CTSH - Earnings call 3 2023 | Cognizant Technology Solutions Corporation

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Operator

Ladies and gentlemen, welcome to the Cognizant Technology Solutions Third Quarter 2023 Earnings Conference Call. [Operator Instructions]. Thank you. I would now like to turn the conference over to Mr. Tyler Scott, Vice President, Investor Relations. sir. ahead, go Please

Tyler Scott

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

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

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

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

Ravi Kumar S

Tyler. third you, demand results, afternoon, Thank priorities. and like I our environment on brief strategic quarter a update the topics: X everyone. to cover would Good our Today,

in points as revenue progress saw revenue year-over-year reported $X.X pleased uncertainty We remained came of XX quarter, cautious pressure. billion, X.X% are and under range. in amid within of modest guidance currency. constant sequential discretionary the We at or XX company's decline during basis with revenue grew basis continued QX economic third our the which clients growth in spend a points was

trailing as generation our on as the track which of and mostly quarter up of strong approximately book-to-bill of operating of discipline bookings investment with ended We margin QX adjusted of another X% X.Xx. Our operational our a a remains opportunities. expectations, billion, exceeded XX% on our up spend growth, program, from year-over-year timing and year-over-year. XX-month bookings record growth reflecting recorded We from savings $XX.X next XX.X% well

deal QX deals through $XXX Approximately generation and these getting large We believe in-quarter deals have solutioning QX. building were creative of large our at I each. deal better a our are XX% engine sustained we million momentum progressively and large X exceeded deals. of bookings

especially points high am see and are Clients leadership, in experience factor account important interdependence know percentage encouraged attrition. of the XX.X%, which delivery Promoter and gives great help year-over-year. client This results down the And XX-month that business underscores Cognizant XX decline to our the that us to in job. that employee a and This let perceive portfolio the especially attrition Trailing assessment for clients client in just historic tech these areas, I making will for Net points continued our them. changes down sequentially management survey, survey declined confidence X the our that long in completed a doing about we're us strengthen the to and of voluntary hit positive a Cognizant. Score run. we year-over-year over are improvement decline significant show attrition annual was our showed services

While quick a Jan services. word offer about will performance segment a I want level, our cover business at financial to

segment We an while demand our to environment. challenged reposition Services continue Financial responding to increasingly

subindustry increase by domain to will change growth we believe highly Americas. go-to-market expertise. reinvigorate a of leaders, approach striving is agility the and experienced are through Directed in we ways focused deepen One the our sharply our this

are increase do investment enable in resilience I'm underwrite environment should, transformation. and demand the helping hearing to turn, and their and providers so. from focused continuing them efficiency clients. Let's and Clients on we turn their remain consolidate costs initiatives they them to what to reduce in as productivity digital This

a and in a Lineage, management. with through relationship and automation temperature-controlled build our operations to industry-leading to plan expanded help logistics establish their we quarter, global infrastructure an platform support the leader during example, operating For

We multiyear also firm, established a new relationship with Interim. Swedish

We services credit their expect technology digital platform. and to for integration management core provide modernization end-to-end

AI discussed into Cognizant long-term new industry. more how discover and about client than generative our can We North the to strengthen XXX objectives ways and in every first X-day our dive for showed customers. apply To a X AI Summit more with partnership years. held of month clients, to of America clients' collaborative clients deeper with their gathering connected, and last reshape our believe responsive it generative We transformative to Discovery we them, create how relationships power large-scale

Cognizant's We end-to-end cases models create KPIs. AI client also data generative tackle to use alongside and legacy working use AI ran learning showing rapidly cases to at live new platform AI machine

As generative and such in a as studios London. platform areas open last And later Dallas dedicated capabilities studio to quarter, in we invest innovation York, mentioned that X recruiting approximately $X we opened years, AI upskilling. this and expect end, AI billion New to Bangalore. we expect To year, next AI the over focusing on in our infrastructure, modernization

our have an from of a levels employees this pursuing in XX,XXX AI. on all Gen registered training company of AI XX,XXX trained employees generative additional We about in have year and

depend recently to automated will believe gains Cognizant's early generate a to We differentiation growth. and have partners which AI aimed design, also clients help drive validates operations. through to shift at behavior engineering Cognizant refined infrastructure client for We in strategy, invested strengthening platforms partnerships on further is in support client and productivity like This AI-powered significant experimental engagements.

strategy is focused Our X imperatives. on

industry integrating value business outcomes. for are industry-led by technology we drive First, resolved to an to be with use cases creating clients

select embedding our expertise and across industries. value are chain industry We

industry are major use enterprise role and have operational play Partnerships developing a scale cases. designed more We platforms for to here.

