CTSH Cognizant Technology Solutions

Katie Royce Global Head-Investor Relations
Brian Humphries Chief Executive Officer
Karen McLoughlin Chief Financial Officer.
Lisa Ellis MoffettNathanson
Edward Caso Wells Fargo
Tien-Tsin Huang JPMorgan
Keith Bachman BMO Capital Markets
Ashwin Shirvaikar Citi Group
Bryan Keane Deutsche Bank
Rod Bourgeois DeepDive Equity
Bryan Bergin Cowen & Company
Call transcript
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Ladies and gentlemen, welcome to the Cognizant Technology Solutions Third Quarter 2019 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Katie Royce, Global Head of Investor Relations. Please go ahead Katie.

Katie Royce

Thank you, Rob, and good afternoon, everyone. By now, you should have received a copy of the earnings release for the company's third quarter 2019 results.

a available not, our have you copy on is website, If speakers call Karen Officer; Officer. today's have McLoughlin, Brian Financial The on Executive are we Humphries, Chief Chief and

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

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

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

Brian Humphries

and and today's Well afternoon, call. thank for in good you, joining us Katie, everybody, thanks

past evolution process of pursuing will view and initiated the few historical rigor levels as what performance. Over business we've and one or company to revitalizing with urgency. expect returning systematic a our at of this we months company the multi-year of We a we're be aimed

to imperatives where client's facilitate reviewing covering clarify our our our cost strategic are Today plan I the office, to to of by transformation to we’ve project our base posture, our investments aligns in digital and including operationalize refined we want begun for this we're QX in growth. how performance where which then briefly headed and and resetting the conclusions

$X.XX. in quarter. billion North year-over-year in third and QX America economic climate in constant $X.XX our to X.X% In improved our grew uncertain earnings. year-over-year quarter with modestly third begin an Let's non-GAAP the EPS was performance currency revenue

and leadership. line we've depends banking revitalizing in under and new businesses, which on North growth top accelerate our Company's in-particular calls, America our services both to of financial and were performance As our ability the healthcare discussed prior

work huge team do, bring highly year-over-year engaged have leadership new are more North our and leaders businesses important to have running Arguably, seen improvement growth we than the noticing modest have is client-centricity. more strategic While America our we in perspective who and energy we these clients even fresh this. we've now a the

and global level, constant up down services in was a in At basis QX constant currency banking currency. year-over-year points financial healthcare in X% year-over-year XX was and

In financial for engineering, see analytics in interest growing cloud, banking growth we against particular and and DevOps the with backdrop and the business services opportunities in AI insourcing digital of pressure and interactive. of digital demand traditional with skills some cost in

dynamics be revenue Similar rate exist by also to midst growth of merger discounts in reductions clients healthcare, here and from but volume continues the in impacted integration.

other our revenue posted Technology in two currency in digit continued year-over-year. Media and constant and double business Resources Communications, both and segments, momentum Our Products growth

our you in and will the details take including call Later business segment through markets Karen the quarter of the commentary.

my turn to operationalizing the topic, Let's of transformation office. the conclusions second

growth to and put full upon joining of prioritize key initiatives revenue at accelerating into April, Cognizant established aimed action a unlocking identify, office Cognizant. reminder, transformation a As and our we in the potential

be of global models, engagement processes on operating cost tools base delivery focus to structure have now our other of for and our our fit to XXX growth. strategic amongst months required six Following identified by commercial us enable leaders and things we and

continuing at execution with in to in As our mode, going aimed to into and focus, working investments action sharper with putting a creating our key model. facilitating initiatives more a clients, leaner a simpler evolve closely growth, result, we and are skillsets now operating market strategic

customer C-suite the face because of significant meetings I pain with outcomes. me into they by gain desired to the time points I meetings to Let's and our to essential allow industry, find strategy. insights start allocate with clients. continue our business to face key these trends

all they like by disrupted and focus competitors, automation. redirecting next across nimble generation, analytics, engineering, in are their with digital cloud, but Clients digital and native DevOps being and confronted are technologies embracing AI of risk investment the industries to digital

the posture to become needs enabled businesses. months strategic align differentiated spent centric to sharpening few directly past our client's We and customer data with modern,

strategy Our has parts. two

optimizing portfolio, our and of protecting international industry First, and which our strengthening includes; and optimization, tooling efficiency, delivery scaling footprint. our renewals, protection core automation, alignment

clients second, to digital the into new of and improving against in reducing experience defending engineering, the data IoT. at revenue four areas winning data, key digital cloud battlegrounds; core their put customers, offer four streams, And operations, and These disruptors costs. tapping their they their enable

strategy core our parts market. built two the has that strength It's our The of portfolio reinforce our each in other.

