- Full-year revenue of $19.4
billion declined 0.4% year-over-year, or declined 0.3% in
constant currency1, which was within our guidance
range
- Full-year operating margin of 13.9% and Adjusted Operating
Margin1 of 15.1%, which was 40 basis points above our
guidance
- Full-year operating cash flow of $2.3
billion; free cash flow1 of $2.0 billion was 95% of net income
- Trailing 12-month bookings of $26.3
billion, up 9% year-over-year
- $1.7 billion returned to
shareholders through share repurchases and dividends in 2023
- Cash dividend increased 3% to $0.30 per share for Q1 2024
- 2024 revenue growth guidance of (2%) to 2% in constant
currency
- 2024 Adjusted Operating Margin guidance 15.3-15.5%, an
expansion of 20 to 40 basis points
TEANECK,
N.J., Feb. 6, 2024 /PRNewswire/ -- Cognizant
(Nasdaq: CTSH), one of the world's leading professional services
companies, today announced its fourth quarter and full-year 2023
financial results.
"I'm grateful to our nearly 350,000 employees for their
tremendous year-long work enhancing our strength as industry
experts, collaborative partners and passionate innovators for our
clients," said Ravi Kumar S, Chief Executive Officer. "We delivered
Q4 revenue within our guided range and we've maintained our
commercial momentum. Full-year bookings of $26.3 billion represent an increase of 9%
year-over-year, driven by new clients and large deals. To keep
advancing our ability to design and deliver solutions, we continue
to invest in generative AI, cloud, data modernization, digital
engineering and IoT. I believe Cognizant is now in a significantly
stronger position than a year ago to help our clients transform
their businesses to prepare for the future as they navigate ongoing
macro-economic pressures."
$ in millions,
except per share data
|
Q4
2023
|
|
Q4
2022
|
|
|
FY
2023
|
|
FY
2022
|
|
Revenue
|
$4,758
|
|
$4,839
|
|
|
$19,353
|
|
$19,428
|
|
Y/Y Change
|
(1.7 %)
|
|
1.3 %
|
|
|
(0.4 %)
|
|
5.0 %
|
|
Y/Y Change
CC1
|
(2.4 %)
|
|
4.1 %
|
|
|
(0.3 %)
|
|
7.5 %
|
|
GAAP Operating
Margin
|
15.2 %
|
|
14.2 %
|
|
|
13.9 %
|
|
15.3 %
|
|
Adjusted Operating
Margin1
|
16.1 %
|
|
14.2 %
|
|
|
15.1 %
|
|
15.3 %
|
|
GAAP Diluted
EPS
|
$1.11
|
|
$1.02
|
|
|
$4.21
|
|
$4.41
|
|
Adjusted Diluted
EPS1
|
$1.18
|
|
$1.01
|
|
|
$4.55
|
|
$4.40
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash
flow
|
$737
|
|
$702
|
|
|
$2,330
|
|
$2,568
|
|
Free cash
flow1
|
$659
|
|
$612
|
|
|
$2,013
|
|
$2,236
|
|
|
|
|
|
|
1 Constant
currency ("CC") revenue growth, Adjusted Operating Margin, Adjusted
Diluted Earnings Per Share ("Adjusted Diluted EPS") and free cash
flow are not measures of financial performance prepared in
accordance with GAAP. A full reconciliation of Adjusted Operating
Margin guidance to the corresponding GAAP measure on a
forward-looking basis cannot be provided without unreasonable
efforts. See "About Non-GAAP Financial Measures and Performance
Metrics" for more information and, as applicable, reconciliations
to the most directly comparable GAAP financial measures.
|
"Fourth quarter's sequential improvement in adjusted operating
margin to 16.1% reflects our ongoing operational rigor and our
NextGen cost optimization program, which have enabled us to exceed
our margin commitment and continue to invest in our strategy to
improve future revenue growth. We were also pleased to deliver
full-year free cash flow of $2
billion, which represented 95% of net income," said
Jatin Dalal, Chief Financial
Officer. "We remain committed to adjusted operating margin
expansion of 20 to 40 basis points in 2024 and to our balanced
capital allocation framework, which includes share repurchases,
inorganic investments to support our strategic priorities, and
today's announced dividend increase."
Bookings
Bookings in the fourth quarter declined 6% year-over-year. For
the full year, bookings grew 9% year-over-year to $26.3 billion, which represented a
book-to-bill of approximately 1.4x.
Employee Metrics
Total headcount at the end of the fourth quarter was 347,700, an
increase of 1,100 from Q3 2023 and a decrease of 7,600 from Q4
2022. Voluntary attrition - Tech Services for the year ended
December 31, 2023 was 13.8% as compared to 25.6% for the year
ended December 31, 2022.