our them, and as full companies, this a We provider of are stack cloud enterprises ecosystem partner solutions, us on software We providers, enable enterprise with third-party this and Among by new partner startups. our expanding services enhance opens helping opportunities. software hyperscalers, products to significant focused ecosystem transformation. across technology believe digital combining digital enterprise-wide service to a emerging our providers. believe strategy range will managed deliver offering We integrated

heterogeneous more given in Second, we flexible digital project of more. technology which learning, are services, And development, desire lend whether can structured traditional highly build transformations. own a with trade solutions our the we automation strengthen technology partner either support chain capital to clients and of or many human AI and business expertise, technology our operating clients build their capital managed a to that's includes model focus where help journeys. deals, transfer, We co-innovation technology and range they on transformation muscle, their up to their value across today's clients along meet landscape them large human can infrastructure types,

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innovation. is of co-innovation. and third out Our client to intimate more of enable heritage and imperative grassroots centricity levels client our grows This of effort collaboration

have employees ideas our of have X, Inspired in our Given by the BlueBolt a diversity to more than innovation XX,XXX of abundance our grassroots contribute focus. that big global small scale of quarter to we our potential generated an we clients' XX,XXX believe teams, movement ideas. harvest can and and launched

these about already applying to XX,XXX ideas, especially client-facing. have co-innovate they AI. as implemented of X,XXX A with and grapple is We nearly with strengthened generative are of which clients ability valuable understanding

network AI-powered a XXX, quarter, we analytics. visibility into and Telco cloud-based ServiceNow telcos resolution launched the solution provide proactive Assurance During designed through and issues fast to built with real-time AI-powered on

partner also health are and the to multiyear digital and U.S. at human of scale. administration will as to help transformation IT and drive of services client's agreement We provider signed leading sole services with programs a solutions the Cognizant serve cloud-enabled that global the vital a across operations

provide member to efficiency also with our growth, administrative with to the advance We along tools, the learning revenue generated AI, improve increase and and machine client TriZetto platform experience. AI our access

being architecture, implement AI. encourage to generative applications. AI-based Today, our Qualcomm solutions What's cloud car client clients are of more, the the initiative. want than collaboration business and to part running XXX-plus our as with transform at edge jointly by our to cloud use the more strategic are We begin first businesses a core to we early who the we Technologies of infrastructure their the data modernizing journey by engagements incorporate AI that expanding

employees, and cases and product for use troubleshooting, knowledge Some of development. call center specific related speech. scribing translating medical use the new writing statement validating product natural code chat planning management financial prediction, analytics. examples cases include documents this audience And and or to claims like and management, prototyping, analysis and specs general work research domain code, deep specific use automation onboarding into Business of productivity cases

have are additional pipeline that planning scale. in opportunities XXX-plus We our we to

on quick X as human our update long-term average. in see that Let's with base. so par continues objectives, our turn capital industry on Cognizant dedication to quality, us the consequential it strategic choice of an on first, is company, of second. to I company, becoming a do employer That's we a with putting industry. in why the scale Everything talent technology and and fall, a our our is attrition starting voluntary

quarters. increase we improvement further for also quarter sequential first worth net noting quarter in X. had several that attrition It's expect X, in in We headcount in time the our a

capital empowering and initiative training partners we skills, economy. that As are mind, our consortium to a will individuals than have Cognizant million the the that aimed AI, of who job in which thrive need lives digital We more a With through technology Synaps training jobs, company, X we groundbreaking of improve yesterday our announced initiative. individuals at will called human around help to in initiative, Synapse and with determined is upskilled world. a to for endeavor workers build training the intend employ advanced generative they then including the

objective performance revenue accelerate is growth. next to Our

said When large priorities. I I January, my deals joined top Cognizant are one in of

large improve and investment underpinned which ongoing growth to new discretionary shape by and the to and we I opportunities roles see These environment needed in see, mentioned efforts we provides client-facing following is have what year's helped growth. driving our bookings spending the muted required to offset last a capabilities are remains are As large for growth. the softer work earlier, partially to deal momentum, our deals sell continuing pleased doing

streamline become objective fewer to using company. sales enhanced and clients including operating working get and performance tools systems optimizing with to can day-to-day continue and to layers, third so flows and the processes our simplifying challenges. business closer unique to AI. our are In Our structure We we general, automate in operational and we delivery our operations excellence on ensure their remain is focused agile with operations, more a across information

at happens I project with building level, That's over trust execution side client why industry services learning and year, meeting key. all the value so in this much to can far Differentiation and invested tech and in XXX strong the Cognizant I've deliver clients can more about making so relationships the them. time

priorities. Over long-term made the past meaningful progress Cognizant believe our I on quarters, has X

work to scaling have and While includes platform-centered discipline client ahead, a grassroots a of. launch large movement. employee improved a proud leadership heightened and approach, have attrition, the we innovation industry also the momentum, a satisfaction This operational of lot be of of much our deals with we continuing declining scores,

a believe the the year. soft we we as expect discretionary to to spending see rapid unlikely we tempering the environment Therefore, begin clients continue ahead, new is Looking rebound. demand

deals focused remain can aimed consolidation, we on pressure winning spending. reality, market at on large discretionary cost current vendor which takeout efficiency-led that offset on Given