clients lead from who how and strength instance, that for to digital state with transition delivery historical and industries, application future. deep enabling their legacy there relationship the reliable managing a responsive mean know of to clients their reputation their For our help current we our

do win we four as we our to in it's because at offer digital our of four to of to more these bit growth. determined want are about battlegrounds and context client's starting strategy which competitiveness. with aggressively data accelerate heart investing these the are so, I revenue the a areas expect core our We and at

to storing, that need analyzing based data. to data their their managing, enormous matter experiences, industry must Clients and platforms management drive of get No customer and clients reporting, transform quickly leverage insight. amounts automation, AI provide at can fuel better reusing

data a and starts like learning. from AI systems This basic We're data services is product engagement. to clients to systems engineering data record leap the make hierarchies. customer of insight generation including and like shift causing next machine of legacy modernization, our It helping with things from and

do edge into clients software-driven digital and their are with to and digital so they application to traditional leading customer infuse services experiences need development become effectively, replacing enterprises compete experiences. software product to to grade and engineering build Turning engineering to consumer

and private battleground years. of to XX% that clouds public a critical on clients' an today, to set as to third in estimated journeys, a workloads our digital all figure Cloud of couple is hit digital XX% just rise given

need and to aim as workloads companies, help SaaS as clients significantly monitoring, partnership companies and of enhance spectrum well our client We scale migrating including entire management, security. hyperscale the their with orchestration, vendors. and leading notification, provisioning Our governance

fourth computing. and years, exciting next are XX% connected cases by the The Our changing and industrial across by environments of given XX is enabled in are devices and businesses, an technology IoT accelerating edge is their sensors adoption proliferate five and and adoption. vast five businesses of generation array explosion space solutions used kinds, spending sparking and be will IoT of to significantly in cities, that distributed all of expected A billion IoT battleground IoT, an to increase plus expected devices XXXX. IoT

which the expertise our our deepening we provide IoT clients, IoT ability Technologies, our domain look portfolio digital clients Zenith our best believe for areas value everything and capabilities while expanded and life you our For will as to engineering expanded in we've back the generating the at been such Cognizant. that to offers instrument if for sciences constant methodically greatest acquisitions which expertise, soft vision, recent insights, return

global speed DevOps transformations our specializes latest a is in methodologies Our helping digital leveraging clients to step that and data along that enterprise path their Contino, platforms. consultancy advanced acquire leading XXXX by agreement

solutions core build will infrastructures shaping migration, to cloud our how and cloud capabilities these their is and to cloud modernization enterprises us clients. to offer approach cloud enable based Cognizant's security we're transformative

quarter. to We transaction close this expect later this

a of portfolio strategic content range of is therefore with in-line of a wide our vision strategic company highlights refinement to posture offers and an for The our that we business not that area industries. to subset digital clients operations a all Within also process services operations, the our across business exit. had

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largely whether can on materials. client's standards certain is focused work determining Our violates involve objectionable content and

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increasing reducing For to and users aimed $X level decided allocate content. of exposure have fund sophistication objectionable million to this research to algorithms we thereby automation, reason, of at the

coming X,XXX performance coming impact subset to quarters, obligations with best our with the path determine forward months to comply to also reducing year work the financial and Over the will contractual effective to impact expect the valued this with ways our Exiting roles we In approximately explore partners to ahead we our our vendors, in intend thereby and clients. affect decisions. roles. alternative the transition to

of As our simplifying continue. our we structure. quarters, centricity our whilst to further content importance enhance empowerment, a and organizational reminder, work operations discussed accountability other Cognizant cost model optimize and role In the I've clarity, ensuring client will digital increase recent

I of today, include of of partner series and actions two-in-a-box us the greater the the goals. to some update decisions has help client last And months, these These transformation we more an to a agility Over office progress experience client for on feedback few a returning measures and seamless to customer. give our you have of simpler in against partner front delivery taken. the identified want and model

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marketing under hired all in vertical powerful positioning to global by Cognizant with thought digital leader as a application thereby Combining me. the Cognizant me. product our CMO consulting plus select brand, capabilities Cognizant’s capabilities team reporting again, greater targeted recently partnerships leader development Strengthening complementing geographies with on digital developing focused industry creating a a by our in verticals, and modernization. engineering Softvision, market better with capabilities a Extending uniting software and to reporting Cognizant leadership in greater and

our intersection are sales with and Aligning service partners. to albeit available industry competencies highest lines ensure to the capabilities point our the specialists to capabilities an client

in allowing implementation development development of acquisition more deployment optimally retention programs And hunt farm. clients, the and segment a teams, RAD leveraged and future model us sales better lastly compensation to and our our to clients and thereby or commercial of the

of most the we for aimed Against a cost part strategy program. ensuring announcing a changes decisions today X, become and backdrop XXXX. execution effective organizational at a reduction also set These will strategic are January

Would intensive up approximately always mid-to-senior and to business to the involves difficult capacity growth choices. people made current quarters. we've decision their level the XX,XXX to from deny remove we to in XX,XXX any invest their freeing skillsets associates roles costs In evolving coming reduction in

a our of roles X,XXX to net lead exit us expected hiring. our associates business. is we X,XXX approximately roles reduction to a reduction These impacted the to approximately impact approximately and gross operations our the rescale thereby as content lessening to X,XXX aim reduce decision associates, of by exclude lateral to subset to allowing X,XXX numbers This on

with we the vendors, and alternative our previously to expect as reducing roles these any transition associated to our stated, charge. associates thereby to to work on ways partners But reducing explore impact also

and end growth. an to to means a drive but is revenue that's structure cost healthier a Establishing