Return of Capital to Shareholders
The Company repurchased 4.2 million shares for $298 million during the fourth quarter under its
share repurchase program. As of December 31, 2023, there was
$1.8 billion remaining under the
share repurchase authorization. In February
2024, the Company declared a quarterly cash dividend of
$0.30 per share, a 3% increase
year-over-year, for shareholders of record on February 20, 2024 This dividend will be payable
on February 28, 2024.
First Quarter and Full-Year 2024 Guidance
(all growth
rates year-over-year)
- First quarter revenue is expected to be $4.68 - $4.76
billion, a decline of 2.7% to 1.2%, or a decline of 3.0% to
1.5% in constant currency.
- Full-year 2024 revenue is expected to be $19.0 - $19.8
billion, a decline of 1.8% to growth of 2.2% as reported, or
a decline of 2.0% to growth of 2.0% in constant currency.
- Full-year 2024 Adjusted Operating Margin2 is
expected to be in the range of 15.3% to 15.5%, or 20 to 40 basis
points of expansion.
- Full-year 2024 Adjusted EPS2 is expected to be in
the range of $4.50 to $4.68.
|
|
|
|
|
2 A full
reconciliation of Adjusted Operating Margin and Adjusted Diluted
EPS guidance to the corresponding GAAP measures on a
forward-looking basis cannot be provided without unreasonable
efforts. See "About Non-GAAP Financial Measures and Performance
Metrics" for more information and a partial reconciliation at the
end of this release.
|
Select Client and Partnership Announcements
- Announced an expanded agreement with Takeda, a global
biopharmaceutical company, to support the company's digital
transformation strategy. Cognizant will support Takeda in
transforming its modern infrastructure and application management
approaches, as well as identifying and hiring key talent to support
the company's data, digital and technology ambitions.
- Announced a collaboration with ServiceNow to enhance the
Cognizant WorkNEXT™ modern workplace services solution with
generative AI capabilities. With the enhanced offering, clients can
benefit from significantly reduced lead time for deploying and
training AI systems.
- In collaboration with Microsoft, unveiled Innovation
Assistant, a generative AI-powered tool built on Microsoft Azure
OpenAI Service. Cognizant's Innovation Assistant is designed to
enable greater creativity and innovation among Cognizant employees
and will augment Cognizant's internal innovation program,
Bluebolt.
- Announced that Fortrea, a leading global provider of
clinical development and patient access solutions to the life
sciences industry, selected Cognizant as its strategic technology
transformation provider. In June
2023, Fortrea successfully completed its spin-off from its
former parent company, and Cognizant will play a fundamental role
in facilitating Fortrea's transition to newly established global
infrastructure while providing application management and end-user
services.
- Partnered with Oxford Economics to quantify generative
AI's impact on productivity and the future of work. According to
our research, generative AI could inject the US GDP with up to
$1 trillion in additional annual
value by 2032; as many as 13% of companies could be leveraging the
technology in three to four years; and most jobs (90%) will be
disrupted in some way by generative AI in the next 10 years. The
results of our research and a description of its methodology are
available on our website.
- Signed a multi-year contract with Cambridge University Press & Assessment
(Cambridge), a leader in
assessment, education, research and academic publishing. The
renewed five-year relationship will see Cognizant and Cambridge drive digital transformation and leverage
AI technology with the goal of improving operational effectiveness,
maintaining exam results integrity and staying competitive in the
evolving education sector.
- Selected by Alm. Brand Group (Alm), a leading insurance
company in Denmark, to provide a
range of business processes previously outsourced by Alm to other
vendors. Cognizant expects to automate a range of processes
including insurance policies and administrative tasks, which are
traditionally manual and repetitive actions, and to also help
identify further automation opportunities alongside Alm's own
automation specialists.
- Selected to implement Amazon's Just Walk Out Technology for
Canberra Institute of Technology Student Association (CITSA)
to enable nearly 24/7 access for students at its Student
Association store. Just Walk Out technology is designed to
transform the retail experience by leveraging advanced technologies
such as artificial intelligence like computer vision and deep
learning, including generative AI, to create a frictionless
shopping experience.
- Announced that Cognizant was selected by The University of Melbourne to help implement the
Tealium Customer Data Platform (CDP) to support the creation of
data-led and personalized experiences for students, staff and
alumni as it looks to enhance meaningful constituent
engagement.
- Appointed by Riyadh Airports Company (RAC) to enhance
the capabilities of RAC's Enterprise Resource Planning (ERP) and
business processes automation capabilities in the domains of
finance, human resources, procurement, and planning, ultimately
enhancing the traveler experience. In the initial phase, Cognizant
will leverage the SAP Appian framework to establish a robust
process automation for airport operations.
