- Revenue of $4.8 billion declined
1.1% year-over-year, or declined 1.2% in constant
currency1, which was above the high-end of our guidance
range
- Operating margin of 14.6%, flat year-over-year, and Adjusted
Operating Margin1 of 15.1%, which expanded 50 basis
points year-over-year
- Trailing 12-month bookings of $25.9
billion; book-to-bill of 1.3x
- $284 million returned to
shareholders through share repurchases and dividends
- 2024 revenue guidance unchanged at (2.0%) to 2.0% in constant
currency
- 2024 Adjusted Operating Margin guidance unchanged at
15.3-15.5%, representing year-over-year expansion of 20 to 40 basis
points
TEANECK,
N.J., May 1, 2024 /PRNewswire/ -- Cognizant
(Nasdaq: CTSH), one of the world's leading professional services
companies, today announced its first quarter 2024 financial
results.
"During the first quarter, we delivered revenue above the
high-end of our guidance range and continued to make progress
against our strategic priorities," said Ravi Kumar S, Chief
Executive Officer. "We have built upon our large deal momentum of
2023, signing eight deals during the quarter, each with a total
contract value of at least $100
million. As our clients navigate an uncertain economic
environment, we are adapting to the market dynamics by helping them
achieve operational efficiencies, supporting their innovation
agendas, and preparing them for AI-driven transformation across
their businesses."
$ in billions,
except per share data
|
Q1
2024
|
|
Q1
2023
|
Revenue
|
$4.76
|
|
$4.81
|
Y/Y Change
|
(1.1 %)
|
|
(0.3 %)
|
Y/Y Change
CC1
|
(1.2 %)
|
|
1.5 %
|
GAAP Operating
Margin
|
14.6 %
|
|
14.6 %
|
Adjusted Operating
Margin1
|
15.1 %
|
|
14.6 %
|
GAAP Diluted
EPS
|
$1.10
|
|
$1.14
|
Adjusted Diluted
EPS1
|
$1.12
|
|
$1.11
|
|
|
|
|
|
|
|
1
Constant currency ("CC") revenue growth, Adjusted Operating Margin,
and Adjusted Diluted Earnings Per Share ("Adjusted Diluted EPS")
are not measures of financial performance prepared in accordance
with GAAP. A full reconciliation of Adjusted Operating Margin
guidance to the corresponding GAAP measure on a forward-looking
basis cannot be provided without unreasonable efforts. See "About
Non-GAAP Financial Measures and Performance Metrics" for more
information and, as applicable, reconciliations to the most
directly comparable GAAP financial measures.
|
"The first quarter's adjusted operating margin of 15.1% expanded
by 50 basis points year-over-year, driven by our NextGen
program. We remain focused on operational excellence and cost
discipline as our clients continue to limit discretionary
spending," said Jatin Dalal, Chief
Financial Officer. "Our recently completed acquisition of Thirdera,
an industry-leading ServiceNow partner, is already opening new
growth opportunities and expanding our pipeline. As part of our
balanced capital allocation strategy, we continue to seek organic
and inorganic investment opportunities to accelerate our growth
profile, expand our capabilities, and diversify our portfolio
mix."
Bookings
Bookings in the first quarter declined 6% year-over-year. On a
trailing-twelve-month basis, bookings grew 1% year-over-year to
$25.9 billion, which represented
a book-to-bill of approximately 1.3x.
Employee Metrics
Total headcount at the end of the first quarter was 344,400, a
decrease of 3,300 from Q4 2023 and a decrease of 7,100 from Q1
2023. Voluntary attrition - Tech Services on a trailing-twelve
months basis was 13.1% as compared to 23.1% for the period ended
March 31, 2023.
Return of Capital to Shareholders
The Company repurchased 1.4 million shares for $110 million during the first quarter under its
share repurchase program. As of March 31, 2024, there was
$1.7 billion remaining under the
share repurchase authorization. In April
2024, the Company declared a quarterly cash dividend of
$0.30 per share for shareholders of
record on May 20, 2024. This dividend
will be payable on May 29, 2024.
