segment currency. growth will clients declined XXX in rates reflecting points in the of year-over-year impact and was of growth clients. revenue This fourth Financial related offset UK partially sector provided results

Ravi, give leadership strategy, revenue on initiated performance. portfolio the under we go-to-market we will certain which us our the to the actions, changes, the that opportunity team financial expect of enhancing services remain have driven a I our best banking entire this strength series weakness of practice, and pressure reevaluating our believe being including improve and will next The are by and for several is quarters. laser-focused

higher successfully confidence have that We moving This direction. shifted relationships in global success early are of portfolio signs we right the we our seeing select areas. us towards in mix strategic are banking growth where gives with

to improvements take will implement. time However, more meaningful

been last COVID. growth by consistent Healthcare Life some and X%, with reflects demand clients, grew which normalization Sciences revenue We Services experienced quarter. had among Health of partially similar that both driven

last seen complexity. Sciences we segment, driven some by excited capability continue these as have the environment growth macro our of term. to challenges, we opportunities the the As discussed quarter, and Health medium pockets Despite regulatory we over and within the softness remain about review industry-leading

revenue Products environment. was last the goods modest softening we goods, macro negatively manufacturing, customers. grew the was strength among and X%, consumer retail consumer continued offset and reflected growth from impacted customers, among which logistics primarily, slower a automotive, utility Revenue deceleration and believe This by Resources of quarter. by

Technology led and X%. technology work Media driven Growth core in Communications, with grew where revenue growth our our again portfolio. has was by digital-native business, our clients

Our growth largest has among positive. remains clients moderated somewhat some have our but as growth of slowed,

closely developments tech industry. are trends the monitoring We affecting and

Continuing with in from year-over-year and grew a by currency QX. revenue growth American Sciences. in Health was perspective constant CMT Growth North led geographic X%.

Our XXX includes GGM, X%. or global grew markets, Samlink. It the all points revenue negative growth basis impact included also North of which approximately a sale of from outside America

UK, by again growth grew sector in Growth clients. and was led the XX% Financial double-digit public Services which including included

large a QX, costs quarter. margins basis Sciences XXX the non-GAAP on XXX moving and were a On XX.X% by adjustments to previously with in GAAP our disclosed a operating This both no Health margins. of there In were impairment a contract adjusted as volume-based capitalized basis from GAAP the and point Now includes related margins adjusted impact noncash year-over-year operating customer. points. to basis, declined negative

efficiencies leverage, while pricing. costs gross increased from offset by from compensation and benefited Our partially pressure operating delivery disciplined SG&A margin margin was

also a rupee, Indian from tailwind experienced of the point basis XXX year-over-year. hedges represented approximate depreciation net benefit an of meaningful We the which

connection XX%. X% XX.X%. quarter Adjusted diluted EPS adjusted QX EPS and the tax and X%, was GAAP $X.XX, was customer. each the tax was rate down in GAAP adjusted were $X.XX Our costs $X.XX volume-based negatively the to earnings in respectively. impacted related QX GAAP in per Sciences was impairment share rate capitalized quarter of the a large with contract and with by Health

flat of cash billion. $X.X Now days billion cash year-over-year. ended quarter of by was sheet. or net $X.X increased sequentially We short-term turning five balance to XX investments the DSO and with days and of the

of flow approximately XXX% XXX% in Free to million, This $X.X brings in cash year representing expectations. our income. line approximately full income, was $XXX billion, of free cash representing net with flow QX net

pleased We our XXXX. with are performance in

However, now that became a tax to last year than expenses. companies rather change requires in capitalize currently R&D effective deduct law U.S.

will As XXXX. a like many our in flow this free result, companies, impact other cash

negatively we to year capitalization includes ratio payments tax which impact R&D cash increased $XXX our as below in million, for change, expect XXXX conversion expect by target of We of our net income cash costs flow tax XXX% for for of free With XXXX. the to payments be deferred well XXXX. purposes as this

deployment. capital to on Moving

total dividends the we approximately X During and our repurchased share to through million This million repurchase $XXX to the billion shareholders shareholders million program shares through our quarter, dividend. brings full regular to $XXX repurchases under for return year. returned $X share and capital for

