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CTSH Cognizant Technology Solutions

Participants
David Nelson VP of IR and Treasurer
Francisco D'Souza CEO
Karen McLoughlin CFO
Rajeev Mehta President
Tien-tsin Huang JPMorgan
Bryan Keane Deutsche Bank
Jim Schneider Goldman Sachs
Jason Kupferberg Bank of America Merrill Lynch
Moshe Katri Wedbush Securities
Ashwin Shirvaikar Citi
Brian Essex Morgan Stanley
Rod Bourgeois DeepDive Equity
Bryan Bergin Cowen and Company
Glenn Greene Oppenheimer
Arvind Ramnani KeyBanc
Frank Atkins SunTrust
Call transcript
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Operator

Ladies and gentlemen, welcome to the Cognizant Technology Solutions First Quarter 2018 Earnings Conference Call. All lines have been laced on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. And I would now like to turn the conference over to David Nelson, Vice President of Investor Relations and Treasurer at Cognizant. sir. ahead, go Please

David Nelson

And a everyone. release copy quarter company's operator. should for now, have first results. received of XXXX good you, By morning, you the Thank the earnings

available you Financial on we If Officer. on are Raj Executive call D'Souza, today's a Karen Mehta, not, copy President; have our cognizant.com. and The have website, speakers Chief Officer; Francisco is McLoughlin, Chief

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

Francisco D'Souza

thanks an call. cover from Good joining in second, and two morning, environment. how up the and our current first, business scaling morning, to our a topics: for everyone, few highlights we're competing update I'd performance; like effectively and our on QX This

quarter. the with off the gotten start. begin Let's to a year solid We've

and billion quarter our range First high up end XX% $X.XX the guided year-over-year. of revenue at was

and XX% digital. about grew well first digital are to quickly many who quarter pivoting profile Our revenue of of reflecting of above represented company the XX%, revenue, average about total our clients

for the $X.XX. services digital of was generated above non-GAAP company quarter portfolio EPS and Our margins, average our

Turning to guidance.

$XX.XX XX%. achieving $XX.X remain our We a billion now full operating be to stated expect confident quarter X.X% range in within to XXXX non-GAAP expect to We margin we billion guidance billion. previously approximately And billion, $X to year of $X.XX second and revenue of in of of of a a within growth XX%. be revenue range a

by in second our world's at momentum, response to of Moving macroeconomic innovating for services The shift continues technological economic We've growth global topic, progress our environment in and and scale. with colocating sustained be in growing environment. and Cognizant fastest demand is clients' today's even the resulting our thriving accelerating the to technological by my in professional changes needs. part to one clients. companies, current defined increasing

tightening these many shortages and skill of parts morning. To trends, like of world. result and continue three that we to this thrive digitized, environment, see to internationalized a broad this labor I'd the markets as them As cover in to emphasize I'll refer approaches we localized. in

digitized. start Let's with

time, distinctive that We digital experience their This our build scalable business within customers, It a through CIO their resonates to advancing capturing chief products approach of have COO the to the At of entire opportunity areas: business, decision strong CFO, them capabilities the transformation to a three the world’s just our by CMO, us digital keep which at beyond models. of which their enterprises, speed built to, enables digital client's our Ad marketing and to clients' their largest scale their interactive, foundation We IT and infrastructures as this Digital technology and of digital practice, portion digital digital leadership. the become us services, well digitizing in digital all like and pursuing to tandem. and is their transform really essence, all a our run ability & three also an networks. personalizing to digital with core, and in presence huge their Technology. part enterprise significant we're and in we've practice the digital accounts our enterprise and a Cognizant Reflecting for Age Systems processes, and gives delighted market layers expand the to use modernizing partnering fully with our officer. one a same was This operations approach at plumb transformation. recognized that We the business operating other doing automating line commitment help of this to edge business, clients. on layer throughout offer makers agency they serves

models foundation augmented Things, elements. know cloud trusted and has robotic like technologies environments. intelligence, more. knowledge process many reality, broad the our clients' automation, relationships These with industries, We clients penetrating powerful of apply new and to Internet how virtual of Our and include strategic intimate our technology blockchain, artificial business and

across skills, operations platforms quickly technology, these to and our ability are to of the As clients include high-end the areas leadership acquisitions. delivery global that create clients. geographies, most more important be growth build position and our new In our to for our portion sustaining industry-specific which capture services apply therefore, our advise adopt for fully of these growth us and in substantial And the and our of enable develop which both client’s solutions meantime, consulting solutions solutions opportunity will technologies, to scale the deliver able scale strategy, organically these practices levels of digital value to investments technologies our to further and specialized the needs reliability. our industries, understanding use of and and on of we're through global at aggressively local a capabilities and amplify that software element emerge. foundation how at teams all to serves Perhaps we'll highest end-to-end rapidly anticipate our and the all to

and biotech and health in Now the with over for the revenue fintech, care, product smart health work financial of coming center from services, at tech, XX% of our clients the retail we're revolutions. manufacturing, do we

these to keep shifts. us at the leading so developing Our We businesses. of to edge clients them depend their on solutions do by advance

engine runs. maintenance utilization fleet quick across on failures truck client helped faults to two with haul of XX,XXX We per XXX,XXX month, preventive enabling are Here and the potential manufacturer increase a identify examples. an long partnered We engine truck catch vehicles.

