- Revenue of $4.9 billion, above
the high end of our guidance range; sequentially increased 1.9%, or
2.1% in constant currency1
- Operating margin of 14.6%, up from 11.8% in the second quarter
of 2023, and Adjusted Operating Margin1 of 15.2%, which
expanded 100 basis points year-over-year
- Trailing 12-month bookings of $26.2
billion; book-to-bill of 1.4x
- Third quarter of 2024 revenue guidance of flat to 1.5%
year-over-year growth in constant currency
- Full-year 2024 revenue guidance narrowed to a decline of 0.5%
to growth of 1.0% in constant currency, an increase at the
midpoint
- Full-year 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., July 31, 2024 /PRNewswire/ -- Cognizant
(Nasdaq: CTSH), one of the world's leading professional services
companies, today announced its second quarter 2024 financial
results.
"In the second quarter, we delivered revenue above the high end
of our guidance range, expanded adjusted operating margin, and
maintained our large deal momentum," said Ravi Kumar S, Chief
Executive Officer. "Progress against our strategic priorities is
opening new opportunities with clients and allowing us to operate
with greater agility. We believe our performance this quarter and
the improved organic growth outlook for the full year demonstrate
how our execution against these priorities is beginning to
translate to our results and support long-term shareholder
value."
$ in billions,
except per share data
|
Q2
2024
|
|
Q2
2023
|
Revenue
|
$4.85
|
|
$4.89
|
Y/Y Change
|
(0.7 %)
|
|
(0.4 %)
|
Y/Y Change
CC1
|
(0.5 %)
|
|
(0.1 %)
|
GAAP Operating
Margin
|
14.6 %
|
|
11.8 %
|
Adjusted Operating
Margin1
|
15.2 %
|
|
14.2 %
|
GAAP Diluted
EPS
|
$1.14
|
|
$0.91
|
Adjusted Diluted
EPS1
|
$1.17
|
|
$1.10
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
"Sequential revenue growth of 2.1% in constant currency, driven
by our Financial Services and Health Sciences segments, was the
strongest in two years," said Jatin Dalal, Chief Financial
Officer. "Our NextGen program has helped us fund investments in
support of revenue growth and deliver 70 basis points of adjusted
operating margin expansion in the first half of 2024. We enter the
third quarter with improved revenue momentum and remain committed
to driving operational excellence."
Bookings
Bookings in the second quarter increased 5% year-over-year. On a
trailing-twelve-month basis, bookings declined 1% year-over-year to
$26.2 billion, which represented
a book-to-bill of approximately 1.4x.
Employee Metrics
Voluntary attrition - Tech Services on a trailing-twelve months
basis was 13.6% as compared to 19.9% for the period ended
June 30, 2023. Total headcount at the end of the second
quarter was 336,300, a decrease of 8,100 from Q1 2024 and a
decrease of 9,300 from Q2 2023.
Return of Capital to Shareholders
The Company repurchased 0.9 million shares for $63 million during the second quarter under its
share repurchase program. As of June 30, 2024, there was
$1.6 billion remaining under the
share repurchase authorization. In July
2024, the Company declared a quarterly cash dividend of
$0.30 per share for shareholders of
record on August 20, 2024. This
dividend will be payable on August 28,
2024.
Third Quarter and Full-Year 2024
Guidance2
(all growth rates year-over-year;
excludes the impact of the Belcan transaction, which is expected to
close in the third quarter 2024)
- Third quarter revenue is expected to be $4.89 - $4.96
billion, a decline of 0.2% to an increase of 1.3%, or flat
to an increase of 1.5% in constant currency.
- Full-year 2024 revenue is expected to be $19.3 - $19.5
billion, a decline of 0.5% to an increase of 1.0% as
reported and on a constant currency basis. This assumes
approximately 70 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 $4.62 to $4.70.
|
|
|
|
|
|
|
|
|
|
2
|
Guidance as of July 31,
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 Company, Client and Partnership Announcements
- Signed definitive agreement to acquire Belcan, a leading
global supplier of Engineering Research & Development
(ER&D) services for a long-standing customer base across the
commercial aerospace, defense, space, marine and industrial
verticals, for $1.3 billion in cash
and stock. The acquisition is expected to significantly expand
Cognizant's ER&D capabilities, building upon the Company's
leadership in the Internet of Things (IoT) and Digital Engineering
practice areas. Belcan will bring a highly accredited and skilled
workforce of approximately 6,500 engineers and technical
consultants, primarily based in North
America. The acquisition is expected to close in Q3
2024.
