- Revenue of $4.8 billion grew 9.7%
year-over-year, or 10.9% in constant currency1
- Digital revenue1 grew 20% year-over-year
- Bookings grew 4% year-over-year, trailing 12-month bookings of
$23.4 billion, 1.2x book-to-bill
- Operating cash flow of $306
million and free cash flow1 of $186 million
- Full-year 2022 revenue growth guidance 7.2% to 9.2%, or 9.0% to
11.0% in constant currency
TEANECK,
N.J., May 4, 2022 /PRNewswire/ -- Cognizant
(Nasdaq: CTSH), one of the world's leading professional services
companies, today announced its first quarter 2022 financial
results.
"Thanks to our talented employees, we delivered on our first
quarter commitments in what is an intensely competitive global
labor market," said Brian Humphries,
Chief Executive Officer. "While the economic backdrop is uncertain,
we remain optimistic about the demand outlook for our solutions.
Our strategic repositioning enables us to engage more deeply with
clients, helping them succeed, and supports our growth
trajectory."
|
Q1
2022
|
|
Q1
2021
|
|
Revenue (in
billions)
|
$4.8
|
|
$4.4
|
|
Y/Y
Growth
|
9.7%
|
|
4.2%
|
|
Y/Y Growth
CC1
|
10.9%
|
|
2.4%
|
|
GAAP and Adjusted
Operating Margin1
|
15.0%
|
|
15.2%
|
|
GAAP Diluted
EPS
|
$1.07
|
|
$0.95
|
|
Adjusted Diluted
EPS1
|
$1.08
|
|
$0.97
|
|
First Quarter 2022 Performance by Business Segment
Financial Services revenue grew 4.8% year-over-year, or
6.0% in constant currency. Growth reflects demand for digital
services, partially offset by clients' continued focus on cost
optimization. In February 2022 the
sale of the Samlink subsidiary was completed, which negatively
impacted segment revenue growth by approximately 130 basis
points.
Healthcare revenue grew 8.1% year-over-year, or 8.8% in
constant currency. Growth in the Healthcare segment was driven by
increased demand for digital services among life sciences clients,
including digitization of clinical trial processes and investments
in manufacturing operations modernization.
Products and Resources revenue grew 13.2% year-over-year,
or 14.9% in constant currency. Growth was driven by strong client
demand for digital services across all industries and included the
benefit from recently completed acquisitions.
Communications, Media and Technology revenue grew 18.1%
year-over-year, or 19.9% in constant currency, reflecting strong
demand for data services among digital native companies.
Bookings
Q1 bookings grew 4% year-over-year, which resulted in trailing
12-month bookings of $23.4 billion,
which represented a book-to-bill of approximately 1.2x.
Return of Capital to Shareholders
During the first quarter, the Company repurchased 5.0 million
shares for $444 million at an average
price of $88.22 under its share
repurchase program. As of March 31,
2022, there was $1.7 billion
remaining under the share repurchase authorization. In May 2022, the Company declared a quarterly cash
dividend of $0.27 per share for
shareholders of record on May 20,
2022. This dividend is payable on May
31, 2022.
"Our first quarter performance reflects strong revenue growth in
our digital portfolio and a healthy demand environment. We remain
focused on investing to support growth opportunities while also
executing on pricing to offset the impact of compensation pressure
driven by the continued labor supply-demand imbalance," said
Jan Siegmund, Chief Financial
Officer. "Our updated 2022 constant currency revenue guidance
includes an improved organic revenue growth outlook and a lower
inorganic contribution, reflecting a disciplined acquisition
strategy."
Second Quarter and Full Year 2022 Outlook
The Company provided the following guidance:
- Second quarter revenue is expected to be $4.90-$4.94
billion, or growth of 6.8%-7.8% (9.3%-10.3% in constant
currency).
- Full-year 2022 revenue is expected to be $19.8-$20.2
billion, or growth of 7.2%-9.2% (9.0%-11.0% in constant
currency).