million signs of may save $XX at patients patients. to company early professionals as report This of life. leading substance learning to developed XX,XXX risk of who warning We the enables are algorithm and health quality by patients' advanced intervene analyze helped behaviors also indicate abuse. exhibiting that We to on an identifying machine a improve as patterns much these care

to continue deepen We continue grow invest we've momentum double-digit sustained expect and Based end broaden our portfolio we to solutions. at digital on industry-specific investment, services on to to more to our rates. and focus and developing capabilities, our our forward and end intensified

$X Last fast to digital worldwide approach Non-U.S. internationalize. and our the second markets sizable of further environment our first technologies the adding expanded well We've the year, geographic global crossed U.S. revenue of operation billion Collaboratories today's in our new businesses the Our and for course, mark as to absolutely markets. a and key as outside phenomenon. growing delivery centers, application time. is are, organically, is footprint

integrated Association, us. In BHP over have with of and And and of of we of Centrica, have several many engines Netcentric seeds the non-U.S. for the billion-dollar the become We been the the Adaptra, planting have America, of to the for Football excel past the U.S., In the clients, operating across of Asia to a years have businesses English Softbank Idea projects we've U.S., essence, short, few Dexia, to them Robotics, the likes delivery been outside and the Europe, projects. methodically Services, become Brilliant our Indian decade. a early Couture, consortium Mirabeau, life see talent, insurers, already and many couple and Zone. acquisitions underway we these Latin and each potential Pacific our digital-at-scale the among growth name just model in markets outside next

emphasis to Our is localize. third on continuing

As essential. technology clients the can them to you're imagine, operating need business, is you models, engage their to partnering locally with when with transform and

of development the doing and work scale typically deeply at digital growing a in-person agile volume approach we're with fact, In consultative clients. involves

substantially training continue teams to rescaling world. our workforces we and the around in in invest expanding local So our extensively and

North Latin to local Our built and goal massive delivery That's we've Asia, Europe, specialized America around complement the capability additional centers with of is globe. in and network why we a in operations America. have delivery of regional delivery and India points the

capabilities To with to as is their also develop languages local where the clients us the retain proximity to enable these partnering built people communities centers the establish and and can also skills technologies to agile our respond in using clients, local quickly services is sense high-demand fund operate, to shifts. we're delivered digital secure business With high-quality regulations also hire, are that way, talented centers These with multiple retraining programs ability and By as serve strong wrap require. and who local up, enable digital, our we've market we educational institutions and in to comply technologies. delivery and and clients.

clients of developed one strong Our business serving transform level us to digitized, of of at of range internationalized, digital a who with well builder handful how Raj, to clients leadership our Raj? today's our a scalable will over working and We're is the companies discuss which well And capabilities a the expect the them their of as environment. economy, small of in on extend the enterprises. our as We've speed foundation business segment help momentum to every approach their specifics now to as and localized forward performance. we along to digital strong XXXX. we're transformation deliver with journeys

Rajeev Mehta

want enabling we model way for top clients, client good for work about investment. and be a to But of us value partner and to I echo how industry, and discussion feel concrete the and capabilities, our builder create example. to and the going no insurer to everyone. they're very doing individuals I morning, Frank, segment a clients. of cover casualty Thanks, performance. high-net-worth of To the we're good with and Frank's first, than digital families. our Frank, about transformation with there's combination, property geographic and add go-to we business the range Consider better economy am sustained scale In Cognizant's

client and a property. a in their accident is where claims key or to redesigning help truth This policyholder process. Our moment to damage of needed calls an report point a rethinking

often make Of call. stressed such they a when course, are people

satisfaction retention. intelligence to analytics of transform by can notice loss. So this client that experience informed determine developed an and Cognizant artificial first platform

enables insurer We [ph] solution respond. fraud. of time representatives dual calls. best machine policyholder in brought audit AI how policyholders and and to result to knowledge Our have together misunderstandings analytics has between the of service learning, customer the alone to conversations gained automate bots, reduced the the about learning The that litigation XX,XXX chat quality guide or and captured and machine This processes. in reviewing transcription improved rep analyze voice-to-text real information from the and can repeatable likelihood

insurers labor see to expect associated significant in a improvement reduction XX% a and As client XX% reduction total a call and saw result, in expenses length satisfaction. and the about in

outcomes our of combination business us underway importance. investment many our and other be engagements our including facing continued in practice in areas, AI-enabled It's capabilities, doing have this go-to work clients' that this partner client of delivers for client we're We the transformations. equips scaling digital-at-scale which that teams to further of

Let's our double-digit growth interested as in transform grew had QX. In using example. was look now segments Banking advanced primarily increasingly Insurers by performed our in how the at business large the X.X% strategic and year-over-year. to by are conveyed Financial earlier we customer my Services quarter, experience driven industry in insurance that deals. technology

to Banking. Moving

advanced to transform mid-tier investment banking continue they models, in our greater see which strong business work involves We their clients amongst growth as to technologies.

in reported the large run-the-bank industry positive more banks their business change-the-back pressure climate, spending investment on As they're putting stepping while technology. money-center up more

pickup a the we business digitally continued in banking overall legacy optimization While seeing intensive a improvement. we're of of modest our and portion this anticipate work,

