- Revenue of $4.9 billion increased
0.8% year-over-year, declined 0.2% in constant
currency1
- Record trailing 12-month bookings of $26.9 billion, up 16% year-over-year
- Operating cash flow of $828
million; free cash flow1 of $755 million was ~144% of net income
- Share repurchase expectation for 2023 increased by $200 million to $1
billion
- Full-year 2023 revenue guidance narrowed to (0.7%) to flat, as
reported and in constant currency1
- Full-year 2023 Adjusted Operating Margin1 guidance
now ~14.7%, the high end of prior guidance
TEANECK,
N.J., Nov. 1, 2023 /PRNewswire/ -- Cognizant
(Nasdaq: CTSH), one of the world's leading professional services
companies, today announced its third quarter 2023 financial
results.
"We strengthened the company's fundamentals during the third
quarter as reflected in higher customer satisfaction scores,
significantly lower voluntary attrition, and continued growth in
bookings, despite ongoing economic uncertainty," said Ravi Kumar S,
Chief Executive Officer. "We are investing to put Cognizant in the
best position to serve clients as they strive to reduce costs,
digitally transform their businesses and embrace generative
AI."
|
Q3
2023
|
|
Q3
2022
|
|
Revenue (in
billions)
|
$4.90
|
|
$4.86
|
|
Y/Y Change
|
0.8 %
|
|
2.4 %
|
|
Y/Y Change
CC1
|
(0.2 %)
|
|
5.6 %
|
|
GAAP Operating
Margin
|
14.0 %
|
|
16.4 %
|
|
Adjusted Operating
Margin1
|
15.5 %
|
|
16.4 %
|
|
GAAP Diluted
EPS
|
$1.04
|
|
$1.22
|
|
Adjusted Diluted
EPS1
|
$1.16
|
|
$1.17
|
|
____________________
|
1
|
Constant currency
("CC") revenue growth, Adjusted Operating Margin, Adjusted Diluted
Earnings Per Share ("Adjusted Diluted EPS") and free cash flow are
not measures of financial performance prepared in accordance with
GAAP. A full reconciliation of Adjusted Operating Margin 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, where applicable, reconciliations to the most
directly comparable GAAP financial measures.
|
"Cognizant delivered third-quarter revenue within our guidance
range along with an adjusted operating margin above our
expectations, evidencing progress with our NextGen program,"
said Jan Siegmund, Chief Financial
Officer. "We have narrowed our full-year revenue guidance range,
which now reflects recent discretionary spending pressure and its
impact to our near-term revenue expectations. We have also updated
our adjusted operating margin guidance to approximately 14.7%,
which is the high-end of our prior range, reflecting our continuing
focus on enhancing operational discipline."
Bookings
Bookings in the third quarter grew 9% year-over-year. On a
trailing-twelve-month basis, bookings grew 16% year-over-year to
$26.9 billion, which represented
a book-to-bill of approximately 1.4x.
Employee Metrics
Total headcount at the end of the third quarter was 346,600, an
increase of 1,000 from Q2 2023 and a decrease of 2,800 from Q3
2022. Voluntary attrition - Tech Services on a
trailing-twelve-month basis, declined to 16.2% from 19.9% in Q2
2023 and 29.2% in Q3 2022.
Return of Capital to Shareholders
The Company repurchased 4.3 million shares for $300 million during the third quarter under its
share repurchase program. As of September
30, 2023, there was $2.1
billion remaining under the share repurchase authorization.
In October 2023, the Company declared
a quarterly cash dividend of $0.29
per share, a 7% increase year-over-year, for shareholders of record
on November 21, 2023. This dividend
will be payable on November 30,
2023.
Fourth Quarter and Full-Year 2023 Guidance
- Fourth quarter revenue is expected to be $4.69 - $4.82
billion, a decline of 3.1% to 0.3%, or a decline of 4.0% to
1.2% in constant currency.
- Full-year 2023 revenue is expected to be $19.3 - $19.4
billion, or a decline of 0.7% to flat, both as reported and
in constant currency.
