CTSH - Earnings call transcript Q4 2024 | Cognizant Technology Solutions Corporation

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Operator

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

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

Tyler Scott

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

available have you website, not, are If on copies cognizant.com. our

are The Executive Kumar, Financial Officer; speakers Chief Chief Dalal, Ravi today's Jatin we on Officer. have call and

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

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

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

Ravi Kumar S

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

drawn peers Cognizant set to incubate its technologies place our years harness Circle. global new Winners' strengths and ago, ahead to along by extraordinary We joined I DNA, scale heritage and sense, often enterprises, and reclaim for and with its clients. X of unique ability the out in the

ability in a strategic operating year. deal marked XXXX. delivering Operationally, and pivoted large investments growth. reflected our stabilization from bookings. completed drive QX building point revenue successfully make throughout our progress margin profitable We NextGen pleased we to and report the in adjusted program, and strengthening solid I'm to growth, for savings to signings momentum our growth, high year-over-year

our strong becoming Our execution accelerating choice of strategic results growth XXXX and modernizing operations. the priorities, reflect employer an of

margins Winner's returning the time. steadily growth revenue while with remains expanding Star North Our quartile over top our Circle to

enhancements, deals, momentum which Let's with starting new and strategic our take initiatives, large reflect to moment partnerships, through growth and acquisitions. platform a gained strengthened on XXXX,

and With Cybersecurity XXXX. Neuro respect introduced significant AI for made agent capabilities defense Flowsource for offerings in AI AI Neuro our AI real-time for engineering, proactive Accelerator AI-enabled our to Neuro We and AI, stack platforms, Multi-Agent labs development. Edge for advancements with full

capabilities added also AI Cognizant our Neuro orchestration to multi-agent reimagine experiences. we to help platform, our We AI-powered and clients Moment client debuted

ecosystem, expanded we added XXXX, X and In portfolio, breadth acquisitions and of and to strategic alliances depth Belcan. global our our Thirdera our we

largest quarter, recognition on of highest for ServiceNow our strengthens to partners. Thirdera of believe integration billion recently ServiceNow's client. at within the market. signed fourth deal partnership XXXX, We the defense. in us clients And completed first the valued made ecosystem. focused level elevated And of on Belcan we their and in track. We us integration ER&D the $XXX the Status, outside Elite one dollars multiyear quarter opportunity significantly integration a of in commercial hundred Global several Phase aerospace million aerospace an of is X with our

revenue. about note one Finally, efforts last accelerate our to

historic satisfaction to in scores Our NPS a XXXX. client improved high

our an the current key also clients. and NPS maintained rising and engagement drove becoming and employees returned These voluntary choice. share employees happy of employer are happy correlation our is our strengthening low attrition. priority to have scores pleased Turning of we I'm our Cognizant. employee scores high future. metrics, at strategic reskilling associates with XX,XXX to of to combined who high to sustained between second Developing have evidence scale, AI We

generate for to tangible continues Bluebolt, ideas initiative, clients. innovation grassroots Our

the Our clients. associates XXXX, in number by ideas doubled were submitting nearly XXX,XXX, of of implemented XX,XXX which

our work way million well goal people on skills XXX,XXX future opportunities, with Our workers. of Synapse program equipped a more to than for X

Change Fortune's list. Reliable Most prestigious XXXX earned Best #X World's in Companies recognition, Employers, America's Forbes on Newsweek's World work the and including Our ranking

Turning third priority. our modernize several the to operations. and steps during to simplify We our strategic took year

For our in the helped part year, India. smaller our performance India in drive by program directing investments. while operating infrastructure throughout sequential supporting and margin expansion adjusted NextGen We cost optimized into our example, diversified cities completing our growth

a You have to offers double engine transformation our does heard opportunity progress of me much it accelerate the as it call Cognizant AI because own clients. as for

our clients. organization We across rapidly at the learnings with sharing AI the same while, are applying our strengthen to operating quickly time, agility,

X experience identified to improve productivity, have internal cases and XXXX. business AI major will technology more We remain across associate enabling important our and use operations, applying than in and priorities landscape. These XXX AI dimensions: security

and and X.X% Belcan me quarter. of with constant note revenue segments: let we the and year organic up Sciences in of $X.X Performance delivered driven year-over-year won growth improved margin and year-over-year improved the Financial again recently fueled was revenue some the Organic in on currency. turn spending largest adjusted highlights Services. our the of from expectations. contribution quarter growth accelerating momentum Health by by as improved strong finished operating expanded ahead deals primarily We discretionary our sequentially was billion, growth services. our Revenue Now X to a included financial another organic

large digital cloud XXXX to totaled brought XXXX. strong our This We compared signed ago, up year in deals financial in in large from industries, XX reflecting to momentum and engineering, across a lines deal including XX service QX, and services. X XX services

used over our revenue about with health X/X TriZetto, growth. U.S. claims. software is Health that of differentiated led This included continued care Sciences to in platform, process XX% strength

service demand platform Financial for Services we supported data cloud, year-over-year TriZetto example, enhance increased by services. health as in another with growth recent a to modernization a As care and XXXX Shield delivered quarter Blue of our segment an agreement And for our operations California solution. entered Facets of

performance make while investments operating Adjusted sequentially margin to driving to expectations our M&A. full AI year improved XX.X%, we continue in and that exceeded