Select Analyst Ratings, Company Recognition and
Announcements
- Acquired Thirdera, an Elite ServiceNow Partner, to
enhance cross-industry digital transformation with ServiceNow and
create one of the world's largest, most credentialed ServiceNow
partners. This announcement builds on Cognizant and ServiceNow's
previously announced strategic partnership in AI-driven automation
across industries.
- Announced Cognizant Flowsource™, a generative AI-enabled
platform that aims to fuel the next generation of software
engineering for enterprises. The platform integrates all stages of
the software delivery lifecycle to help cross-functional
engineering teams deliver high quality code faster, and with
increased control and transparency.
- Unveiled Shakti, a unified framework of women-centric
programs and policies to accelerate careers and boost women
leadership in technology. Additionally, Cognizant has partnered
with NASSCOM (National Association of Software and Service
Companies) to establish and prioritize best practices with a shared
goal of making diversity and inclusion a key differentiator of
India's tech sector.
- Earned a top score in Human Rights Campaign Foundation's
2023-2024 Corporate Equality Index, the leading US benchmarking
survey and report measuring corporate policies and practices
related to LGBTQ+ workplace equality.
- Recognized as a "Gold" employer, the highest rating awarded, by
the India Workplace Equality Index (IWEI) 2023 for ensuring an
inclusive culture and workplace for lesbian, gay, bisexual,
transgender, queer, non-binary and intersex (LGBTQ+) employees and
demonstrating long-term and in-depth commitment towards the LGBTQ+
community.
- Recognized as a Leader by Everest Group® in:
- Digital Workplace Services North America PEAK Matrix®
Assessment, 2023
- Data and Analytics Services PEAK Matrix® Assessment, 2023
- Cloud Services In Insurance PEAK Matrix® Assessment, 2023
- Next Gen Quality Engineering Services PEAK Matrix® Assessment,
2023
- Revenue Cycle Management (RCM) Platforms PEAK Matrix®
Assessment, 2023
- MedTech Operations PEAK Matrix® Assessment, 2023
- Healthcare Payer Digital Services PEAK Matrix® Assessment,
2023
- Lending IT Services PEAK Matrix® Assessment, 2023
- Artificial Intelligence (AI) Services PEAK Matrix® Assessment,
2023
- Leadership in IDC MarketScapes:
- Worldwide Life Science R&D Strategic Consulting Services
Vendor Assessment, 2023 - 2024
- Worldwide Hospitality, Dining & Travel Omnichannel Guest
Experience Services Providers, 2023
- Worldwide Experience Build Services Vendor Assessment,
2023–2024
- Market Leader in HFS Horizon 3:
- Life Sciences Service Providers, 2023
- Retail and CPG Service Providers, 2023
- Leadership in ISG Provider Lens™:
- Oracle Cloud & Technology Ecosystem, 2023
- Oil and Gas Industry - Services and Solutions, 2023
- Insurance Services, 2023
- Manufacturing Industry Services, 2023
- Analytics Services, 2023
- Telecom, Media & Entertainment, 2023
- Next-Gen ADM Services, 2023
- Leadership in Avasant RadarView™:
- Claims Processing Business Process Transformation, 2023
- Tech Enabled Sustainability Services, 2023–2024
- Workday HCM Services, 2023–2024
- Data Center Managed Services, 2023–2024
- Intelligent IT Ops Services, 2023–2024
- UK Digital Services, 2023–2024
- Data Management and Advanced Analytics Services, 2023
- Recognized as a Global Leader in Constellation's 2023 ShortList
Reports:
- Public Cloud Transformation Services
- AI Services
- Experience (CX) Operations Services
- Digital Transformation Services (DTX)
Conference Call
Cognizant will host a conference call on February 6, 2024,
at 5:00 p.m. (Eastern) to discuss the
Company's fourth quarter 2023 results. To listen to the conference
call, please dial (877) 810-9510 (domestic) or +1 (201)
493-6778 (international) and provide the following conference
passcode: "Cognizant Call."
The conference call will also be available live on the Investor
Relations section of the Cognizant website at
http://investors.cognizant.com. An earnings supplement will also be
available on the Cognizant website at the time of the conference
call.
For those who cannot access the live broadcast, a replay will be
available. To listen to the replay, please dial (877) 660-6853
(domestically) or +1 (201) 612-7415 (internationally) and enter
13743343 beginning two hours after the end of the call until
11:59 p.m. (Eastern) on Tuesday, February 20, 2024. The replay will also
be available at Cognizant's website www.cognizant.com for 60
days following the call.