We’re free professionals a customer series and of hiring facing associates generating cost. coming and sales of including support over existing We've ones. XXX revenue who require investments previously of funding, that approximately a accounts generate new the year announced identified expand us of help will the combination

we learning aim as Cognizant our and in the investments center investments and in imperatives. aim Academy brand. in tooling Significant towards and DDER international skills and to we our technical digital investments Accelerated reskill and increased in as and to our strengthen internal operations talent marketing digital automation branding redeploy

XXXX and with Karen run incur. savings charges the including more along our to on completion the Fit will provide expected date Plan, for expected we detail Growth rate

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and been of now And knowledge my which clients. me. three months, seven role cure things our our resenting opportunity operations, me has I've full considerably to CEO the our a the opportunity, for market deepen to in are given

large market First, at we position a to in enviable continue and a steady built that's expected rate. an growing attractive

early to serve transformation. or businesses. are the stages our of fully distinct their intimate Most of They their knowledge need digital coupled their a clients we technologies technology digitize expertise our in and set environments with of of still

actually working love time me to able spend I've us convinces significant and our the wants that accounts our us Second, with succeed. to with clients been top

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relentless IT since in its and the and to its Cognizant's the of A defined to ago position strong focus that Cognizant bellwether finding industry. ever. historical performance quarter has the on determined determination return as growth as focus and potential unlock We're a are organization's growth services century being

the our as operational Karen? call view to to the financial Karen, With give the to fourth how an as in will update we you as performance will who that, my well both see and quarter. it's over pleasure turn

Karen McLoughlin

everyone. Thank good you, Brian afternoon and

$X.XX and X.X% Third revenue of of the XX% constant high range X.X% mid-XX% total end of and represented Digital guided the currency. billion revenue. quarter in of above represented year-over-year growth over was growth range our revenue or within

to to impacted banking was ramp continues and be projects and driven performance Moving X% in where constant which growth Healthcare. was consistent overall up and currency with insurance Services Services company Financial the quarter. several Financial last verticals industry by of up performance the by

grow performance we of of be three a continue customers. our trend to continue the through by with two expect of pressure, year. our continues quarter, Banking, Within under top remain a last the remainder five to accounts Consistent to largest our few the impacted while

did QX benefited in our up we earnings had we a from based work. expected insurance last when As call, in ramp project

larger course over year transition However, where in this QX around the underway and slowing several seen the trends particularly pipeline. the our executive we anticipate in a process, decision-making clients continuation of of of deals is

mergers. currency, in of onto down our in year-over-year continued an shift a third-party. the involved Healthcare captive Moving large to work were large constant a performance vertical, X.X% the The continues subcontractor from by year-over-year to client clients within the of ramp be we in impact impacted which which to declined Healthcare completed primarily a account at continued and

double-digits contract by industry-specific were to dispute large year-over-year, quarter the and a momentum enterprise platform in to impacted and continued migrating a Life impacted grew Additionally, related with we again client. charge both charge revenue ongoing This margin. an demand investigator from as digital trials. transformation platform our within Large such solutions from benefiting and smart shared deals, environments operations. on-premise cloud-based within Sciences our

the growth this to with quarter are success the contributed seen also in Zenith and we have pleased acquisition. we early

quarter trends We double-digit growth. is XX.X% Resources quarter. the seventh in expect year-over-year consecutive fourth similar currency. Products grew year-over-year This and in Healthcare of currency the constant constant in

and within across demand engineering, broad-based our from and continued as infrastructure, was Growth verticals, business benefit digital results strong for growth to digital IoT solutions. cloud analytics

the with acquisitions ramp new logos a XXXX. year-over-year lapped we in fourth the growth the of You as do segment of made in expect up see QX contribution Products and on slower basis in the Resources quarter, and to work

Technology currency. XX.X% for Our revenue for by segment constant In grew digital services, growth was content engineering and and from by Communications, recent slowing services. driven offset in our partly year-over-year demand Technology, demand acquisitions Media

company. Brian within have is our minutes. long-term our vision I our a of the content in Communications, As to impact digital some overall and more for practice in mentioned, the the but well to provide not as work practice as strategic certain operations on few we company types Media exit color with Tech line decided this of will

Continental part in our X.X% by uncertainty. Turning Sciences, from weakness year-over-year UK Zenith In in constant the saw in Life currency, we Europe, grew driven strength acquisition. macroeconomic to in geos, Europe reflecting

of under relationships financial see good the a Europe finished banking growth larger partnership in including did We logos in our While few of pressure. newer institutions. remained several our three with

in the offset of The with banking, our year-over-year Rest by large currency, growth XX.X% of in partially and that weakness softness and in clients. by by Products several Insurance was grew CMT strong Resources, driven World driven constant

intend World. significant we coming Rest these increase share And further years, the coming a opportunity quarters. the investments the to well as Over market of as to there's markets Europe gain in within in