- Announced the launch of Cognizant Moment™, the next
evolution of Cognizant's digital experience practice area, designed
to help clients leverage the power of AI to reimagine customer
experience and engineer innovative strategies aimed at driving
growth. The new practice builds on the digital experience expertise
and solutions Cognizant has delivered for clients over the last 20+
years and advanced through a series of key acquisitions in the
digital experience space. Now, as the ways consumers interact with
technology are shifting to include multi-modal experiences,
Cognizant aims to give clients the tools and insights they need to
drive differentiation, cultivate customer loyalty and become
future-ready.
- Introduced Cognizant Neuro® Edge, a new platform in the
Cognizant Neuro® suite, designed to empower businesses across
industries to leverage artificial intelligence and generative AI at
the edge. Edge computing enables enterprises to access computing
power via sensors and devices on their networks, reducing
dependency on centralized servers and the cloud. The platform
facilitates real-time interactions with devices, helping businesses
to accelerate decision-making, reduce data costs and privacy risks
and maintain operational stability even in low bandwidth
scenarios.
- Launched our first set of healthcare large language model (LLM)
solutions on Google Cloud's generative AI (gen AI)
technology, including the company's Vertex AI platform and Gemini
models, aimed at redesigning healthcare administrative processes
and improving experiences. The suite of healthcare LLM solutions
addresses four high-cost workflows: marketing operations, call
center operations (including appeals and grievances), provider
management and contracting.
- Signed an agreement to provide engineering services to
Gentherm, the global market leader of innovative thermal
management and pneumatic comfort technologies for the automotive
industry and a leader in medical patient temperature management
systems. Cognizant is providing systems engineering, validation and
model-based development services from Hyderabad, India, and has created a test
facility to conduct research and development for Gentherm
products.
- Signed a five-year strategic agreement with Victory Capital
Holdings, Inc, a diversified global asset management firm.
Cognizant will provide IT infrastructure, security, and data and
analytics support to Victory Capital's next phase of digital
transformation.
- Agreement with Texas Dow Employees Credit Union (TDECU),
the largest credit union in Houston and the fourth largest in Texas, to accelerate its 'Run the Business'
transformation journey. Cognizant will be leveraging its Neuro® IT
Operations platform to help transform TDECU's enterprise
infrastructure and technology, enhance the credit union's
operational efficiency and resilience, and increase TDECU's ability
to achieve cost savings over the next five years.
- Expanded relationship with Cengage Group, a global
educational technology company that supports millions of students
each year, from middle school through graduate school and skills
education, with quality content and technology. Under this
seven-year agreement, Cognizant will provide advanced technology
services that are designed to enhance operational efficiency,
reduce the total cost of ownership, and continue to support Cengage
Group's digital transformation.
- Announced an agreement with Nexthink under which
Cognizant will apply its deep expertise in digital workplace
services and its portfolio of tools with Nexthink's flagship
product, Nexthink Infinity, to create a new joint offering -
Cognizant WorkNEXT™ Workplace Intelligence. The new joint offering
aims to provide seamless, reliable experiences across the devices,
applications and connectivity provided by workplace IT to reduce
operational costs and improve user productivity.
- Partnered to support Kohler Co. in establishing its
energy business – Kohler Energy – as a standalone entity with
independent operations. As Kohler's existing strategic partner,
Cognizant worked hand-in-hand with Kohler to evaluate the right
approach for the carve-out, devise an optimal plan, and execute the
separation of systems within a challenging six-month
timeframe.
- Expanded relationship with Whitbread, the owner of
Premier Inn, the UK's biggest hotel brand. The three-year digital
innovation agreement will see Cognizant support Whitbread's ongoing
digital transformation with product design, product management and
engineering as Whitbread expands its operations in the UK and
Germany. This follows a major
modernization program where Cognizant helped Whitbread replace its
legacy property management system.
- Announced a five-year agreement with Unitywater, a
leading water utility in Queensland, for Unitywater's ICT Support
Managed Services. The new relationship aims to support Unitywater's
digital infrastructure, enhancing operational efficiency and
productivity, in alignment with Unitywater's strategic ambition of
healthy and thriving communities.