Taking are gaining our capabilities gen momentum a step marketplace. expanding in we believe back, AI the

industries maintenance, for fraud proliferate. This service content and end the financial We media, and health third advertising as detection and credit to services; demand at now name scoring assistance and For personalization have analytics X,XXX virtual for targeted quarter. manufacturing; across gen and cases just early predictive engagements discovery drug of example, see analysis, AI and we use expanding includes patient outcomes, chain services over health X,XXX compared a predictive quality and in supply to and control optimization care; few. automation customer AI

operations, application to capabilities launched in integrated, Stores aims Stores experience Another our retailers industry great productivity enhance customer predictive ServiceNow. automated retail AI of streamline the with employee AI XXX, with gen strategic and and XXX for improve capabilities. partner, our their help store recently

interest early seeing excitement. already are We and

to cycles productivity by leveraging with across AI its solutioning, tenure. redeployed development X-year a is extended signed the us infuse and can also customer software AI We example agreement Toyota gen the contract reengineering. that to to great It significant new for an hyper-automation, be proactive process cover services allowing deliver of quarter during under a

partnership and of we our operations And its with to customer streamline strategic exceptional experiences. McDonald's support renewed delivery

Our multiyear using transform into observability, operations systems our improve reliability to IT Skygrade aims agreement to and McDonald's platforms system modern agility. Neuro legacy and infrastructure cloud-based

Lastly, we expanded our partnership with Gilead Sciences.

engage and productivity to will our improve in framework cost AI an generate with agentic gen collaboration Our and machine savings. learning expertise

and focus delivering accelerates agreement core of Our critical to its allowing Gilead on Gilead's discovering new transformation, mission digital medicines.

a this we or global in GCCs. their we leading notified a provider India. centers, And Earlier that also GCC were establish seeing are capability insurance year, traction partnership won new we with to with strategic

in their accelerate milestone leveraging marks transformation and talent in and This global expand transformation as will our our partner We growth the our position partnership expertise to GCC digital scaling significant efficiency, deep a work in and enhance building their operational GCCs. trusted reinforces footprint, a continued space.

helping our illustrating examples strategic how clients and are to momentum. partnerships technologies few significant are our addition These to a our delivering innovative by recent commercial cutting-edge powered just solutions value in accelerate

work, landscapes, of and Cognizant about workforces clients. can enterprise AI-enabled about in I'm we new play excited businesses, and role co-creating reshaping and think the workplaces services products operating very our As reimagining models, the redefining

think be advances newer in our will recent multiplier. front democratizing big for we And models it can force to play the are value The unlocking end a AI chain. in role efficiently clients levers. diffusing a the innovation value and We efficiency value of foundation

We believe services. see a and AI-led the frontrunner us as a stay design, strength operations be will intersection engineering allow in our proliferation of of we and industry domain to deep differentiated

the distinct the with vectors, already here. playing first opportunity AI-enabled X see out in We

mainstream with the use cycles AI software is of assist First, help case the of for most tech development in application tech platforms. its code or

own AI, do allowing workbench hyper-productivity. was quarter, We a our have fourth of In estimated less our and more our developer developers by by code unleash on Flowsource to of the the platform. generated us XX% wave that for accepted we

modernize of backlog partners with legacy opportunity Our like and ways level technical belief operations an of debt, hyper-productivity, trillions dollars and workloads. be eliminate is unlock us there the the automate will find viable applications of to and for to infrastructure help of systems clients this estimated

for cloud enterprise be cognitive X opportunity related vector The foundation building domain-specific this believe integrating and about AI the will into infrastructure landscapes. will modernizing last-mile require opportunity to We data reasoning explainability is costs. ethical output AI's and also and optimized use that is responsible and ensuring identification accuracy involves and and platforms. multi-agent frameworks, and traceability, orchestration the It and for

cycles, by our is to and identification being new this drive that belief advanced significant products innovation AI-enabled AI that services will leading process work Our of is labs.

