CTSH - Earnings call transcript Q3 2024 | Cognizant Technology Solutions Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, welcome to the Cognizant Technology Solutions Third Quarter 2024 Earnings Conference Call. [Operator Instructions]

I'd like to turn the conference over to our host, Mr. Tyler Scott, Vice President of Investor Relations. Please go ahead.

Tyler Scott

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

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

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

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

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

Ravi Kumar S

you, Thank earnings afternoon, for you call. quarter Thank our everyone. third joining XXXX and Tyler, good

an priorities which accelerate with and operations. strong results, expanding strategic third of quarter adjusted and of employer represented our revenue in industry are pleased and our growth We margins earnings become our sequentially growth, choice delivered execution while to modernize

We are spend rebound financial gradual cycles of and seeing in a gaining wallet services. share

opportunities, and on revenue is led and focus Meanwhile, growth. together a AI-led traction in a differentiation large health driving all-round While to our strength deals sciences performance. rigor in historical a significant talent operational with strong steadfast investments and

our strategic results our summary on with priorities. update begin me Let quick an of a before

recently currency contribution. X.X% basis currency, end Revenue constant high including constant inorganic by sequentially, guidance our inorganic range. of completed grew XXX $X Third quarter of acquisitions. Year-over-year revenue basis grew was the points in approximately of from revenue approximately approximately of X.X% currency, including contribution in XXX billion points our at constant

cycle. by driven our year-over-year, investments fourth growth XX.X% the to approximately EPS improved X%. impact Belcan Adjusted in quarter margin strong EPS bringing sequentially, partial consecutive year-over-year in minute despite X% cost operating growth, year-to-date of Adjusted annual grew discipline of our quarter approximately our from

against the Now let progress made provide update strategic priorities. an on we our me

growth. accelerating First,

our X return more. contract improving offerings. in growth by compared Health Sciences Health X.X% $XXX largest driven deals and and maintained deals, Sciences the strong momentum, during all deal driven in momentum by acquisitions. Our spending. our completed Financial contribution year-over-year sub we was to returned X of by with execution financial our in XXXX. growth, backed a each year-over-year signing Services quarter XX strong we And signed constant million and differentiated large partial XX recently total Year-to-date, of or segments, discretionary to our of currency value from services increased

of at our We are and this all-around order particularly the are I'm in the AI pleased deals clients' list. infrastructure services. with in sustained engineering, and remain excited of the momentum, lines. forefront getting traction at agenda to large must today, in about digital the momentum service believe top we across sustain the We where we is innovation cloud industries

strong to flexible allowed Our operating quickly model and intimate to us relationships of expertise engineering domain deep respond heritage opportunity. client and has this

own profound to the ourselves a our it we while accelerate to chance applying our also productivity. We adoption clients. is AI shift, aim have what call I does Cognizant double engine our accelerate significantly tools to much offers rapidly as it disrupt developed as to practical clients transformation for as it a help because ourselves

AI $X mid-XXXX, announced opportunity platforms AI to plans heritage, our into billion with early capabilities. Consistent the initiatives, in invest we and spotted and

our over powered we The examples, costs workbench some are foundation speed, XXX,XXX phases we the by basis, implementations the per are that supporting clients data Using to us. our the Cognizant human modernization increase accepted projects and and Today, hyper an annualized our and deployment. tooling, That lower utilized which to It's is the strategy AI great productivity. code into are with enabling with Today, than various is technology AI reduce co-creating is a in clients code we productivity data integrating X developers adoption where of lines our our share platforms gains over of toolkit, with of to we and month. more AI XXX testing to developer XXX beginning project how as share with journeys. me cost XXX example which of these Let clients. clients' of means AI clients. of by of are predictability accepted and Flowsource our platform, generating effort a improve is improve million have clients. lines And our productivity deliver we

of Our Neuro automation single end-to-end AI-driven clients operations, bringing is for and in IT It Ops infrastructure adoption. various late in phases testing XXX a and of glass. launched Ops platform in also XXXX enables pane IT supporting

leveraging strategic to And Neuro modernize time technology infrastructure its example, source for intelligent through greater GenAI and platforms transparency. and market, and through enhance project is cycle, helping life an flow Neuro faster IT IT together operational increase scaling Ops DIRECTV DIRECTV DIRECTV to automated efficiency development As our is collaboration increased Ops are and IT across resolution. its resiliency both Flowsource detection we capabilities. with software innovation promoting and a issue