$XXX also total we two for CSI quarter, price the acquisitions: Austin Utegration purchase and In a million. approximately completed of

we expected In of the services our are capabilities. acquisitions consulting These acquisitions announced addition, practices of Virtual. revenue the Mobica and mix, our professional enhance and digital to OneSource management improve

remains framework allocation capital Our unchanged.

the capital continue share balanced inorganic policy, to term, deploy investments. XX% of flow approximately in remaining of dividends and Over of to to form and to XX% an longer returning the shareholders cash free allocating a expect repurchases to aggregate allocation we

outlook. forward our to Turning

revenue for earnings we and materials, XXXX. in providing will our of Ravi guidance you the are only As see mentioned, quarter first

we momentum update goals full operating on Given macroeconomic adjusted the XXXX next We the an expectations year XXXX be intend in year and for expect environment, XXXX. multiyear provided revenue and uncertain quarter. to we provide bookings our performance to below XXXX our full the late margin in

X% minus For flat we to $X.XX a X.X% in quarter, a constant year-over-year of to X.X% the minus or minus billion currency. representing billion, decline first $X.XX expect to the decline of in range revenue of

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

up as look get Ravi forward more sharing speed. continues to We to to

about discussed, the he excited market very we opportunity. remain As medium-term

opportunity new while invest to clients of We digital help some presents also capabilities. efficiently operate to believe led for an more continuing that our has it in while uncertainty pockets also to macroeconomic the Cognizant slowdown, current

With the for questions. call will that, we your open

Operator

comes with proceed first question. Our Instructions] the of Please line [Operator your you. Ashwin Thank question Citi. with from Shirvaikar

Ashwin Shirvaikar

you. congratulations and well, Steve It’s you as to to good reconnect. Thank and congratulations welcome and Ravi

think to to I what’s might to you first view speak that return you I can early of what needed large like on for capability that, investment question explicit to growth your need some take sales the to contract, growth investments, chase steps if my G&A the get is mindset, are incrementally things investments, just that? mindset,

Ravi Kumar

you, Good spent connect Ashwin, of would talked question. Thank things do. for time a to with three you. to we build Having significant to I But priorities. probably this in to number most a growth that are important industry. the I today, a say as would There I of need mindset. them highlight

you talent, client First to industry, employees based linked. of is that and scale is, the is employer experience by create choice in industry. an what mean I on foremost, spending that Cognizant What a employee by tightly the industry, IT and time I dedication in are this self-reinforcing of and service has IT but be quality, cycle experience Sustained with and success so clients. mean

passion cycle engaged with have opportunity We which to clients and best mindset, a clients. talent build attracts growth self-reinforcing the a the with the for

flywheel whole to be that has self-reinforcing. So

mine our day. clients, every a things, Remember, talk to leaders. program to of and the retention development lot equally, a these leaders. our corridors, programs, project they they and as of walk all associates the are the we essentially means leadership to And means projects to which from way It infusing upscaling company they project

does with point that where starting to a you of a is call continue cycle to create player that and that they [ph] So trust virtual self-reinforcing try build it.

think you talked I about deals. large

that to start transformational initiatives client way ability with end, to initiatives to takeout the various and continuum to both build ability take to a investments the work addressing the from to dealmakers, theirs. influencers, deals of equally, large all initiatives people come on I manage on opportunities. cost have over will investments think capabilities solutioning large has deals in at our by sides, momentum back supporting deal create initiatives on But you services

And of course, productivity improvements.

lot there’s infrastructure. of So a tooling and

from all and to also building behind growth and already consortium initiatives I Cognizant cost the way on mindset a you we and cycle some risk the discipline, bunch then of equally deals create think life has it, this build It’s which management deals it, have go to competitiveness whole contract market that operational of fulfilling takeout things. us like to and those important partnerships on opportunity. to build to helps

Well, have place? of all do this in we Yes.