about X will pools identification. And believe newer finally, is unlock by vector that we and service untapped

executing merely become work a the itself is humans. that organizing longer of view understanding, traditionally Our worker can and improving services no be capable software by delivered may tool but for

see teams new and of inject We reasoning work. system a potential that unimaginable into We expect to each collaborate building transformative context, experts will human by future categories autonomous contribute and the be can of AI intelligence the those most team unique applying and previously that with with workflows abilities. where grasping applications knowledge of of agents a unlock a

Services use This business our evolution expansive is functions operations, spend few. our budgets name vertical for retail clients' to operations it, alone. expand sales functions addressable many rather business and new Software, like access as as marketing, are to technology clinical and budgets to well as case we like of clients call opportunities dramatically resources service than as operations the identify Early our connected human expected and through horizontal functions customer of to a a care,

increasing by We and of to we our portfolio are transitioning growth. will XXXX a have stabilization that phase operationally accomplishments saying believe phase I close our a strengthened by strategically while agility. Cognizant from of now broadening

and help win we gradual on capabilities margin believe Circle improved design, well expansion to back of will are that IT leadership confident thought Winner's growth changing tooling, We and revenue the us in practical engineering confidence us unique the AI, the to strategic in deliver right at focus get this us growth time. investments and to gives we tech-led have our intersection positioned the and capitalize services that market. over opportunities early operations dynamically Our to ahead

in more financials forward their worldwide depth, I our updating Before to would deliver. trust I our daily to greater and review turn Day dedication to and and detail in to clients our steadfast you look in their We for our like partners XX Jatin March Investor at York. to thank drive associates New for

turn With Jatin. the that, to call I'll over

Jatin Dalal

you, us. and you joining Ravi, for all Thank thank

results we quarter underscore strategic momentum against to excellence. and priorities fourth progress enhance Our the commercial improve made have our operational

Fourth approximately guidance $X.X our of constant revenue X%. X.X% billion Services, in driven Financial end was at quarter year-over-year grew and XX% which revenue currency, grew year-over-year; Health grew more growth range. Sciences, of than which Organic by the high

growth into Our year-over-year revenue from acquisitions included with attractive growth our entry acquisitions. supported have approximately Belcan and long-term quarter markets end Fourth these XXX of points basis profiles. Thirdera of new

year, constant points of full Thirdera included X.X% $XX.X XXX Belcan. revenue and basis approximately For from billion the and growth in of year-over-year currency increased

pleased have We margin strengthen operations ahead rigorous very represents significant XX.X%. guidance. completion drove with driven accelerate our and by performance our were operating basis margin quarter was of actions growth, expansion XX.X%. to adjusted of full of basis year AI our This also such we points year-over-year, adjusted of made margin XX operating XX platforms. of our NextGen to fourth points net This as program and This Belcan our of investments

continue migration, sciences details modernization the of more cloud By Sciences and segment, saw provider end offset Health to prioritize Clients across discretionary muted legacy life Now environment. which optimization, the than cost to are strength markets. let's the broad-based payer, projects, quarter. helping spending and to turn

with modernization gradual, we in America, further, saw both balanced capital was for financial growth North and cards In fintech ADRs albeit select pipeline of across We spending. Services, Financial and an improved commercial banking services insurance of seeing clients. across markets, trends and clients. and payments, banking opportunities transformation pickup are a positive discretionary and Within projects

the bookings. In Canada addition, growth we to new have see continued healthy driven in by recent

Growth driven P&R. or Belcan. Resources, and Products by was

convergence been has others. includes logistics, segment large noted among manufacturing pressure, We excited quarter. by technology about the accelerating. information see end in P&R the quarter, we last aerospace, and across X technology signed the we As This we near-term fourth opportunities rapidly across this is pressured markets. Despite cautious the deals segment of the in discretionary where and environment are automotive, operational

was on focused with and consistent pressured. quarter cost have budgets discretionary spending optimization, clients last and Technology performance Media Communication, remain as been

reflected segment, By year-over-year. softness and by in From the segments. Resources. Services Financial and finally, and strength Sciences, X% This all year-over-year. World Belcan Sciences a by which growth. North growth geographic and about X% America, year-over-year. perspective, was And growth Health of Financial led Health Services offset in Products increased most Rest were across more about supported solid Europe grew by X% than Banking the increased

large a basis, Trends in a which contract to increase both bookings and supported annual Fourth bookings. smaller improved, in low year-over-year. a by year-over-year deals. deals to our grew book-to-bill. turning bookings increased and X% On driven represented XX% XX-month value, year-over-year XX-month trailing trailing X.Xx Now mid-single-digit quarter sequentially