additions our new to X introduced recently Neuro suite. We've

opportunities. capabilities scenarios decision-making to our platform now appraised Sciences tested on available Bayer and aims enterprises foundational several effectively. incorporates These and First, decision-making model while our aim have by enhancements help platform. revenue AI navigate Neuro simplifying the to approach, others generation Gilead like help complex data its market problem like identification, creation enhanced AI Clients to orchestration, improving and clients

cybersecurity and security across Cybersecurity cyber enterprise is by Cognizant solutions point improve enhanced risk enterprise. resilience orchestration This resilience orchestrating tool help Second, designed Neuro security for management. offers AI-enabled the to cyber integrating

end AI XX%. least by at helping We product through productivity user also infused have our improve suite, TriZetto

across second have now enterprise, than early end XXX engagements more compared we about X,XXX GenAI quarter. to Looking of at the our the

starting in in cycles, significant categories customer aggregation of for X had traction AI experience, seeing or We applying content with software and and tech by early use which followed generation. use cases employee cases velocity, are the content development highest to Tech

We demand in addictive and see manufacturing. broad-based optimization and detection, across regulatory services. care medical discovery, compliance fraud financial imaging health industries, assessment risk and design and maintenance including Drug transcription and credit

week, deliver our are integrated also ServiceNow the for that with threats levers announced to partnerships. improve integrator across levels services integrate Partnerships update the market, cybersecurity joint Cognizant enterprises and capabilities to real-time be our strategy relationship growth to our for leverage to security. will capability layers to with and which AI through opportunities industries, to This with our that of cybersecurity to in their acquisitions recently data strategic excited first Networks about be on an accelerate overall its digital new important bring significant workflows. agents orchestration keep customers I'm fabric announced and system giving AI AI-driven we last will workflow tightly and data can evolving

we implementation software to exciting of to expansion and use bringing platform rapids, announced of NVIDIA Together, infrastructure aim transition also together new and AI cases. of help GenAI modernization with capabilities offering. an NVIDIA the to part partnership, clients accelerate our enhance the GPU-based data NVIDIA our We to

Services signing to enterprises week, and strategic computing with agreement this Amazon deliver strengthened we earlier focused our partnership advanced with by a cloud collaboration multiple capabilities Web industries. services enhancing smart across global technology And manufacturing plans solutions on for

acquisitions. to strategic Turning our

automation billion is us IT market, positioned projected one year in as our AI-driven $XXX outpace to largest this the access earlier Belcan market as And services significantly acquired acquisition and of Thirdera to solutions. the of which enterprise our the ServiceNow has and workflow through partners ER&D XXXX. legacy services a leader broadened world's

to and blue-chip with notably footprint Additionally, in our client I'm commercial aerospace progressing is industries attractive that well. the it has happy base. our integration defense increased report an

seen have Belcan joint We opportunities significant in already identified as the model-based areas offerings such and engineering pipeline systems for potential expertise. where has early new

accelerate in We actions are market. resonating believe to these the growth

see the we XX customers highlights industries. investments a we are additional to few to last in have share bringing Financial months. over from changes Let Within of continue traction made me across Services, the we value our the

bringing capabilities opportunity. every to and breadth the our are depth of We

example, cloud are ongoing journey. Citizen supporting transformation For Bank's we

in-the-house collaborated with have We And we customer system management new that helping capabilities system. to are banking citizens Citizens elevate their a streamlines resolution. with revamp a their fraud modernized this with experience

to the in U.K., the sector. In success continued we public see winning

to expanded looking relationships to needed with Under drive of valuations the signed office and future agreement, we benefits. $XXX valuation underwrite his And provide U.K. the and Majesty's advice our the with are greater During was third one customs. quarter. and in government clients still property we'll U.K. contract million This than support taxation productivity quarter, revenue innovation. agency the a and the of

incumbent. us significant quarter reduce GenAI. AI-led was of in improve A to long-standing global customer allowed operations displace $XXX the deal productivity streamline to support technology a transform using For outcome-based the to the costs. consolidation leveraged example, million operations, GenAI we elements vendor won where approach, This pricing third with a we opportunity agent client and a which differentiated included

boost through Now to bearing more upskilling, to demonstrate and mobility We're believe choice in an We of that strategic fruit are can employer are investments effort well. moving our employees becoming in in as access AI grow. where the and an on to in next talent our our industry. notably of our we priority adding organization learning

to grassroots more of clients. which related mostly build to presented initiative, AI BlueBoard XX,XXX ideas, XXX,XXX continues ideas, being are Our than to innovation with traction

months is stayed Forbes world's the year -- And straight we attrition recently multiyear XX employers. second for named are voluntary scores strong. XX.X%, engagement services for lows. we of near list Employee best were to Trailing tech at