- Full-year 2022 Adjusted Operating Margin2 is
expected to expand 20 to 30 basis points to 15.6% to 15.7%.[2]
- Full-year 2022 Adjusted Diluted EPS2 is expected to
be in the range of $4.45-$4.55.
Conference Call
Cognizant will host a conference call on May 4, 2022, at
5:00 p.m. (Eastern) to discuss the
Company's first quarter 2022 results. To listen to the conference
call, please dial (877) 810-9510 (domestic) or +1 (201)
493-6778 (international) and provide the following conference
passcode: "Cognizant Call."
The conference call will also be available live on the Investor
Relations section of the Cognizant website at
http://investors.cognizant.com. An earnings supplement will also be
available on the Cognizant website at the time of the conference
call.
For those who cannot access the live broadcast, a replay will be
available. To listen to the replay, please dial (877) 660-6853
(domestically) or +1 (201) 612-7415 (internationally) and enter
13728473 from two hours after the end of the call until
11:59 p.m. (Eastern) on Wednesday, May 18, 2022. The replay will also be
available at Cognizant's website www.cognizant.com for 60 days
following the call.
1 Constant currency ("CC") revenue growth, Adjusted
Operating Margin, Adjusted Diluted Earnings Per Share ("Adjusted
Diluted EPS") and free cash flow are not measures of financial
performance prepared in accordance with GAAP. See "About Non-GAAP
Financial Measures and Performance Metrics" for more information
and, where applicable, reconciliations to the most directly
comparable GAAP financial measures as well as more information
about digital revenue at the end of this release.
2 A full reconciliation of Adjusted Operating Margin and
Adjusted Diluted EPS guidance to the corresponding GAAP measure on
a forward-looking basis cannot be provided without unreasonable
efforts, as we are unable to provide reconciling information with
respect to unusual items. See "About Non-GAAP Financial Measures
and Performance Metrics" for more information and a reconciliation
at the end of this release.
About Cognizant
Cognizant (Nasdaq: CTSH) engineers
modern businesses. We help our clients modernize technology,
reimagine processes and transform experiences so they can stay
ahead in our fast-changing world. Together, we're improving
everyday life. See how at www.cognizant.com or @cognizant.
Forward-Looking Statements
This press release
includes statements that may constitute forward-looking statements
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, the accuracy of which are
necessarily subject to risks, uncertainties, and assumptions as to
future events that may not prove to be accurate. These statements
include, but are not limited to, express or implied forward-looking
statements relating to our expectations regarding the impact of the
COVID-19 pandemic on our business, our strategy, competitive
position and opportunities in the marketplace, investment in and
growth of our business, the effectiveness of our recruiting and
talent efforts and related costs, our and our clients' shift to
digital solutions and services, labor market trends and our
anticipated financial performance. These statements are neither
promises nor guarantees, but are subject to a variety of risks and
uncertainties, many of which are beyond our control, which could
cause actual results to differ materially from those contemplated
in these forward-looking statements. Existing and prospective
investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date
hereof. Factors that could cause actual results to
differ materially from those expressed or implied include general
economic conditions, the competitive and rapidly changing nature of
the markets we compete in, the competitive marketplace for talent
and its impact on employee recruitment and retention, legal,
reputational and financial risks resulting from cyberattacks, the
impact of and effectiveness of business continuity plans during the
COVID-19 pandemic, risks related to the invasion of Ukraine by Russia, changes in the regulatory environment,
including with respect to immigration and taxes, and the other
factors discussed in our most recent Annual Report on
Form 10-K and other filings with the Securities and Exchange
Commission. Cognizant undertakes no obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events, or otherwise, except as may be required
under applicable securities law.