these a the taking have market. In the which then but a some by the that been in long in down start investments to momentum of future. the costs out create lot mean this have few have short run, you I of of will so think this mindset for that to run, additional medium inside things pool to set investments, to there I opportunities, years you can the sustain that I double at on already Cognizant. orient the and and would growth say last to in are

Ashwin Shirvaikar

for put it. you Got obvious answer. into the thought that you Thank

question entirely words, was at XQ? top it now? taking is other on a impact second care is sort margin Any In granularity impact? of impact? least the What’s the forward-looking The that bottom the into revenue in forward-looking account line is And the impact health quarter. link-fenced a contract the problem on there out as in well? separating Or and

Jan Siegmund

Yes. Maybe client. the healthcare have this. volume-based Sciences of Health is on that clients performance that we contract-based The a I'll take

expected had And changed, business the volumes then the we that us a for our take of adjust led had our outlook to forward, we in to of so essence. incoming as to charge which revenue going expectations lower to client has

guidance revenue forecast. and the so impact natural And is really our going baked be into to revenue

been that have of million. charge we discrete $XX So is taking a the charge

prior are the contract. of capitalized a is charge that non-cash now And taken of costs we out implementation that

volume future impact as our well. So client implementation costs these capitalized of this on could calculation changes

well. our our we to client We possibility there's as future performance the in growth revenue clients great there market development and but So could that interest as still be still drive is the and very obviously impacted interest, the clients' outlook. hard with of work revenue on the a depending of the

Ashwin Shirvaikar

Okay. Thank you.

Operator

proceed comes from Tien-Tsin with your JP question. question Please Huang Next line the Morgan. of with

Tien-Tsin Huang

It's Hey you while. nice Steve, thanks much hear to been guys. from upfront. so a

ask having So growth take similar of that choice change level? to you I but it for culture you I'm maybe to How do the want and of a be being can't Ravi differently? the the think a employer feel fix, mindset here, to imagining long quick just to a Ashwin get would – lot to goal to it of sense. makes

Ravi Kumar

to virtuous I'm It's a assess that's job, weeks the a self-reinforcing continuing what cycle. I'm to so good into Yes, question. we do. we just what need three have,

as As looks clients, it on it's you're be with months, meeting meeting not weeks I'll if I for associates, the partners and it's easy, it's going to on and it few much tour come it back assessment. meeting not. listening I'm you're easy, as – if a next on said,

have think infrastructure and enough I on client we built organizational employee both – infrastructure.

it some it we build build changes board. Now what going I refine refine and want growth; on it, that's get refine it. want how We it, We're and drawing we I reset on there. the to to and have as we'll to see for to it. and I have go not back to make

India. our of lot out work employees, two-thirds of With related of our to employees – a

in own set to self, of which India an India strategy this stay you that February. XXX is going So of so XXX get later my our a in meeting I've you differentiate And for the I'm spend clients pulse, and on weeks is goal well, focused get deals. know few to the and to next integral days, I'm as part large part

focus doing I'm deals fact, monitoring are XX and keep we continuing a In the momentum. on to week, every of commercial large

look continue still transformation, That's do momentum, this, the medium- will see continue for part. going it. how I long-term question flight weeks the we a in it. through it's spend like I I will answer as to but call create it. you We'll probably I more sustained how once few to So to a listening It's to

Jan Siegmund

breather Ravi one. give which the certainly talk I'll improved and is also tiny attrition, Maybe here a about

a the employer more reflected. step First becoming and into right direction it attractive of seeing

merit not cycles. but So regular investments in also, clearly shifted the we we also the competitive labor believe have in have markets made dynamic that and only that the

remember cycle which second for quarter we announced in quarter, also – the to modeling the quarter. the accelerated may year's guys we that you You is the this our merit of second important last into had

number we internal et graduates as have we progress development increased permit. huge education, the on learning that pathing career our have and our of And cetera, promotions, into college and made and

So drop a I were from seen permit one quarter. and we in piece relatively we stabilize, steep and nuts now just think in with nutrition this this very bolts have year pleased to of a

on side big think of a start we that on I need think So here it. we and enthusiasm, actually And on is – have continue we Ravi growth as a already we are focus and then those will with to But year feel we'll then management, on off to ended good investments aligning we kind help. the forward. I refine as step