GAAP to which diluted and margins diluted were EPS Adjusted XX.X% margins, our margins respectfully. excludes in our $X.XX quarter. operating adjusted and operating EPS XX.X% realignment charges Turning $X.XX the was and was third

growth QX, dispute points While and XXX adjusted from client large by basis down basis healthcare XX with to basis up points. costs expectations margin XXX operating a our and our margins ongoing below primarily year-over-year, by revenue operating due outpacing compensation benefit negatively impacted was which points the employee

a actions and that by savings our our offset partially impact of in as org and to result senior $XXX pyramid compensation of now in cost lower approximately expected targeted levels QX. the the cumulative simplify of took were savings headwinds realized These over we the QX to at taken XXXX. incentive-based of QX in The realized from with and in QX structure annualized result are savings million actions million $XX

structure to have our the pyramid achieve full did of the more we our rates in as and not levers, bill are quarter work promotions with achieved satisfied optimization. amount we to do aligning reduction cost around not potential However, right-size and with pricing cost

demand timeline to a to and our experienced we previously we reskill growth Attracting success. hire is and to and a long-term retaining continue key Also, be our to talent align workforce to in positioned headcount better as our the revenue capture than digital factor market. longer anticipated

to undergo the we running quarters remains do at goal, XX% we While this few reduction a expect annualized as of rate transformation. for remain currently this next our attrition long-term rate elevated

XX, up billion, reflecting approximately over from of our year-to-date XX, sheet, deployed down approximately investment $XX at as million $XXX billion short-term million balance on cash completed repurchases our $X to acquisitions. and and billion XX, balance June share from $X.X $X.X stood to Turning December September of

As includes with investments investment a ongoing short-term the reminder, of short-term related Department. $XXX the our Indian restricted million balance Tax dispute Income to

cash quarter. of was referenced days DSO the which of XX primarily up negatively sequentially the impacted in generated million. but dispute $XXX flow We free slightly by earlier. down due $XXX This cash approximately flow million customer two I days free was year-over-year, to

outstanding balance $XXX the was there the debt quarter outstanding and at end on million no revolver. the Our was of balance

On we shares the approximately third and the share repurchased diluted X.X to XX shares we million year-to-date approximately for a opportunistically basis, $X billion. During our million shares million quarter. million $XXX over approximately count decreased quarter, XXX for have repurchased for

September repurchase million XXX our have As XX, we under remaining of existing share authorization.

Through from generated our to remaining the we capital revolving and on as credit return facility, cash acquisitions. to have cash operations, balance fund existing both sheet continue to of our well plenty program as access our future liquidity

intend turn me that Growth transformation on announced the for I outcomes as including this XXXX to exit. we Before Fit as update the content that the an provide we to office let work Plan guidance, of our afternoon well

moving As our highlighted, transformation Brian implement we the rapidly identified initiatives office are the revenue aimed by key growth. to accelerating at

expected Our our reduce enable for XXXX This years. program the two investments which will to Fit to and business Growth is work, we cost fund Plan designed structure simplify run way growth. is for the in

this remove XX,XXX to expect part associates plan, current their roles. mid level XX,XXX to As senior from we of to

model that on to delivery approximately client roles effort for X,XXX within every identify sales new roles make the opportunity or will based company. reskill have to We the assumes and associates will demand productive our

associates elimination. role remaining either exit X,XXX X,XXX the by to or company through expect attrition the We to mid-XXXX

company. health anytime make of the decisions impact said, long-term we take seriously. the for employees, We these As very believe we critical our it are competitiveness that and actions Brian

of $XXX result gross estate of our charges to These expected the run charges We XXXX. XXXX in and optimizing will substantially be actions $XXX to annualized also to by complete in savings million year related expect million the rate are will end include real portfolio.

investments we begin the not activities accelerate reskilling These including we and of execution fourth across talent, at automation we time the resources, While in impact and reduction occurring will investments same battlegrounds QX, enhancements the will in cost and our the further M&A. material lean that digital key in the company expect four branding, the plan sales in do be savings quarter.

step future in strong actions our ambitions building an a These to our to support are important and success battlegrounds. growth chosen foundation digital

ensure great preserve culture transition all Our during clients time commitment the a and make Cognizant of associates we for company to this qualities, that is that employees alike. value, then to

content the the to around for Additionally, in one with as not Brian determined practice we mentioned, of the years. world. X,XXX to over is strategic course next within operations to transition certain This the approximately impact work digital vision expected our our is we this exit have long-term line two intend company. associates that And work

deserve. our addition are In associates continuing during this with that they treated we our and obligations contractual ensure to respect the to will meet period, fairly that

and In to with the ways the to programs. our the programs severance months of in associates ahead, vendors packages retention number participate opportunity provide assistance impacted and and various to we will partners a roles reskilling work we'll transition with including alternative explore work transition bonuses, to

Technology revenue While is completion quarter. to within basis we of that the in practice to there segment. of lose for an decision, And small Communications, within to estimate revenues of the annualized CMT million this the do and Media result as timing we $XXX on fourth $XXX this our a million impact transition between the be may uncertain, a exact we expect

to the We timing than the to be expected anticipate be impact expected therefore on the over dilutive our margin XXXX subject operating factors. of and This lower is two down rate. other to one down revenues adjusted ramp next the modestly will run revenues ramp annualized years the may and to

incur such expect to and a of real the as and to equipment. assets estate charge transition related We related wind any these associates down

certain of of total range to The work Growth to charges the associated this be the plan, for wind in million. approximately $XXX expected including with expected million content is transformation cost down Fit $XXX

the of we on detailed more call. our when a our the XXXX provide QX regarding will provide impact phasing We update guidance