Second Quarter and Full-Year 2024
Guidance2
(all growth rates
year-over-year)
- Second quarter revenue is expected to be $4.75 - $4.82
billion, a decline of 2.9% to a decline of 1.4%, or a
decline of 2.5% to a decline of 1.0% in constant currency.
- Full-year 2024 revenue is expected to be $18.9 - $19.7
billion, a decline of 2.2% to growth of 1.8% as reported, or
a decline of 2.0% to growth of 2.0% in constant currency. This
assumes up to 100 basis points of inorganic contribution.
- Full-year 2024 Adjusted Operating Margin3 is
expected to be in the range of 15.3% to 15.5%, or 20 to 40 basis
points of expansion.
- Full-year 2024 Adjusted EPS3 is expected to be in
the range of $4.50 to $4.68.
|
|
|
|
|
|
|
2 Guidance
as of May 1, 2024
|
3 A full
reconciliation of Adjusted Operating Margin and Adjusted Diluted
EPS guidance to the corresponding GAAP measures on a
forward-looking basis cannot be provided without unreasonable
efforts. See "About Non-GAAP Financial Measures and Performance
Metrics" for more information and a partial reconciliation at the
end of this release.
|
Select Client and Partnership Announcements
- Signed agreement with Telstra, Australia's leading telecommunications and
technology company, to elevate their software engineering
capabilities and enhance their customers' experience. We will
leverage our AI tools to drive innovation, enable more efficient
software engineering and IT operations and decommission legacy
systems to improve operational efficiency and support their
employee experience.
- Expanded partnership with Microsoft that will
leverage Microsoft Copilot and Cognizant's advisory and digital
transformation services to help employees and enterprise customers
operationalize generative AI and realize strategic business
transformation. The partnership aims to make Microsoft's
generative AI and Copilots available to millions of users, to
transform enterprise business operations, enhance employee
experiences and accelerate cross-industry innovation. As part
of the partnership, Cognizant purchased 25,000 Microsoft 365
Copilot seats for Cognizant associates, along with 500 Sales
Copilot seats and 500 Services Copilot seats to enhance
productivity, streamline workflows and transform customer
experiences.
- Announced a collaboration with Microsoft to infuse
generative AI into healthcare administration. The TriZetto
Assistant on Facets will leverage Azure OpenAI Service and Semantic
Kernel to provide access to generative AI within the TriZetto user
interface. This new collaboration aims to increase productivity and
efficiency for healthcare payers and providers, while ensuring
timely responses and improved care for patients.
- Announced a planned collaboration with FICO, a
leading analytics software company, to launch a cloud-based
real-time payment fraud prevention
solution powered by FICO® Falcon® Fraud Manager. The joint offering would leverage both
firms' artificial intelligence and machine learning (ML)
capabilities to help banks and other payment service providers in
North America protect their
customers from fraud in the growing
world of instant digital payments.
- Announced a strategic alliance with Shopify and
Google Cloud to drive digital transformation and platform
modernization for global retailers and brands. By utilizing
Shopify's commerce operating system, built on Google Cloud, along
with the expansive suite of Google Cloud offerings, retailers are
expected to have the foundational technology needed to enable
Cognizant to execute impactful digital transformation services and
deliver benefits across a range of retail scenarios.
- Signed a new agreement to transform and manage the global
technology infrastructure of McCormick & Company,
Inc., a global leader in flavor with a portfolio of
category-leading brands. The new agreement is expected to
deliver predictable business outcomes powered by AI automated
tools. Cognizant is expected to deliver several key capabilities
for McCormick over the next five years, including new self-service
capabilities, improved service productivity and significant cost
savings.
- Extended strategic agreement with LexisNexis® Legal
& Professional, a leading global provider of information
and analytics. Cognizant will provide cloud and digital engineering
services to enhance customer experience on LexisNexis' next-gen
legal research solution in the U.S. and Canada.