Healthcare. to Turning

virtualization interest Our our increasing with payer revenue solutions. year-over-year. consistent analytics, was across saw and up in cloud digital, We demand clients XX.X%

our Boulder invest clients complement we've chain. Consulting, our and capture scope care health position business To our market, and to and Healthcare the end-to-end to Healthcare health position digital and value models solutions the have care to the to of hospitals network closed our cycle and services TriZetto, held offerings our hospitals of in portfolio now as other our from We that underlying care. physicians. doctors, span Health health their clinicians. provider practice and technology revenue privately Solutions, provider continued shift expands recently By We fee-for-service Tier leadership with TMG in extends bringing care leading and a include of demand value-based consulting, strong payer provider business and process expanded business to operations. IT together Top we payer management Boulder Boulder acquisition

revenue Turning Products XX.X% offsets to increased our We logistics clients growth and in manufacturing year-over-year. growth Strong Resources. continues, and retail. from sluggish which

autonomy offerings. The is from analytics CXOs Technology more had creating data smarter AI-based and attention ever result than And providers. experience manufacturing, in engaging XX.X% increasingly us richer. curating to on broad-based for leading with of by process utility far and an made about digital areas another Communications, of meaningful sensors, quarter machine caught digital Our like has up is strength with all before. products implement the in already self-driven infusion versatile and advanced now economy to year-over-year, the energy platform the many of content with Media our personalized their and logistics, areas digital growth, The business content. transform making machines enabled emphasis consumer are experiences digital and and has learning who digital digital creating expansion models. strong This

seek digital clients business particularly user-generated Silicon our verify clients, efforts with intensify our deliver the their this As ability monitoring many and and scale sheer help globally. content. run of manage volume to help personalized the to of requires we seen These and content to authenticity they moderation, as have Valley content with of

geographies. our at Looking

and value so dozen three and We is been XX.X% Our QX. countries, impact localization we a skills attrition higher that historic rate global from across countries. demand the the many growth is exhibit organization the strong a of for aware largely insight, Europe on basis these of the quarter points our through have Cognizant of At in development was enabled our we skills markets depend over successful of predominantly continue local global our XX.X% and currency. QX, keep associates. digital foundation invest to of associates is in passion expanding including to very gone impact The We our the than positive the has scalable collaboration U.S. in of and up result and year for our much leadership. believe world in, specialize the the work from to the relevant time, rest now particularly outside all growth. including our currency. the higher of including grew of ago, continuously year-over-year several knowledge-based clients. this attrition norm markets strong talent, And of offices shortage we're increasing we clients for technology to our point from XX.X% a XXX positive heavily build transition annualized XX.X% create in for has We same by

management. we succeed on extending for focused focus to continue We to and our capabilities and investment up, energy their sum over over our in year, clients help the workforce our past considerable strategy transformation journeys. To strengthening foundation Karen, in and profitable to you. growth

Karen McLoughlin

you, in our which Raj, to off year us The business guidance. well achieve full margin revenue solid to good and morning, a got QX, and Thank positions start everyone. updated

related impact the First and was our XX.X%, expenses range non-GAAP high point currency. from including a and acquisition which XX.X%, quarter excludes basis $X.XX operating increase $X.XX. was was charges, expense, stock-based guidance of at positive and Non-GAAP revenue end billion represented of EPS compensation XXX year-over-year margin, of a realignment

expected provision tax non-GAAP than updated tax QX global interpretation the of was XX.X% the new law. due income low primarily of rate U.S. or intangible Our the to of tax GILTI higher

demonstrated for in will of March, our EPS XX. a share $X.XX guidance a repurchase business of is launching to capital first a of XXXX. my In the I the shareholders discuss $X.X shareholders this per of per dividend commitment quarterly accelerated As second full during $X.XX quarter, second million This section updated the And repurchase or we have interpretation remarks, of at return the year cash piece by today, expected we GILTI through further the marked share. our provision to of expected impact quarter. close to ASR with of $XXX record of share on declared billion program in May the share ASR completion the end estimated

tax result during reform. billion of that Additionally, a available earnings repatriated we U.S. States the the to of as $X United quarter, distribution were for

We that the have Boulder. of XX% cash already of approximately through acquisition deployed

return evaluate U.S. implications are to continuing our legislation on of We program. overall tax the capital

services Now services grew Consulting XX% ago. services year-over-year technology of details outsourcing our for let revenue outsourcing the and revenue, respectfully, grew additional quarter. X.X% from QX XX.X% and services of technology represented me and year Consulting a performance. and financial discuss XX% and

about to we over XX% contracts, revenue more During of our trend an progress, arrangements. increasing are quarter, from managed the we've the first long of transaction-based seeing and fixed-price for time, pricing. changing came to make the as mix we business towards continue term, or output or spoken fixed-price Also, our some services

added contracts on the our improvement to X% optimal in are continual that effectively. defined are on the margin in value first spend function clients beginning our in so revenue breaking X to in overhead quarter. higher strategic we business, were as approximately which have we million separately, discussion We QX, of on non-GAAP XX% as XXXX. leveraging out sustained transaction-based structure, customers quarter, of services, utilization, And the And We our potential levers annual simplification $XX to focus least now our the higher on $X to strategic number moving of committed operating quarter, XXX. in driving target revenue, such more corporate in to levels margin. at of and to pyramid continued business to more bringing clients generate structure focusing million total remain of In or a track our achieve and unit addition with

And XX% for recent quarter. college training utilization was who XX%. the was the offshore our program excluding in utilization on-site was XX%. during quarter graduates Our are Offshore utilization