- Announced a deal with Hays, the world's leading
specialist in workforce solutions and recruitment, to become its
global technology partner. Cognizant is expected to manage Hays' IT
operations globally by overseeing its IT service desk, business
applications, and infrastructure and operations with the goal of
enhancing Hays' operational efficiency and innovation
capabilities.
Select Analyst Ratings, Company Recognition and
Announcements
- Released a companion analysis to our comprehensive 2023 study
with Oxford Economics and the related report – titled
"New Work, New World" – that provides a detailed analysis
outlining the current market adoption of generative AI across
various industries and geographies. Key findings from the survey
reveal that the greatest strategic priority for generative AI
adoption is enhancing productivity. Additionally, the study found
that 76% of businesses are looking to leverage the technology to
create new revenue streams, while 58% are incorporating revenue
increases into their business cases.
- Named one of "America's Greatest Workplaces" and "Greatest
Workplaces for Job Starters" by Newsweek, a global media
organization that recognized us for our engaging workplace culture
and proficiency at helping early talent launch their careers.
- Salesforce named Cognizant their 2024 UKI Partner of the
Year and Google Cloud awarded us their 2024 Industry
Solution Services Partner of the Year - Healthcare and Life
Sciences in recognition of our success driving digital
transformations with customers utilizing Google Cloud technologies,
including AI.
- Singapore's Digital for
Life movement, a pivotal national initiative to foster a
digitally empowered and inclusive society, recognized Cognizant as
a Digital for Life – Champion. This award highlights our commitment
to advancing tech-enabled livelihoods for women, enhancing Gen AI
skills within our community, and creating pathways in technology
through our collaboration with schools.
- Recognized as a Leader by Everest Group® in:
- Healthcare Industry Cloud Services PEAK Matrix® Assessment,
2024
- Care Management Platforms PEAK Matrix® Assessment, 2024
- Guidewire IT Services PEAK Matrix® Assessment, 2024
- Capital Market IT Services PEAK Matrix® Assessment, 2024
- Open Banking IT Services PEAK Matrix® Assessment, 2024
- Duck Creek Services, 2024
- A Leader in IDC MarketScape:
- Worldwide Consulting and Digital Services Providers for the
Upstream Oil and Gas Industry, doc #US51004123, May 2024
- Worldwide Consulting and Digital Services Providers for the
Downstream Oil & Gas Industry, doc #US51004223, June 2024
- Asia/Pacific Sustainability/ESG Program Management Services
2024 Vendor Assessment, doc #AP50679323, June 2024
- Market Leader in HFS Horizon 3:
- Healthcare Provider Services, 2024
- Industry Cloud Services, 2024
- Leadership in ISG Provider Lens™:
- ServiceNow Ecosystem Partners, 2024
- SAP Ecosystem, 2024
- Leading Pack in TechMarketView MRI Report 2024 - The Road to
AI
- Leadership in Avasant RadarView™:
- Internet of Things Services, 2024
- Applied AI Services, 2024
- Banking Process Transformation, 2024
- Banking Digital Services, 2024
- Clinical and Care Management Services Business Process
Transformation, 2024
Conference Call
Cognizant will host a conference call on July 31, 2024, at
5:00 p.m. (Eastern) to discuss the
Company's second 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
13747233 beginning two hours after the end of the call until