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

on for to currency. range in exchange to billion reported our exchange year $XX.X range revenue billion of rates, basis of X.X% grow year-over-year the $XX.X billion For expect full to the to points current $XX.XX a billion to within translates reflecting assumption the to Based to year. full growth constant in X.X% foreign the XXX negative X.X% X.X% XXXX, basis, this on to for of $XX.XX we a

billion fourth reflect the revenue to continues range for the and currency. billion to to guidance growth to muted quarter implies X.X% this growth X.X% range of Banking a on This exchange translates in assumption to on in rates, $X.XX to $X.X constant quarter. outlook year-over-year This the the to to in X.X% $X.XX Healthcare. current a X.X% Based in foreign billion year-over-year of $X.XX negative billion points exchange of reported for basis, reflecting our basis fourth XX

result This exiting Services in revenue QX slower certain work. Financial expectation Healthcare the growth macro the UK of outlook of continued in and a for a headwinds our outlook content in organic and as and cautious more impact reflects

than full and timeline we previously trajectory actual the between XX.X% revenue the anticipated now XXXX, operating the headcount recent For normalize year growth XX%, expect longer reflecting from and additional to QX margins and adjusted costs and acquisitions. to be

We diluted expect the adjusted deliver in range $X.XX $X.XX. to EPS of to

year adjustments. Court related This the diluted ruling our Guidance other EPS Defined foreign rate XXX under for currency Obligation and of realignment approximately of non-operating the any; if India for application XXXX and provided the to charges, XX% the the government the shares a Plan items, Supreme million share of above tax net count effects clarification, the guidance to XX%. gains excludes full a losses, in Growth and range adjusted Indian Fit tax charges as and if by exchange of any, Contribution to anticipates unusual

adjusted the XXXX of in XX% Fit the Plan be of announced in Growth margins for context today, the are In range operating we XX%. to to targeting we

today and QX major being things. QX outlined the is increase near program cost the future mitigated savings annualized with increase While This two by from will rates. margin coupled in

our full given lower XXXX our margin target. versus rate compensation reflects incentive underperformance year fiscal First, payouts

is margin at goal structure of and therefore performance. to to with a points Our basis a absorb. normalized be we cost in company in rate line to perform headwind plan This of our is year-over-year have payouts target that XXXX plan part XXX

branding. help number and of generating areas us growth will and tooling accelerate investing marketing revenue investments are automation and a We Academy, resources, Cognizant meaningfully important in including These rates.

However, in XXX negatively the by impact they points. approximately margins basis short-term,

questions. we open the for With that, Operator? can call


a of Thank question-and-answer [Operator be first comes question you. Lisa We'll And conducting now our Ellis session. from with Thank line Instructions] you. the MoffettNathanson.

Lisa Ellis

like for one thanks double afternoon investment I'd all sales the critical reaccelerating Hi, of Brian, line and on fantastic. going areas through most marketing, to areas click good growth. this. That's to one of and in the clearly, top

things, view maybe a few model. the and model? return changes two-in-a-box a Thank sales provide to more you new coverage salespeople, XXX overall the mentioned You Can the Cognizant's strategy planning of holistic to the major sales you. make and you're go-to-market to

Brian Humphries

Lisa. hi Yes,

four you examples. So I'll give

the customer. really First team go-to-market in partner of roll it's to clarify of simplifies all, important to up two-in-a-box, I think front the client and returning Cognizant's to

we clarity partner to to A few delivery ago, of moved two-in-a-box of we client and greater three-in-a-box we we years with and to had what roles traditionally have responsibilities. returning have traditionally used So partner. and were

client role partner. will the that partner delivery we engagement an between term Therefore, the and new

headcount more call. or sales function prior our will commercial in before. Second I've referenced than add point, in this actually the we

to We are quota agility the but all a carrying, have business be lawyers, to adding are but up responsibility. helping clients approximately instance it's more of for those greater some Not XXX or will all and and finance us show with clients indeed with headcounts. view for people commercial greater

teams. to major commercial we our want third relates thing The to compensate how

the leveraged to we their terms a And plan the or at strict more of with compensation, XX% of variable. sales XX% portion in least variable parameters there January compensation of will base As at fixed move X, most be will within then of and the that embraced that do sell they to our sell, follow required of will that part the not readily which sold but which them to path strategy. yesterday, are more least enable resistance, of things people to need what is is we ensure they what us digital

is And a thing four the on how time what lot will working I fourth in segmentation about call months, to we deploy term model. you you readily spend not have a then form, something That based you last the them a how customers, the we of address today purest sell think sell to on. X what and you Tier on on potential X just X, sales but more what tier the RAD them

box, you you in they like current develop sales customer or or versus get to or acquire. a coverage And want customers to myself then that your or that you that customer retain between wallet sits according to tier subject then share where somebody nine changes. that potential of potentially existing customer a an visits So from to the want of and degree

going are those So script to doing talked momentum. in today's I examples the addition Guidewire, to have alignment referenced with about we players, what verticals want to commercial of tremendous partners. readily in of like Obviously previously notion some we make greater I've go-to-market but we're Temenos, with with try our that industry Adobe further the and to in we that, to ramp partners together. more embrace hyperscale market and strategic sure four like


Edward from question Fargo. Thank The the line next Caso Wells with comes of you.