Our the well Synaps was another X I nearly example when impact learning. people program, prestigious the #X is great Fortune a to of deep which as the commitment world list technology Synapse. its provide million while on worldwide named training the delighted us change in to aims recognizing of to

list more to named independent exceptional This our reliability were based on our of recognition clients. we than decision-makers of X,XXX the reliable delivering Newsweek's week, last Just highlights most companies. services America's in #XX survey

are believe position in services, joined ourselves for years and We our and and more Cognizant by our nearly clients. I I to strengthened healthier that X when strong of ecosystem talent growing the of is a our confident than opportunity developing resilient AI And portfolio breadth capabilities, are we capture ago. expanded and partner domain

brought Americas weeks events and of discovery numerous Texas event We Austin, In our together initial closing, The clients excited capabilities over a strength AI early of offerings. incredible. large and the deals buzz in platforms, products. enthusiasm was productivity to showcase XXX AI-powered about the were and momentum to few ago, we with our

leading to the streams automation Our products to to AI belief flywheel process is new a and business evolve transformation, revenue new cycles, will task innovation of from productivity model faster business into. to and opportunities tap way

our the against I all over priority strengthen quarter third globally to work the will and want capabilities details to our of that, the With progress thank to the future. I modernizing the operations. commitment employees will clients call cover who their to turn Jatin, our and of strategic for for our

Jatin Dalal

Thank first We of you, joining growth organic time a delivered growth thank currency revenue X third a end solid range return guidance afternoon, high at quarters. for us. for to Good revenue the and Ravi. year-over-year everyone, with and you our constant in performance the quarter

X. utilization modestly automation cycle we exceeded modernizing delivered This quarter improved of margin and by acquisition-related basis points us from adjusted basis we annual headwinds deliver operations. This quarter, continue the costs During a increase increase year-over-year. operating gross driven Year-to-date, that helped of operating became partial within on a increased our delivery. allowed to which merit despite XX.X%, adoption margin XX.X%, adjusted effective our AI sequentially, us impact from and XX August on expectations our focus by XX point of margin to and

Now to details. the turn let's

acquisitions. revenue quarter currency. revenue inorganic included constant points sequentially in This recent of points was billion, basis of Third Year-over-year, in from basis approximately X.X% increased currency, contribution weeks XXX growth approximately $X growing X.X% of Belcan. including from XXX constant X about

From strongest broad-based payer, was segment, Growth year-over-year currency. standpoint, Sciences was our here in constant Health growing an industry and life X.X% provider across sciences.

cloud cycle and provider particular, seek delivery including continue for of demand payer side, has offering true services. platform the end-to-end On scalable our clients to In revenue modern its seen for management, clearing TriZetto our solutions. house solutions healthy

growth has Sciences of the by large recent Life deal side, the ramp-up been wins. On supported

currency. environment constant and segment quarter's Services to year-over-year Financial an added benefited Our grew in from last X.X% uptick and the execution. This in discretionary performance better momentum demand

and have we In Growth in both and led insurance services performance was banking banking across Canada, by customers. clients seen North financial strong America.

Products and Resources revenue currency, constant by driven of year-over-year in grew X.X% contribution the Belcan.

weakness aerospace of manufacturing, seen automotive in have logistics, with pockets industries. and clients We discretionary

long and This grid area, software-defined drive sharply opportunity focused will significant we smart vehicles on believe, We modernization, are run. the in manufacturing.

a constant X% spending both customers declined in discretionary technology year-over-year media. CMT in across and currency, telecom environment and continued primarily reflecting tight

on impacted where currency. constant X%. Moving rates provided discretionary spending. by Americas all Health was about led strength by third and in from contribution the was quarter increased Growth the growth in and by to driven declined the about will and software the Sciences year-over-year geography, in details X% which be been has Financial geography, Services by Europe This

the geography region Europe. and see are We about However, deals, within which growth recent driven about in comms, sequential wins largest strength in X%. growth and Germany like and this technology segments U.K. growth and delivered in in World And we in increased Rest areas recent by the helped our in the support large Performance we opportunity media positive Nordics. optimistic the financial services. healthy was of our particularly Ireland,

Turning to bookings.

bookings represented lumpiness deals. were quarter down of and book-to-bill. $XX.X year-over-year X.Xx roughly large driven a basis, in the by a XX-month billion, flat On trailing Bookings Third part were X% year-over-year,