11:59 p.m. (Eastern) on Tuesday,
August 14, 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 anticipated closing of the pending
Belcan acquisition, 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, matters relating to the acquisition of Belcan 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
June 30,
|
|
Six Months
Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Revenues
|
$ 4,850
|
|
$ 4,886
|
|
$ 9,610
|
|
$ 9,698
|
Operating
expenses:
|
|
|
|
|
|
|
|
Cost of revenues
(exclusive of depreciation and amortization expense shown
separately below)
|
3,204
|
|
3,231
|
|
6,350
|
|
6,374
|
Selling, general
and administrative expenses
|
781
|
|
830
|
|
1,546
|
|
1,665
|
Restructuring
charges
|
29
|
|
117
|
|
52
|
|
117
|
Depreciation and
amortization expense
|
128
|
|
131
|
|
259
|
|
263
|
Income from
operations
|
708
|
|
577
|
|
1,403
|
|
1,279
|
Other income
(expense), net:
|
|
|
|
|
|
|
|
Interest
income
|
30
|
|
30
|
|
60
|
|
60
|
Interest
expense
|
(10)
|
|
(10)
|
|
(21)
|
|
(19)
|
Foreign currency
exchange gains (losses), net
|
1
|
|
(9)
|
|
7
|
|
3
|
Other,
net
|
(1)
|
|
(1)
|
|
1
|
|
2
|
Total other
income (expense), net
|
20
|
|
10
|
|
47
|
|
46
|
Income before
provision for income taxes
|
728
|
|
587
|
|
1,450
|
|
1,325
|
Provision for
income taxes
|
(165)
|
|
(124)
|
|
(344)
|
|
(282)
|
Income (loss)
from equity method investment
|
3
|
|
—
|
|
6
|
|
—
|
Net income
|
$
566
|
|
$
463
|
|
$ 1,112
|
|
$ 1,043
|
Basic earnings
per share
|
$ 1.14
|
|
$ 0.92
|
|
$ 2.24
|
|
$ 2.05
|
Diluted earnings
per share
|
$ 1.14
|
|
$ 0.91
|
|
$ 2.23
|
|
$ 2.05
|
Weighted average number
of common shares outstanding - Basic
|
497
|
|
506
|
|
497
|
|
508
|
Dilutive effect of
shares issuable under stock-based compensation plans
|
1
|
|
1
|
|
1
|
|
—
|
Weighted average number
of common shares outstanding - Diluted
|
498
|
|
507
|
|
498
|
|
508
|
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
(Unaudited)
|
|
(in millions, except
par values)
|
June 30,
2024
|
|
December 31,
2023
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
2,193
|
|
$
2,621
|
Short-term
investments
|
12
|
|
14
|
Trade accounts
receivable, net
|
3,973
|
|
3,849
|
Other current
assets
|
1,067
|
|
1,022
|
Total current
assets
|
7,245
|
|
7,506
|
Property and equipment,
net
|
1,009
|
|
1,048
|
Operating lease assets,
net
|
553
|
|
611
|
Goodwill
|
6,395
|
|
6,085
|
Intangible assets,
net
|
1,129
|
|
1,149
|
Deferred income tax
assets, net
|
1,095
|
|
993
|
Long-term
investments
|
86
|
|
435
|
Other noncurrent
assets
|
1,068
|
|
656
|
Total
assets
|
$
18,580
|
|
$
18,483
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
298
|
|
$
337
|
Deferred
revenue
|
391
|
|
385
|
Short-term
debt
|
33
|
|
33
|
Operating lease
liabilities
|
148
|
|
153
|
Accrued expenses and
other current liabilities
|
2,076
|
|
2,425
|
Total current
liabilities
|
2,946
|
|
3,333
|
Deferred revenue,
noncurrent
|
29
|
|
42
|
Operating lease
liabilities, noncurrent
|
466
|
|
523
|
Deferred income tax
liabilities, net
|
203
|
|
226
|
Long-term
debt
|
590
|
|
606
|
Long-term income taxes
payable
|
—
|
|
157
|
Other noncurrent
liabilities
|
448
|
|
369
|
Total
liabilities
|
4,682
|
|
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 June 30, 2024 and December 31,
2023, respectively
|
5
|
|
5
|
Additional paid-in
capital
|
15
|
|
15
|
Retained
earnings
|
14,028
|
|
13,301
|
Accumulated other
comprehensive income (loss)
|
(150)
|
|