- Full-year 2023 Adjusted Operating Margin2 is
expected to be approximately 14.7%.
- Full-year 2023 Adjusted EPS2 is expected to be in
the range of $4.39 to $4.42.
____________________
|
2
|
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
- Selected by Technicolor Creative Studios, a creative
technology company, as its global IT & Digital Transformation
partner. Cognizant expects to provide an end-to-end managed service
for Technicolor Creative Studios' users, applications, and
infrastructure. Cognizant's approach utilizes an integrated
operating model covering service desk, end user services,
application services, infrastructure, network, and platform
services.
- Established a new relationship with Intrum, a global
credit management services company headquartered in Sweden, to provide end-to-end digital
integration and core modernization services for Intrum's credit
management technology platform. Cognizant expects to build and
support a core digital system, jointly with Intrum, including
working to implement a new integration layer. The system aims to
help Intrum reduce total cost of ownership, accelerate
modernization of its integration platform and build an agile
digital services team to manage its customers' needs across 20
countries in Europe.
- Announced the launch of Telco Assurance 360, a
cloud-based, AI-powered solution, built on ServiceNow and
designed to help telecommunications companies reimagine their
service management strategies to drive growth in the age of AI.
Telco Assurance 360 offers telecom firms real-time visibility into
network issues, and fast, proactive resolution through AI-powered
analytics. The solution advances the two companies' previously
announced strategic partnership in AI-driven automation across
industries.
- In partnership with Google Cloud, we supported
Bendigo and Adelaide Bank,
one of the largest retail banks in Australia, in rebuilding its digital banking
system on Google Cloud. The migration to Google Cloud is a key
component of the Bank's wider transformation program to drive
simplification, modernization and consolidation through streamlined
service offerings.
- Renewed partnership agreements with Aston Martin Aramco
Cognizant Formula One® Team (AMF1 Team) and The
Football Association (The FA) to support those partners'
ongoing transformation programs. The AMF1 partnership renewal and
extension names Cognizant as AMF1's Global Technology Services
Partner, contributing Cognizant's data and machine-learning
technology and broader digital transformation expertise to the
day-to-day operation of the race team. The expanded relationship
with The FA will see Cognizant become the Digital Transformation
Partner of The FA, Official Partner of the Emirates FA Cup,
Official Partner of the Women's FA Cup, Official Partner of The FA
Community Shield, and Official Partner of England Football.
- Announced launch of a global strategic go-to-market partnership
with Vianai to accelerate human-centered generative AI
offerings. This partnership leverages Vianai's hila™ Enterprise
platform alongside Cognizant's Neuro® AI, creating a seamless,
unified interface to unlock predictive, AI-driven decision making.
For both companies, this partnership is expected to enable growth
opportunities in their respective customer bases, including through
Cognizant's plans to resell Vianai solutions.
- Announced a five-year renewal with ISS, a leading
workplace experience and facility management company. The extended
collaboration will enable Cognizant to continue helping ISS create
efficiencies and enhanced innovation within its financial
organization across Northern
Europe. To date, Cognizant has transitioned multiple and
country specific processes and systems into one simplified,
consolidated, and automated framework. During the next phase,
Cognizant aims to drive continuous innovation and productivity
improvements for the customer's financial organization by providing
solutions and processes designed to simplify, harmonize, and
standardize the way of working with the goal of achieving further
cost savings.
Select Analyst Ratings, Company Recognition and
Announcements
- Announced an important new training initiative, Synapse, aimed
at empowering more than one million individuals with cutting-edge
technology skills, including Generative AI, for the digital age.
Together with government, academic institutions, businesses, and
other strategic partners, Cognizant's program intends to prepare
individuals to participate in the future workforce. Cognizant
intends to build a consortium of partners, which then will help
employ individuals who are upskilled through the Synapse
initiative.