$XX related million. at The debt, end of remains billion Receivables $X includes billion We of for of balance amounts up healthy. finished income finished and $X the period. and the X by This to quarter cash, days of the days. Turning restricted of up the standard days, by with quarter last restricted our billion department. quarter XX from versus These year-ago adoption end the India at ongoing were the two restricted the with revenue the cash the balance and with which ending investments increased investments quarter. this new sheet, $X.XX December from DSO was tax We our $XXX a Net DSO short-term the million to very the XX quarter. quarter up cash. quarter short-term are dispute the of recognition of

the at million $XXX quarter. was balance debt outstanding end the of Our

count share diluted million Our quarter. was for current shares the XXX

on full year like for would our the XXXX. now QX I Now to and outlook comment

the XXXX, the of $XX.XX year full in of XX%. to which billion to revenue For growth represents we expect be $XX.X range to X.X% billion,

Our guidance guidance year. the at time the currency is fluctuations for we based at on the and exchange forecast which the current rates does course not providing are of the potential over

EPS the XXXX, deliver we we This $X to XX%. deliver billion For second of $X.XX non-GAAP quarter of approximately the in to for share of shares count revenue second at the a range and of expect rate least billion. tax quarter, XXX a to approximately of And guidance anticipates $X.XX. expect million

we least to at year shares non-GAAP tax to XX%. a For This $X.XX. approximately rate EPS XXXX, of of approximately the deliver non-GAAP of approximately a margins million full XXX and be expect share full year XX% operating guidance anticipates count and

as rate previous expected interpretation our an of EPS the closed earlier, I As the tax benefit estimated the month. partially updated Boulder from as acquisition, in rate tax is well better increased offset than of on our expectation higher by The performance mentioned expected last this our impact from due GILTI provision. which QX, guidance to has

GILTI receive could we of provision our of evolve, interpretation to clarification estimate the impact and change. the As continues additional the

adjustments Our our of charges; amortization; reform stock-based gains any to and quarter to XXXX related exchange new and to expense to expenses Cognizant fund compensation; tax Foundation, expect second act; incremental we non-operating guidance year. tax foreign currency losses; in income acquisition-related the the EPS contribution the onetime U.S. excludes which and realignment future non-GAAP this net the

revenue well such the questions. XXXX. in QX, open business, account regulatory positioned deliver to does immigration and shifts execution continued impact us also investment guidance environment of year for call the our or solid in has Our earnings strong in growth another along as Operator, in areas not from tax. summary, can in In with we the for the

Operator

Thank JPMorgan. you. of [Operator Instructions] Our Huang from with first line Tien-tsin question the is

Tien-tsin Huang

wanted Thanks, bit thought ago. second to any that I if growth starting organic impact there's more revenue good quarter. ask The versus would to morning. days I the outlook Boulder little change in XX have Health, your a

also maybe to this on contribution you revenue us update can year? acquisition So Thanks.. the

Karen McLoughlin

Sure. is Tien-tsin, Karen. this

Let me take that.

the as revenue bottom account have seen the So guidance end acquisition. did about for to would you obviously, the took up of Boulder which X.X%, we

benefit also this FX us offset we'll against so from get the Boulder of that year. about that moved half However,

impact. if year-over-year point XXX to of the basis So you the there basis at had has said on now recall, in XX about of of FX the year-over-year was European basis we movement dropped recent beginning impact points because the currencies. number about year, That a a

Tien-tsin Huang

it. Got

change So since on any there, ahead, I'm at it, the go organic What can sorry. revenue side, front? XXX - you on the

Karen McLoughlin

Yes.

we So changes that's basis, movement as XXX, the ultimately, you a million as contracts $XX talked for timing those little over saw, organic anything than no other as quarter. because, issue on The was in the that a reverses Obviously, an Boulder than about. more FX for mature. guidance of our and

impact year don't a full a basis, expect from material still to have on XXX. So we

Tien-tsin Huang

There Karen. you, is material, Thank okay. a

Operator

from your Deutsche Please Bank. is question question. line Keane next the Our with proceed Bryan our with

Bryan Keane

my ask I'll guys. upfront. Hi, questions

secondly, Financial single on at the how look continue to growing low then digits looking growth headcount Just in real grow digits Thanks. revenue larger spend any guys long like increase can without we've Karen, the spend. there. doesn't And much? It seen you bank in the high Services, double to pickup

Rajeev Mehta

which is represents strong the and continues side, And with see challenge on work. of transition. make our continue strategic And one In Look, starting legacy banks. financial high in to Obviously, Bryan, but work. our think transition. portfolio Yes. large I in is work take is pickup in in portfolio good second in that answer winning banks, we're our think, in the the portfolio mid-tier legacy modernization, obviously and part, a to at more -- banks, That Karen a growth honestly, it's even there. to winning seeing deliver you're this lot then portfolio, on I'll money-center a app and mobility Raj. the can these banking we part. the first can you of healthy have the some We're blockchain. what solutions. work continue that, we actually get And of that initial to we're margins is evaluate digital to we're sure the then optimized. we some winning And

So the digital business business we'll a pace, so banking. as seen we've in that additional to think growing digital the getting - But get the back spend overall in digital then look, as at growth there. is really continues, consistent growth. healthy to the start I we growing - Cognizant is - overall healthy strong the the portfolio, But