About Cognizant
Cognizant (Nasdaq: CTSH) engineers
modern businesses. We help our clients modernize technology,
reimagine processes and transform experiences so they can stay
ahead in our fast-changing world. Together, we're improving
everyday life. See how at www.cognizant.com or @cognizant.
Forward-Looking Statements
This press release
includes statements that may constitute forward-looking statements
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, the accuracy of which are
necessarily subject to risks, uncertainties and assumptions as to
future events that may not prove to be accurate. These statements
include, but are not limited to, express or implied forward-looking
statements relating to our strategy, strategic partnerships and
collaborations, competitive position and opportunities in the
marketplace, investment in and growth of our business, the pace and
magnitude of change and client needs related to generative AI, the
effectiveness of our recruiting and talent efforts and related
costs, labor market trends, the anticipated amount of capital to be
returned to shareholders and our anticipated financial performance.
These statements are neither promises nor guarantees, but are
subject to a variety of risks and uncertainties, many of which are
beyond our control, which could cause actual results to differ
materially from those contemplated in these forward-looking
statements. Existing and prospective investors are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date hereof. Factors that could cause actual
results to differ materially from those expressed or implied
include general economic conditions, the competitive and rapidly
changing nature of the markets we compete in, the competitive
marketplace for talent and its impact on employee recruitment and
retention, our ability to successfully implement our NextGen
program and the amount of costs, timing of incurring costs and
ultimate benefits of such plans, our ability to successfully use
AI-based technologies, legal, reputational and financial risks
resulting from cyberattacks, changes in the regulatory environment,
including with respect to immigration and taxes, and the other
factors discussed in our most recent Annual Report on Form 10-K and
other filings with the Securities and Exchange Commission.
Cognizant undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise, except as may be required under
applicable securities law.
About Non-GAAP Financial Measures and Performance
Metrics
Non-GAAP Financial Measures
To supplement our
financial results presented in accordance with GAAP, this press
release includes references to the following measures defined by
the Securities and Exchange Commission as non-GAAP financial
measures: Adjusted Operating Margin, Adjusted Diluted EPS, free
cash flow, net cash and constant currency revenue growth. These
non-GAAP financial measures are not based on any comprehensive set
of accounting rules or principles and should not be considered a
substitute for, or superior to, financial measures calculated in
accordance with GAAP, and may be different from non-GAAP financial
measures used by other companies. In addition, these non-GAAP
financial measures should be read in conjunction with our financial
statements prepared in accordance with GAAP. The reconciliations of
our non-GAAP financial measures to the corresponding GAAP measures
should be carefully evaluated.
Our non-GAAP financial measures Adjusted Operating Margin and
Adjusted Income from Operations excludes unusual items, such as
NextGen charges. Our non-GAAP financial measure Adjusted Diluted
EPS excludes unusual items, such as Nextgen charges and the effect
of recognition in the third quarter of 2022 of an income tax
benefit related to a specific uncertain tax position that was
previously unrecognized in our prior-year consolidated financial
statements, and net non-operating foreign currency exchange gains
or losses and the tax impact of all the applicable adjustments. The
income tax impact of each item excluded from Adjusted Diluted EPS
is calculated by applying the statutory rate and local tax
regulations in the jurisdiction in which the item was incurred.
Free cash flow is defined as cash flows from operating activities
net of purchases of property and equipment. Net cash is defined as
cash and cash equivalents and short-term investments less
short-term and long-term debt. Constant currency revenue growth is
defined as revenues for a given period restated at the comparative
period's foreign currency exchange rates measured against the
comparative period's reported revenues.
Management believes providing investors with an operating
view consistent with how we manage the Company provides enhanced
transparency into our operating results. For our internal
management reporting and budgeting purposes, we use various GAAP
and non-GAAP financial measures for financial and operational
decision-making, to evaluate period-to-period comparisons, to
determine portions of the compensation for our executive officers
and for making comparisons of our operating results to those of our
competitors. Accordingly, we believe that the presentation of our
non-GAAP measures, which exclude certain costs, when read in
conjunction with our reported GAAP results, can provide useful
supplemental information to our management and investors regarding
financial and business trends relating to our financial condition
and results of operations.
A limitation of using non-GAAP financial measures versus
financial measures calculated in accordance with GAAP is that
non-GAAP financial measures do not reflect all of the amounts
associated with our operating results as determined in accordance
with GAAP and may exclude costs that are recurring such as our net
non-operating foreign currency exchange gains or losses. In
addition, other companies may calculate non-GAAP financial measures
differently than us, thereby limiting the usefulness of these
non-GAAP financial measures as a comparative tool. We compensate
for these limitations by providing specific information regarding
the GAAP amounts excluded from our non-GAAP financial measures to
allow investors to evaluate such non-GAAP financial
measures.