Ravi Kumar

also looking been strengthen and ready talent chain, And clients fulfillment the be to. are we've and to it, which forward supply able for it, streamline opportunities, our

Tien-Tsin Huang

given and – with my you've ask hired can I if then still a okay, it's the if follow-up attrition did drop bit, that in utilization XX-point drop. rates little Then Yes.

to us but are modeling a a perspective, guide because on short-term here? not in the people, bore some of to KPIs bit from they quite anything So those moving to

Jan Siegmund

COVID are period. the we detailed actually age in had the utilization our also slight return utilized higher In pyramid, a as not on very where hires taking and is young of which location years We're vacation in abnormally metric this of Z normalized actually Gen compared to quarter, obviously more decrease to a the driven into utilization this low relative the answer. by percentage

the So those biggest were factors.

too model drive we of this quarter, in factors, the both actually, utilization, X Tien-Tsin. utilization. into wouldn't But need better have and I as biggest fulfillment to were we Obviously, the So some growth now opportunities. much the

Tien-Tsin Huang

Jan you look travels. the Okay. Appreciate Perfect. Thank to healthy and forward Thanks. Ravi. and updates and safe that and get to

Ravi Kumar

Thank you.

Operator

proceed Our the with comes Morgan with next Stanley. of from your line Faucette James question. question Please

James Faucette

is. I look been much. If as wondering customers right around as you that a Jan's Thank together we to attrition, you'd some at the Ravi, give Great. listening cetera. now et with well or investment your the helping can that business? in out what so And stages if of and if comments Ravi's you I'm have of that places maybe to perspective seeing like on stands anything put to under if and bit two you're in investment there's as could I be that there points seems follow-up comment where little impact about the and want evaluating Jan resources, Tien-Tsin's on question thinking and initial direct objectives you right profitability that you're from how that thinking and – the to standpoint? are way does the about and Board cost a

Jan Siegmund

chime Ravi a give after I will thing. technical you more in

and clearly deals us characteristics would plans, otherwise, calculate mostly profile. the large dilution us I our discipline these But for the we it of have we delivery deal our volume, exclude if that to you think when these their we developing to to end that, deals we potential. large of care And kind strength when culture today. build we're so about full margin our as need and our to on that larger the our think margin cause not may of job, guidance up at relative margin initially health think pricing give impact and think [indiscernible] leverage I charge of competitive so and allows then you ramp discipline, deals be

James Faucette

to impact would figure the of mean would think overall out success assuming I what structure. the focus for deal biggest the that for practically P&L our be So large in us,

be Ravi, going away that have biggest you, be that is managing to the more think I bit think we're that within investments to already but going volume I is not be one. take going be that's going think... to but to a of going little the from I those an we Ravi There's framework to other SG&A proposing,

Ravi Kumar

thing I heavily takeout continuum, Jan, to one I managed one years, deals covered so that way Cognizant The has the is, on from think initiatives I the add would to invested all to transformation to think continuum. in services probably you've infrastructure last digital large on a cost pricing on transaction-based two it take nicely. to organizational

take on leverage those and time those investments deals. to large Now is the those competitive large deals and be

of So a a say part done. I large it way, in would is

and we strengthened us. now for have going oriented which have is to We the be to the presented opportunity, to market it,

So see that's I it. how broadly

saying, I to going I'm We're to isn't drawing on but board, the build going going it have. As back to what keep refine we it.

have to those we going we have. As the be to opportunities make changes, enough it, some but changes. market in make we'll agile refine we We're to the seize

James Faucette

a you environment? listen seems of then parse And as follow-up, you and the business specific are is and challenge has how on maybe as economic Ravi, to forward on It go impact are feedback big what's happening customers, a going cetera. for you current that et basis versus that. that engage near-term. your to will part things some be sustained Cognizant with Appreciate just the thinking move out and how to like Obviously, the should you perception of about a

thinking some So you're at and comments wanted the how lens to to the hear you're these current that looking of environment comments just listening these at, some of about or economic through? these –