Edward Caso

workforce the that you're start the get for sort mean, sales it like evening. commentary more is you of organization of you can get of Could some – I the when that good Thank going sort the take out calibrated to for an flesh you is to think around you get and hoping Hi, detail. to it a get the those sounded to value the for give? pricing inability and to going – all to time bit be pricing do – little here? of

Brian Humphries

through and as inherently we that this. managed more let can topic perhaps complex of decompose Karen, materials or augmentation to your question series a me But That's comment type and price well a down activities from services fixed on bids. we have time have because you staff

to ability the regards With their ramp also they the they've before sales where ultimately and depends or teams, if to on from the client if know itself know they industry. come

speak to a are sell C-suites, the of sell outcome. have is the people and industry intent who the with gravitas business the able pain who to to outcomes, business and points Our understand course hire wherewithal

expect So need last. you to to them

a build they which and salespeople pipeline, is later the turns clients, into pipeline as build for subsequently and we the into ultimately However, these progress revenue. TCV, relationships turns eventually deploy

impact that more around reason a of we terms short-term. negative agreed in of For impact to spoken headcount our these structure it's we've that cost XXX hire, previously that the into

viewed force have as I a time appropriate will in the However, investment an that view over form of it sales cost. I don't return a as gearing.

So OpEx first or from revenue kick indeed in FYXXXX. to indeed return year in or QX the to we really anticipating dollars and margin to more revenue gross the half OpEx are dollars next of that

analytics one to have dynamics client the or intelligence key point. pricing quarterback or practices can areas, important. a artificial comment and those. aligned be add just to are competencies or I are engineering partner Karen world-class surrounded the on If is those in they to digital wanted deal, need or experts the a otherwise. on whether is Look, with that cloud that

or pricing generalist We capability back client. We allocate partner, the client a basis. to to of on in months of bands model will recent greater greater think and client partner pricing quarterly give as to a spend more the we deals want that great the operate support they parameters deal but honing technical the front competency within are certain in on have do a to will us time power in

We will notions checks it be of will some that those, and review balances.

Karen McLoughlin


what me and market so a new One bill call let I so would forth. is and rates about of And things pricing renewals and couple pricing. deals for talk in

demand the business pricing If you talent. high you in short look there. of be that Obviously, at and strong business, continues the very a to have digital supply

So do continued deals pressure see with and definition you particularly on there, rates renewals consolidations bill forth. and vendor strong continue be and so by where to to

see et business of maintenance, continue we transactions. do core part of where pressure application the business, the those in cetera, the heritage part to the pricing It's on

The I other piece contract we in referring hygiene. call which around, the what are script is also would to

the COLA changes increases, to we get rolling to promote when So ability get people.

many opportunities started several their progress in firms in still to for that have adjustments new we where to to when but have better reinitiate have know I within at lot made we the into so and last we we that was to portfolio see terms. people as forth, something are that you a that over something was promote year rate industry. As think And of COLA years that contract just opportunity them both appropriate that the this to And some adjustments opportunities years. rotate We've commonly continue few enforcing into for existing continue automated to particular, clients, level of either get new or forward. get not so done we and are it's their those their move

Edward Caso

is Huang question next Tien-Tsin you. JPMorgan. Thank with The from

Tien-Tsin Huang

your culture Hi, and detail savings soft to I wanted the the that from XXX out just all of the on hard How from on cost, thanks million disruption attain $XXX the the also might called million be in cost, Fit much from so here. thoughts to the content to for much on get aside both the out and getting the cost you there $XXX appreciate then revenues, work? Growth.

Brian Humphries

to They of degree middle say, some the of clients, into would over through partners years. crept in tend targeting majority but of I people we're exercise senior executives. mid-level system has the the not management this declined the are be that to front

growth. spending we're are that are of sure we they bringing investing course, that our in these through time a people and changes Of know and huge making team contextualized amount

leveraged the having as business, honest, I compensation plan. And an a spending giving do my we're more ever to the be these back delighted that degree swagger they returning sales folks Client are back fact will of earn reinvest of opinion, model. the millions dollars two-in-a-box with Cognizant sales a to that To days. before today more coverage of appreciate a including more hundreds and into via opportunity in coming than we there's feel be in news partners, though to the

as will competency in for aim Of that more course, segmentation, But a that optimization more measured And be adding deploying and degree model via in disruption. not not on is on best will of we're that are said, to people mitigate also forward. skills but be some everybody we I honing only of we there we as can. thorough basis going

very it's huge right We're time people to It's it's of to contextualizing a communicating, spending this. look, the hard we do. So thing a but feel business. control amount


Thank you.

line the with with coming your question question. Markets. of Please BMO from Bachman proceed Keith Capital Next is

Keith Bachman

the content our million much. ask think clarification, in a to additional to out ops clarification. take The $XXX be Cognizant wanted very expectations question, the don't and Thanks is something. normalized an or I clear know, revenue from XXXX, whatever just for ahead of, I we Hi. rate we run on the Karen, amount should go

gets next taken As partially at least ops that out we assumed year. content

to hoping directed number said the is had swagger on Brian, talked question was you comment. in the last I call, my about a little but side but time then you seen could Brian. some you And called win talk as your A last what incremental I you weakness, backdrop. against rates services just IT of conference And up, think juxtapose in see gone the what economic have the about bit you've that there. out companies,

out. frankly, I putting a and sales win into initiative rates bit Thanks your might about very could talk a bounce much. you think the how lot more side, about if little those