Performance Metrics
Bookings are defined as total
contract value (or TCV) of new contracts, including new contract
sales as well as renewals and expansions of existing contracts.
Bookings can vary significantly quarter to quarter depending in
part on the timing of the signing of a small number of large
contracts. Our book-to-bill ratio is defined as bookings for the
trailing twelve months divided by revenue for the same period.
Measuring bookings involves the use of estimates and judgments and
there are no independent standards or requirements governing the
calculation of bookings. The extent and timing of conversion of
bookings to revenues may be impacted by, among other factors, the
types of services and solutions sold, contract duration, the pace
of client spending, actual volumes of services delivered as
compared to the volumes anticipated at the time of sale, and
contract modifications, including terminations, over the lifetime
of a contract. The majority of our contracts are terminable by the
client on short notice often without penalty, and some without
notice. We do not update our bookings for subsequent terminations,
reductions or foreign currency exchange rate fluctuations.
Information regarding our bookings is not comparable to, nor should
it be substituted for, an analysis of our reported revenues.
However, management believes that it is a key indicator of
potential future revenues and provides a useful indicator of the
volume of our business over time.
Investor Relations
Contact:
|
|
|
|
Media
Contact:
|
|
Tyler Scott
|
|
|
|
Jeff
DeMarrais
|
|
VP, Investor
Relations
|
|
|
|
VP, Corporate
Communications
|
|
+1
551-220-8246
|
|
|
|
+1
475-223-2298
|
|
Tyler.Scott@cognizant.com
|
|
|
|
Jeff.DeMarrais@cognizant.com
|
|
- tables to follow -
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
(in millions,
except per share data)
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues
|
$ 4,758
|
|
$ 4,839
|
|
$
19,353
|
|
$
19,428
|
Operating
expenses:
|
|
|
|
|
|
|
|
Cost of revenues
(exclusive of depreciation and amortization expense shown
separately below)
|
3,081
|
|
3,152
|
|
12,664
|
|
12,448
|
Selling, general
and administrative expenses
|
786
|
|
860
|
|
3,252
|
|
3,443
|
Restructuring
charges
|
40
|
|
—
|
|
229
|
|
—
|
Depreciation and
amortization expense
|
127
|
|
141
|
|
519
|
|
569
|
Income from
operations
|
724
|
|
686
|
|
2,689
|
|
2,968
|
Other income
(expense), net:
|
|
|
|
|
|
|
|
Interest
income
|
34
|
|
27
|
|
126
|
|
59
|
Interest
expense
|
(11)
|
|
(8)
|
|
(41)
|
|
(19)
|
Foreign currency
exchange gains (losses), net
|
(1)
|
|
8
|
|
2
|
|
7
|
Other,
net
|
3
|
|
1
|
|
11
|
|
1
|
Total other
income (expense), net
|
25
|
|
28
|
|
98
|
|
48
|
Income before
provision for income taxes
|
749
|
|
714
|
|
2,787
|
|
3,016
|
Provision for
income taxes
|
(195)
|
|
(193)
|
|
(668)
|
|
(730)
|
Income (loss)
from equity method investment
|
4
|
|
—
|
|
7
|
|
4
|
Net income
|
$
558
|
|
$
521
|
|
$ 2,126
|
|
$ 2,290
|
Basic earnings
per share
|
$ 1.12
|
|
$ 1.02
|
|
$ 4.21
|
|
$ 4.42
|
Diluted earnings
per share
|
$ 1.11
|
|
$ 1.02
|
|
$ 4.21
|
|
$ 4.41
|
Weighted average number
of common shares outstanding - Basic
|
500
|
|
512
|
|
505
|
|
518
|
Dilutive effect of
shares issuable under stock-based compensation plans
|
1
|
|
1
|
|
—
|
|
1
|
Weighted average number
of common shares outstanding - Diluted
|
501
|
|
513
|
|
505
|
|
519
|
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
|
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
|
(Unaudited)
|
|
(in millions, except
par values)
|
December 31,
2023
|
|
December 31,
2022
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
2,621
|
|
$
2,191
|
Short-term
investments
|
14
|
|
310
|
Trade accounts
receivable, net
|
3,849
|
|
3,796
|
Other current
assets
|
1,022
|
|
969
|
Total current
assets
|
7,506
|
|
7,266
|
Property and equipment,
net
|
1,048
|
|
1,101
|
Operating lease assets,
net
|
611
|
|
876
|
Goodwill
|
6,085
|
|
5,710
|
Intangible assets,
net
|
1,149
|
|
1,168
|
Deferred income tax