XX on expectation Our of confidence the on margin points meet progress next-gen expansion basis to year. deliver us gives can discipline our year-to-date operating our and that we to XX our focus next program

such change with power which Jan a consequential intertwined primarily by become transformative Internet history, will I business a general-purpose business on as is great generative What such and with Today, I uncertainty new a as is did believe period are international domestic risks. being a NextGen view number and of of and being deep-seated rarely longer can great in the ubiquitous periods compounded in of detail driven as technologies change and of uncertainty become simultaneous by believe society X The decades just periods could as for AI, immense a my we more ago. change. of read share coincide. Taking moment. uncertainty

this I reality most expect clients. leave will

left is with navigating Cognizant are make to I focused on bets to in own or choice position are be prepare some achieve to if in include technology great uncertainty However helping transformation build the muscle, them big becoming a a but position future, for peers. they whether AI-ready. to this them by they by significant no -- which not investments behind in fully their helping by underwrite savings them can believe

strategic, positive global and and especially to provide dimensions: turn to left our I'm details Jatin be know he that joining with that Jan's Cognizant's I transition additional all organization, a Officer, operational the recently cultural. closing, partner earnings He I'll that, Financial December. to Cognizant, across on ensure next Dalal to appointed In he's are Chief will this to agreed that . this we're many on mark With is we over he aware smooth grateful financial, call next in and be us until what Jan early with you Since call want year powerful all a that me to excited last been so and to you to quarter. [indiscernible] us stay indelible

Jan Siegmund

all the kind working making welcoming time in great the here with is you been world memorable has so who years an ago great this an our -- people hands into CFO Cognizant X you, at Ravi, I'm the family confident services for IT many leaving to of I around company and know, you accomplished associates and executive. for experience. and want call. of me a on such the Thank experienced all It Cognizant I'm that thank of words. with many pleasure for a my

Ravi Over leadership to rest working smooth the the I next Jason several look to the forward and ensure a months, with transition. team of the

that to larger despite third within a guidance guidance which from by is discretionary We expectations. uncertainty. touch NextGen our on our delivered Adjusted investments, operating and and revenue will range also results. longer-duration timing driven to pleased of quarter our growth, which the bookings continue to driving We another later. modest solid environment spending range -- our of some in our turn upside economic deliver let's be soft margin exceeded ongoing I engagements. reflecting that, With savings program quarter were

quarter. on Moving to of the the details

constant weak Third growth increase X.X%, continuing This quarter and impacted contracts billion, quarterly duration to to At an softness basis up better in the same of over position XX-month of near-term our grew we duration Year-over-year basis, X% but includes XX% discretionary smaller contributions but year X.X% our to the prior acquisitions. was duration in is will growth spending. future currency. when last was time, driven negatively dynamic we revenue from bookings from the a period. discretionary the larger Year-over-year, Similar revenue longer experience quarter, $X.X trailing short revenue spending are accelerate our put has driven in X.X% a revenue primarily XXX by growth sequentially. deals. believe approximately us On points declined in improves. by

reflecting of rates mentioned resale benefit prepared third offset the Moving his integrated the quarter Services, the declined that on strategy will from discussed with Ravi offering demand products to results Within currency. across in where earlier partially regions growth remarks. the X%, be in revenue all segment decline was in subindustries. third-party year-over-year constant the connection This for environment our Financial and by in softer

expect Looking a and this remains ahead, we in the market will challenging, segment again the macroeconomic meaningful impact have believe the for fourth uncertainty quarter. we

was year that Growth payer with and we That a leadership. profitability. rate I said, under approach the X%. we go-to-market which resulted signed in meaningfully in is negatively revenue renewal working improved and lower make Health correct believe customer, can hard declined a but new run by revenue subindustry are our to what meaningful Sciences this impacted a large progress earlier we control,

been has and turn larger clients in softer Products completed recently clients performance to end and spending. addition, among investments and than strong modernization In Europe. revenue less market of growth own grid discretionary have which benefit their utility their impacted acquisitions, by grew reflecting led challenges, company-specific X%, by driven our in Resources automotive customers several the from from

revenue manufacturing. contract globally. Products by our offset with QX, in geographic recently constant X%, engagement year-over-year and X%, revenue partially this less and the of new perspective the & our these these scale with Growth expansion from solutions partially the America vertical down expertise Sciences are leveraging currency includes was Communications, in This declines Continuing North within pressure areas driven awards. by growth portfolios. a and in revenue and launching largest was to in in rapidly CMT by This than ramp portfolio completed Resources. from our Services benefit acquisitions areas current was innovative and Financial in Technology who Media Health customers growth reflecting in increased of offset

outside GGM, resources. strong of Europe, grew within and led customers which approximately markets all America X%, segment Growth include Sciences X%. or which Life global North growth was included and revenue CMT, by growth and products our Sciences Our grew Health within

XXX overall Finally, of QX, of Financial which in basis the segment. third-party resale was points our products to contributed revenue Services growth in the the majority

Now moving on margins. to

we the to GAAP approximately impacted XXX points. our This our margin next-gen During negatively basis of by related quarter, operating costs program. million $XX incurred approximately

Excluding this margin depreciation over tailwinds last cycles last from to adjusted of months. impact, negative from impact was XX.X%. offset our our from costs adjusted partially operating the the and operating quarter, program XX Similar the by margin merit our next-gen attributable the increased savings Indian to included X rupee. This compensation was

quarter the adjusted Our QX GAAP rate and was QX XX.X%. diluted GAAP the in $X.XX, was tax XX.X%. quarter Adjusted was rate in EPS tax EPS was $X.XX.