About Non-GAAP Financial Measures and Performance
Metrics
To supplement our financial results presented in
accordance with GAAP, this press release includes references to the
following measures defined by the Securities and Exchange
Commission as non-GAAP financial measures: Adjusted Operating
Margin, Adjusted Diluted EPS, free cash flow, net cash and constant
currency revenue growth. These non-GAAP financial measures are not
based on any comprehensive set of accounting rules or principles
and should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and may be
different from non-GAAP financial measures used by other companies.
In addition, these non-GAAP financial measures should be read in
conjunction with our financial statements prepared in accordance
with GAAP. The reconciliations of our non-GAAP financial measures
to the corresponding GAAP measures should be carefully
evaluated.
Our non-GAAP financial measures, Adjusted Operating Margin
and Adjusted Diluted EPS, exclude unusual items. Additionally,
Adjusted Diluted EPS excludes net non-operating foreign currency
exchange gains or losses and the tax impact of all the applicable
adjustments. The income tax impact of each item is calculated by
applying the statutory rate and local tax regulations in the
jurisdiction in which the item was incurred. Free cash flow is
defined as cash flows from operating activities net of purchases of
property and equipment. Net cash is defined as cash and cash
equivalents and short-term investments less short-term and
long-term debt. Constant currency revenue growth is defined as
revenues for a given period restated at the comparative period's
foreign currency exchange rates measured against the comparative
period's reported revenues.
Management believes providing investors with an operating
view consistent with how we manage the Company provides enhanced
transparency into our operating results. For our internal
management reporting and budgeting purposes, we use various GAAP
and non-GAAP financial measures for financial and operational
decision-making, to evaluate period-to-period comparisons, to
determine portions of the compensation for our executive officers
and for making comparisons of our operating results to those of our
competitors. Accordingly, we believe that the presentation of our
non-GAAP measures, which exclude certain costs, when read in
conjunction with our reported GAAP results, can provide useful
supplemental information to our management and investors regarding
financial and business trends relating to our financial condition
and results of operations.
A limitation of using non-GAAP financial measures versus
financial measures calculated in accordance with GAAP is that
non-GAAP financial measures do not reflect all of the amounts
associated with our operating results as determined in accordance
with GAAP and may exclude costs that are recurring such as our net
non-operating foreign currency exchange gains or losses. In
addition, other companies may calculate non-GAAP financial measures
differently than us, thereby limiting the usefulness of these
non-GAAP financial measures as a comparative tool. We compensate
for these limitations by providing specific information regarding
the GAAP amounts excluded from our non-GAAP financial measures to
allow investors to evaluate such non-GAAP financial
measures.
Bookings are defined as total contract value (or TCV) of new
contracts, including new contract sales as well as renewals and
expansions of existing contracts. Bookings can vary significantly
quarter to quarter depending in part on the timing of the signing
of a small number of large contracts. Our book-to-bill ratio is
defined as bookings for the trailing twelve months divided by
revenue for the same period. Measuring bookings involves the use of
estimates and judgments and there are no independent standards or
requirements governing the calculation of bookings. The extent and
timing of conversion of bookings to revenues may be impacted by,
among other factors, the types of services and solutions sold,
contract duration, the pace of client spending, actual volumes of
services delivered as compared to the volumes anticipated at the
time of sale, and contract modifications, including terminations,
over the lifetime of a contract. The majority of our contracts are
terminable by the client on short notice often without penalty, and
some without notice. We do not update our bookings for material
subsequent terminations or reductions related to bookings
originally recorded in prior year periods or foreign currency
exchange rate fluctuations. Information regarding our bookings is
not comparable to, nor should it be substituted for, an analysis of
our reported revenues. However, management believes that it is a
key indicator of potential future revenues and provides a useful
indicator of the volume of our business over time.
We disclose digital revenue as management believes it
provides additional insights into the Company's business. Measuring
digital revenue requires the use of estimates and judgement, there
are no independent standards or requirements governing the
calculation and our calculation may differ from the calculations
underlying similar such metrics disclosed by other companies. In
the first quarter of 2022, we modified our definition of digital
revenue to reflect our latest assessment of digital skills, growth
priorities and pricing initiatives. Under the updated
definition, digital revenue as a percentage of total revenue
was 46%, 47%, 49% and 49% for the first, second, third and fourth
quarter of 2021, respectively, and 48% for full year 2021.