Turning of to related costs the quarter. the program, the program to Quarter million we end the incurred $XX expenses. about and of NextGen marked in X

impact This high by was the compensation rate. margin was utilization XX.X%, of by currency reflecting significantly expectations. costs. increased our offset exchange Year-over-year, basis and and primarily above partially Belcan of operating points, adjusted favorable NextGen, these margin savings declined impact Excluding a from the costs, XX

with model. base more We exiting are an pleased cost to the operating be resilient improved year and

to allocation. of net cash was free This flow capital Fourth flow is our line billion year brought with This cash quarter moving Now full million. cash $XXX flow $X.X and or free our in to guidance. XX% income.

ongoing cash Indian negatively impact made tax free $XXX the our authorities flow our XXXX previously reminder, matter. dispute relation to by to in tax of disclosed was a million a impacted As from payment

X or short-term quarter cash $X.X by third decreased with X investments XX increased the and We year year. ended days of of cash days prior the $X.X by and DSO of billion net billion. versus day from

$X.X of we fourth shareholders billion strategic billion For capital through in million the returned dividends, year, quarter, acquisitions. and the we $XXX and repurchases to invested X full including $X.X in share

now. forward Turning to outlook our

start, value strategy will modest I like around growth to Before our I revenue margin we long-term believe would support built that enduring and which is through growth operating reiterate shareholder creation. EPS driving expansion,

to or constant quarter X% we the basis. first this X.X% to currency. negative range represents a XXXX, X% grow to Sequentially, year-over-year For in of currency revenue expect to of X.X% positive X.X% constant X.X% in growth

increase For currency. the to X% release full X.X% year revenue expect in constant X.X% to X.X% XXXX, available dollars are in our we and or in press of to supplement. revenue Details

year first in little the growth XXX the more Belcan contribution expect a half. will half of XXXX, than points a with We contribute of in the basis compared greater with second

XXXX the of As it a August to acquisition our and end XXXX at reminder, approximately closed we the contributed $XXX million Belcan revenue. of

margins our operating This performance drive a automation adoption XX basis represents better expect strong be points and off XX time, to higher margins. XXXX. expect of year, XX.X% we we full growing Over of AI our adjusted and expansion to the will productivity XX.X%. in For to

the you quarter, drives remind that modest We seasonality sequential margin a in first typically decline.

our rate expect year between to XX% We and full XX%. tax be adjusted

align to no closely this Some guidance. noticed of income the that providing net with longer we our change interest may We more metrics are made have you guidance industry.

exchange $X.XX our year. guidance expect This represents interest balances to leads of net includes lower rates X line and X% share year full modestly to that we XXXX cash points from percentage below our headwind reported earnings year, foreign EPS. X% rate. per impacting full to slightly the other This For to XXXX $X.XX. decline tax exiting will revenue unfavorable than items, compared expected higher This income growth more adjusted including currency growth given the of

For expect the the flow income. than we XX% year, free represent more full will of net cash

to of capabilities plan investments allocation In that return strengthen with and XXXX, growth changes growth our we capital the to inorganic material strategy. capital to not our support do expect shareholders ambition. We our balance

to about For we repurchases million approximately including return and our dividend. expect in full regular $XXX billion year, towards remainder $X.X quarterly shareholders, to the share

a weighted year, $XXX dilutive the under our count And expect about of XXXX. share we facility. million outstanding XXX during average plan the to We for repay million credit

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

Operator

question [Operator Bergin is Bryan first from Instructions] Our TD with Cowen.

Bryan Bergin

I bookings want with to start here.

So you performance? talk bookings more consistent exited deal larger reaching you've through feel with now you'll and just where maybe a Ravi, like been 'XX. versus go-to-market about building the engine Do momentum as rhythm have on front. now large where you you've deal quarterly gone the you're

Ravi Kumar S

I momentum XX Yes, did million of phenomenal Yes. in XX in Thank them, deals. XXXX, large for plus that question. We we've some XXXX. mean, you got on $XXX versus

multiple us believe So there going XXXX. in help to things are which I are

of have First, dealmaking. velocity tail we

of would small starting Second, to X.X. the have a we And come book-to-bill I third, now say, is back. deals are

So we has it are it monetization about in the same excited year. because

In higher great fact, me, combination ACV ACV again, it's confidence which numbers, than of gives before, track that internally, TCV. that are our we a and

also bid are are 'XX we pretty 'XX, in to good on And signed We pretty we deals versus a signed executing deals the good the inside track. bid company. we we the do looking in

would I a we now say in rhythm. are So

the are We well. accessing deals

It's are rates spread. win a significantly Our higher.

now organic engineering we application In we the from stuff moved and of had the services to services which have we combination over X engineering got is years, strength a to fact, from Belcan. services, infrastructure the

breadth the from services to other a to to products of We moving to from now of industries, parts financial and also the Americas world. resources care got health progressively

very a good So 'XX, great tail spread. it for to velocity a a rhythm good us, this is and is into getting

the it future. sustainable So for is and resilient

Bryan Bergin

growth follow-up then hear. outlook. Okay. to That's on the good just the And

you built 'XX, potentially Tech? care Comm, organic Media, relative 'XX on and industries these how to versus plan unfold to solutions here, health versus what plan some growth it in can you the of saw you the for comment relates as As P&R financial