- Extended a strategic partnership with CNO Financial
Group, Inc., a leading provider of insurance, financial
services and workforce benefits solutions to middle-income America.
Cognizant will leverage generative AI technologies designed to
deliver improvements and drive efficiencies for CNO's technology
landscape across infrastructure, applications, enterprise software,
and engineering.
- Announced the combination of Cognizant's generative AI
technology with the NVIDIA BioNeMo gen AI platform to solve
complex challenges of drug discovery in the life sciences industry,
such as improving productivity in the development process and
increasing the speed at which new, life-saving treatments can be
brought to market.
- Unveiled an Advanced Artificial Intelligence Lab
based in San Francisco that will
focus on advancing the science and practice of AI through
innovation and development of intellectual property and
AI-enablement technologies. Staffed by a team of researchers and
developers, including AI pioneers and PhDs, the lab will
collaborate with research institutions, customers, and
startups.
- Renewed Cognizant's long-standing relationship with Pon
IT, which is part of the Dutch family-owned multinational Pon
Holdings. The collaboration will enable Cognizant to continue
providing cloud managed services for Pon IT across its suite of
operating companies. During the next phase of the collaboration,
Cognizant will continue to implement further optimizations that are
expected to enable Pon IT to benefit from an agile, intuitive, and
integrated cloud platform.
- Selected by Clario, a healthcare research
technology company that delivers leading endpoint technology
solutions for clinical trials, to support its global IT
infrastructure and applications. Cognizant services will
provide automation and digital technologies that can reduce cost of
service and speed time to market.
- Renewed Cognizant's collaboration with Cermaq Group
AS, a leading global salmon producer driving the transition of
systems towards healthier and more climate-friendly foods. The
renewal comes after an existing ten-year relationship between the
two companies that has enabled Cognizant to reliably act as a
strategic ally on Cermaq's path towards digital modernization.
Select Analyst Ratings, Company Recognition and
Announcements
- Announced our Bluebolt grassroots innovation
program, which launched a year ago in April
2023, has driven more than $150
million in estimated annualized client cost savings across
more than 1,100 client implementations. We introduced
Bluebolt to empower our global associates to devise and submit
ideas – large and small – with the goal of advancing clients'
success. Cognizant associates have submitted more than
130,000 ideas to date, of which more than 23,000 ideas have been
implemented.
- Named as one of "America's Most Innovative Companies 2024"
by Fortune Magazine, the world-leading
statistics portal and industry ranking provider. Cognizant was
recognized for its innovative products and services, processes, and
culture for the second consecutive year.
- Secured a number three ranking on the LinkedIn Top
Companies in India 2024 list,
which spotlights 25 leading workplaces with more than 5,000
employees globally. The recognition acknowledges our commitment to
prioritizing associate experience, fostering skilling, facilitating
career growth and championing gender diversity.
- Recognized as a Leader by Everest Group® in:
- Retail IT Services PEAK Matrix® Assessment, 2024
- Pega Services PEAK Matrix® Assessment, 2024
- Financial Crime and Compliance (FCC) Operations Services PEAK
Matrix® Assessment, 2024
- CPG IT Services PEAK Matrix® Assessment, 2024
- Intelligent Process Automation Services PEAK Matrix®
Assessment, 2024
- Marketing Services PEAK Matrix® Assessment, 2024
- A Leader in IDC MarketScape:
- Worldwide Professional Services in Railways and Airlines 2024
Vendor Assessment, doc #US51421623, February
2024
- Market Leader in HFS Horizon 3:
- Assuring the Generative Enterprise™, 2024
- Customer Experience Service Providers, 2024
- Leadership in ISG Provider Lens™:
- Intelligent Automation Services and Solutions, 2023
- Sustainability and ESG Services, 2024
- Mainframe Services, 2024
- Salesforce Ecosystem Partners, 2024 – US & UK
- Leadership in Avasant RadarViewTM:
- Life Sciences Digital Services, 2024
- Airlines and Airports Digital Services, 2024
- Hybrid Enterprise Cloud Services, 2024
- Intelligent Automation Services, 2024
- Healthcare Payor Digital Services, 2024
- Retail Digital Services, 2024
- Manufacturing Digital Services, 2024
- Leadership in NelsonHall NEAT Reports:
- Salesforce Services, 2024
Conference Call
Cognizant will host a conference call on May 1, 2024, at
5:00 p.m. (Eastern) to discuss the
Company's first quarter 2024 results. To listen to the conference
call, please dial (877) 810-9510 (domestic) or +1 (201)
493-6778 (international) and provide the following conference
passcode: "Cognizant Call."