Investor Relations
Contact:
|
|
|
|
Media
Contact:
|
Tyler Scott
|
|
|
|
Jeff
DeMarrais
|
VP, Investor
Relations
|
|
|
|
VP, Corporate
Communications
|
551-220-8246
|
|
|
|
475-223-2298
|
Tyler.Scott@cognizant.com
|
|
|
|
Jeff.DeMarrais@cognizant.com
|
- tables to follow -
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
(in millions, except per share
data)
|
Three Months Ended
March 31,
|
|
2022
|
|
2021
|
Revenues
|
$ 4,826
|
|
$ 4,401
|
Operating
expenses:
|
|
|
|
Cost of revenues
(exclusive of depreciation and amortization expense shown
separately below)
|
3,097
|
|
2,764
|
Selling, general
and administrative expenses
|
862
|
|
827
|
Depreciation and
amortization expense
|
143
|
|
141
|
Income from
operations
|
724
|
|
669
|
Other income (expense),
net:
|
|
|
|
Interest
income
|
6
|
|
9
|
Interest
expense
|
(2)
|
|
(2)
|
Foreign currency
exchange gains (losses), net
|
—
|
|
(9)
|
Other,
net
|
1
|
|
(2)
|
Total other income
(expense), net
|
5
|
|
(4)
|
Income before provision
for income taxes
|
729
|
|
665
|
Provision for income
taxes
|
(170)
|
|
(160)
|
Income (loss) from
equity method investment
|
4
|
|
—
|
Net income
|
$
563
|
|
$
505
|
Basic earnings per
share
|
$ 1.07
|
|
$ 0.95
|
Diluted earnings per
share
|
$ 1.07
|
|
$ 0.95
|
Weighted average number
of common shares outstanding - Basic
|
524
|
|
530
|
Dilutive effect of shares
issuable under stock-based compensation plans
|
1
|
|
1
|
Weighted average number
of common shares outstanding - Diluted
|
525
|
|
531
|
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
(Unaudited)
|
|
(in millions, except par
values)
|
March 31,
2022
|
|
December 31,
2021
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
2,192
|
|
$
1,792
|
Short-term
investments
|
127
|
|
927
|
Trade accounts
receivable, net
|
3,663
|
|
3,557
|
Other current
assets
|
1,095
|
|
1,066
|
Total current assets
|
7,077
|
|
7,342
|
Property and equipment,
net
|
1,171
|
|
1,171
|
Operating lease assets,
net
|
915
|
|
933
|
Goodwill
|
5,605
|
|
5,620
|
Intangible assets,
net
|
1,167
|
|
1,218
|
Deferred income tax
assets, net
|
333
|
|
404
|
Long-term
investments
|
458
|
|
463
|
Other noncurrent
assets
|
708
|
|
701
|
Total assets
|
$
17,434
|
|
$
17,852
|
Liabilities and Stockholders'
Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
394
|
|
$
361
|
Deferred
revenue
|
455
|
|
403
|
Short-term
debt
|
38
|
|
38
|
Operating lease
liabilities
|
194
|
|
195
|
Accrued expenses
and other current liabilities
|
2,105
|
|
2,532
|
Total current liabilities
|
3,186
|
|
3,529
|
Deferred revenue,
noncurrent
|
23
|
|
40
|
Operating lease
liabilities, noncurrent
|
758
|
|
783
|
Deferred income tax
liabilities, net
|
213
|
|
218
|
Long-term
debt
|
617
|
|
626
|
Long-term income taxes
payable
|
378
|
|
378
|
Other noncurrent
liabilities
|
286
|
|
287
|
Total liabilities
|
5,461
|
|
5,861
|
Stockholders'
equity:
|
|
|
|
Preferred stock, $0.10
par value, 15 shares authorized, none issued