Ravi Kumar S

Yes.

have growth we breadth very and the is and all broad-based because So mean, around. now, our the going to I resilience be

a healthy care, have XX% in You'll which pretty done on good see is we health base. Y-on-Y, big

are from provider sciences. growth We all-round payer to way having pretty all the life

last And discretionary today, about are where now for services, I lot seeing a to we excited financial actually back, very a quarters. of growth are and where that Y-on-Y services, subsequent very, capturing have financial that. fact rhythm am of I On we the coming are started created we year we

muscle with with a consumer created starting we broader a resources, goods, strength are capability, we see built. which well. the last we on we with Belcan in now doing and the otherwise was is is retail the and manufacturing have in we years, Now of the the Products power capability to X and doing well. technology, communications have created And muscle

while an market, Americas comprehensive it's looking fact the leading excited So actually organic it I'm growth way, the the starting a is all-round also And to process. is this that to are markets international contribute we at. about principal and are

first which is But weak. this strong. range, mean you if of one normally pretty the is those positive. I seasonally midpoint are we guidance see is of quarter Our quarters, that guidance

So it velocity have. quarter into the momentum cutting X quarter is from a plus we all tail X,

Operator

of Our with from next Jason question is America. Bank Kupferberg

Jason Kupferberg

organic would growth with be XXXX we're I basis. guess, looks year. I on targeting wanted to just on currency. the how to pretty the The you organic exited consistent for of constant It that, midpoint like X.X% X% start the same

there's the sounds going acceleration, it of just spending exiting more in bookings on momentum wondering, some discretionary you So have year. and like terms

an other But there? So much Or the are acceleration doesn't built into there conservatism? basis. is seem just like guide that we've considerations on underlying it

Ravi Kumar S

Yes.

of The the weeks. So the the kind it it's next into of year. half, the build in second visibility few start you

continued half of there that hoping is range the is doable. into are We the so end the upper second buoyancy

constructed into we we to I And of discretionary our do mean, velocity the middle the are there now, builds constructed well, continue way it best I outperform. And execute we is is in, the So range. starting half the the are the then is we see we hoping visibility come first to same of to a continue to guidance and back. the tail that year, to is buoyancy seeing as

in quarters, including If you end of last look at X we the concluded. the the X guidance last to got the just one quarters, we the range upper

quarter I'm So spoke I you about the we to I'm ago say, I today, it. more where I optimistic when to how all I future. are would that's seeing mean, mean of X

Jason Kupferberg

more to DeepSeek And you IT doing how Okay. could what's are I know helpful. to about ultimately any if services then talk wondering earlier, That's prepare the touched AI And very agentic views for just impact clients on And starting on opportunity? that invest it. to industry? Cognizant

Ravi Kumar S

Yes.

put yes, So just ago, this I detail spoke in I think X vectors. in few minutes I a

code. write only The with get machines going believer is I'm writing to humans first writing vector that more. strong is a us amplifying code to

seeing us dollars large landscapes, helping led. the we've I We will is XX is our made is one and we deals X different. on A debt, investments of very productivity last in the that's early that assumptions we deals are reasons plus baked And lot billions productivity it providers we in between is now XX of to AI win baked the of mean legacy have unlock in winning sitting why backlogs. technology years. the legacy corporate that done mean because into are deals of is we I productivity now.

process. about of efficiency excited part we're the So this

how The to innovation on are does second our help us. and starting growth. invest I is lever on clients mean it

migration, helps data the create That modernization, the to to accelerate our last-mile We journey lot stickiness have a and have clients. of us we helps heavy identification and to X,XXX projects us make of a cloud lift, infrastructure, the now. predictable. helps to platforms journey running And help us

which platform, orchestration is In fact, layer. our an have identification we own

have the If between orchestrate can this software existing agents, pools. which has software, you

identification act layer. layer, actually If have not an as do identification you this can an

opportunity of think So our ahead of an and of peers, we is probably a lifetime. we most this way are

or connected we didn't drug retail discovery. which It things is also earlier which address, unlocking say, about, spend, care operations is addressable new is, I of spoke pools or which

are service didn't pools, before, us. to which we available now capture the So

not of So the just are opportunities now across actually the which company. seeing we it's operations at CIO, the business are

where think pool be like going multiplier force we addressable the that is ours. this gives before. that to to companies were And I So for multifold me of confidence is work a

context is models, back is end, DeepSeek simple a and foundation layer. which has a DeepSeek, In the to it commoditized has the uniquely summary quick at democratized layer that