Karen McLoughlin

about And Bryan, headcount. your so to question answer

to great of take a I in that right we things. flat think basis did and where so got up of headcount you've this environment that utilization a on-site where the So bringing utilization few basis. year, now new are Obviously, I want number manage to held an business marketplace. up do current There's of having growth and a on fairly digital, But and said start from forth helping much next last and there to look both offshore. and headcount obviously the demand while wouldn't the are given more effectively. the us also overall and increase environment and and parts as it automation But on we're forth beyond strong sequential we to QX it are drive seeing to so for months, demand headcount QX that, the in job skills then need we'll see

grow see headcount coming with as in the continues each other past, So But longer to in about the to no as months. evolve. in line I you'll talked the think do and revenue we've grow business headcount would I expect

Bryan Keane

the for Okay. color. Thanks

Operator

Our from is of Schneider Sachs. with question Jim Goldman your the Please with question. proceed next line

Jim Schneider

one term maybe Can about either to financials, your And expect in versus of term? attrition and attrition for morning. Karen. question. reduce extent just was the down longer more about taking tick you voluntary the of to are much quarter. Maybe on talk involuntary what my how attrition the maybe Good to talk which kind plans Thanks short the rate the you

Rajeev Mehta

Jim, this out the Raj. involuntary. and actually Yes. is we voluntary Look, break don't

I our and includes attrition that key business, the think we training number includes that our the the our happens plus are pool, involuntary all BPO trainees. notice quoted the point in voluntary, to everything,

I thing I would past mind this keep digital, -- a obviously, been mobility initiatives. cloud over and especially look, think to we've social past analytics the in one over in you committed our got with years, But we're number to lot attrition. the all around -- of reducing terms invested in the seven say, we've SMAC, of investing

that given monitor not technology a But we're to our A so surprising, digital especially in we've in lot continue our environment as it's an associates, at. associates competitors the addition So a opportunity skills, and latest it's of we lot of to our that, trained attract to surprise that many our associates. this skills, levels. employees, use their of around all digital the not

to in we engage seen of we come this would to dot-com great during we've associates, attract, think down we the We our had fluctuations quarters. have attrition. days. platform employees. our And we our levels I continue in for we we to attrition growth the terms in that continue -- for to the continue expect think past monitor But future a and and

Karen McLoughlin

seasonality is also to let's right? Jim, bonus we So mind tend some attrition, attrition spike there keep think, in I And after payments. to see Yes.

the last You didn't -- raises the fourth tend to our see year, you a we've deferred spike after until promotions if and forth. raises we and And promotions and quarter. recall, so

a QX, to seasonality early raises bit the those on we some So seasonality in this to I numbers. in do a there schedule, but little normal is change back and pattern. think of expect we've promotions Obviously, seen year, a

Jim Schneider

rather your than Okay. That's and a just little outlook to doing particularly some acquisitions your thus follow maybe a commit an the you've then of helpful. to you as with tuck-in on far? of been bit can deals some willingness us update M&A And larger up, maybe provide

Francisco D'Souza

I what and continue say Jim, thing. in is little also focus we gets if it's primary we would TriZetto open which a that said of did in Boulder bigger, and to in transformative acquisition that we consistent ago larger. have something the things the will that become few as We we've tuck-ins. definition done it's largely is bit right And what that's is the past. we've be said the I'm larger, with to small looking to as in integrated. a past, now tucks the what are compared we the was Frank. small that said But I've the at bigger feel - well years past, more like

about We something to the things the would sense could be able We've accelerate the shareholders would progress that our lot talked found shift If we've and bandwidth the have capability to - digital. will work those we for think value something that something we the integrate and there. economics be can to the it consider obviously. continuing something digital, But The cautious, point. we a strategic to digital be and look we and we'll at we lines. large do this be only and management we'd obviously along places made create that like makes larger capacity, if

expansion. the script If -- prepared international in you today comments. We on think that international about and - I we at look talked

and IP of opportunities. also non-U.S. look something of We like And assets. at growth for course, left we then, those TriZetto, software to are continue, think could us we at with did look plenty think and of I markets, that. like those there's platforms we interesting in kinds and so potential

Jim Schneider

Thank you.

Operator

of Kupferberg America question. is with Merrill Jason line from of the Bank proceed Lynch. question with next your Please The

Jason Kupferberg

the a just Thanks, wanted guys. of Good to combat drove morning. see are to the be And tended attrition bit last ask the a middle kind on to on at to some wanted contemplating start of know, had I year, follow-up of dynamic, the increases spike, levels. if give and perhaps you and I vis-à-vis year the could the to been we there's last lower parts when a for in past, this which pyramid around year I increase. war point. of us that little of you higher wage try it's talent? the color

Karen McLoughlin

Karen. it's Jason, Sure.

in is we've seen in attrition So which historically lower the is be the the tend happening, terms attrition. does to ends where of pyramid, where it of

end the based. - skewed the have junior years, attrition, which very the obviously, tend pyramid majority be is where the low top of our of our pyramid to of to vast middle, tend our Over offshore part towards is

So during other high fairly we've seen of what attrition. with that's periods consistent

the ourselves the market both world. In will terms elsewhere India what in and of wages, on around we base does,

certainly a that to bit so are competitors more in sure that regard. becomes in And are doing, apparent we make marketplace as that as will competitive the what little we

Jason Kupferberg

you. Thank

Operator

of The Securities. with Moshe is Wedbush line Katri the next from question

Moshe Katri

Thank you.

the to entire of clarification. the expected kind And Financial Services modest When Just feel say vertical that a to quantify you the then look a about improvement you in of the to spoke the us this you is of at Services, how this a of growth legacy did business growth follow up, entire year? Thanks. -- kind Financial to give portion year? just a just there of way