Ravi Kumar

to That's I'm in. well chime good leave it to and question, going a as Yes. Jan to

landscape in nature. Large spend swim takeout equally, will cost has to gone a IT lanes. a little study initiatives see environment, consolidation But homogeneous from going years, engagements a economic discrete landscape, hybridness you're on to But they're because to consumer investing employee Services today a side digital on being only work on softer. digital start initiatives, moderate different the to if transformation and the how of lane. side interacting other their hand, swim platform digital enterprises are not invest are because different places organizations an what with continuing We're see Over are. of to employees I on the vendor uncertain the would happening a become say digital. going you're In heterogeneous are of because the of they that's also investing

you of would one a duality On So softness. side, would I it's sorts. see say

side, On and happening. and the lesser on other kind of have intensity. the look vendor and digital are have would industry and higher which tech for, cost you Depending tech industries takeout there the intensity see you which consolidation industries digital

them of to are digital some and using And transform deliver. platform the

an In digital economy. inflationary force a is fact, would say, technologies almost I like deflationary in

of to do our are technologies using some clients So digital so.

a it's you heterogeneity, a want mixed each the swim bag. say in? it's own I would So – bag; to has its because mixed It's Jan, characteristics. do lane of chime

Jan Siegmund

Yes. I'm full our really have about give would world. in digital you Like more bookings solid I'll background in biggest bookings us. digital. seen about where you and Group, little actually We bookings we what by last relatively a giving year and concentrated, digital – softness our bookings in I'm the something you growth growth geographically maybe where the XX%,XX% have numbers. and for weakness bit and we performance Financial a sector And this the in year, to we by actually then as saw the Services It's doing decline expect saw did volume or

do and it's And but where as have Ravi industry. and industry we trying sector, are by kind out, industries almost we illustrated comments, in success every in in have we're we stories stronger industry of declines having others, some his to sort

bit little seems client specific to be a it to of So what out. we watch need

with we our ever, now largest forward; entered You have pipelines looking one basically. obviously, year the talked of

of pipeline and qualifications which is bookings numbers. teams achieve, the market lot to Ravi is into that a to now work, and And into for convert

thing. a the business participation a we're the lot to number higher We and opportunity had higher in of – of be there bit. a is out little still which the haven't So capture. opportunity drive revenue we that in incremental mix deals, that's true for shifting aiming hope want to and bookings the larger we seems past, Obviously, revenue to that

that some solid on there but demand a though basis there. a sense. the has softer, sequential gotten a And if out Even market makes is still bit little very

converting to underlying focused, market be But then opportunity my going remains this So we're to into revenues. attractive obviously on and the bookings laser perspective. from

James Faucette

and for That's of Jan. great. the color Ravi Thanks

Operator

with of the question. line comes from Please question your proceed next Our Togut with David Evercore.

David Togut

and gross for but Thanks again. give us and XXXX? so Ravi just Jan, headwinds Not Congratulations, your voice through Could precise, really some around you, guardrails looking margins some anything Steve, good it's in much. of think maybe help us the to tailwinds. hear

the be what think little about, margin attrition could you us increases gross year? range help but You Obviously, in coming had down a number this of helps bit, wage XXXX. a might

Jan Siegmund

important your Well, give we I But pointers modeling you had as I that Good I can give the words And of few, think for a I do. David. cannot hear that a you kind disclosed. I think well. that are prior to few

the our gross now fourth second on negative quarter. in quarter in occur So that the margin usual increase pressure puts the merit will

disturb quarter quarter third will fourth little that bit. traditionally I anything, shift a So If second we year. pattern bit development this the our due strongest the a little marathon and margin have margin will that of and regular then think, patterns, throughout the our to

the that, general other that the way. are meaningful of going very a But thinking our pattern we to shift of in is dynamic year really than not

that think there's I But no like principal it's like when even our performance, past our guarantee I think year, remain think So performance. the I dynamics for future about unchanged.