So we it a in will the that the lot adoption as AI of and the will money into so, into end, front helping landscapes. now heavy will be accelerate it lifting clients. and flow does enterprise of And middle of it our

uniquely moment, the inflection DeepSeek to the is end is from an the value that a end. point, on So transferring back front

Operator

next from Jefferies. Our with question is Surinder Thind

Surinder Thind

just up part. on the building last Ravi, kind of

wanted if we're better that's then you a sounds itself, building follows it more things you a and as a all a the solution go build terms of services, bit about that you're one color sustainability of proprietary was shifting provide all those to I and changing solutions of this within more and AI solution you that demand, the now there before As just a like but of layer those where, can software into the sustainable. client, the you landscape the bit types the of think injecting to solutions Or building? what of understand somebody in you quickly? really of is about you're model

Ravi Kumar S

you, Thank Surinder.

potentially, from way by you was in the software the years London needed I it ago, this, fast the role to our the practical is changed clients gap build I many conference, bridge tooling to talking software, system cloudification you started long contain, of there. existing the layer If enterprise how to how micro of a or ways, a industry The in software technology, vertical software and which of call to come templates, journey and or integrators. build, accelerate built either remember, very about we've some doesn't similar

say example. this clients. of is our helping you I'll would I Now one all give

you And yes. built workbench, because you by a orchestration of have it Flowsource, like something time? at look platform humans, layer you practically that the then, as called functionality that advanced replicate will will of productivity. some code problems assist to which which is That together, we code But bring orchestration GitHub. synchronize figured you machines will period written is over of and we we a written and developer improve out solve. We need and bring Maybe top on platforms existing effort start by code layer an a to by platforms bring that

problems them. today, Some of will and to we a the job have we fix of the the some remain gaps integrator have of it's today, gaps system

And as they next the we get endeavor, the some will of next productize. them to endeavor. move And productized, problem-solving

of work cost enterprise for is grade. There efficiency between and the output efficiencies needed making AI

not. of automatically happen and some optimization will with Some that software will of it

new venturing heavy So evolving will I'll service integrator. role identifying did The you further, I we which would I'm pools, is capture. one landscapes, system example. of am not which remain. say not it's an a lift step one I now give venturing just identifying into

and is function, sitting take in If software you sales marketing data. structured the data all

you data And momentum mean the a of not If then unstructured didn't you meetings means were sitting momentum of were in is data getting I people find sales a I there's actually salespeople unstructured is are chat I in data minutes messages, who if on. to working data sitting cycle, into in tap actually a mean, sitting was there of could company, e-mails, it which or labor sales doing not want of in and that it which doing, touch. work, sets that that into which Either we didn't tapped. company, value, transfer it pool data. identify capture people new pool of was and we a

for will into our opportunity And companies at And an to and industry of of technology theoretical. This see intersection service we spend not opportunity for operations us. can this projects an domain, real-life identify deep go and as longer help create is no we do as strength, now are just we address. engineering, enterprises, this it is that clients. believe implementing operations and which see I our pools So this of I the

already of those stated in And examples remarks. some I've my

Surinder Thind

the the look you improve managed I the of XXXX about and services how we and between on discretionary how where in growth as when spend all most the should the wins, I integration about maybe deal? much then should that X Or helpful. side? is ahead in That's think the from ramp, deals consulting consulting deals segments? And to terms managed with is of we signed, wait the services of sharing large of the think we as work think come the there about large large And

Jatin Dalal

Yes.

I'll take So that, Surinder.

'XX is comments, or see value volume 'XX. driving between large large be are essentially, will of are led the by X, exit contract as improvement, opening think seen we by I volumes little in slightly I some discretionary the the some for saw in getting being large particularly you as the as the 'XX, the that which as 'XX, bit were added texture a deals described the the spend growth both therefore, deals. contracts which quarter means In of different But back. we And have we and terms, the annual growth. my deals changing large work volumes work the will or 'XX, where we and texture well short-end

Ravi Kumar S

more is Especially services discretionary. there in financial where

an earlier our ACV but fact, also indication mentioned back. significantly just deals, In that have Surinder, in numbers is which coming not deals quarter jumped X, just of I smaller large

Operator

Securities. question next is with Lee from Jonathan Guggenheim Our

Yu Lee

utilization that, with 'XX? perhaps could And and margin what outperformance unpack levers calendar into softer to especially what you see you some the see Can Ruby incremental here. Tremendous benefit? drove

Jatin Dalal

Sure.

quarter numerically on X, we you're utilization while seeing ground. the the continue softer but very to So execute in well looks

organization. run able improvement last months, way operational achieve So been the the this the the we sort that of over have underrepresents to XX we

think I that reflected margin That gross side. on one also So in the driver. the is performance is big

benefit through the That contributor We on a key seen quarter have is in specifically, and NextGen the for X. XXXX definitely program. coming general for profitability another our performance to