Rajeev Mehta

Moshe. Yes,

of I in company. is very business, digital see a what we growing the at starting with is pace, spend a -- side that we're look, are and the the So it -- said healthy line having on with pickup on the to

of continue right, tax reform. all -- -- large money-center the banks, obviously they're that, the you're I we think changes as to starting the with the -- healthier much with with some

spending You're there. starting to see more

get of some to demand some as banks, increasing that of legacy these with outstrip point, continue get engagements the larger you'll portfolio. to that's the expect some optimization the "money-center" the prevalent there happening would in I more at So and

are of in then in terms growing the is mean, along of business business I some optimization. - right, you -- so the banks money-center even some going -- look of on we of -- the the some work as terms that, all well looking And in of too. with amount with So with changes of some in-house at they the also outsourced, that and they've continue the regulatory have at to work focus

is business pickup the at year. growing, that, all I in expect sort would later with overall, some some So and the of point

Karen McLoughlin

think, add Yes. could And if just to Moshe, I I that.

while the QX was, obviously, overall strongest than Financial last is practice, in Services growing banking the slower several in -- quarters. fact fact, the growth year-over-year In

where not line is the regards then still to practice to while spend, trend right to like it's And of the your think digital type I right in in direction. we'd be, So in it certainly banking legacy question starting versus average. company with

So well. average in and that's with about XX% is is the company line Financial our of as digital, practices revenue our right right Services now

Operator

with the The question of next Citi. from Shirvaikar line comes Ashwin Thank you.

Ashwin Shirvaikar

wanted of thanks. And as you from apply As immaterial income clarification. question have with out and operating well? attrition? come can versus to And percent new the Hi, off when would EPS is, does XXX full reskilled ASC you you new skills an year and is people? training then reskilling revenues, for start to on that on a technology impact comment said Karen, I such, what roll hires broadly? that

Karen McLoughlin

terms in of a lot rev is rec in terms of issue. So a obviously, changes, -- of Ashwin, the timing this

the so will past. revenue depending to we or forward we implementation would under call costs contracts side, get rules, are new is, or margin structure the the there transition deferred. happens the on So that And are more timing of I in what required and capitalize pulled and of what than the did -- the similarly, contracts of forth, on

the rather. So have in quarter a point, that impact what like. or in, impact determination year contracts the final that -- material come little looks of not the saw obviously, a on to we're new you of certainly QX. make At as will this expecting that But bit that on

to Frank. of it terms In turn for over Frank I'll ahead, reskilling. go --

Francisco D'Souza

Yes.

sure thousands how know, on your as of tens exactly I'm What reskilled last you of question answer reskilling. employees to I'd Ashwin, we year. not --

but that We that's not continue a some not to recent quite -- phenomenon. do aggressively, that's

we've out, SMAC about time years executing talked As and in you so we or been we've projects seven to digital Raj the and from pointed part skilling of -- been for area the better forth. the now and eight first and than skilling more training training, on and so

we've think us pointed higher view from. as And think skilled a scaled we're to I good place is of and part as digitally we a seeing got reason that competitors So attrition talent Raj the that workforce. very get out,

with not So inconsistent what past in we've seen technology that's and again, transitions.

we very We very them as deployed tool. also a We process we're focused standpoint, skills in that, a new when reskill do an our important structured or career retention it's quickly when and the maximizing have from a get investment we but management that, retrain as so -- somebody. it's obviously, very we can

and the or through how and the and you on gaps rely redeploying locations. reskilling really is in the skills when and doesn't the create fill right So about when And the go retraining geographies to think our process, source. redeploying we right then we primary right recruiting retraining reskilling

in recruiting the So internally. we experienced fill last say of when -- can't sort recruiting, mean the I resort recruiting. is sense, I from And a when

Of level the course, business. at continue we're to always grow entry recruiting to the

Operator

Thank you.

of your question next is Please Essex Stanley. Our the Brian question. from with Morgan line proceed with

Brian Essex

Hi, Jim's follow-up for I good question. wondering a could taking if with was I to morning. And thank start question. the you first

see follow remainder bit up, prior getting through U.S. of sheet, balance of an the outlook your of expectations composition of on maybe for maybe rest through might a relative the little a bit that what acceleration year like how the the Just the Just looks be. periods. we might robust? the there, M&A And what cash Is pipeline more maybe to of the on year. much in to color

Francisco D'Souza

tuck-in more as had past. we'd are, Brian, substantial same be the got I - would XX look any more as maybe I different of do, as the been last on I deals bigger and about We've to any in that say, robust. we'll characterize think continue cautious continue the be the I small it's to then but those meaningfully of what it's a but little it unique say, be than careful we've we the and fit. acquisitions bigger But pipeline not deals. a bit the continued I a things, months, more are over have And -- always to we robust before, said would so. evaluate to substantial so pipeline don't at very good would

it at we'll on U.S. if clearly, do foregone any execute that year, but we Karen over So conclusion continue this by something on find would look we'll makes We'll stretch And to and to evaluate. look cash. turn isn't I'll and sense this year. it that it, something it we a

Karen McLoughlin

Yes.