North mentioned, TCV in deals rest X million. services the we Europe deals in also $XXX X signed included Health X in financial quarter of these deals X pleased am outside and Sciences, of than X world. a that more had each of the X X from Ravi in As were each and I that CMT. This in America, of value

also We This annual improvement value smaller a in TCV our has to modest trailing last from contract deals saw sequentially. stabilized led XX-month from trend quarter.

muted quarter reflected seeing performance. despite We are this in improved this our performance revenue TCV

margin margin XX and a to year-over-year. third which the points. on NextGen, quarter, operating negatively XX.X%, $XX XX basis margins. Adjusted by sequentially our moving Now an GAAP decrease points impacted related approximately million of XX increase was operating we incurred basis to costs In of of points basis

sequential gross improvement bench operational utilization rigor, was quarter-over-quarter. through margin, basis We which driven points Our this by costs. lower corresponding approximately expanded delivered improved XX and

with delivery our also increasingly modernizing increase making are our We platforms in AI productivity fewer fulfillment help and leveraging to improve operations, progress resources. in

adjusted year-over-year growth XX.X%, This and was was of rate was XX.X%, $X.XX. QX, In tax timing benefit adjusted items. GAAP the EPS our respectively. $X.XX a GAAP and diluted rate tax and reflecting discrete from X%, QX was XX% EPS QX represented of

$XXX up primarily of and year-over-year ended turning acquisition days quarter billion the days our cash business of borrowings on funded X credibility. $X.X the This revolving with to or short-term reflects day mix. net was cash Now in sheet. investments which We of of billion and balance quarter, under the hand XX by and through $X million. cash of Belcan third our a sequentially X driven was DSO our increased combination about

free our year-to-date flow free approximately million, full no cash bringing to $XXX is year guidance. change was QX cash There flow billion. cash $X to Free of flow conversion

XX% disclosed ongoing relation million to Indian the This year flow includes to from the $XXX made first free appeal XXXX negative income. our in impact full tax about net We to quarter. to matter the cash represent previously of of authorities tax continue in expect our payment

the quarter, $XXX to regular dividend. During shareholders and to $XXX $XXX through returned aggregate including through we share in million million our repurchases shareholders, million

under remaining share our had billion As September XX, we of $X.X repurchase authorization.

returned part to new and million have approximately dividends. share full the Belcan through to And shares This approximately expect million to return repurchases of we billion. $XXX issued includes $X.X offset of acquisition. shareholders we the Year-to-date, now the for approximately repurchases as year, share $XXX

forward outlook. our to now Turning

furloughs. constant builders year-over-year to we to of and by $X including an basis, of reflects currency. reported For This partially On lower of guidance Belcan, fourth X.X%. to impact X.X% to of the of representing quarter, revenue to billion, quarter benefit increase offset X.X% translates billion as $X.X this expect year-end full a in revenue the X.X% the growth seasonality,

full revenue of to to revenue maintained to to an X.X% currency. X.X% the We expect now growth revenue to this billion midpoint. For grow X.X%. translates range $XX.X we tightened year, basis, billion, of the representing reported and $XX.X as X.X% in constant the have On

prior basis approximately output contribution, Our of our inorganic assumption. includes XXX points unchanged from

in our of and no to to starting year the be financial EPS of over changes we the the revenue Ravi in There in the acquisition X full shared As we closed are late mentioned, announcement We generate anticipate Belcan in years XXXX. within acquisition August. time will at projections $XXX million June. accretive synergies transaction annual

to on operating Moving adjusted margin.

year We the impact which including quarter of The will August customer adjusted expected be of our operating will are the be impact costs, range. of impacted is amortization also by from fourth midpoint our Belcan, now margin of with pleased XX.X%, that full to operating impact integration-related performance. We merit margin prior effective our approximately full full the expect is year-to-date include It quarter cycle noncash quarter intangibles. and acquired was adjusted X.

and headwinds Gen expect in with program. partially the savings We Next be continued will offset operations by associated these our rigor

For the to approximately of which full previously, reflecting primarily interest cash year, we million compares $XX income anticipate million, balance the assumptions. $XX latest net

adjusted unchanged. full XX% of Our to rate is year guidance tax XX%

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

Our guidance which to year is to adjusted $X.XX from previously. up earnings $X.XX $X.XX full is $X.XX, share per

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

Operator

from is [Operator Instructions] Kupferberg of America. Our first from Jason question here Bank

Jason Kupferberg

growth just right our be So guidance, math X%. the will around at QX suggests looking midpoint organic of

spending about since accelerate a that's in you your in we like if wanted that see to are vertical? especially floor can of So I so, And discretionary turn starting XXXX, just see if think seems to for up right. it off to check is and in largest a Cognizant

Ravi Kumar S

Yes.

was end upper Y-on-Y the the quarter thought around I X of X%. So

positive organic midpoint starting in that X% going I mean we -- the are and going to the is X, is So be to build quarter Y-on-Y upper end you're be movement. to X%. right an

good to it's into a velocity get So tail XXXX.