Karen McLoughlin

Karen. it's Keith, So

the content off situation. Let me on just cover

First, you're right.

portion year, As is of the take you estimate of XXX think XXX. the to to next model it some our about for appropriate

will point at it think I part year, that go it – We the expect year. we'll the all would phase said, of the we the this we at first to of heavily be don't As would beginning it to although more say year. away in the throughout not weighted

work. also like situations just that to to of digital the work, range is this may they specific does The assume that that that find other they than it that exit more operations more in may client's choose thing transition would out certain I what

at can what the understand we further we So transition impact provide the much this of estimate be. this as we obviously, we'll best as think is our annualized time would plans. And color as

Brian Humphries

regards go unnoticed bear coming question, dynamics into to Keith, But guidance in mind, this the delighted course, but us with for it we indeed we're didn't having the of set also quarter and beaten consensus and to industry. have walking well, prudently yes, with in guidance as had And the read second our quarter. the we're

this So well. as we would remained quarter prudent uncertain. I going backdrop somewhat The into is say

Cognizant. However, would within look I I if the say, micro at element

our people are company. the We We're delighted is all, First to actually back on growth going to roots, that. back focusing permeating opposed growth and as is I appreciation of margin to with of rate. think found basics

have a months number the very presence I'm that organization deliberately permeates we in on as leading working well. significant And of Karen now. have with announced of customers, uptake for then by insisted We course, I been executive example a on what and And today myself.

structure delivery, economic cost clients, make know, model we with over in been to and new we reason forward hence teams because sure we've the RAD we time not in accelerate aiming so deals envisaging looking at know to cost And the with you and we're the structure, tomorrow's and expand. trying to of as have confidence our confidence the cross And door upsell. in we going tend and Cognizant and get our our once sell today's land logos also to we we're in deals, with start value deploying that’s but that foot reduce which

backdrop pricing pressure in compression UK but continued America, we the the uncertain, what businesses would it's an say uncertain. legacy but is and in a there again, steady I is found So, key. are digital Certainly the the at is continues positives, renewals those rate, imperatives in under North remain

see the being more nature that the not see And generation disrupt or avoid teams pleasantly as contrary very demands. to by It where well offense companies we dealt viewed the cost I I throughout next been executives with expense. C-suite nimble on as certainly a defense as world, those to that indeed critical given on more I've do companies. surprised is constraints area an of enabler the I've demand viewed a not is as fulfill the these the digital disrupted center both supply constraints. on much for is as to need


Our with Citi next Group. line question comes Ashwin of Shirvaikar from the

Ashwin Shirvaikar

see I mean, asking on ops. unfold. Karen. that community of growth to And to impact providing you before as that's are content meantime, perhaps metrics CMT think velocity the framework Growth could initiatives us Hi are if help investors flattish including start want if will right in. for your then how a what thoughts It's I And over the track? pace in kicks Brian. the guess years of the see should Hi Fit of we the good higher initiatives. you by couple type I of the investor these next a the trajectory the growth on provide to on maybe for the

Karen McLoughlin

over be some next So tend acceleration year. although of we expect will certainly and QX for little year obviously, growth, is start QX light Ashwin constant to for guidance to obviously a we give I quarter does slower to see it's a growth versus think organic us. in would this terms early bit currency that

more guidance in on the terms rest when give color hires how a and so incremental from in year of bit little February, revenue forth. we have the see we'll the So we playing out of sales

ramp-up months as think a anticipate that we It had we the do investment. significant takes generate any sales and incremental not revenue that XX I teams for actually from becomes We this before, to year to about revenue about talked really us. next

of So content, that be now of how I excludes certainly back more that, the think work excluding XXXX. the play content operations practice. in the ended we But would moderate it obviously And expect that's into impact to all digital and would out. that


you. Thank

Our next Bryan Keane question is Bank. from the line of with Deutsche

Bryan Keane


year margins just XXXX see to drop XXXX fiscal in be if of line. some of bottom there we some year million operating savings a to that gross it there's there the in fiscal XXXX, impact fiscal can I’m margins year fiscal drag XXXX. on annualized net Because from adjusted beyond like what's million so after go $XXX net but that positive $XXX away there? expect investments sounds savings, we'll the investments and the On wondering a might in one-time

Karen McLoughlin


with as in-line I assuming were you and next a So we’ve target we XX% to Bryan said, heard the on year, think, roughly as XXXX. of range obviously call XX%

points on and sales given about investments up is training on And make forth. of lower that, there so about this call, we to the the talked a and have top in we compensation XXX As then year. the basis that incentive-based

investments investments and XXXX. it's and we're beyond those on think to we premature pay we'll in in for guidance start off anticipate make so training obviously the certainly, will think making continue some time. and forth, that that to rescaling I would XXXX, the give in and branding certainly I but sales quite will

recently areas relatively the that is think under that of are still perhaps so become a linear we in But forward. those those the we've of this going core organization business. will invested and part think I certainly,

year So future, look and the accelerate provide business. growth to we make to revenue depending year as we help some in want stabilize in the to investments certainly margin should opportunity on that to the that


the of with line question next Equity. Rod is Our from Bourgeois DeepDive

Rod Bourgeois

go its Hey large over guys. ability additional distinctive Cognizant's slowed recent Hey, in client a I it's clients a If lot seven of work in history, back done had months. performance to mine has mining that here revenues. years. for Clearly

made RAD to is of being are ability. model large ton client a also or the connect initiatives measures if here wondering practical but question here, clients. The with seeing the changes better model front makes Are specifically for mining? rejuvenate you're client new on beyond whether sense I'm corrective there ways my there mining to RAD the Cognizant's so And