Ravi Kumar S

pyramid. of the So we the improved our X continuing accruing I the part we has with sharpen overall, clients, rigor mean runway. in us. have our to some We're years. and pyramid. AI-led it operational And sharing last have significantly productivity, to

will have a into it 'XX. flow-through had flow-through Our NextGen 'XX started it into in which program, 'XX, a and we

reality goes were are very deals So excited bid I on about also large executed we the versus large very mean well. which And we always margin budgeting deals bid but contributed have something really for it. our to the we large wrong, if the growth. deals is the

with pleased into the the have interestingly, dilution, very runway as we've well. margin and absorbing where we investing are heavily we M&A, done for the that absorbed AI. we are we We're on margin have landed and have we So 'XX. plus And also

to investments to create I to So an the expansion, keep margins, We're my and be expansive ability desire. desire that's of improve stay mean, continue but going an to contribute margins, our to our our going ahead peers.

Yu Lee

a about to given adds of XXXX, through Belcan base your thinking new and hiring in talent perhaps growth can how you're And pace you mix talk support there? geographic dynamic of

Jatin Dalal

Sure.

addition seen of are should continue capacity to seeing to well start for hire previous certainly, have in a panning geography we will you in Overall, of few quarters. we So standpoint you placed as bank of well QX hire count as in XXXX Probably see need and a our need as our that availability out from from as talent the every head growth. each you And also. in geographies. we the onwards, what from versus we cycle it's

So a equation we good quite XXXX enter as feel from supply we standpoint.

Operator

with from Morgan Stanley. Our next James question Faucette is

James Faucette

here and just Belcan. the I a I to ask on appreciate today. all follow-up question wanted quick color detail

that of maybe the you announced deals as or Does you include from other basis both if that will think organic expect And are any in growth heard contribute inorganic roughly yet? points been correctly, haven't I I inorganic assumptions, building your contribution closed after I that, you XXXX. and that part in August? guess XXX it period in

Jatin Dalal

sure. Yes,

provides the the that we opening comments. of approximately Belcan months, So additional essentially, will revenue that XXX mentioned number basis this XXXX. point I for XXX months, essentially for in basis X points get is in that from my And X

We that have XXX in factored basis not inorganic any additional in points.

James Faucette

great. That's

Okay.

we're large and like the I Ravi, cetera. think like now point where we've it deals, that, wondering, that's been to messaging, kind of and really is to then where improving, this your on So that's seen of et has improvement and clear, top And very great hear this consistent I'm seems discretionary clear.

processes of this type view, budgeting any what and conclusive into like year, what's It like maybe engagements little bookings terms early to people's have As the past on sounds we still went that in budget you it's we've I budgets? of seen years? flush see know in did a end most a your but And is but positive, temperature or for early growth it's pretty universal?

Ravi Kumar S

Yes.

you sectoral environment. people very a uncertainty the mood work. that to dollars The favoring, discretionary down expecting general will in but pro-business way, coming it's starting is want business settle to down lesser tell is I around us So There and right? I regulation innovation are trickle a is the to actually world, all I mean down. which this also be is set those to means and pretty uncertainty in mean across

is we very at are which are I the We're where our made, seizing are with services, are. way. pleased financial discretionary opportunities would with the services, where the say I'm financial we very progress coming conversations we all which pleased how

You one is are doing setting ID global our can would have you capability centers. clients which a us is area clients, one shop lot capability it transfer. A centers, of build, noticed interestingly of global biggest spoke the actually up trends, about, up in other our set for the but saying, of our one which help I operate,

all-round So play with. a lot opportunities of to

the data and migration enterprises, and on cloud their the modernization AI As us. their heavy a hitting on is the wave mean journey. for cloud that lift reality opportunity data I check reopening migration the is unique is

services, we I to We would now play. company to have application mean, aren't our company. I with. all in now landscape I from are now services, way vertical say heterogeneity We X mean experience, have health very multiple we a have play ops in verticals we And BPO engineering. services more a different years. the financial on a just care

second were are things the we I I'm don't very where that fact where optimistic So say I about ago know a now, we we optimistic. but were in if half, I would the will change optimistic. quarter I'm a feel year to where ago,

Operator

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

Tien-Tsin Huang

Can the question, see that general, you build balance what is how new Cognizant between that and Ravi. if for theme expand you GCCs understand Just trying that? in-sourcing that And to a means how on the to and on Just of emerging? outsourcing? James' in to that here, Cognizant seize is does into change you this trade mentioned going to read