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

approximately to $X.X X days year-over-year. sequentially cash was cash year-to-date in which million, QX days and billion. X increased $XXX of Free flow DSO flow XX free days brings

free XX% to of For income. to the flow cash represent expect approximately net full year, we continue

repurchase program to repurchased our under million. billion $XXX remaining we XX dividend. $X.X share shares quarter, million At about share under shareholders Year-to-date, end, our $XXX we we through returned million approximately shares X $XXX and million authorization. have repurchased the regular our million for for During had quarter repurchase

our to outlook. Turning forward

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

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

of heading guidance of our heightened revenue uncertainty of than discretionary recent range reflecting the into year. is end QX level a and decision-making wider historical regarding client Our spending practice, pace the

the $XX.X billion, which range will as be approximately expect we both down a $XX.X is full to in of foreign billion revenue do and exchange we in expect currency, rates. not impact from to reported For the as year, X.X% flat, constant material

of This negative billion points. plus currency. or X% expect our be We compares approximately constant to $XX.X X% contribution XXX basis to guidance in $XX.X to still range prior billion to growth inorganic

Gen lower to XXXX track, remains lower reduction the from Our of previously. $XXX previously, million a estate the reflects program in cost third-party are versus -- we million expectations the last real further of expected $XXX are now million versus and incur real $XXX exits. $XXX that office associated $XXX our charges with pleased is million to space next about costs net This for next-gen versus costs. to estate as share consolidation we million I'm quarter. cost result as for now incur to previously. expect year we total on in related unchanged million also now $XXX We reducing our With are this assumptions savings expect

reinvest beyond. intend the still we previously, about of and the spoken in NextGen XXXX have opportunities majority and we growth savings to As

Moving operating on to margin. adjusted

our prior XX.X%, our which end high are of range. increasing the guidance modestly We is to

and is interest lower provided. As XXXX We the XX% QX previously versus rate $XXX an and XX% a seasonally of approximately operating XX% margin reminder, income levels. approximately of adjusted range tax anticipate typically than still of QX million to our

addition, we approximately shareholders to versus share prior $XXX dividends In In through in deploy an XXXX expect and now of share quarter. total, share return we million, the of repurchases fourth $X assumes to to which on million billion approximately expectations XXXX. in expect $X.X repurchases repurchases in billion our $XXX approximately additional

approximately XXX outstanding Our unchanged shares million. guidance is at for

of $X.XX previously, and $X.XX our $X.XX This in operating updated leads to earnings revenue adjusted expectations versus our full adjusted to and $X.XX share year per for guidance reflecting margin.

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

Operator

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

Bryan Bergin

pipeline, offering expansion So the or But what margin thoughts environment base share and I understanding then based here? clarify the on dynamic. for XX.X% deal and and appreciate activity want is margin XXXX that potential. you're the commentary And on bookings you XXXX I to early quite the in growth duration adjusted that seeing of well? that's backlog raised as you first now guardrails just can off behavior any

Jan Siegmund

Yes.

our to So one of easy midpoint Bryan, XX expand of point I'll the reaffirmation catch of our points margins landing XX by is our to Yes, our the intent first. basis at up XX.X%. expectation,

good a that's assumption. So

be For the a we're giving of seeing might around Ravi you what color market. bit bookings in little momentum, the

Ravi Kumar S

Yes.

the very saying been well. our is I've our this quarters last and Bryan, So as bookings momentum momentum X deal quarter strong. for in this

swimlane We lanes. efficiency, is consolidation, on to spoken also I've and cost about see are good the in a this the but about transformation, deals savings continuing deals. more category we kind There efficiency-led of underwriting versus see I've transformation. vendor to the We see category this transformation-led X spoken traction. swim

earlier in is the I of of together. things -- one my -- of is and a change uncertainty -- coming this times my spoke on So a remember, lot period remarks initial

So change who cycle. us. clients significant change are the of the X. is ahead funds There wondering CapEx are -- navigating clients And