The conference call will also be available live on the Investor
Relations section of the Cognizant website at
http://investors.cognizant.com. An earnings supplement will also be
available on the Cognizant website at the time of the conference
call. For those who cannot access the live broadcast, a replay will
be available. To listen to the replay, please dial (877) 660-6853
(domestically) or +1 (201) 612-7415 (internationally) and enter
13744823 beginning two hours after the end of the call until
11:59 p.m. (Eastern) on Tuesday,
May 15, 2024. The replay will also be available at Cognizant's
website www.cognizant.com for 60 days following the call.
About Cognizant
Cognizant (Nasdaq: CTSH) engineers
modern businesses. We help our clients modernize technology,
reimagine processes and transform experiences so they can stay
ahead in our fast-changing world. Together, we're improving
everyday life. See how at www.cognizant.com or @cognizant.
Forward-Looking Statements
This press release
includes statements that may constitute forward-looking statements
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, the accuracy of which is
necessarily subject to risks, uncertainties and assumptions as to
future events that may not prove to be accurate. These statements
include, but are not limited to, express or implied forward-looking
statements relating to our strategy, strategic partnerships and
collaborations, competitive position and opportunities in the
marketplace, investment in and growth of our business, the pace and
magnitude of change and client needs related to generative AI, the
effectiveness of our recruiting and talent efforts and related
costs, labor market trends, the anticipated amount of capital to be
returned to shareholders and our anticipated financial performance.
These statements are neither promises nor guarantees, but are
subject to a variety of risks and uncertainties, many of which are
beyond our control, which could cause actual results to differ
materially from those contemplated in these forward-looking
statements. Existing and prospective investors are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date hereof. Factors that could cause actual
results to differ materially from those expressed or implied
include general economic conditions, the competitive and rapidly
changing nature of the markets we compete in, the competitive
marketplace for talent and its impact on employee recruitment and
retention, our ability to successfully implement our NextGen
program and the amount of costs, timing of incurring costs and
ultimate benefits of such plans, our ability to successfully use
AI-based technologies, legal, reputational and financial risks
resulting from cyberattacks, changes in the regulatory environment,
including with respect to immigration and taxes, and the other
factors discussed in our most recent Annual Report on Form 10-K and
other filings with the Securities and Exchange Commission.
Cognizant undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise, except as may be required under
applicable securities law.
About Non-GAAP Financial Measures and Performance
Metrics
Non-GAAP Financial Measures
To supplement our
financial results presented in accordance with GAAP, this press
release includes references to the following measures defined by
the Securities and Exchange Commission as non-GAAP financial
measures: Adjusted Operating Margin, Adjusted Diluted EPS, free
cash flow, net cash and constant currency revenue growth. These
non-GAAP financial measures are not based on any comprehensive set
of accounting rules or principles and should not be considered a
substitute for, or superior to, financial measures calculated in
accordance with GAAP, and may be different from non-GAAP financial
measures used by other companies. In addition, these non-GAAP
financial measures should be read in conjunction with our financial
statements prepared in accordance with GAAP. The reconciliations of
our non-GAAP financial measures to the corresponding GAAP measures
should be carefully evaluated.