Jason Kupferberg

some comments to estimate that those Okay. around has revenue been what improvement productivity Shin AI-enabled Understood. coding with savings sort from your the seeing What from clients. of the AI-enabled that I to wanted to seeing efforts? efforts you're back you cannibalization? the And avoid offsets would you're of then come And are the coding

Ravi Kumar S

be this a -- and Jason, complicated would say, to is as complicated economic going is complicated well. response the a little, I a

it and not and we fixed is you Let share how have an we translate and if fit productivity, opportunity clients, your and tell this with me go have have and state time to the to When works. new, nonlinear oriented, labor you which that them. can is better price materialness, business

If you have I developers. our by code X accepted of million noticed, lines mentioned about annually

number keep going that going So up. is to

ability with those our in So to makes benefits competitive more actually share clients market. us the the

a In have very you budgets. positive take of do of because reduce productivity, want for saying and down, more backlog They're we we'll benefits fact, cost my saying share not I are clients down, actually said, mean less. to actually goes clients we side. many that's when of the can these deployment our our

very So a that indicator. is positive

also places in consolidate and, where than increase higher our our to we a can consolidation can to throughput therefore, is productivity gives actually an offer It revenue opportunity us us. -- We peers.

displaced about mentioned my an the a examples actually of a where showed remarks One up because I with incumbent we in productivity. is higher we client

do productivity know packet but still back you means are protect we want and it actually the you Now say, we cannibalize turf, and be will to could But a you consolidate "Look, for it, clients could you work arguably say those we third your less," clients benefits. then it you But if for the do there the where revenue. to is did, our could less. which stay -- times we set go could more you creative what,

say can set, in with a is I is where to actually clients work, price. time but generate you to which and fixed the benefits ways, there the value, some work Then that move would fourth material to work have your productivity

a There development. would positive actually in this believe is very tech I spend. is So elasticity

are all cost why reduce deals can we our And of going clients the able tough. the more we're large you. if winning deployment, actually believe spend that's more curve our you in peers. ahead we and to with are of And comparison to we are to So protect

Operator

from question next is JPMorgan. from Huang Our Tien-Tsin

Tien-Tsin Huang

last ask deal on able want bit pipeline, to here here, signed than from pipeline more deal large the being quite to I a year, . your year-to-date large in Ravi? you replenish confidence considering the

Ravi Kumar S

Yes.

that we year, confident spend sustain cost than vendor way than very did the more we momentum. for where but opportunities not year, million full million we opportunities. look last takeout for look $XXX and I'm also $XXX goes more for to just This up, transformation deals. the year, So at deals, already can million this sustain the are The is million, efficiency XX deals. $XX $XXX consolidation

opportunity always consolidate mentioned Similar I an to previous what in my there's response, using to productivity.

are excited So about it. we

-- Europe I think deals starting now Asia have to are we large and see to in we Pacific.

the In this did in was similar X as Europe, fact, deals quarter, of Pacific in well. and Asia we quarter Asia deal last out one them of was in one large Pacific, them we of had

So expand. mean in industries. concentrated a we this I few also is can

Now taking other we and industry. stepping of up view broader a are

will ago, our from and So work a services has will more which expansion the landscape. come expansion already was lot services related The from come our And BPO. beyond Two years of also expansion Americas, the happening. going tech come will to started from industries.

because tech before. did Now Belcan BPO, services, the engineering we we acquisition of acquisitions some have the and of

bit We many on traction a having historically services, are X player a are we those quite large top we interestingly, of now which services. getting engineering And infrastructure in not deals.

all are X firing cylinders. capability sets now, right So

I'm So deal the how momentum. confident can large about sustain very we

Tien-Tsin Huang

to was good color. great. actually know that's No, I of segues because question your It X into diversify. my nicely That's objectives follow-up

expect that you which to mentioned is before? But do we verticals. care used largest it indexed in Or BFSI priority? that other biggest to the practices. what more being journey now to are your your work the on But now recognizant. some health so still and vertical is expand like, discussed across you're to is Is just of a under we the come? where that You Can geographically of doing seeing into some looks

Ravi Kumar S

say great at look we and the question. momentum grown have, that's Both have have health would mean, sequentially, at X.X% if we mix grown look I No, grown you Y-on-Y. and care, Y-o-Y. a we we've I our revenue

differentiation So have have lead are some very about is in the we and opportunities we we the in the excited care, of the health areas unmatched.

care, health very are So we confident.