- Opened AI Innovation Hub in London in partnership with Google
- Named to Forbes' World's Best Employers 2023
- Named to Forbes' America's Best Employers in the State of New Jersey for 2023
- Recognized by Pegasystems' as winner of Pega Industry
Excellence Award in Telecommunications
- Recognized as Automation Anywhere Innovation Solutions Partner
of the Year 2023 - North
America
- Recognized as a Leader by Everest Group® in:
- Property & Casualty (P&C) Insurance BPS PEAK
Matrix® Assessment, 2023
- Clinical and Care Management Operations Services PEAK
Matrix® Assessment, 2023
- Life Sciences Operations Services PEAK Matrix®
Assessment 2023
- Market Leader in HFS Horizon 3:
- Services for the Platform Economy, 2023
- Generative Enterprise™ Services, 2023
- Leadership in ISG Provider Lens™
- Workday Ecosystem – U.S. & Europe, 2023
- Google Cloud Partner Ecosystem – U.S. & Europe, 2023
- Next-Gen ADM Services – U.S. & Europe, 2023
- Digital Service Desk and Workplace Support Services – U.S.,
2023
- Managed Workplace Services-End-User Technology-Large Accounts –
U.S., 2023
- Power and Utilities - Services and Solutions, North America, 2023
- Leadership in Avasant RadarView™
- End-User Computing Services, 2023
- Digital Workplace Services, 2023
- Data Management and Advanced Analytics Services, 2023
Conference Call
Cognizant will host a conference call on November 1, 2023, at 5:00
p.m. (Eastern) to discuss the Company's third quarter 2023
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
13741068 beginning two hours after the end of the call until
11:59 p.m. (Eastern) on Wednesday,
November 15, 2023. 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 are
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 and results of our new Synapse initiative, including
our ability to build a consortium of partners for the training
program and the number of individuals we expect to reach with the
initiative, 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, 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 and the effect
of recognition in the third quarter of 2022 of an income tax
benefit related to a specific uncertain tax position that was
previously unrecognized in our prior-year consolidated financial
statements, and 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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues
|
$ 4,897
|
|
$ 4,857
|
|
$
14,595
|
|
$
14,589
|
Operating
expenses:
|
|
|
|
|
|
|
|
Cost of revenues
(exclusive of depreciation and amortization expense shown
separately below)
|
3,209
|
|
3,080
|
|
9,583
|
|
9,296
|
Selling, general and
administrative expenses
|
801
|
|
838
|
|
2,466
|
|
2,583
|
Restructuring
charges
|
72
|
|
—
|
|
189
|
|
—
|
Depreciation and
amortization expense
|
129
|
|
141
|
|
392
|
|
428
|
Income from
operations
|
686
|
|
798
|
|
1,965
|
|
2,282
|
Other income (expense),
net:
|
|
|
|
|
|
|
|
Interest
income
|
32
|
|
17
|
|
92
|
|
32
|
Interest
expense
|
(11)
|
|
(6)
|
|
(30)
|
|
(11)
|
Foreign currency
exchange gains (losses), net
|
—
|
|
3
|
|
3
|
|
(1)
|
Other, net
|
6
|
|
—
|
|
8
|
|
—
|
Total other income
(expense), net
|
27
|
|
14
|
|
73
|
|
20
|
Income before provision
for income taxes
|
713
|
|
812
|
|
2,038
|
|
2,302
|
Provision for income
taxes
|
(191)
|
|
(183)
|
|
(473)
|
|
(537)
|
Income (loss) from
equity method investment
|
3
|
|
—
|
|
3
|
|
4
|
Net income
|
$
525
|
|
$
629
|
|
$ 1,568
|
|
$ 1,769
|
Basic earnings per
share
|
$ 1.04
|
|
$ 1.22
|
|
$ 3.10
|
|
$ 3.40
|
Diluted earnings per
share
|
$ 1.04
|
|
$ 1.22
|
|
$ 3.09
|
|
$ 3.40
|
Weighted average number
of common shares outstanding - Basic
|
504
|
|
516
|
|
506
|
|
520
|
Dilutive effect of
shares issuable under stock-based compensation plans
|
1
|
|
1
|
|
1
|
|
1
|
Weighted average number