(94)
|
Total stockholders'
equity
|
13,898
|
|
13,227
|
Total liabilities and
stockholders' equity
|
$
18,580
|
|
$
18,483
|
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
Reconciliations of
Non-GAAP Financial Measures
(Unaudited)
|
|
(dollars in
millions, except per share amounts)
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
Guidance
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Full Year 2024
(1)
|
GAAP income from
operations
|
$
708
|
|
$
577
|
|
$ 1,403
|
|
$ 1,279
|
|
|
NextGen
charges(a)
|
29
|
|
117
|
|
52
|
|
117
|
|
|
Adjusted Income From
Operations
|
$
737
|
|
$
694
|
|
$ 1,455
|
|
$ 1,396
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
14.6 %
|
|
11.8 %
|
|
14.6 %
|
|
13.2 %
|
|
|
NextGen
charges
|
0.6
|
|
2.4
|
|
0.5
|
|
1.2
|
|
0.4% - 0.5%
|
Adjusted Operating
Margin
|
15.2 %
|
|
14.2 %
|
|
15.1 %
|
|
14.4 %
|
|
15.3% -
15.5%
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings
per share
|
$
1.14
|
|
$
0.91
|
|
$
2.23
|
|
$
2.05
|
|
|
Effect of NextGen
charges, pre-tax
|
0.06
|
|
0.23
|
|
0.10
|
|
0.23
|
|
$0.17 -
$0.19
|
Non-operating foreign
currency exchange (gains) losses, pre-tax(b)
|
—
|
|
0.02
|
|
(0.01)
|
|
(0.01)
|
|
(b)
|
Tax effect of above
adjustments(c)
|
(0.03)
|
|
(0.06)
|
|
(0.02)
|
|
(0.06)
|
|
(a) (b)
|
Adjusted Diluted
Earnings Per Share
|
$
1.17
|
|
$
1.10
|
|
$
2.30
|
|
$
2.21
|
|
$4.62 -
$4.70
|
|
(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 include:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(in
millions)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Employee separation
costs
|
$
18
|
|
$
78
|
|
$
26
|
|
$
78
|
Facility exit
costs
|
11
|
|
37
|
|
25
|
|
37
|
Third party and other
costs
|
—
|
|
2
|
|
1
|
|
2
|
Total NextGen
charges
|
$
29
|
|
$
117
|
|
$
52
|
|
$
117
|
|
|
|
The costs related to
the NextGen program are reported in "Restructuring charges" in our
unaudited consolidated statements of operations. We expect to incur
approximately $95 million of costs in 2024 in connection with
the NextGen program. Our guidance anticipates pre-tax charges of
approximately $0.17 to $0.19 per diluted share for the full year
2024. The tax effect of these charges is expected to be
approximately $0.04 to $0.05 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
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Non-GAAP income tax
benefit (expense) related to:
|
|
|
|
|
|
|
|
NextGen
charges
|
$
8
|
|
$
31
|
|
$
13
|
|
$
31
|
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)
|
|
June 30,
2024
|
|
December 31,
2023
|
Cash and unrestricted
cash equivalents
|
|
$
2,193
|
|
$
2,621
|
Short-term
investments
|
|
12
|
|
14
|
Less:
|
|
|
|
|
Short-term
debt
|
|
33
|
|
33
|
Long-term
debt
|
|
590
|
|
606
|
Net cash
|
|
$
1,582
|
|
$
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
June 30, 2024
|
|
|
|
|
|
Year over
Year
|
|
$
|
|
% of
total
|
|
%
Change
|
|
Constant
Currency
% Change (a)
|
Revenues by
Segment:
|
|
|
|
|
|
|
|
Financial
Services
|
$
1,447
|
|
29.9 %
|
|
(1.1) %
|
|
(0.8) %
|
Health
Sciences
|
1,461
|
|
30.1 %
|
|
1.5 %
|
|
1.7 %
|
Products and
Resources
|
1,126
|
|
23.2 %
|
|
(4.3) %
|
|
(4.1) %
|
Communications, Media
and Technology
|
816
|
|
16.8 %
|
|
1.2 %
|
|
1.4 %
|
Total
Revenues
|
$
4,850
|
|
|
|
(0.7) %
|
|
(0.5) %
|
Revenues by
Geography:
|
|
|
|
|
|
|
|
North
America
|
$
3,620
|
|
74.6 %
|
|
0.9 %
|
|
0.9 %
|
United
Kingdom
|
444
|
|
9.2 %
|
|
(6.1) %
|
|
(6.5) %
|
Continental
Europe
|
470
|