|
—
|
|
—
|
Class A common
stock, $0.01 par value, 1,000 shares authorized, 521 and 525 shares
issued and outstanding as of March 31, 2022 and December 31, 2021,
respectively
|
5
|
|
5
|
Additional paid-in
capital
|
31
|
|
27
|
Retained
earnings
|
11,956
|
|
11,922
|
Accumulated other
comprehensive income (loss)
|
(19)
|
|
37
|
Total stockholders' equity
|
11,973
|
|
11,991
|
Total liabilities and stockholders'
equity
|
$
17,434
|
|
$
17,852
|
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
Reconciliations of
Non-GAAP Financial Measures
(Unaudited)
|
|
(dollars in millions, except per share
amounts)
|
Three Months Ended
March 31,
|
|
Guidance
|
|
2022
|
|
2021
|
|
Full Year 2022
|
GAAP diluted earnings
per share
|
$
1.07
|
|
$
0.95
|
|
|
Non-operating
foreign currency exchange (gains) losses,
pre-tax(a)
|
—
|
|
0.02
|
|
(a)
|
Tax effect of
non-operating foreign currency exchange (gains)
losses(b)
|
0.01
|
|
—
|
|
(a)
|
Adjusted Diluted
Earnings Per Share
|
$
1.08
|
|
$
0.97
|
|
$4.45 -
$4.55
|
Notes:
|
(a)
|
Non-operating foreign
currency exchange gains and losses, inclusive of gains and losses
on related foreign exchange forward contracts not designated as
hedging instruments for accounting purposes, are reported in
"Foreign currency exchange gains (losses), net" in our unaudited
consolidated statements of operations. Non-operating foreign
currency exchange gains and losses are subject to high variability
and low visibility and therefore cannot be provided on a
forward-looking basis without unreasonable efforts.
|
(b)
|
Presented below are the
tax impacts of each of our non-GAAP adjustments to pre-tax income
for the three months ended March 31:
|
(in
millions)
|
2022
|
|
2021
|
Non-GAAP income tax
benefit (expense) related to:
|
|
|
|
Foreign currency
exchange gains and losses
|
(6)
|
|
—
|
The effective tax rate related to non-operating foreign currency
exchange gains and losses varies depending on the jurisdictions in
which such income and expenses are generated and the statutory
rates applicable in those jurisdictions. As such, the income tax
effect of non-operating foreign currency exchange gains and losses
shown in the above table may not appear proportionate to the net
pre-tax foreign currency exchange gains and losses reported in our
unaudited consolidated statements of operations.
Reconciliations of net cash
|
|
(in millions)
|
|
March 31, 2022
|
|
December 31, 2021
|
Cash and cash
equivalents
|
|
$
2,192
|
|
$
1,792
|
Short-term
investments
|
|
127
|
|
927
|
Less:
|
|
|
|
|
Short-term
debt
|
|
38
|
|
38
|
Long-term
debt
|
|
617
|
|
626
|
Net cash
|
|
$
1,664
|
|
$
2,055
|
The above tables serve to reconcile the Non-GAAP financial
measures to the most directly comparable GAAP measures. Refer to
the "About Non-GAAP Financial Measures and Performance Metrics"
section of our press release for further information on the use of
these Non-GAAP measures.