of common shares outstanding - Diluted
|
505
|
|
517
|
|
507
|
|
521
|
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
(Unaudited)
|
|
(in millions, except
par values)
|
September
30,
2023
|
|
December 31,
2022
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
2,204
|
|
$
2,191
|
Short-term
investments
|
164
|
|
310
|
Trade accounts
receivable, net
|
3,807
|
|
3,796
|
Other current
assets
|
952
|
|
969
|
Total current
assets
|
7,127
|
|
7,266
|
Property and equipment,
net
|
1,048
|
|
1,101
|
Operating lease assets,
net
|
718
|
|
876
|
Goodwill
|
6,013
|
|
5,710
|
Intangible assets,
net
|
1,174
|
|
1,168
|
Deferred income tax
assets, net
|
935
|
|
642
|
Long-term
investments
|
432
|
|
427
|
Other noncurrent
assets
|
632
|
|
662
|
Total
assets
|
$
18,079
|
|
$
17,852
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
325
|
|
$
360
|
Deferred
revenue
|
302
|
|
398
|
Short-term
debt
|
33
|
|
8
|
Operating lease
liabilities
|
164
|
|
174
|
Accrued expenses and
other current liabilities
|
2,367
|
|
2,407
|
Total current
liabilities
|
3,191
|
|
3,347
|
Deferred revenue,
noncurrent
|
34
|
|
19
|
Operating lease
liabilities, noncurrent
|
634
|
|
714
|
Deferred income tax
liabilities, net
|
220
|
|
180
|
Long-term
debt
|
614
|
|
638
|
Long-term income taxes
payable
|
157
|
|
283
|
Other noncurrent
liabilities
|
347
|
|
362
|
Total
liabilities
|
5,197
|
|
5,543
|
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, 501 and 509 shares
issued
and outstanding as of September 30, 2023 and December 31, 2022,
respectively
|
5
|
|
5
|
Additional paid-in
capital
|
16
|
|
15
|
Retained
earnings
|
13,146
|
|
12,588
|
Accumulated other
comprehensive income (loss)
|
(285)
|
|
(299)
|
Total stockholders'
equity
|
12,882
|
|
12,309
|
Total liabilities and
stockholders' equity
|
$
18,079
|
|
$
17,852
|
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
Reconciliations of
Non-GAAP Financial Measures
(Unaudited)
|
|
(dollars in
millions, except per share amounts)
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
Guidance
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Full Year 2023
(1)
|
GAAP income from
operations
|
$
686
|
|
$
798
|
|
$ 1,965
|
|
$ 2,282
|
|
|
NextGen
charges(a)
|
72
|
|
—
|
|
189
|
|
—
|
|
|
Adjusted Income From
Operations
|
$
758
|
|
$
798
|
|
$ 2,154
|
|
$ 2,282
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
14.0 %
|
|
16.4 %
|
|
13.5 %
|
|
15.6 %
|
|
|
NextGen
charges
|
1.5
|
|
—
|
|
1.3
|
|
—
|
|
1.0% - 1.1%
|
Adjusted Operating
Margin
|
15.5 %
|
|
16.4 %
|
|
14.8 %
|
|
15.6 %
|
|
~14.7%
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings
per share
|
$
1.04
|
|
$
1.22
|
|
$
3.09
|
|
$
3.40
|
|
|
Effect of NextGen
charges, pre-tax
|
0.14
|
|
—
|
|
0.37
|
|
—
|
|
(a)
|
Non-operating foreign
currency exchange (gains) losses, pre-
tax(b)
|
—
|
|
(0.01)
|
|
(0.01)
|
|
—
|
|
(b)
|
Tax effect of above
adjustments(c)
|
(0.02)
|
|
0.03
|
|
(0.08)
|
|
0.07
|
|
(a) (b)
|
Effect of recognition
of income tax benefit related to an
uncertain tax position(d)
|
—
|
|
(0.07)
|
|
—
|
|
(0.07)
|
|
—
|
Adjusted Diluted
Earnings Per Share
|
$
1.16
|
|
$
1.17
|
|
$
3.37
|
|
$
3.40
|
|
$4.39
- $4.42
|
|
(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 September 30, 2023 include $15 million of
employee separation costs, $55 million of facility exit costs and
$2 million of third party and other costs. NextGen charges for the
nine months ended September 30, 2023 include $93 million of
employee separation costs, $92 million of facility exit costs and
$4 million of third party and other costs. We expect to incur total
costs of approximately $300 million in connection with the
NextGen program, with approximately $200 million of such costs
anticipated in 2023 and approximately $100 million in 2024.