initiatives. I'm seen good one have but point years – this into seen maybe our look Tyler, I to success we getting We moderate at at actually pricing XX with have

fourth the of quarter initiative margin pricing our to the contribution the so And highest. gross was in

and quarter-after-quarter together. really have momentum, XX% all we So it than was built quarters other higher

partially is so as – offset how wage quarter. some going second revenue efficiencies some with for by of modeling. metric, entering the momentum, is and And going offset our or of be which have us bit sort the in then then coming attrition of you going we and to or up increases help said, that's in a to And to fulfillment then, we're little pricing be with

also we now, right undergo what That's David.

have yet the update the we're don't planning quarter those I and really second So numbers for in you, to then. do

David Togut

much. Understood. Thanks so

Operator

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

Jason Kupferberg

level, plan. terms high to thanks just need of strategy the room develop or Steve just in maybe you Cognizant obviously Ravi, But terms with your call. initial to has of execution? improve Ravi. guys time that your study Hey in I a taking at more organization, sense you. know to my to is and for Congrats start

Ravi Kumar

to it's think And my need with the clients us. the see But it I I and course, of it. I more I time opportunity ahead will listening to as associates. I how see both assess, it's way is said, of

pool. talent have an I client extraordinary think extraordinary relationships, we of set

always Looking from the very some bold Cognizant. and teamwork good impressed I've outside, been entrepreneurs ambitions spirit, by the at

vertical Cognizant spot. excited confluence a the been at expertise, of The technology about one very, very unique a industry spot. experience It's unique very trend with always I've is

forward clients, the for I win as I which we So necessary retail opportunities, could do also that to retail way and look fit bill. deals. been see employees, infrastructure almost and attract will strength clients a have organizational this And employees, believe attract large

and That is need calibrating and up of us to we have trying back looking is looking what we how the I configuring what of opportunity I'm in forward see it. to kind and gear The build. for that of front firm actually opportunity and to instead what with

approach So How that's what I'm can my broadly say. to actually I direction. way trying forward

Jason Kupferberg

you Thanks issues? fully commentary Very helpful. any then think And are close give directional just quarter guys. margins? fulfillment just least can operating as Jan. a the we on follow-up, this do you at us But remediating for more first how to might be And

Jan Siegmund

the in and hampered go really and quarter. optimism was third the fourth meaningfully. think, of And part, very in it I have needs, improved fourth times clients part to The we our gives as quarter we the have is Yes. constraints. talked fulfill the In can their we quarter which at us third resource that by fulfillment

And have. lower and thesis That's will it of enhanced our have need accelerated will and we all forth. I So fulfillment clients obviously efficiencies and of activity. so into for make the think the translate for improvement happier sales in this least part support at and recruiting our that should

really the were year. we compared smoother a where fiscal So throughout shift last engine to is a running underlying

gives hope Yes, direction quarter for us first think unfortunately, I and there. so you optimism giving any that's I it. margins, we're So a can't with that gives – really us not help

Ravi Kumar

Yes.

grinding one my well our of it's So think of Jan think very, to very I kind add weeks, chain just what or moving said, well. is to supply initial few is talent I observations the

that have we moved started good. to clients to the to with the the us the demand few some Cognizant I've look to can in start of of weeks tell get Some last starting to spoken fulfillment

the I'm So about excited very we've fulfillment. progress on made actually

ready are we're our talent to we the take and ready opportunity supply chain the to I continuously for sharpen with clients. think more,

are to see with that traction starting us. Our clients

Jason Kupferberg

for comments. Thanks the

Operator

is time Ladies management and the call we that back for all hand gentlemen, the closing to to questions. like remarks. for have I'd

Tyler Scott

joining all look of with for a Great. to earnings quarter couple in Thank forward catching on us. you months up We you call. our first

Jan Siegmund

you. Thank

Steve Rohleder

you. Thank

Ravi Kumar

Thank you.

Operator

Ladies your conclude for this Thank you today's and participation. gentlemen, does teleconference.

time, day. at have and may You wonderful your disconnect this lines a

Cognizant Technology Solutions (CTSH) 2 Feb 232022 Q4 Earnings call transcript