X and quarters. we cost it's template though, to out the very, I and take that. been short are discretionary is a run, the to for great underwrite I well fallen very soft. spend ability positioned happens the think, the has transformation, mean, in savings over the the think is What really So last I

levels gestation we know second to come as the backfill the that a have you in the deals as that well the their large won first peak have of to So and with we deals quarter, to period potential. actually get

contribute year. momentum the don't And to environment won the course, year I next the deals will continues. what this soft. of we hopeful know are more mean, year. that deal What the the we to spend. continues very It discretionary is happens over next I So large is

and So spectrum. cost vendor well. see And the are is, efficiency-led I are takeout, that we consolidation seeing momentum winning to but the large how very we'll wait optimistic happens, I'm we especially deals think how the on about have discretionary across deal

can the year. bookings You see momentum this

So the X is of. we CapEx Perhaps they which to these early are the catch as cost transformation. continue, -- on. Hopefully, kind that going sure discretionary. not if it takeouts of cycles is Hopefully, we unknown happens, deals if as for trigger piece the that And happens. are

Bryan Bergin

Okay. maybe resale on of quarter, mentioned -- Understood. here, And third-party assuming that resale outlook? just in to And last average how the my to you are think the in follow-up forward the X the does piece I bps over amounts X products, the the XXX compare quarters? you

Ravi Kumar S

Yes.

over that So productivity -- about efficiency-led strategy take the in large software-led all deals is had of in to be way of Brian, I people and it, spoken to to a them. all about from our I've -- swim with lanes, to participation all spoken all going

upstream, and Now you coming is mean, it. attached upstream services, situations sometimes And happens have downstream timing. in. is I there is which for software downstream in it's coming what have in significant the these services you to software

deals. have added the to So have is year before this we've in then But had really what of the points you we basis these look timing quarter. in XX at

software, and we which bundle you're one it we quarter, see for partnership. a offering, quarter X, to in you opportunity ServiceNow the services with pursuing. a timing that's a downstream. a could $X you has actually in as announced have attached to are partnership going And of billion, we particular one And the software model. managed deals is services strategic and particular always And have the could services it, joint quarter come, reusable in large have Now assets and

that's of this. process how see you -- it's So the

have the time, over and sometimes upfront takeover, downstream. there transition is asset and on Sometimes effort services upfront productivity you are there you sometimes people take is there the have upfront,

I hard quarter-on-quarter. going get it's this. they pick you're gives terms quarter large to flow, But how that of may, So see the constructed of which to you if nature in deals

Operator

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

Ashwin Shirvaikar

of I effort question say, start, number just the if is before to yes, I the since all and over Jan, for last is, thank you going changes. you probably call, Cognizant, to be would earnings you work your made years. this come The a

be be talked the is infrastructure. raise going you would it next seems come discretionary about good to large that But between, a Cognizant's that competitive there me, You you to isn't place. to to back there it competitive when and will does work in It need deal in to seems but because ability mid-single low difference be and in win how the digits digits. now, year say, be single

Jan Siegmund

have in with I color The overall position Yes, I'll we the to think -- a an give more much clients, really improved X last our of or little bit answer, I that meaningfully think, quarters. but Ravi over adding has will be X this.

have high. of kind Net really reporting of on is was this in -- the Promoter Scores at historic Ravi coming in leverage a We that statistic the

the of number escalations see comments and But from one. is another we can the just

talked call that but coming the haven't obviously, been has about in We down. it, in parallel

has That's better. So the been attrition partially service by fueled quality low rates.

deals, the that relationships type, now, type kind more productivity overall of where the the discretionary have structural we client consolidation have the on So meeting improvement with improved. has has meaningfully vendor client spending have and of the philosophy think row. the cost we right And are our back needs. a really taken I and needs And clients very embraced

are transformative up comes to want of be and that deals We spend it. there popping and and for our clients going the when discretionary part

relationships high and I Ravi? deep with going feel should ready that having for be to to So focus we're on relationships clients the do so. client we be our and

Ravi Kumar S

Yes.

thank So you, Jan.

very -- well think I said.

question. the So thank you Ashwin, for

And it to it -- which over sustain managed something built quarters, the very can and that not for and from infrastructure X This invested all in came last you the on improved we that I'm automation have and actually in, productivity is sustained levers, quarters. the for which future. we're muscle very apply do confident X classical I institutional now right. muscle January consistently the This the infrastructure services is that it. to You're kind and absolutely is we way deals. takeout deals can of in large support We've did confident we exist to cost before.

the to good our of I'm We strong spend is did with before. confident transformation muscle providers spend. naturally that on going clients, for have be discretionary the we the comes discretionary I as good we very company because mean engagement have the also back, are infrastructure

some in use the the -- momentum ways, of could, current company. discretionary support to strength of the muscle You historic the discretionary deal

I Now very which year, which high that. I survey come raised scores. are very, there and X we is have Promoter things Score an ran this X historic important or the And Jan think think out We Net point, have important. of

They've gone have and rates attrition even next the Our down gone trending they're quarter. down. into downwards

scores an all-time satisfaction employee high. are Our

discretionary lanes Our client each which of to strength of all-time satisfaction to the means is a high. more engaging back, lanes, variety scores are when us the going on these comes over back relationships. with of those an swim much are swim Customers contribute