assets, net
|
993
|
|
642
|
Long-term
investments
|
435
|
|
427
|
Other noncurrent
assets
|
656
|
|
662
|
Total
assets
|
$
18,483
|
|
$
17,852
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
337
|
|
$
360
|
Deferred
revenue
|
385
|
|
398
|
Short-term
debt
|
33
|
|
8
|
Operating lease
liabilities
|
153
|
|
174
|
Accrued expenses and
other current liabilities
|
2,425
|
|
2,407
|
Total current
liabilities
|
3,333
|
|
3,347
|
Deferred revenue,
noncurrent
|
42
|
|
19
|
Operating lease
liabilities, noncurrent
|
523
|
|
714
|
Deferred income tax
liabilities, net
|
226
|
|
180
|
Long-term
debt
|
606
|
|
638
|
Long-term income taxes
payable
|
157
|
|
283
|
Other noncurrent
liabilities
|
369
|
|
362
|
Total
liabilities
|
5,256
|
|
5,543
|
Stockholders'
equity:
|
|
|
|
Preferred stock, $0.10
par value, 15 shares authorized, none issued
|
—
|
|
—
|
Class A common
stock, $0.01 par value, 1,000 shares authorized, 498 and 509 shares
issued
and outstanding as of December 31, 2023 and 2022,
respectively
|
5
|
|
5
|
Additional paid-in
capital
|
15
|
|
15
|
Retained
earnings
|
13,301
|
|
12,588
|
Accumulated other
comprehensive income (loss)
|
(94)
|
|
(299)
|
Total stockholders'
equity
|
13,227
|
|
12,309
|
Total liabilities and
stockholders' equity
|
$
18,483
|
|
$
17,852
|
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
|
Reconciliations of
Non-GAAP Financial Measures
|
(Unaudited)
|
|
(dollars in
millions, except per share amounts)
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
Guidance
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Full Year 2024
(1)
|
GAAP income from
operations
|
$
724
|
|
$
686
|
|
$ 2,689
|
|
$ 2,968
|
|
|
NextGen
charges(a)
|
40
|
|
—
|
|
229
|
|
—
|
|
|
Adjusted Income From
Operations
|
$
764
|
|
$
686
|
|
$ 2,918
|
|
$ 2,968
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
15.2 %
|
|
14.2 %
|
|
13.9 %
|
|
15.3 %
|
|
|
NextGen
charges
|
0.9
|
|
—
|
|
1.2
|
|
—
|
|
0.3% - 0.4%
|
Adjusted Operating
Margin
|
16.1 %
|
|
14.2 %
|
|
15.1 %
|
|
15.3 %
|
|
15.3%
- 15.5%
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings
per share
|
$
1.11
|
|
$
1.02
|
|
$
4.21
|
|
$
4.41
|
|
|
Effect of NextGen
charges, pre-tax
|
0.08
|
|
—
|
|
0.45
|
|
—
|
|
0.14
|
Non-operating foreign
currency exchange (gains) losses, pre-
tax(b)
|
—
|
|
(0.02)
|
|
—
|
|
(0.01)
|
|
(b)
|
Tax effect of above
adjustments(c)
|
(0.01)
|
|
0.01
|
|
(0.11)
|
|
0.07
|
|
(a) (b)
|
Effect of recognition
of income tax benefit related to an
uncertain tax position(d)
|
—
|
|
—
|
|
—
|
|
(0.07)
|
|
—
|
Adjusted Diluted
Earnings Per Share
|
$
1.18
|
|
$
1.01
|
|
$
4.55
|
|
$
4.40
|
|
$4.50
- $4.68
|
|
(1) A full
reconciliation of Adjusted Operating Margin and Adjusted Diluted
Earnings Per Share guidance to the corresponding GAAP measures on a
forward-looking basis cannot be provided without unreasonable
efforts, as we are unable to provide reconciling information with
respect to unusual items, net non-operating foreign currency
exchange gains or losses and the tax effects of these adjustments,
and such adjustments may be significant.
|
Notes:
|
(a)
|
NextGen charges for the
three months ended December 31, 2023 include $22 million of
employee separation costs, $16 million of facility exit costs and
$2 million of third party and other costs. NextGen charges for the
year ended December 31, 2023 include $115 million of employee
separation costs, $108 million of facility exit costs and
$6 million of third party and other costs. In 2024, we expect
to incur $70 million of expenses in connection with the NextGen
program, which is expected to bring the total charges under the
program to approximately $300 million. The total costs related
to the NextGen program are reported in "Restructuring charges" in
our unaudited consolidated statements of operations. Our guidance
anticipates pre-tax charges of approximately $0.14 per diluted
share for the full year 2024. The tax effect of these charges is
expected to be approximately $0.04 per diluted share for the full
year 2024.