Our non-GAAP financial measures Adjusted Operating Margin and
Adjusted Income from Operations excludes unusual items, such as
NextGen charges. Our non-GAAP financial measure Adjusted Diluted
EPS excludes unusual items, such as NextGen charges, net
non-operating foreign currency exchange gains or losses and the tax
impact of all the applicable adjustments. The income tax impact of
each item excluded from Adjusted Diluted EPS is calculated by
applying the statutory rate and local tax regulations in the
jurisdiction in which the item was incurred. Free cash flow is
defined as cash flows from operating activities net of purchases of
property and equipment. Net cash is defined as cash and cash
equivalents and short-term investments less short-term and
long-term debt. Constant currency revenue growth is defined as
revenues for a given period restated at the comparative period's
foreign currency exchange rates measured against the comparative
period's reported revenues.
Management believes providing investors with an operating
view consistent with how we manage the Company provides enhanced
transparency into our operating results. For our internal
management reporting and budgeting purposes, we use various GAAP
and non-GAAP financial measures for financial and operational
decision-making, to evaluate period-to-period comparisons, to
determine portions of the compensation for our executive officers
and for making comparisons of our operating results to those of our
competitors. Accordingly, we believe that the presentation of our
non-GAAP measures, which exclude certain costs, when read in
conjunction with our reported GAAP results, can provide useful
supplemental information to our management and investors regarding
financial and business trends relating to our financial condition
and results of operations.
A limitation of using non-GAAP financial measures versus
financial measures calculated in accordance with GAAP is that
non-GAAP financial measures do not reflect all of the amounts
associated with our operating results as determined in accordance
with GAAP and may exclude costs that are recurring such as our net
non-operating foreign currency exchange gains or losses. In
addition, other companies may calculate non-GAAP financial measures
differently than us, thereby limiting the usefulness of these
non-GAAP financial measures as a comparative tool. We compensate
for these limitations by providing specific information regarding
the GAAP amounts excluded from our non-GAAP financial measures to
allow investors to evaluate such non-GAAP financial
measures.
Performance Metrics
Bookings are defined as total
contract value (or TCV) of new contracts, including new contract
sales as well as renewals and expansions of existing contracts.
Bookings can vary significantly quarter to quarter depending in
part on the timing of the signing of a small number of large
contracts. Our book-to-bill ratio is defined as bookings for the
trailing twelve months divided by revenue for the same period.
Measuring bookings involves the use of estimates and judgments and
there are no independent standards or requirements governing the
calculation of bookings. The extent and timing of conversion of
bookings to revenues may be impacted by, among other factors, the
types of services and solutions sold, contract duration, the pace
of client spending, actual volumes of services delivered as
compared to the volumes anticipated at the time of sale, and
contract modifications, including terminations, over the lifetime
of a contract. The majority of our contracts are terminable by the
client on short notice often without penalty, and some without
notice. We do not update our bookings for subsequent terminations,
reductions or foreign currency exchange rate fluctuations.
Information regarding our bookings is not comparable to, nor should
it be substituted for, an analysis of our reported revenues.
However, management believes that it is a key indicator of
potential future revenues and provides a useful indicator of the
volume of our business over time.