enough obviously We've X/X spent did I that, U.S. call, we reform. as could the So billion back benefit the of back Europe sure our think, transactions million have objective do about million we U.S. was of not on about to I to $XXX talked we -- Certainly, just which a about to bring about advantage and flexibility they $X tax world, U.S., under in occur. after on take elsewhere, make the Boulder. $XXX the is in as around but that just

timing is always As Frank said, the right, that predictable. not

program we continue So the our over evaluate certainly, months. world and return next the cash we few evaluate look the to capital forward will needs as around also

Operator

with Thank is your Please Equity. question DeepDive with question. you. from line next of Bourgeois proceed The Rod the

Rod Bourgeois

might side, markets. Accenture Okay, disappointment over positive large, the Infosys great. side, IBM, I key we've and negative In the changing see our want prospects. data the challenges certain industry at do in how on just your guided show picture good be at suggested and to digital ask have And to margin margin underlying some time. about margins But about pricing pretty meaningful some on margin contraction. the commentary

guess, you looking margin know I in is XXXX? big I'm achieving bigger smaller those this and targets long-term asking closer your ask, get to the to becoming or in So context, your path to I I'm to whether margin the about want getting factors these challenges I your or not easier difficult industry? given asking unchanged. about margin more And is guidance. challenges in as the involved guidance for targets are

Karen McLoughlin

Yes.

So Rod, it's Karen.

take Let a that. stab at me

think our and different things. was there's about right, factors for targets set a of said, margin number that the the really And XX% at a ourselves, that you profile compilation a XXXX, number of as we in of out think, I as play. we

'XX. some utilization on right we some that. and So we that, we've achieve think spend to and certainly, XXXX business the and of unit took last And been benefits I from our would those actions with said knew, the improvements optimizing spend. track certainly, a year, and we early our expected lot come overhead that of this in We of SG&A XXXX from

the as the as in in forward digital, the benefit the core And higher into now 'XX. You're running so look than more to platform then of at full that the currently we rest getting the the -- well as is business, is about shift shift it which year than business. margin business XXXX,

a business continues mature, much that to nonlinear more drive to like and look starts margins. that As evolve and higher

sort the to we're looking the continue drive of to in pivot say, mix of, towards that So I for next the year. margins in would business now shift right, guess I

we'll obviously, we room into where think to on can automation we continue beyond. that see things the we of forth and things So very and made have heading the the are around number comfortable trajectory market what business so good I would each on We've but very and we to is evolve, of driving other, that But cost XXXX traction call in do a you more the this as offsetting are the optimization, and business. still pyramid do point. with then, the get at -- we have

Operator

question next our Bryan with Cowen the from line and Company. Bergin is of And

Bryan Bergin

Boulder you. affect Can offering may how Good ask large-deal care wanted health integrated on organizations? pipeline? an care. on to Thanks. care you across health comment morning. I then large-deal the Thank overall health And

Rajeev Mehta

to overall, Look, Raj. care well it's for us. Bryan, health do Yes. continues

-- have companies continues of those past, now as probably deals the those side right, deals the to business, made in investments done we of -- opportunity payer be terms of have done but of we BPaaS that to that been the there the the those few one in business take -- some like that in long like but I the to care sort our mean, deals I large have the a have think Look, not Emblem an we've we large pipeline, to think able type TriZetto, around materialize. only time of provider I well. expand ones side of with also we that health

as there. it's a addition But will of well. in, do they of lot out hard have progress when solutions we those in predict BPaaS to our seen come but to So around some we've TMG that,

it aware, you're the Medicaid. Medicare, As addresses

that of So platform coming good a we're that as small of more TriZetto the solution as QNXT then along lot that, new seeing the and, out addresses of lot are our the with player products well. CareAdvance a well, traction and space

may that to working there. addition get you're we in potential for are So excited mergers acquisitions out right, acquired, because about aware, and the that that, well We're there's as are company as a only but of opportunity lot not the too. the acquiree

there'll think, to for those be well. I I think transactions develop, continue as good So future as opportunity M&A work

Karen McLoughlin

to just Yes. And could think if that, I add Bryan. I

continue we think, But opportunities now, seeing new clients I'd I not be to full is even what opportunities been think which to bigger up care, payers, with we're those acquisition benefits care. end-to-end But that we with up with the health bullish really just the suite open opportunities just the market does call have us. historically in market of and health clients we I what's offerings and and the platforms nice significant particular, now for now platform that but platform have offer suite business, the so frankly, our for business, has who also on a And opens the the of full-service with in Boulder also what spend, of really payer the up open clients. of with in that can with for we space, in and not can provider long-term and forth, we the really enough strength, whole market. provider. have between had TriZetto payers that wouldn't the And very small historical it mid-sized now, offerings Boulder be, is

Operator

Our next Oppenheimer. of Glenn with from question line comes the Greene

Glenn Greene

I'll questions Thanks, of good a couple morning. ask upfront.