Financial services, we track. I -- quarter, are -- is mean, we this on sequential this back the quarter did last growth.

have This quarter, and sequential growth. growth Y-on-Y we done

different again, financial a services So has muscle. very

think we I have now stabilized, winning that the and we we believe are do share there. wallet

have, aerospace. unique because now opportunity clients that's in in I And believe, in access -- would the Belcan we with and have to industrial We blue-chip a manufacturing mix. they have

us we breadth have to capability tech sector from are where capability deals, gives we do to build in a engineering industrial services a into and win and think a to way which automotive. going believe We services. have a of It set go chance muscle manufacturing to that engineering, And deals. we is now I large

to put has The I'm comps, get going presence. you and there of to work we been comps. that's up, picks much spend good progress on think a lower Where a pace as team have is energy gas, have make vertical we we that on. something which But moving. to I where that noticed, oil a have have And if in lower

services. the So the way technology from essentially created engineering, done services the we capability is have years, all a and last what infrastructure of of BPO, idea X breadth we've

deals. momentum work do more the We very this us on international large we've sustained on industries. markets U.S. the expansive has far But to our strategy -- have outside with to I keep expansion now opportunities expansive of pleased have on helped because the progress so the made created

Operator

Goldman Next from question is from Jim Sachs. Schneider

James Schneider

momentum the see you in to care, health about earlier. talked Good just

And to directionally not your us might overall maybe business but Obviously, think lag up which XXXX? corporate verticals ones of outperform last a you might backlog you your which you little on in growth think as guidance providing the for follow can do revenue So Maybe maybe now, you're XXXX. bit? then question. about tell

Ravi Kumar S

Yes.

of certainly we we So as momentum wins continue at the have health Jim, look deal financial the and growth that and built, will lead the company. care services to -- the

We slow, had that through we should that manufacturing through. 'XX CMT, all also have one back And been but momentum year. build into as next get Media come and comps to we has hopes Telecom that, in

lead the So look order, quarters. I growth is as think who Jim, next the at us look few for to we would that at

James Schneider

follow-up. see then the as good the And maybe delivered a margin quarter. to leverage was you It gross in

You in the moving of in pieces mentioned Belcan in you but us and mix of And it beyond much land? help the of And terms QX is gross part with about where you as we those should gains sustainable? should of are what part margins, Can how that into in think terms go-forward of then gross margins basis of a of also utilization, maybe on QX? quarter. of was just the mentioned AI, X sort

Ravi Kumar S

Sure, Jim.

out with me let way. start because to of easier Belcan So that's get the

a of not Belcan at I movement number think sort gross a range. of similar will material margin operate the the company have they on

not that. should So be we should be okay. noise There any from

fourth by AI third is levers one and another the classic margin from productivity are and really standpoint, the led pricing. is Pyramid one. is automation Now utilization, gross the the

and is X are the we So by the only largest more say The most to but time be I have would or material these projects, flexibility customers in of offshore offshore. mix, typically around the fixed-price And the requirements rivers. driven business. our more fifth offshore tends mix, in

which be leveraged specific fifth count X and would big situations. in on, ones sort I of So can

left is the some we has AI led by flex year, look as inch as enter of up I at tremendous opportunity. -- So we continued quarter performance still this certainly to utilization have we every X. Automation, think quarter. And a

within We that feel build rollout continue to of we'll well of that delivery have still of our capability, absorption our I spectrum greater get capability a in as our additional leverage within executed delivery. greater -- 'XX, we and

Pyramid certainly initiative. an ongoing is The

of We have getting as had, I the 'XX sudden to a that rhythm the 'XX, an sudden industry went with of pyramid, as are we in keep drop industry an up of demand through increase of pyramids. through think reason demand and then organization building shock all back and 'XX, as struggle to a

say would lever but years I lever a initiative it internal a So certainly for at it we X around. look as next is a great is XX, not we that are putting and

current something pricing. margin competitive. to Pricing of that is, it It's not demand adding I factor but environment today, the is environment. finally, gross say, the would And is a in

I that's So how it. see

Operator

question William Blair. Nolan from is next Our Maggie from

Margaret Nolan

across of services you Or you to of as this financial the vertical specific trend be your and IT dynamics the view Do and markets? terms how services performance do spend may view in at foresee more leading business time? specific end financial