Investor Relations
Contact:
|
|
|
|
Media
Contact:
|
Tyler Scott
|
|
|
|
Jeff
DeMarrais
|
VP, Investor
Relations
|
|
|
|
VP, Corporate
Communications
|
+1
551-220-8246
|
|
|
|
+1
475-223-2298
|
Tyler.Scott@cognizant.com
|
|
|
|
Jeff.DeMarrais@cognizant.com
|
- tables to follow -
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
(in millions,
except per share data)
|
Three Months
Ended
March 31,
|
|
2024
|
|
2023
|
Revenues
|
$ 4,760
|
|
$ 4,812
|
Operating
expenses:
|
|
|
|
Cost of revenues
(exclusive of depreciation and amortization expense shown
separately below)
|
3,146
|
|
3,143
|
Selling, general
and administrative expenses
|
765
|
|
835
|
Restructuring
charges
|
23
|
|
—
|
Depreciation and
amortization expense
|
131
|
|
132
|
Income from
operations
|
695
|
|
702
|
Other income
(expense), net:
|
|
|
|
Interest
income
|
30
|
|
30
|
Interest
expense
|
(11)
|
|
(9)
|
Foreign currency
exchange gains (losses), net
|
6
|
|
12
|
Other,
net
|
2
|
|
3
|
Total other
income (expense), net
|
27
|
|
36
|
Income before
provision for income taxes
|
722
|
|
738
|
Provision for
income taxes
|
(179)
|
|
(158)
|
Income (loss)
from equity method investment
|
3
|
|
—
|
Net income
|
$
546
|
|
$
580
|
Basic earnings
per share
|
$ 1.10
|
|
$ 1.14
|
Diluted earnings
per share
|
$ 1.10
|
|
$ 1.14
|
Weighted average number
of common shares outstanding - Basic
|
497
|
|
509
|
Dilutive effect of
shares issuable under stock-based compensation plans
|
1
|
|
—
|
Weighted average number
of common shares outstanding - Diluted
|
498
|
|
509
|
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
(Unaudited)
|
|
|
|
|
(in millions, except
par values)
|
March 31,
2024
|
|
December 31,
2023
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
2,231
|
|
$
2,621
|
Short-term
investments
|
12
|
|
14
|
Trade accounts
receivable, net
|
3,822
|
|
3,849
|
Other current
assets
|
1,021
|
|
1,022
|
Total current
assets
|
7,086
|
|
7,506
|
Property and equipment,
net
|
1,036
|
|
1,048
|
Operating lease assets,
net
|
589
|
|
611
|
Goodwill
|
6,393
|
|
6,085
|
Intangible assets,
net
|
1,171
|
|
1,149
|
Deferred income tax
assets, net
|
993
|
|
993
|
Long-term
investments
|
83
|
|
435
|
Other noncurrent
assets
|
1,057
|
|
656
|
Total
assets
|
$
18,408
|
|
$
18,483
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
291
|
|
$
337
|
Deferred
revenue
|
449
|
|
385
|
Short-term
debt
|
33
|
|
33
|
Operating lease
liabilities
|
143
|
|
153
|
Accrued expenses and
other current liabilities
|
2,096
|
|
2,425
|
Total current
liabilities
|
3,012
|
|
3,333
|
Deferred revenue,
noncurrent
|
36
|
|
42
|
Operating lease
liabilities, noncurrent
|
503
|
|
523
|
Deferred income tax
liabilities, net
|
201
|
|
226
|
Long-term
debt
|
598
|
|
606
|
Long-term income taxes
payable
|
157
|
|
157
|
Other noncurrent
liabilities
|
411
|
|
369
|
Total
liabilities
|
4,918
|
|
5,256
|
Stockholders'
equity:
|
|
|
|
Preferred stock, $0.10
par value, 15 shares authorized, none issued
|
—
|
|
—
|
Class A common
stock, $0.01 par value, 1,000 shares authorized, 497 and 498 shares
issued
and outstanding as of December 31, 2023 and 2022,
respectively
|
5
|
|
5
|
Additional paid-in
capital
|
20
|
|
15
|
Retained
earnings
|
13,621
|
|
13,301
|
Accumulated other
comprehensive income (loss)
|
(156)
|
|
(94)
|
Total stockholders'
equity
|
13,490
|
|
13,227
|
Total liabilities and
stockholders' equity
|
$
18,408
|
|
$
18,483
|
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
Reconciliations of
Non-GAAP Financial Measures
(Unaudited)
|
|
|
|
|
(dollars in
millions, except per share amounts)
|
Three Months
Ended
March 31,
|
|
Guidance
|
|
2024
|
|
2023
|
|
Full Year 2024
(1)
|
GAAP income from
operations
|
$
695
|
|
$
702
|
|
|
NextGen
charges(a)
|
23
|
|
—
|
|
|
Adjusted Income From
Operations
|
$
718
|
|
$
702
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
14.6 %
|
|
14.6 %
|
|
|
NextGen
charges
|
0.5
|
|
—
|
|
0.3% - 0.4%
|
Adjusted Operating
Margin
|
15.1 %
|
|
14.6 %
|
|
15.3%
- 15.5%
|
|
|
|
|
|
|
GAAP diluted earnings
per share
|
$
1.10
|
|
$
1.14
|
|
|
Effect of NextGen
charges, pre-tax
|
0.05
|
|
—
|
|
0.14
|
Non-operating foreign
currency exchange (gains) losses, pre-tax(b)
|
(0.01)
|
|
(0.02)
|
|
(b)
|
Tax effect of above
adjustments(c)
|
(0.02)
|
|
(0.01)
|
|
(a) (b)
|
Adjusted Diluted
Earnings Per Share
|
$
1.12
|
|
$
1.11
|
|
$4.50
- $4.68
|
|
(1) A full
reconciliation of Adjusted Operating Margin and Adjusted Diluted
Earnings Per Share guidance to the corresponding GAAP measures on a
forward-looking basis cannot be provided without unreasonable
efforts, as we are unable to provide reconciling information with
respect to unusual items, net non-operating foreign currency
exchange gains or losses and the tax effects of these adjustments,
and such adjustments may be significant.