I'm Promoter thing back. one Score form. saying is there's or is the Cognizant back our back mojo fact, with Cognizant survey, about on which me it, some is Net customers in which in really So registered paraphrasing is the

to back that spending our to as and think it. which get start discretionary the momentum, customers the spend us I when will is allow

I think as back. very foundation, which X foundation. I have spoken said, about, is we The have clients our Cognizant things this So a strong set

lower lower is more second of these the a The agile as good And execution, it comes responses have discretionary on much rub actually stable back. much -- employees. would off and leadership, we turnover significantly much

Ashwin Shirvaikar

Good hear. to

again, is you on structuring, on margin signing, of The new performance. question any and The of get future a together are today terms various need deals the and so think have doing you you you second to on in it's good terms potential. of partners are I that what question, margin job in of mentioned how the is flexible that Does deals bringing to forth. so there be now affect

Jan Siegmund

Yes.

example, growth competitive expansion. keep this a benefit margins Ashwin, deals had in actually order larger deals, in the this obviously, up because stronger a we environment, and on, it maybe didn't disciplined of we to for are we little in the meet investments. to apply and investments some continued and quarter a with when investments really of margin out we needed balance a those approach So sign played anticipated And to initially deals quarter, we they lower through than margin those the bit and

nonbillable and cost have this view controls we approach out. is it about and carefully our large with think I deal very portfolio administrative on layering So playing that supporting disciplined

have very margin exhibit renegotiation. But very that expect that profile. our gross have actually we large And improved the profile meaningfully business historic confidence deals have renewals lower I in the balance next that it that in do we're expected I that prior our I in deals we And to that, meaningfully year entering year deal, have mentioned that intact. call, think we with is also that margin think deals profile of

profile, net balanced outcome, been I now, future. actually So has muted, into not But that say. for it a all the more has very would may and the continue in been the impact

Ravi Kumar S

that So metrics are performance deals. across are we Ashwin, the the just the we and institutional our is lanes enough, the are and commit infrastructure win which to about, execution spoke have actually better thing support swim we on and we deals we when we to competitive -- we first built participating those I changed

strengthening always So have progress. to is -- in This we work that. keep a

continue competitive, stay AI call I and our tools. our competitiveness keep have to and automation them to and it. to price productivity continue deliver continue we our win we to and to tools to as margins by our strengthening And have We tools to them

keep an continue is have to process ongoing to have you -- productivity levers. you where past, working on the to were keep as these the this want and labor-oriented the they because to say, have Unlike to in changing be competitive, you were classical. So levers would baseline keep productivity I you

have we to a hence, opportunity some nonlinearity. And oriented. unique create technology are they Now

did In the we participate past, those in deals. not

Now them. we and are participating winning

high. really confidence has the So been

Operator

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

Unknown Analyst

trends particular the I'm rates, of driving ramp whether seen that's over of you've stance? as anything beginning Jason. we win be at or couple This the of narrowed, changes the whether that start and ask as seeing into DuPont revenue what incremental into additional the cautious XXXX start end guidance look is Tyler a softness, as look we past geography, updated looking just I you're demand wanted months, in -- environment XXXX, to even to being we that's curious may on times about vertical, offering, service like when for the that, the

Ravi Kumar S

discretionary the around related uncertainty the think is to I cautiousness the spend.

not bookings are in very What and the we our our in a seasonally deal is much facing a vibrant. as I unable by And impacted? momentum deals quarter certain much will What large think slow we to do momentum quarter, our market our because furloughs and including get deal slow predict know, especially gets seasonally quarter of always it, everybody is us. of to continues discretionary is neutralized well. we is are What how how large of this. X the be

fair we extent, the adjusted be in was what only could felt keep it risk keep that risk quarter to to believe that And we we X. -- we soft a

Unknown Analyst

verticals speak clarity you're that budgeting don't just Okay. this rather compare That's or sort just of last kind regarding bit more of I visibility But very certainty in than decisions. And budgets and visibility seen, And guidance into how deeper any to clients go the current appreciated. does there early you just it's to 'XX just others? Or into little conversations sort seeing macro just then, still certain can with anything and there I a of that give guess, on choppy you we're helpful. having XXXX yet. know even would environment very is with given have be 'XX the time year?