Ravi Kumar S

how with had and business. issues. on company-specific both financial I less issues I'd working have we more our stable very least came put about gone compelling services clients. We They market-specific pleased now very have corridors quarters a few issues structurally or company-specific gone team. When we gone. the a now say We have have offerings, are the ago. team turning and our We're around board at good we on board, of

see to gain starting share wallet the for ourselves. are we So

got that with across -- of leading I all that continue had one mean, at like it's companies done starting am to dollars where the have environment financial financial of services ours. to are is We I technology retailed are innovation innovative of will in because of organizations back were the in clients, industries. the and we our a high partnership it do we I before. does back. that. we probably peers, that to very There optimistic see uptick lot most world, and point discretionary a cutting-edge one spending is and in therefore, that have go And financial in muscle services players we time believe also seizing some module they services always those

market how do financial the We So on in we the grab challenges we had depending will in past. turns company-specific those around which specific have services, opportunities. any not

mean to of So team I that And the is up. market the continues bouncing confidence services. rebound that as the keeps the have and gives as there agility, that discretionary dollars go me the financial differentiation, back. we in a

great We in more gain are share. a to start wallet

Margaret Nolan

conversion some the And the the that seeing forward rate, large that deals given this appears be both and of what expectations for continued changes demand? also in deal any then you also and And your quarter but smaller cycle return Okay. that you're the of early just then sales traction, just to discretionary reported?

Ravi Kumar S

deals discretionary take a to have momentum. smaller The Yes. little started

on I the deals, change -- have -- say on savings, underwrite feed is last put table the the the those I a months proposal for seen make would biggest able legacy, in So savings large if innovation. you to to the can where we are few

clients flywheel. love that Our

are to are you do saying, more times I'm can But spend So is less. saying time not for more. going

the So and backlog us cleared. translated getting tooling more translate is and less, helping savings do to to for it to dollars those AI getting are innovation

dollars is -- we mean, a for underwrite deals. a win these to we model new back back those a model which those not new is the we when put I it's that large actually think going deals, And technology. I innovation. able helping where are going those win to us to elsewhere, dollars are they're

That's clients you can elastic. -- the more what So change. an can kind for of you less, spend I you less are in more is do mean, if this industry do where for or the spend. looking the that's

get therefore, for is more. more going could clients you That's get are the done, elastic. You because spend to and

you done. projects get You value, get to more more be

Operator

from from Our next Susquehanna. question is Friedman Jamie

James Friedman

view to results market that questions a science But of very recovery. health briefly we're So payer science for of I demand see impacting for changes the services? the you maybe unpack in lot speak side payer the wanted life do be and how And the you durability market, on your seems the your the Ravi, this -- turnaround. the potentially end of side, the getting the that a end especially on It's to could is if clear themselves. ask a but to

Ravi Kumar S

a technology of the core benefit and payer our business mean the Life It's business. Life core. systems, pharma longer technology at they're And Sciences. the standout drug enabling their is for not there cycles, apply a question. for discovery business. the some is enabling Sciences clients it. IT support partnering enabling extraordinary the that is capability ability to to enabling This discovery with is as are using great are we I Sciences core cycles because X the and Life segments here, clients their There provider, have technology using business, no clearly

sciences really have We some capability very including manufacturing. there, life good

to to drug think which we opportunity there. sector that's So we a the in technology invest we'll and good I continue development think a reduce cycle, have

month would On as PMPM is have you per payer, the which takeout, that the as noticed, lot call it, there's cost of cost because a under pressure. to member is going I per happen

about and care. think how value the have So to payers their start towards do cost you increase reduce to

enable technology can we cost. to us think So reduce that be

Generative TriZetto, processing. so Just costs claims. out we power the to produce administrative use more able that The example, straight generate give you And -- we you AI and for managers on cost value, and are applied to more end are payers take high more could users and to technology processing who XX% case of an you through AI. create

auto claims intervention. has mean Our human adjudicate up. gone without could significantly I on claims adjudication we auto

is cost of that a than distributed payer lead is opportunity TriZetto rather on providers. to takeout a going there anything and payer. again, takeout So else. to has the so unique there large a a of much opportunity And pool is consolidation technology market, side Provider transformation happening on on is Cost platform we think I today our happening have, very because providers. it's

XXX of our have we fact, In and platform. have members, we thousands million are who on providers

payers. Clearing actually combination do providers of which because provider also gateways and the Clearing House House, a between on payer and We sits the is

are going benefit very transformation. to Pharma and themselves small number companies, they

they're be Is is there Yes, be to be but more So there be to by there to this transformation in more more change? sector? Is technology. going all to going powered going consolidation? going

in position care our which going think a opportunities our edition benefit care, be unique in the we to for where. unique huge health health is So come out