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 in the range
of $0.39 to $0.42 per diluted share for the full year 2023. The tax
effect of these charges is expected to be approximately $0.11 per
diluted share for the full year 2023.
|
(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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Non-GAAP income tax
benefit (expense) related to:
|
|
|
|
|
|
|
|
|
NextGen
charges
|
$
18
|
|
$
—
|
|
$
49
|
|
$
—
|
|
Foreign currency
exchange gains and losses
|
(7)
|
|
(15)
|
|
(2)
|
|
(35)
|
|
|
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.
|
|
(d)
|
As previously reported
in our Annual Report on Form 10-K, during the three months ended
September 30, 2022, we recognized an income tax benefit of $36
million related to a specific uncertain tax position that was
previously unrecognized in our prior-year consolidated financial
statements. The recognition of the benefit in the third quarter of
2022 was based on management's reassessment regarding whether this
unrecognized tax benefit met the more-likely-than-not threshold in
light of the lapse in the statute of limitations as to a portion of
such benefit.
|
|
|
Reconciliations of
Net Cash
(Unaudited)
|
|
(in
millions)
|
|
September 30,
2023
|
|
December 31,
2022
|
Cash and cash
equivalents
|
|
$
2,204
|
|
$
2,191
|
Short-term
investments
|
|
164
|
|
310
|
Less:
|
|
|
|
|
Short-term
debt
|
|
33
|
|
8
|
Long-term
debt
|
|
614
|
|
638
|
Net cash
|
|
$
1,721
|
|
$
1,855
|
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
September 30, 2023
|
|
|
|
|
|
Year over
Year
|
|
$
|
|
% of
total
|
|
%
Change
|
|
Constant
Currency
% Change (a)
|
Revenues by
Segment:
|
|
|
|
|
|
|
|
Financial
Services
|
$
1,475
|
|
30.1 %
|
|
(3.0) %
|
|
(4.0) %
|
Health
Sciences
|
1,405
|
|
28.7 %
|
|
— %
|
|
(0.8) %
|
Products and
Resources
|
1,170
|
|
23.9 %
|
|
1.9 %
|
|
0.6 %
|
Communications, Media
and Technology
|
847
|
|
17.3 %
|
|
8.2 %
|
|
7.3 %
|
Total
Revenues
|
$
4,897
|
|
|
|
0.8 %
|
|
(0.2) %
|
Revenues by
Geography:
|
|
|
|
|
|
|
|
North
America
|
$
3,599
|
|
73.5 %
|
|
(0.6) %
|
|
(0.6) %
|
United
Kingdom
|
486
|
|
9.9 %
|
|
9.0 %
|
|
2.2 %
|
Continental
Europe
|
484
|
|
9.9 %
|
|
10.5 %
|
|
3.7 %
|
Europe -
Total
|
970
|
|
19.8 %
|
|
9.7 %
|
|
3.0 %
|
Rest of
World
|
328
|
|
6.7 %
|
|
(6.8) %
|
|
(3.4) %
|
Total
Revenues
|
$
4,897
|
|
|
|
0.8 %
|
|
(0.2) %
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2023
|
|
|
|
|
|
Year over
Year
|
|
$
|
|
% of
total
|
|
%
Change
|
|
Constant
Currency
% Change (a)
|
Revenues by
Segment:
|
|
|
|
|
|
|
|
Financial
Services
|
$
4,414
|
|
30.3 %
|
|
(3.9) %
|
|
(3.4) %
|
Health
Sciences
|
4,278
|
|
29.3 %
|
|
1.7 %
|
|
1.6 %
|
Products and
Resources
|
3,465
|
|
23.7 %
|
|
1.4 %
|
|
1.9 %
|
Communications, Media
and Technology
|