Jan Siegmund

Yes, jump really the because of we to expansion. basis kind half a one, margin I'll we -- in disclosed P&L to of XX actually lot of we're for -- XX think number we points already our of committing I gave

spending be today has X Ravi range know quarters. months. the we will revenue going forward think economic last if that increased the uncertainty is, said, But the softened now has I so -- gradually, you And as throughout discretionary subject and X in to our what guidance call

not seen yet. stopping have trend that we So

later our we if around or developing budget. well. not same quarter, the early of of honest in are if really knowledge, budget fourth part And their time IT turn quite it's lack be in our and as known forming own clients in the to be budgets their at is year And will year, to the it's as the stopping going us to

of be is scaling simultaneous for always our process. now that will a What the the longer-term has improved kind this that of are and contributing in 'XX. visibility obviously they is So us deals and in portfolio

to really safety, So kind it's own us of assumptions on -- a have you of bullish development on you spend next that bit like, bearish. just think next economic determine for so. then year? the the more Or do same you that self or discretionary do can year and for then outcome revenue on and to -- I gives and planning a little And we are your are make that will the

we will go I under. think that's what really

we'll and We -- February, in -- process that. commit but February, haven't of beginning to in a -- finished that and

Operator

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

Tien-Tsin Huang

how this at drill ACV and deal, just couple know is terms larger and the book-to-bill would But how mix TCV? I guide term, ACV to that between quarters, short quite of there of the in in, translation, you Jan, next the the X.X. to for maybe consider with us TCV versus I towards in shift want high

Jan Siegmund

X I Thank now bookings the you, had duration my years. in that duration duration was roughly previous comment. The in this calls -- disclosed gave average our around remarks, we years X And and historically in that. for I Tien-Tsin, think our and is about

then for you have actually shift. increase. that's scaling. larger is And down. on the mix this annual obviously, meaningful revenue some deals need ACV, top, that And a it's So also expectations The

have you're they thing do completely ACV to up you -- you're year, assets starting your get building in So because ready. need symmetrical not transferring the first is the to and and the to do infrastructure what

So 'XX. of larger the the and of deals in is ACV come will delayed some

translate deals that same million And we year always time, to have a below the typically deals of of at the TCV, are revenue. in which decline $X

you coming So those in explanation few that actuals see in the basically revenue spend back, I'm change. discretionary last things together won't quarters, and that, are anticipating our unless trend of roaring a XX% what the is

terms going in from a of we're visibility revenue entering year probably -- is parts, of the the so too position with that Now moving all in not year forward. these different last

to now I how our is our some deals And next and as to of have So make -- in mysteriously out said scaling balances then going maturing estimate because having prior little bit and my demand a be contribution short-term developing. year. better we larger it to on we'll answer,

in So in have compared the net it to of within setup 'XX, to beginning a of the we is factors that position kind stock. approximately the of are but changed 'XX, similar

Ravi Kumar S

year velocity a in have will that's quarter done did going it quarter we X, Just year, we from you're previous year, happen slope of year terms realizing we won and revenues had the to add quarter the not have is though, happen. what this year, which because said, for accrue X. what change of Jan going it now of because tail that, this have in next deals year didn't large to next to this X, to deals What's consistently

up. deals also We have done large the gone percentage deals these -- the percentage And of new has in up. of has gone large our

unknown question So a on that's spend. change. discretionary The is the positive the piece

Operator

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

Keith Bachman

Cognizant is think program a and of level will, contributing would us about growth a March first I of that Can headwind spend of such about talked still or at a many headwind. is at start kind it proportionality of it when year, to less you've you year much and wanted metric the mentioned bookings, discretionary discretionary to anniversary give either revenues, any you is how it you impacted you sense that the next lot be a as others. comments. think large how deal and next of quarter it of me we low a the as year? beginning follow percentage of discretionary ramping is the duration revenue And what that's that of Because from and growth, deals, today set changed seems if as to to up on about

Ravi Kumar S

mean, of trigger back if question to the taking going of don't you're of are and XX% to that doing, large you underwriting will allow deals coming going savings, CapEx you it's It's The swim of some see savings it we smarter a is next lane but I always those then necessarily difficult CapEx of of to some see discretionary year. which large deals do productivity on means can we're now cycles that swim transformation, bookings. are they the on to of answer large the savings how it lane be deals doing you the cycle. they are because some to for the them clients -- then not actually trigger the

they're leverage use to mean my met savings divert living can the CapEx of because out. our to, the very divert done And take are early looking I've transformation change. got What the very, really spoke to The into and clients you and cutting more I clients some they do mean, the them navigated takeout XXX of to discretionary. this AI all the is, they're the reality budgets many would savings for They're about I -- actually transformation can engagements. you of because of forward savings cost to anxious related not you saying the they their from this they XXX-plus year. today, less? either saying to in are want period if the have have to -- technology is have uncertainty about CapEx. CapEx IT scale we preliminary it or AI the they covered I need they come and The the will up, themselves cost

significantly will That's continues, going something not it's then change trigger I of which will environment, coming see to cost what another trigger discretionary create hard know a takeout in spend that you're hopefully back. and the virtuous the overall that year? which the cycle uncertainty you whether a that is now. move headwind, and then that The really obviously to clients, see going turn, positively, these will do transformation is predict for to if to savings our positive cycles But initiatives next cycle. issue hopefully, economic triggering the see into you're if revenue of is spend, going to But which not is

because tricky deals cycles a these to these within answer, And discretionary. are a CapEx realized all all between mentioned, trigger the they are need it's million. of discretionary So the year $XX you one $X same all all to get the small spend, for as Jan They deals. get

change So it's a a very and simultaneously. of a of time unusual coming time time, uncertainty

takeout fund there them. potentially them, And we cycles are deals don't, So they then triggers CapEx if that's can the cost fund other making. and of I'm the have to point