Boulder the was what there? fairly just on it. follow-up maybe somewhat solid, acquisition, -- be, the some of give us for maybe you us would the expectations thought you Given help sense so Raj annual color actually heard sluggish, growth say somewhat the I've a I contribution, frame margins counterintuitive, maybe for size retail sort that and I of And seems some the of -- of retail thought heard which then so revenue impact could environment is kind you Karen,

Karen McLoughlin

So it roughly be on year, but material. fairly dilutive Boulder, it'd but roughly enough break contribution, little Glenn, a on the million not - this neutral be of line, it's we bit didn't $XXX margin out, to

this then, split year. obviously, as So synergies year to expect into certainly And get to to year into or want - we comment you this not but in next and then, on... we'll kick the probably Raj, start maybe

Rajeev Mehta

Yes.

in to little compare to RPA So bit in emerging intelligent the starting are such invest it's algorithms. as automation retail, of Glenn, previous think technologies, see see when mean lot a I I little retailers years, look, to robotic, starting I to even we're still I we're but pickup AI and starting it and think a sluggish. a

to years, So we're but previous I see again, us. it's a that, starting when little to it still compare sluggish for

Operator

with of Our proceed Please next your KeyBanc. question is from the question. line Arvind with Ramnani

Arvind Ramnani

Hi.

quick right? my a your doesn't M&A, clarification. guidance From Just understanding, include

Karen McLoughlin

we've not guidance M&A. includes deals does our already M&A. Arvind, not benefits it include prospective prospective It of that the include does and the completed, So but Boulder

Arvind Ramnani

a the definition evolving? The sales can what newer digital. high-growth are, are has digital you able the to question Can definition just of these team with Great. how how digital stay you're your you on delivery technologies? evolved And comment of also, front And keeps - expand on areas to certainly of if changing from broader in and and on digital. you SMAC is

Francisco D'Souza

Frank. I so ones. key the high-growth I'll different Arvind, a out areas of point a few number within are, it's of There guess, digital,

is are, of and First new to technology, cloud growth. growth. all, those things continuing high call which we cloud, And I cybersecurity, systems way within say, high obviously all development, of the of sort digital of app digital the what replatforming engineering, would migration, is like

intelligence growth robotic processes. the pointed automation, Within digital growth. as then higher automate forms operations artificial the virtually process of intelligent of and business, is other practice, all process digital our using Raj are, And to automation, higher key parts there out, automation within business that business

the both at look during data Cognizant comments, insight, looking the you interactive my that [indiscernible] bit about portfolio. spoke at smart a I within at digital business products little like and You look prepared things and

business digital entirely So is all almost high growth.

gives bit picture. a that you of a So little

the in as -- industry. there As consistent no digital definition past, I across real the said of we is

a conservative our somewhat prudent definition definition. think perhaps I So is but

We we you we that are of making good you continue as so high-value sense the of of do I that shift. on the sense of trying think we're a of a core what and that progress question kind to your the retraining. works get we digital skilling that second was give And as part think

a talked we've about think we're our business technologies focusing of to capabilities. because that people and we across it's and exposure and rotation equally think multiple lot and skills of a important on associates skilling give doing retraining, it, to lot the I

world. digital we've reskilling. retraining that mean, the reskilling from noting has just think and I things we've employees not something very is worth the company that's in I a that, engine that's the one of ways, in many strong been of -- retraining new day and It's one. our

a very retraining So we've that do capability. we got got think strong strong And reskilling, particularly we've and something DNA, a very I well. is

Operator

question-and-answer Thank of session. you. end our reached We've the

line which We have coming one time Frank question, of for Atkins from will the SunTrust. be final with

Frank Atkins

of Can here outside you in you as question, digital A more change about the in the for Thanks about prepared especially part, can your a for kind demand was explain and talked the end. squeezing that bit side clearly international the I taxes me in second And year? U.S., Thanks. it. talk on at what little the you the quick business. margin on driving further work? my for then, exactly the remarks, appreciate view

Francisco D'Souza

Sure, Frank.

growth U.S. about Let talk me outside the

the technology As growth market as economies of happens even world drivers fundamental digital, billion. doing well. to prepared $X crossed older one comments, U.S. still skipping stronger digital you doing see well, we during as We and quite largely, we upside think in technology, last we parts certainly -- parts see the leapfrog straight are We as see and in opportunity around markets see of the world, technologies. adoption some of some the same economies tremendous over -- we said -- of year, I -- you we the as growth The in there. participate our where world know, with the U.S. as are see the the in go non-U.S. said generations In generation of many there's during so the economies of are growth

digital around on we've work So demand margin the in the Karen we general, over tax see good than And as let average on our company question. turn And the is me margin. said, world. higher to it

Karen McLoughlin

Yes, sure.

clear year. least some in February us So that back of in tax the for caused Frank, in they or guess what right, to in to tax, I And language the received -- amount our we that quickly tax have of thought later about or believe I as a been current get. future folks to intangible scrutiny EPS. the or it some, point. tax in is area But guidance, the law of think, perhaps said, foreign law in XXXX, currently is on for fairly continuing would $X.XX in some this now, laws. guidance a It will clarifications both at fourth and law our what call look that. there's even back back we around the as prudent and We're understand, the essentially, may we that's in to into this limit what And some closely, tax we've and And it's there. review that I focus regarding And as possible it, the credits there that sure clarifications call updates complete This be U.S. but GILTI. one has change that, gave at original is looked our been new that we're writing, EPS impact it we've it around low global income impact and provides all for the interpretation gone this when able a our the fourth rate more we've its continuing rate means of the the of particular, In to that the was base laws put refine drafted, not place the not year tax and the lot is cases, the the there we at revision. quarter. quarter tax were as as and the this tax at on in

reach or that, clarification more has our who filed certainly today anybody to For will later out that can questions, and XX-Q us filing tomorrow. more on there you is in be when

Francisco D'Souza

and look think with speak wrap And that, joining everybody. everybody your again with we'll And to today thank to up. for Great. forward next want us I quarter. I questions. we Thanks, again you for

Operator

First Cognizant This XXXX Solutions Quarter Earnings Call. Technology Conference today's concludes

now disconnect. may You