2,438
|
|
16.7 %
|
|
2.7 %
|
|
3.5 %
|
Total
Revenues
|
$
14,595
|
|
|
|
— %
|
|
0.4 %
|
Revenues by
Geography:
|
|
|
|
|
|
|
|
North
America
|
$
10,733
|
|
73.5 %
|
|
(1.0) %
|
|
(1.0) %
|
United
Kingdom
|
1,437
|
|
9.8 %
|
|
5.9 %
|
|
6.6 %
|
Continental
Europe
|
1,439
|
|
9.9 %
|
|
7.2 %
|
|
6.1 %
|
Europe -
Total
|
2,876
|
|
19.7 %
|
|
6.6 %
|
|
6.4 %
|
Rest of
World
|
986
|
|
6.8 %
|
|
(5.6) %
|
|
(0.8) %
|
Total
Revenues
|
$
14,595
|
|
|
|
— %
|
|
0.4 %
|
|
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
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
$
525
|
|
$
629
|
|
$
1,568
|
|
$
1,769
|
Adjustments for
non-cash income and expenses
|
47
|
|
175
|
|
322
|
|
584
|
Changes in assets and
liabilities
|
256
|
|
228
|
|
(297)
|
|
(487)
|
Net cash provided by
operating activities
|
828
|
|
1,032
|
|
1,593
|
|
1,866
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
(73)
|
|
(79)
|
|
(239)
|
|
(242)
|
Net (purchases)
maturities of investments
|
(126)
|
|
(187)
|
|
149
|
|
186
|
Proceeds from sales of
businesses
|
—
|
|
9
|
|
—
|
|
28
|
Payments for business
combinations, net of cash acquired
|
—
|
|
—
|
|
(409)
|
|
—
|
Net cash (used in)
investing activities
|
(199)
|
|
(257)
|
|
(499)
|
|
(28)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Repurchases of common
stock
|
(315)
|
|
(315)
|
|
(751)
|
|
(1,107)
|
Repayment of Term Loan
borrowings and finance lease and earnout
obligations
|
(4)
|
|
(21)
|
|
(15)
|
|
(47)
|
Dividends
paid
|
(147)
|
|
(141)
|
|
(445)
|
|
(425)
|
Issuance of common
stock under stock-based compensation plans
|
16
|
|
19
|
|
57
|
|
71
|
Net cash (used in)
financing activities
|
(450)
|
|
(458)
|
|
(1,154)
|
|
(1,508)
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
(30)
|
|
(43)
|
|
(30)
|
|
(80)
|
Increase (decrease) in
cash, cash equivalents and restricted cash
|
149
|
|
274
|
|
(90)
|
|
250
|
Cash, cash equivalents
and restricted cash, beginning of period
|
2,055
|
|
1,768
|
|
2,294
|
|
1,792
|
Cash and cash
equivalents, end of period
|
$
2,204
|
|
$
2,042
|
|
$
2,204
|
|
$
2,042
|
SUPPLEMENTAL CASH
FLOW INFORMATION
|
|
(in
millions)
|
|
Three Months
Ended
September
30,
|
Stock Repurchases
under Board of Directors' authorized stock repurchase
program:
|
|
2023
|
|
2022
|
Number of shares
repurchased
|
|
4.3
|
|
4.6
|
|
|
|
|
|
Remaining authorized
balance as of September 30, 2023
|
|
$
2,075
|
|
|
Reconciliation of
Free Cash Flow Non-GAAP Financial Measure
|
|
(in
millions)
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net cash provided by
operating activities
|
$
828
|
|
$
1,032
|
|
$ 1,593
|
|
$ 1,866
|
Purchases of property
and equipment
|
(73)
|
|
(79)
|
|
(239)
|
|
(242)
|
Free cash
flow
|
$
755
|
|
$
953
|
|
$ 1,354
|
|
$ 1,624
|
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SOURCE Cognizant