Keith Bachman

Okay.

for discretionary and and want think to range Jan, you puts metrics revenue, Okay. to the then I couple also improvement that last point words, do you should -- to know give is don't XX basis with margin you back thinking about wanted done to versus as thank of year. leverage? for other end upper Or years. in work takes And next OpEx how else XX but about? simple think is end over anything question, you've it the the I you direct greater comes the all the we just as lower there that has as be associated about

profiles. cases, have many And ramps deal particularly, you in and did can mention that the margin large indeed, lower

points it takes basis relates Just any to as want us puts the to that about XX think range. and XX to you

Jan Siegmund

the we're impact not to quarter, with impact the were initiative what rate yet. some run have really the executing our And full third in Look, plans. going we're but according to entering well year NextGen and

we NextGen year. will a so have And next of on lot momentum

factor. that the will determines mix elements the your on 'XX calculated you that's and reach reduction big of in -- headcount our a 'XX of the factor kind our a us million revenue be we that offered own savings is is side. for need our revenue $XXX reach estate scale anticipate other in for program real of can lot savings shift. And efficiency on the growth So opportunity probably have that and and we obviously to -- that for to book factor development momentum I all to assumptions SG&A

involved. a little would just the the you And is we invest into expectation. and very of deals there all problems, with if one risk run that style of some our we a their the bit the don't are executing And is scaling problems, nature little cost. well larger to be more second solid and deal scope And factor give margin we'll large help to develop of need maybe to will if this by our the I us you deals, bit execution in and

considering going So I factors, the sustentation give we and X margin major as the those be our think, will range be that it. we're of to

Ravi Kumar S

Yes.

the NextGen quarter just year quarter savings real full back end had the the impact kicked also program end as X in next X, at impact a in course, of So will Jan add at really next X. the we off said, to the quarter estate accrue well. will It year. year. to what savings of And come mean have I

that margin that we year. in we we points that set reinforce next incorporating basis expansion, early XX -- And we reiterated next wanted So that to we year which probably in we at have out one into committed the year, XX work message -- can this the we the now of earlier the reasons have to that are our we working year margins. that's to going why as we look get

Operator

of Jamie night Our Susquehanna. Friedman from with will final question the of come the line

James Friedman

was see you that you trends. as Is a you observations different see if usual? do any that really acceleration foe? And some Do about share or I high-level or than wondering could in-sourcing friend deceleration?

Ravi Kumar S

that So I friend. as see great question. a

observe remember, ask that even technology had for was our strategic that an technology initial you our is comments, stated clients. my to this And you In enabler if carefully stated question, I fact, I if clients. before

muscle, help it into the suited do muscle. build Cognizant technology their own because a best strategic It help is differentiation Every integral is build own in clients their to clients our so. industry is think I market. probably embedded products. to to is have them deeply we is technology our to Now tech the And to their industry,

even help and us our our entrepreneurial people attitude and to our think spirit, potentially I AI global but human to companies technology curve. infrastructure, lend transformation, that build flexible centers and that model, them you learning automation our our our is infrastructure -- capital, is their I co-creation We think infrastructure, actually the just want which capital, to their of infrastructure, my even if build human stated would capability not this own lend remarks, do co-creation your operating we our as ability maturity chain Our because value can through lending, training our them lend captives take culture. actually that they in will once we own and that so, you muscle, support sticky

So than it's before. much sticky more

for unique on a So I offering. we double this see and this opportunity to as Cognizant, down want

James Friedman

few that companies at of aware not And increase in of least the it then you And emphasized the go the in sequential headcount. and their headcount. prepared your remarks unnoticed I'm that's you're one did growing

question you planning indicator my And to right that realization the them where you is we that what So I to -- about leading the are deploy utilization anticipating, -- assume, commitment headcount think increased from headcount confidence be so would and those now? is, a gives as but are people? because what to of growing you the

Ravi Kumar S

positive headcount quarters, growth. we After had sequential many very

is but It of of reflective near needs bookings. -- Of tiny the for is the commercial the and of needs a the reflective course, is it momentum future. is reflective the future of deals of large number, it momentum and the of

very very if satisfy that and confident booking the have very, I'm to deal fulfill headcount we our I'm So continue momentum, on those -- to increase programs. will we

momentum -- it's about is indicator how encouraging it's up. shaping well a our So encouraging very commercial

Operator

And We management of have question-and-answer floor like I comments. our end would session. over to the for back reached the to closing turn

Tyler Scott

We forward up for joining. quarter. you look Thank much Great. next to all catching very

Operator

Thank you. Solutions Quarter Conference concludes Earnings XXXX today's Cognizant This Technology Call. Third

you You may Thank now your lines. disconnect participation. for your

Cognizant Technology Solutions (CTSH) 1 Nov 232023 Q3 Earnings call transcript