Ravi Kumar S

Cognizant tech like destinations multiple the So GCCs. in offshoring X/X that is be things part of India growth a of chain. for services to

play. a themselves services. role to have we They are directly buyers So of big

So that's one.

it and in Second, a that them that's companies sizable, a access player do opportunity to so we who build, different number market, not of an these us operate to help a gives transfer. formidable have labor India, market because are

I transfer. last are where did signed fact, I public Essentially, we year, build, building the it's In domain, transform in deal, it for a operate, and them.

them. operating are We with it

We -- are us. can to it applying them tooling we AI AI the means then going underwrote the years, tooling, draw of we just they them. we transferring which all from and next then are And give are for to couple

Operations for offloaded and on and are that's are around them variety actually ops of on and to and a will addressable set offering, together. set offshoring universe you us, third their this mean a reorganizing my I and are they're micro which I is companies is not There companies there reorganizing, to spend. core nearshoring new GCC, is templates the technology we of a BPO mean the I X.X, focus and the noncore up you. getting offload services of is call And destinations. technology which anymore.

would And and your mean, CRM HR applications, probably if going software I writing finally, outsource run not a you're car, are engineering of applications you car you company, probably companies. to the outsource. to

not it Building yourself. it build to is easy. want You

actually capacity build core. own your engineering give can you we deep to So

of have and and opportunities, we who us. I've number actually have insurer have the my which signed mentioned is about in just won earnings, we with in we which one a pipe, which an So primarily up

about So are excited kind this we opportunity. of

Tien-Tsin Huang

Always really Yes. comments. and thoughtful. That's interesting appreciate your

you client got happening? immigration ask a would Ravi, to here, decision-making characterize talked You flow have about characterize overall you, to stuff, tax, news would themes just that's with you've as lot tariffs you're all that? this you budget of and Just how all and how clients and and this talking

Ravi Kumar S

Yes. uncertainty, you a very Technology everybody is is you efficiency. space, technology And grow. if technology use improve growing, there where to to interesting use is

win can with the turn So in technology. you

I is anchor company, off, taking market is sides. as innovation. want on you in want to do AI So I've some think are agile soft, ways, can efficiency. think seen we it in both When the to sides. anchor a anchor market to And I the both. on both And you on When

X budgets both anchoring than completely think as And those do it exciting. year. so. see I both this placed mean, it sides. this on don't which running? the better visibility opportunity is last I in Budgets, I sides, I I'm vectors is a on of So that's much and because are up why why play Is

year, the a we are year. see much last will better than we into spot move in But more. we As

Operator

Goldman Sachs. Jim question next from with is Schneider Our

Yen-yu Lin

actually these the versus clients driven this banking you driven consumer industrial? think now see it's by is and geopolitical behavior Continental U.K. you how the My Europe? composition divergence being of This between do Yen-yu is, industries considerations? Lin like on by of the as in for Jim Is right do Schneider. such question being Or

Ravi Kumar S

Is otherwise? to Europe this or specific

Yen-yu Lin

Yes, Europe, U.K. so between Continental the and Europe.

Ravi Kumar S

Yes.

still uniquely outsourcing into So offshoring. can outsourcing not I manifest which opportunities, has offshoring, first-time but itself mean, Europe Continental just and

going fact, of Continental one in old the number sometimes, most And has GCCs, Europe back of topic. to the

I and see So ways, in in U.S. a U.K. stage comparison opportunity, of that some different evolution the to very in

really some are are up for opening some very it time. mature the first industries And industries and

market. mature U.K. is a more much

I financial mean role U.K. We are in in the services. big strong have we a

We also U.K. do sector the public in

consumer pretty are in We strong comms. and

is So different market. very a U.K.

we would years. the think investments, I X make cycles. offshoring much I which and actually Continental terms efficiency say But we last the it's more over in are if of ahead right outsourcing, Europe, doing in

much than unlocking are We before. more

business than proportion presence, do in peers. Pacific, is U.S. Our much the and lower of of the Asia Europe comparison out to our we

of that's area be to more these a in for So and an us geographies. capture challenger some

Jatin Dalal

want U.K. point Europe. just Yes. a versus add I on to

and in momentum second a lot our led than contract The that of a before. has started U.K. saw and the Europe, U.K. U.S. there what think is delta in customers of by of between to half more the a quarter, renewed versus XXXX that's we current show CMT one U.K. really I fact

So U.K. momentum see to good there we in is some revenue between But movement continue otherwise, of geographies.

Operator

over This now would concludes question-and-answer back our session. to the like floor closing to hand for comments. any I management

Tyler Scott

to All to thank Thank you talking joining you right. and forward look next we all us for Great. quarter. Well, tonight, you.

Operator

today's conference. concludes This

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

Cognizant Technology Solutions (CTSH) 5 Feb 252024 Q4 Earnings call transcript