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
Revenue by Business
Segment and Geography
(Unaudited)
|
|
(dollars in millions)
|
Three Months Ended March 31,
2022
|
|
|
|
|
|
Year over Year
|
|
$
|
|
% of total
|
|
% Change
|
|
Constant
Currency
% Change (a)
|
Revenues by Segment:
|
|
|
|
|
|
|
|
Financial Services
(b)
|
$
1,528
|
|
31.7 %
|
|
4.8 %
|
|
6.0 %
|
Healthcare
|
1,392
|
|
28.8 %
|
|
8.1 %
|
|
8.8 %
|
Products and
Resources
|
1,130
|
|
23.4 %
|
|
13.2 %
|
|
14.9 %
|
Communications, Media
and Technology
|
776
|
|
16.1 %
|
|
18.1 %
|
|
19.9 %
|
Total
Revenues
|
$
4,826
|
|
|
|
9.7 %
|
|
10.9 %
|
Revenues by Geography:
|
|
|
|
|
|
|
|
North
America
|
$
3,569
|
|
74.0 %
|
|
8.7 %
|
|
8.7 %
|
United
Kingdom
|
453
|
|
9.4 %
|
|
22.4 %
|
|
26.4 %
|
Continental
Europe (b)
|
459
|
|
9.5 %
|
|
0.7 %
|
|
6.8 %
|
Europe - Total
(b)
|
912
|
|
18.9 %
|
|
10.4 %
|
|
15.6 %
|
Rest of
World
|
345
|
|
7.1 %
|
|
18.2 %
|
|
22.1 %
|
Total
Revenues
|
$
4,826
|
|
|
|
9.7 %
|
|
10.9 %
|
Notes:
|
(a)
|
Constant currency
revenue growth is not a measure of financial performance prepared
in accordance with GAAP. See "About Non-GAAP Financial Measures and
Performance Metrics" section of our press release for further
information.
|
(b)
|
The sale of the Samlink
subsidiary, which was completed on February 1, 2022, negatively
impacted revenue growth in Financial Services, Continental Europe
and Europe-Total by 130 basis points, 420 basis points and 230
basis points, respectively.
|
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
(in millions)
|
Three Months Ended
March 31,
|
|
2022
|
|
2021
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
563
|
|
$
505
|
Adjustments for
non-cash income and expenses
|
296
|
|
325
|
Changes in
assets and liabilities
|
(553)
|
|
(649)
|
Net cash provided by
operating activities
|
306
|
|
181
|
Cash flows from
investing activities:
|
|
|
|
Purchases of
property and equipment
|
(120)
|
|
(88)
|
Net maturities
(purchases) of investments
|
801
|
|
(140)
|
Proceeds from
sales of businesses
|
19
|
|
—
|
Payments for
business combinations, net of cash acquired
|
—
|
|
(310)
|
Net cash provided by
(used in) investing activities
|
700
|
|
(538)
|
Cash flows from
financing activities:
|
|
|
|
Repurchases of
common stock
|
(474)
|
|
(240)
|
Repayment of
term loan borrowings and finance lease and earnout
obligations
|
(14)
|
|
(15)
|
Dividends
paid
|
(143)
|
|
(128)
|
Issuance of
common stock under stock-based compensation plans
|
31
|
|
43
|
Net cash (used in)
financing activities
|
(600)
|
|
(340)
|
Effect of exchange rate
changes on cash and cash equivalents
|
(6)
|
|
(10)
|
Increase
(decrease) in cash and cash equivalents
|
400
|
|
(707)
|
Cash and cash
equivalents, beginning of period
|
1,792
|
|
2,680
|
Cash and cash
equivalents, end of period
|
$
2,192
|
|
$
1,973
|
SUPPLEMENTAL CASH FLOW
INFORMATION
|
|
(in millions)
|
|
Three Months Ended
|
Stock Repurchases under Board of Directors'
authorized stock repurchase program:
|
|
March 31, 2022
|
|
March 31, 2021
|
Number of shares
repurchased
|
|
5.0
|
|
3.1
|
|
|
|
|
|
Remaining authorized
balance as of March 31, 2022
|
|
$
1,675
|
|
|
Reconciliation of Free Cash Flow Non-GAAP Financial
Measure
|
|
(in millions)
|
Three Months Ended
March 31,
|
|
2022
|
|
2021
|
Net cash provided by
operating activities
|
$
306
|
|
$
181
|
Purchases of
property and equipment
|
(120)
|
|
(88)
|
Free cash
flow
|
$
186
|
|
$
93
|
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SOURCE Cognizant