|
(b)
|
Non-operating foreign
currency exchange gains and losses, inclusive of gains and losses
on related foreign exchange forward contracts not designated as
hedging instruments for accounting purposes, are reported in
"Foreign currency exchange gains (losses), net" in our unaudited
consolidated statements of operations. Non-operating foreign
currency exchange gains and losses are subject to high variability
and low visibility and therefore cannot be provided on a
forward-looking basis without unreasonable efforts.
|
(c)
|
Presented below are the
tax impacts of our non-GAAP adjustment to pre-tax income for
the:
|
|
|
(in
millions)
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Non-GAAP income tax
benefit (expense) related to:
|
|
|
|
|
|
|
|
NextGen
charges
|
$
10
|
|
$
—
|
|
$
59
|
|
$
—
|
Foreign currency
exchange gains and losses
|
(4)
|
|
(4)
|
|
(6)
|
|
(39)
|
|
The effective tax rate
related to non-operating foreign currency exchange gains and losses
varies depending on the jurisdictions in which such income and
expenses are generated and the statutory rates applicable in those
jurisdictions. As such, the income tax effect of non-operating
foreign currency exchange gains and losses shown in the above table
may not appear proportionate to the net pre-tax foreign currency
exchange gains and losses reported in our unaudited consolidated
statements of operations.
|
|
|
(d)
|
As previously reported
in our Annual Report on Form 10-K, during the three months ended
September 30, 2022, we recognized an income tax benefit of $36
million related to a specific uncertain tax position that was
previously unrecognized in our prior-year consolidated financial
statements. The recognition of the benefit in the third quarter of
2022 was based on management's reassessment regarding whether this
unrecognized tax benefit met the more-likely-than-not threshold in
light of the lapse in the statute of limitations as to a portion of
such benefit.
|
Reconciliations of
Net Cash
|
(Unaudited)
|
|
(in
millions)
|
|
December 31,
2023
|
|
December 31,
2022
|
Cash and unrestricted
cash equivalents
|
|
$
2,621
|
|
$
2,191
|
Short-term
investments
|
|
14
|
|
310
|
Less:
|
|
|
|
|
Short-term
debt
|
|
33
|
|
8
|
Long-term
debt
|
|
606
|
|
638
|
Net cash
|
|
$
1,996
|
|
$
1,855
|
The above tables serve to reconcile the Non-GAAP financial
measures to the most directly comparable GAAP measures. Refer to
the "About Non-GAAP Financial Measures and Performance Metrics"
section of our press release for further information on the use of
these Non-GAAP measures.
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
|
Revenue by Business
Segment and Geography
|
(Unaudited)
|
|
(dollars in
millions)
|
Three Months Ended
December 31, 2023
|
|
|
|
|
|
Year over
Year
|
|
$
|
|
% of
total
|
|
%
Change
|
|
Constant
Currency
% Change (a)
|
Revenues by
Segment:
|
|
|
|
|
|
|
|
Financial
Services
|
$
1,395
|
|
29.3 %
|
|
(5.8) %
|
|
(6.6) %
|
Health
Sciences
|
1,396
|
|
29.3 %
|
|
(2.1) %
|
|
(2.7) %
|
Products and
Resources
|
1,163
|
|
24.5 %
|
|
1.3 %
|
|
0.3 %
|
Communications, Media
and Technology
|
804
|
|
16.9 %
|
|
2.6 %
|
|
2.0 %
|
Total
Revenues
|
$
4,758
|
|
|
|
(1.7) %
|
|
(2.4) %
|
Revenues by
Geography:
|
|
|
|
|
|
|
|
North
America
|
$
3,530
|
|
74.2 %
|
|
(1.6) %
|
|
(1.7) %
|
United
Kingdom
|
448
|
|
9.4 %
|
|
(1.1) %
|
|
(5.8) %
|
Continental
Europe
|
470
|
|
9.9 %
|
|
3.8 %
|
|
(1.0) %
|
Europe -
Total
|
918
|
|
19.3 %
|
|
1.3 %
|
|
(3.4) %
|
Rest of
World
|
310
|
|
6.5 %
|
|
(9.9) %
|
|
(7.9) %
|
Total
Revenues
|
$
4,758
|
|
|
|
(1.7) %
|
|
(2.4) %
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31, 2023