So that to few the entire I'm happen is years. going excited transformation about in chain, the which next in value

Operator

Next Keane question Deutsche from Bryan Bank. from is

Bryan Keane

in expertise gains. like the productivity sounds below as some using you peers some it of that you're pass using Is incumbents guys' replace GenAI some price to and me, an come to advantage and Ravi, in fair? the on to technology

Ravi Kumar S

know the pretty technology-led. was clients. much labor-led it to AI it do sustained In past, have And I are across clients, I momentum. really large us had the our mean, deals which is productivity share model to win automation-led optimized where the that, mainstream have industry. The cycles -- and could I Yes. the Yes. cycles model benefits we benefit sharing think, labor-led. a these allows we are new engagement are to with The those If we we adapting

Bryan Keane

for the yields going it's a under services adds save gets old GenAI pressure the more will because The to lower. time models and outcome outcomes-based the the are environment cost argument IT for Yes, the overall is on, the and that deflationary be in pricing productivity the of yield passed come contracts. materials

got a deflationary it's impact. So

you've it up by is growth. can only make you make volume faster to So got the way

Ravi Kumar S

Yes.

that's actually look, thesis balance is on of American the a about bid. billion So backlog, to have another mean about $X U.S. -- Almost being actually Corporation our $XXX servicing my is so actually being is who sitting are talks a is And versus us. much debt is spent technical money this which on there in trillion there the there of on of that, clear. balance report to told spent technical is There every backlog. they which I report run have because spent that, about almost which have CIOs sheet. I And again, talks lot spoken debt. sheets the a clear CIO, us they want has opportunity with the

this our bid. run in to readjust opportunity the So the is

that's and the the build to and -- you costs referring stuff. We I were what reduce earlier. can run actually was able to more transfer that So to

a could technology actually you that transformational because because the high. -- more it if no you or -- will is elastic do more remain do you're is spend get So -- mean going that is tool to so less, elastic to it I headroom so is there such

believe So is more for doing more generate only less that I actually going us. the opportunities of for thesis to

Bryan Keane

how XX% it roughly less or to is is And less or XX% it? much more

Ravi Kumar S

you're pure give fiercely a There's it higher. clients. Yes, Equally, if a is it the you you it's higher. determines competitive If development, can of also much in the probably because play cycle. you client, get the give it's the kind phase productivity. a much of If you depends testing, get it hard on put technology it's is number away to which to it of situation, how away maturity partially much

they which there to a tech on engage have to capacity-based proposition a shop. they strategically and build call is services and taken deals. price huge a to organizations, have there compelling fixed retained own do us like So or managed use But material always and companies are because their time a companies

In There set those the captives are of to fact, being some build we are actually in clients helping shop. tech India.

their pioneering to are set We our a partner actually to partner up with clients captives.

And which I don't kind them. evolved with to that see opportunity year. in cannibalization. has opportunity an stay of it. I'm the Another about as I last relevant more excited one as again, that see

Operator

last from Bergin is Bryan Cowen. the from TD question

Bryan Bergin

I have view. follow-up a here on do forward the question

rate near-term ahead, support larger of about puts an conversion If smaller picking are versus targeting reacceleration. deals multiyear of takes here year to the bookings growth of when the about the and the consider we exit some kind organic deals you're the and there X% the up midpoint, of flattish of

directionally closer to share want about considerations 'XX? get to as you thoughts any Just we growth

Ravi Kumar S

Sure.

if you X growth the is quarter, year, of the quarter. we every So the growth set this quarter that This in over have beginning first agenda to in quarter. Quarter of -- we last been see the able the first quarters. execute few to was organic the

end velocity with significantly exiting what had are at the than 'XX. We a better we

and I and up to opportunity really -- presents But -- what in think beginning and for execute 'XX. certainly of look then sets it's well guide the is for quarter us focus will X, is critical we that at then that So us well. 'XX

progress we every about to that say in talk the would trajectory. are -- quarter 'XX, the early making I little happy So quite with but on

Bryan Bergin

utilization? as until about bound upper about Do as then an utilization. a on we think is level the recovers? think you lean targeted margin gotten Okay. that Or demand on the levers, you for specifically XX%. when have optimal manage Understood. you Can you've you bench, you so that And more

Ravi Kumar S

that that, is but there not left a lot think flat little more do see, I I on more. certainly, a

Operator

This concludes teleconference. This also concludes session. today's the question-and-answer

this time. You you participation. may disconnect Thank for at your your lines again

Cognizant Technology Solutions (CTSH) 30 Oct 242024 Q3 Earnings call transcript