|
|
Notes:
|
(a)
|
NextGen charges for the
three months ended March 31, 2024 include $8 million of
employee separation costs, $14 million of facility exit costs and
$1 million of third party and other costs. We expect to incur
approximately $70 million of costs in 2024 in connection with the
NextGen program. The total costs related to the NextGen program are
reported in "Restructuring charges" in our unaudited consolidated
statements of operations. Our guidance anticipates pre-tax charges
of approximately $0.14 per diluted share for the full year 2024.
The tax effect of these charges is expected to be approximately
$0.04 per diluted share for the full year 2024.
|
(b)
|
Non-operating foreign
currency exchange gains and losses, inclusive of gains and losses
on related foreign exchange forward contracts not designated as
hedging instruments for accounting purposes, are reported in
"Foreign currency exchange gains (losses), net" in our unaudited
consolidated statements of operations. Non-operating foreign
currency exchange gains and losses are subject to high variability
and low visibility and therefore cannot be provided on a
forward-looking basis without unreasonable efforts.
|
(c)
|
Presented below are the
tax impacts of our non-GAAP adjustment to pre-tax income for
the:
|
|
|
(in
millions)
|
Three Months
Ended
March 31,
|
|
2024
|
|
2023
|
Non-GAAP income tax
benefit (expense) related to:
|
|
|
|
NextGen
charges
|
$
5
|
|
$
—
|
Foreign currency
exchange gains and losses
|
(1)
|
|
5
|
The effective tax rate related to non-operating foreign currency
exchange gains and losses varies depending on the jurisdictions in
which such income and expenses are generated and the statutory
rates applicable in those jurisdictions. As such, the income tax
effect of non-operating foreign currency exchange gains and losses
shown in the above table may not appear proportionate to the net
pre-tax foreign currency exchange gains and losses reported in our
unaudited consolidated statements of operations.
Reconciliations of
Net Cash
(Unaudited)
|
|
|
|
|
|
(in
millions)
|
|
March 31,
2024
|
|
December 31,
2023
|
Cash and unrestricted
cash equivalents
|
|
$
2,231
|
|
$
2,621
|
Short-term
investments
|
|
12
|
|
14
|
Less:
|
|
|
|
|
Short-term
debt
|
|
33
|
|
33
|
Long-term
debt
|
|
598
|
|
606
|
Net cash
|
|
$
1,612
|
|
$
1,996
|
The above tables serve to reconcile the Non-GAAP financial
measures to the most directly comparable GAAP measures. Refer to
the "About Non-GAAP Financial Measures and Performance Metrics"
section of our press release for further information on the use of
these Non-GAAP measures.