|
|
|
|
|
|
Year over
Year
|
|
$
|
|
% of
total
|
|
%
Change
|
|
Constant
Currency
% Change (a)
|
Revenues by
Segment:
|
|
|
|
|
|
|
|
Financial
Services
|
$
5,809
|
|
30.0 %
|
|
(4.3) %
|
|
(4.2) %
|
Health
Sciences
|
5,674
|
|
29.3 %
|
|
0.8 %
|
|
0.5 %
|
Products and
Resources
|
4,628
|
|
23.9 %
|
|
1.4 %
|
|
1.5 %
|
Communications, Media
and Technology
|
3,242
|
|
16.8 %
|
|
2.6 %
|
|
3.1 %
|
Total
Revenues
|
$
19,353
|
|
|
|
(0.4) %
|
|
(0.3) %
|
Revenues by
Geography:
|
|
|
|
|
|
|
|
North
America
|
$
14,263
|
|
73.7 %
|
|
(1.2) %
|
|
(1.1) %
|
United
Kingdom
|
1,885
|
|
9.7 %
|
|
4.1 %
|
|
3.5 %
|
Continental
Europe
|
1,909
|
|
9.9 %
|
|
6.4 %
|
|
4.3 %
|
Europe -
Total
|
3,794
|
|
19.6 %
|
|
5.2 %
|
|
3.9 %
|
Rest of
World
|
1,296
|
|
6.7 %
|
|
(6.6) %
|
|
(2.6) %
|
Total
Revenues
|
$
19,353
|
|
|
|
(0.4) %
|
|
(0.3) %
|
|
|
Notes:
|
(a)
|
Constant currency
revenue growth is not a measure of financial performance prepared
in accordance with GAAP. See "About Non-GAAP Financial Measures and
Performance Metrics" section of our press release for further
information.
|
COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
(in
millions)
|
Three Months
Ended
December
31,
|
|
Twelve Months
Ended
December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
$
558
|
|
$
521
|
|
$
2,126
|
|
$
2,290
|
Adjustments for
non-cash income and expenses
|
71
|
|
18
|
|
393
|
|
602
|
Changes in assets and
liabilities
|
108
|
|
163
|
|
(189)
|
|
(324)
|
Net cash provided by
operating activities
|
737
|
|
702
|
|
2,330
|
|
2,568
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
(78)
|
|
(90)
|
|
(317)
|
|
(332)
|
Net maturities of
investments
|
246
|
|
379
|
|
395
|
|
565
|
Proceeds from sales of
businesses
|
—
|
|
—
|
|
—
|
|
28
|
Payments for business
combinations, net of cash acquired
|
—
|
|
(367)
|
|
(409)
|
|
(367)
|
Net cash provided by
(used in) investing activities
|
168
|
|
(78)
|
|
(331)
|
|
(106)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Repurchases of common
stock
|
(313)
|
|
(315)
|
|
(1,064)
|
|
(1,422)
|
Net change in term
loan borrowings and finance lease and earnout
obligations
|
(10)
|
|
8
|
|
(25)
|
|
(39)
|
Dividends
paid
|
(146)
|
|
(139)
|
|
(591)
|
|
(564)
|
Issuance of common
stock under stock-based compensation plans
|
14
|
|
15
|
|
71
|
|
86
|
Net cash (used in)
financing activities
|
(455)
|
|
(431)
|
|
(1,609)
|
|
(1,939)
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
and cash equivalents
|
63
|
|
59
|
|
33
|
|
(21)
|
Increase in cash, cash
equivalents and restricted cash and cash equivalents
|
513
|
|
252
|
|
423
|
|
502
|
Cash, cash equivalents
and restricted cash, beginning of period
|
2,204
|
|
2,042
|
|
2,294
|
|
1,792
|
Cash, cash equivalents
and restricted cash and cash equivalents, end of period
|
$
2,717
|
|
$
2,294
|
|
$
2,717
|
|
$
2,294
|
SUPPLEMENTAL CASH
FLOW INFORMATION
|
|
(in
millions)
|
|
Three Months
Ended
December
31,
|
Stock Repurchases
under Board of Directors' authorized stock repurchase
program:
|
|
2023
|
|
2022
|
Number of shares
repurchased
|
|
4.2
|
|
5.2
|
|
|
|
|
|
Remaining authorized
balance as of December 31, 2023
|
|
$
1,777
|
|
|
Reconciliation of
Free Cash Flow Non-GAAP Financial Measure
|
|
(in
millions)
|
Three Months
Ended
December
31,
|
|
Twelve Months
Ended
December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net cash provided by
operating activities
|
$
737
|
|
$
702
|
|
$ 2,330
|
|
$ 2,568
|
Purchases of property
and equipment
|
(78)
|
|
(90)
|
|
(317)
|
|
(332)
|
Free cash
flow
|
$
659
|
|
$
612
|
|
$ 2,013
|
|
$ 2,236
|
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SOURCE Cognizant