Brian Humphries


the the the look last logo tell if new But because or issue point, drag of look, and or the renewals that hi really little the four time had and will and this in accounts the last logos at accelerating upselling revenue erosion to of data bit pipeline stop that and months but a we base year rod. we a of new contrary growing really performing be. question to needed was on I been a your became on back So, the and the years pricing install so, stopped over It's it good bigger and you business. have not where we the the mining TCV XX

the a to already customers based you where at customers retain. core model today. acquisition to And course much hearing that course very want than some So you already not you're or exist in trying where customers, we simply of versus develop are make segmenting of you RAD potential, on customer between of is that the exist that

compensation that digital sold view which cross-sell of to of obligated we RAD enticed their compensation also our more a what into the accounts, they're has put resistance. selling portfolio into existing opposed to is are this. not model in such traditionally path simply get because in the as just compensation beyond to least but people's also the is achieving Sales they program was point sales of parameters and do want and they earnings from yesterday, So much what to leverage key key portion been

we're of it's of decision It's third pod upselling cross thinking the more to cultures project selling, leads then that in and And makers. course, about as lot It's based, more digital of service. line a different engineering. thing

seen out job partners, on months. of last a some few for us So, client in good in distinctively done the we've I've changing the accounts some that

again, These joined a think a in are XX salesperson different Cognizant or a background, or about the But that client different months, cost. model. last of I partners year so, don't a as compensation salary the

about basis think level I revenue I versus therefore margin and it a in think sales OpEx. both on gearing on as gross an investment it versus of indeed or about terms OpEx

to is technology own last then segment in understand the the sellers least, box the but and trying were a capabilities who top industry great not quadrant. really right four into our understand hand we And

really with but competent who have people also very sellers. are You a bunch of technology not

across of commercial skills. migrate you can to those Some more

people. presales will them of oriented, types oriented Some presales remain simply

educate most the in compensation particularly a not in are both and the with certainly signed exit as earning then they of forward, or We but people industry sellers bottom as been people great worst them terms company see in higher the frankly pain Some enough the they that going are PO not previously. good variable getting particularly of people are customer of a really understand be well portion either. the much commercial obviously comp left worlds, where points. have the don't not sales Those that you'll but to skills plan will the technical a have likely

into so-called verticals specialists a lines of our And assessments, we've ensure and the make certifications, and the aligned CSE's. taken is competency to ensure one with then put to service deal selling focus on do of need These with of have to the alignment salespeople more that are to great to all of ours then can final nonetheless our these us skill up and practice actions and versa. intersect partners with the and and go QBR their partners our more asymmetrical partners clients We right of accounts end where right bring we indeed make market into vice sets into best the sure can, our sure can them leverage worlds. accounts partnerships bring we both cross with to


Thank you.

of Bergin Bryan question with & next from is line Our Company. the Cowen

Bryan Bergin

Hi. Thank you.

just an sell and wind to and just clarify are this opportunity more so us on healthcare, practice top you these be give or then on among clients? the large just what there inflection trajectory may close you a seeing to how the clients in sense any at point they the not transfer this content a and I there down First can or banking is ops, is to wanted within

Brian Humphries

qualification digital. and really banking think more have tremendous I teams, in much seen some of these But account that through company. have blueprint more we accounts need actually that two some or in on around across last So focused we a healthcare a to examples myself turned different that's have bring I've we the broadly the and years

rounding as You points, particularly some be the compares. tougher inflection get will in we see we FYXX, will because healthcare into

single two In next will know, in it's once obvious that insourcing, in clients or Cognizant. very our wasn't for point a we dynamic QX some ended you particular inflection of running And up world in get captives, healthcare different ongoing some less to many and rate merged for year. a be DevOps. banking a of with As particularly there we the sense trends, into

the have us coming we're legacy earlier, a in of in participate of or years, I for spend prioritizing better that have these what the that's do banks disposal under price course. well see traditional some renewals. been digital and at as setting out business have achieve areas But of I to and been their the business said pressure opportunity to

North but always banking I a So and inflection revised now well the clients. pleased indicator. particular no And they major good positive say team with energy that's going the new be I'm am leader down seeing the with in in leader and new to I seem a will leading healthcare point, America

it another, our we're With to content the of to now determine reference something in is partners best work. the one the regards with coming right the or understand how moderation on transition working that's we to periods. or will Whether business options that

our it, to taken now, minimal transition that but we've a against to For of minimal with financial well. disruption. charges as very charge partners make is employees our work we with restructuring And aggressively course, sure intention that consequence is of can of course

Katie Royce

this is Katie. And Okay.

I next think call. all we that Thank look and to forward quarter. today's with your that, for will end speaking with you you questions


you. Thank Cognizant XXXX quarter third conference today’s earnings concludes call. This Solutions Technology

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