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
Revenue by Business
Segment and Geography
(Unaudited)
|
|
|
(dollars in
millions)
|
Three Months Ended
March 31, 2024
|
|
|
|
|
|
Year over
Year
|
|
$
|
|
% of
total
|
|
%
Change
|
|
Constant
Currency
% Change (a)
|
Revenues by
Segment:
|
|
|
|
|
|
|
|
Financial
Services
|
$
1,385
|
|
29.1 %
|
|
(6.2) %
|
|
(6.5) %
|
Health
Sciences
|
1,416
|
|
29.7 %
|
|
(1.2) %
|
|
(1.3) %
|
Products and
Resources
|
1,133
|
|
23.8 %
|
|
1.3 %
|
|
0.9 %
|
Communications, Media
and Technology
|
826
|
|
17.4 %
|
|
5.2 %
|
|
5.7 %
|
Total
Revenues
|
$
4,760
|
|
|
|
(1.1) %
|
|
(1.2) %
|
Revenues by
Geography:
|
|
|
|
|
|
|
|
North
America
|
$
3,521
|
|
74.0 %
|
|
(0.7) %
|
|
(0.7) %
|
United
Kingdom
|
456
|
|
9.6 %
|
|
(4.6) %
|
|
(7.7) %
|
Continental
Europe
|
483
|
|
10.1 %
|
|
4.8 %
|
|
3.1 %
|
Europe -
Total
|
939
|
|
19.7 %
|
|
— %
|
|
(2.4) %
|
Rest of
World
|
300
|
|
6.3 %
|
|
(8.5) %
|
|
(3.7) %
|
Total
Revenues
|
$
4,760
|
|
|
|
(1.1) %
|
|
(1.2) %
|
|
|
|
|
|
|
|
|
|
Notes:
|
(a)
|
Constant currency
revenue growth is not a measure of financial performance prepared
in accordance with GAAP. See "About Non-GAAP Financial Measures and
Performance Metrics" section of our press release for further
information.
|
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
(in
millions)
|
Three Months
Ended
March
31,
|
|
2024
|
|
2023
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
546
|
|
$
580
|
Adjustments for
non-cash income and expenses
|
181
|
|
187
|
Changes in assets and
liabilities
|
(632)
|
|
(38)
|
Net cash provided by
operating activities
|
95
|
|
729
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property
and equipment
|
(79)
|
|
(98)
|
Net maturities of
investments
|
262
|
|
292
|
Payments for business
combinations, net of cash acquired
|
(421)
|
|
(409)
|
Net cash (used in)
investing activities
|
(238)
|
|
(215)
|
Cash flows from
financing activities:
|
|
|
|
Issuance of common
stock under stock-based compensation plans
|
20
|
|
23
|
Repurchases of common
stock
|
(133)
|
|
(222)
|
Net change in term
loan borrowings and earnout and finance lease
obligations
|
(40)
|
|
(1)
|
Dividends
paid
|
(151)
|
|
(150)
|
Net cash (used in)
financing activities
|
(304)
|
|
(350)
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash and cash
equivalents
|
(39)
|
|
—
|
(Decrease) increase in
cash, cash equivalents and restricted cash and cash
equivalents
|
(486)
|
|
164
|
Cash, cash equivalents
and restricted cash and cash equivalents, beginning of
period
|
2,717
|
|
2,294
|
Cash, cash equivalents,
end of period
|
$
2,231
|
|
$
2,458
|
SUPPLEMENTAL CASH
FLOW INFORMATION
|
|
|
(in
millions)
|
Three Months
Ended
March
31,
|
Stock Repurchases
under Board of Directors' authorized stock repurchase
program:
|
2024
|
|
2023
|
Number of shares
repurchased
|
1.4
|
|
3.2
|
|
|
|
|
Remaining authorized
balance as of March 31, 2024
|
$
1,667
|
|
|
Reconciliation of
Free Cash Flow Non-GAAP Financial Measure
|
|
|
(in
millions)
|
Three Months
Ended
March
31,
|
|
2024
|
|
2023
|
Net cash provided by
operating activities
|
$
95
|
|
$
729
|
Purchases of property
and equipment
|
(79)
|
|
(98)
|
Free cash
flow
|
$
16
|
|
$
631
|
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SOURCE Cognizant