|
9.7 %
|
|
(4.9) %
|
|
(4.0) %
|
Europe -
Total
|
914
|
|
18.9 %
|
|
(5.5) %
|
|
(5.2) %
|
Rest of
World
|
316
|
|
6.5 %
|
|
(4.2) %
|
|
(2.0) %
|
Total
Revenues
|
$
4,850
|
|
|
|
(0.7) %
|
|
(0.5) %
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2024
|
|
|
|
|
|
Year over
Year
|
|
$
|
|
% of
total
|
|
%
Change
|
|
Constant
Currency
% Change (a)
|
Revenues by
Segment:
|
|
|
|
|
|
|
|
Financial
Services
|
$
2,832
|
|
29.5 %
|
|
(3.6) %
|
|
(3.7) %
|
Health
Sciences
|
2,877
|
|
29.9 %
|
|
0.1 %
|
|
0.2 %
|
Products and
Resources
|
2,259
|
|
23.5 %
|
|
(1.6) %
|
|
(1.6) %
|
Communications, Media
and Technology
|
1,642
|
|
17.1 %
|
|
3.2 %
|
|
3.1 %
|
Total
Revenues
|
$
9,610
|
|
|
|
(0.9) %
|
|
(0.9) %
|
Revenues by
Geography:
|
|
|
|
|
|
|
|
North
America
|
$
7,141
|
|
74.3 %
|
|
0.1 %
|
|
0.1 %
|
United
Kingdom
|
900
|
|
9.4 %
|
|
(5.4) %
|
|
(7.1) %
|
Continental
Europe
|
953
|
|
9.9 %
|
|
(0.2) %
|
|
(0.6) %
|
Europe -
Total
|
1,853
|
|
19.3 %
|
|
(2.8) %
|
|
(3.8) %
|
Rest of
World
|
616
|
|
6.4 %
|
|
(6.4) %
|
|
(3.9) %
|
Total
Revenues
|
$
9,610
|
|
|
|
(0.9) %
|
|
(0.9) %
|
|
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
June
30,
|
|
Six Months
Ended
June
30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
$
566
|
|
$
463
|
|
$
1,112
|
|
$
1,043
|
Adjustments for
non-cash income and expenses
|
81
|
|
88
|
|
262
|
|
275
|
Changes in assets and
liabilities
|
(385)
|
|
(515)
|
|
(1,017)
|
|
(553)
|
Net cash provided by
operating activities
|
262
|
|
36
|
|
357
|
|
765
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
(79)
|
|
(68)
|
|
(158)
|
|
(166)
|
Net maturities of
investments
|
—
|
|
(17)
|
|
262
|
|
275
|
Payments for business
combinations, net of cash acquired
|
—
|
|
—
|
|
(421)
|
|
(409)
|
Net cash (used in)
investing activities
|
(79)
|
|
(85)
|
|
(317)
|
|
(300)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Issuance of common
stock under stock-based compensation plans
|
15
|
|
18
|
|
35
|
|
41
|
Repurchases of common
stock
|
(76)
|
|
(214)
|
|
(209)
|
|
(436)
|
Net change in term
loan borrowings and earnout and finance lease
obligations
|
(10)
|
|
(10)
|
|
(50)
|
|
(11)
|
Dividends
paid
|
(150)
|
|
(148)
|
|
(301)
|
|
(298)
|
Net cash (used in)
financing activities
|
(221)
|
|
(354)
|
|
(525)
|
|
(704)
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash and cash
equivalents
|
—
|
|
—
|
|
(39)
|
|
—
|
(Decrease) in cash,
cash equivalents and restricted cash and cash
equivalents
|
(38)
|
|
(403)
|
|
(524)
|
|
(239)
|
Cash, cash equivalents
and restricted cash and cash equivalents, beginning of
period
|
2,231
|
|
2,458
|
|
2,717
|
|
2,294
|
Cash, cash equivalents,
end of period
|
$
2,193
|
|
$
2,055
|
|
$
2,193
|
|
$
2,055
|
SUPPLEMENTAL CASH
FLOW INFORMATION
|
|
|
(in
millions)
|
Three Months
Ended
June
30,
|
Stock Repurchases
under Board of Directors' authorized stock repurchase
program:
|
2024
|
|
2023
|
Number of shares
repurchased
|
0.9
|
|
3.2
|
|
|
|
|
Remaining authorized
balance as of June 30, 2024
|
$
1,605
|
|
|
Reconciliation of
Free Cash Flow Non-GAAP Financial Measure
|
|
|
(in
millions)
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Net cash provided by
operating activities
|
$
262
|
|
$
36
|
|
$
357
|
|
$
765
|
Purchases of property
and equipment
|
(79)
|
|
(68)
|
|
(158)
|
|
(166)
|
Free cash
flow
|
$
183
|
|
$
(32)
|
|
$
199
|
|
$
599
|
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SOURCE Cognizant Technology Solutions Corporation